On this episode of Fortune’s Leadership Next podcast, host Diane Brady talks to Tom Nolan, CEO of jewelry and accessories brand Kendra Scott. They discuss what it takes to step into a CEO role that was recently vacated by a still very present company founder, the continued expansion of Kendra Scott's brick-and-mortar stores, and how to lead a company in a category you're not personally passionate about.
Listen to the episode or read the transcript below.
Transcript
Diane Brady: Leadership Next is powered by the folks at Deloitte who, like me, are exploring the changing roles of business leadership and how CEOs are navigating this change.
Welcome to Leadership Next, the podcast about the changing rules of business leadership. I'm Diane Brady. This week I speak with Tom Nolan, the CEO of Kendra Scott. You may not know it, but it is one of the fastest growing jewelry brands in the world. A billion-dollar brand at this point, affordable luxury fashion meets philanthropy. It will soon be in 300 stores across the U.S. Tom took over from the woman who founded it more than 20 years ago with $500 in her pocket. He talks about that. He talks about his own journey to the C-suite and what's next for one of the world's most popular jewelry brands. Here's the interview.
Hi, everyone. We are here with Tom Nolan, CEO of Kendra Scott, a billion-dollar jewelry brand. Tom, good to see you. I have to say, when I mentioned I was doing this, one of my colleagues downstairs immediately pointed to a gold chain on her neck with a very beautiful gem. So you are beloved here at Fortune. I can tell you you've got customers in the building.
Tom Nolan: Yeah. Thanks, Diane. I'm happy to be here and appreciate you having me.
Brady: Well, let's start for those who don't know. Tell us a little bit about where this brand fits in the pantheon of jewelry out there.
Nolan: Yeah. I mean, look Kendra started the business 22 years ago now, which is amazing to think about. I've been around it for going on 10 years now, but 22 years ago, as a single mom, she saw white space in the industry to create affordable, beautiful, natural gemstone material for somebody that she couldn't afford. And there was white space out in the marketplace at the time, it didn't really exist. So, she created Kendra Scott out of the spare bedroom of her house with $500 and a dream and started the business as a wholesale business, really walking around with her eldest son, Cade, in a Baby Bjorn selling her wares. And today, as you mentioned, the company's really just grown leaps and bounds and couldn't be more proud of the team or her or what we've created throughout the years.
Brady: Yeah. And you became CEO in 2021, but you joined the board, I believe, 10 years ago, and you've had various roles, including president. Let me pause a second with the, uh, the origin story is is fantastic. When I hear the term affordable luxury, I've also heard the term fashion meets philanthropy…
Nolan: Mm hmm.
Brady: …give me a sense of what that means, because that's a term that people can immediately read as somewhere in that mid-market that's kind of undefinable and sometimes hard to grow. What do you think has differentiated the brand?
Nolan: Yeah, well, it's funny. When I was at Ralph Lauren, I never liked the term affordable luxury. But, you know, living in a space where a large constituency of our customers are mid-market customers, you know, and the customer is our boss. We love her and love him. I feel like it's important for a brand to be able to touch all aspects of the customer wherever they are in their lives. So I think that's a really important place to be. And there's been a lot of stories written recently in the consumer space specifically about luxury goods, and LVMH has been kind of centered around that, and they've had tremendous amounts of success, but, you know, 85% of the global population makes less than $100,000 a year, and 81% of the U.S. population does. So I think, like all customers are important, is kind of my way of saying that. As it relates to fashion meets philanthropy, we have three pillars of the company—family, fashion and philanthropy—and philanthropy, I believe, is our most important one. Kendra put a stake in the ground 22 years ago when she started the business to make sure we were not just selling jewelry or creating something but trying to do good in the world. And there's a story behind how she started her previous business, which was called The Hat Box. Her stepfather, Rob, was going to…
Brady: That failed, that one, didn’t it.
Nolan: It did, pretty monumentally, as a lot of those do. And, you know, just like I try to teach my kids, you learn a lot more from failure than you do from success. But she saw her stepfather, Rob, was going through chemotherapy for brain cancer, wound up passing away. But she was at M.D. Anderson a lot in Houston and saw patients dealing with the loss of hair. So she wanted to create a hat company to help those patients and had soft linings inside of hats and, you know, had these grand visions of people walking around wearing top hats and fedoras again, and that business failed. But it showed her what a difference a company could make in the lives of somebody.
And when she started Kendra Scott out of The Hat Box, out of that failure, I should say, the Austin community really got around her and galvanized around her because she always had something to give, whether it was to a local church or a school or somebody in need. And she put a stake in the ground and said she always wanted to make sure that she helps people in need, not just organizations in need, but individuals in need. And we felt true to that 22 years later. And it's, I think for a lot of us, the why of why we enjoy working here so much and it's foundational to our culture as an organization.
And I think the consumer over the years, Fortune's written a lot about this as well as other media outlets, cares a lot more about the companies they're working with and who they're buying something from. It's not just purchasing goods, it's it's really about making a difference and aligning yourself with companies and businesses that appreciate the same things that you do. And we've been at the center of that for more than two decades now. So, I think it's really allowed us to be more successful in recent years and see just tremendous step growth in the last couple of years specifically.
Brady: So let's remind people, you've got a fascinating background yourself. By the way, I want to get into you've been a founder as well and a golf fan. We can talk about that. But the price point, it’s around, what I mean seems to be a pretty wide range. Let’s just tell people what the category…
Nolan: Average price point. Sorry, is around $100.
Brady: Yeah.
Nolan: And we span from $35 and now we have engagement rings that span up to $35,000. Our sweet spot is right around the $100 mark. But, you know, some of the things we really care about are creating beautiful, natural gemstone, high quality product that has a high value proposition. And value proposition means a lot of different things to different people in points in their life. You know, last night, I went took my family to Bingo and I was sitting next to one of my daughter's friends who's 12, who had an “Elisa” necklace on, and she was super proud of it and saved up her money to buy it, and that item sells for $65. And she got it at our Color Bar, which is in every one of our 139 stores across the country, and her mom was wearing one of our fine jewelry pieces. And I was sitting next to my wife, who was wearing several of our fashion pieces, as well as our fine jewelry pieces, and seeing that multi-generation, you know, wearing that and, a lot of times, the same product but also different product from the same brand with pride and feeling good about themselves, I think is kind of what we stand for as a brand.
Brady: I'm fascinated that you're taking your family to play Bingo. Is that a weekly occurrence in the Nolan household?
Nolan: We have, and when we're here in the summer, the place that we go to has Bingo every Monday night. And it's the highlight of our summer. It's the highlight of my week. And my son actually won.
Brady: Let's talk about here. Here right now is not Austin, Texas. Where are we talking to you from?
Nolan: Yeah, I'm talking to you from the mountains in North Carolina, which is kind of an escape for us in the summer.
Brady: Nice. Very nice. Well, I want to get into before we, I know you've got bold expansion plans, etc., etc., but I want to talk a little bit about your background, Tom, because when I look, you know, you've spanned the horizon here. You've been a partner in a spirits company. You've co-owned a golf club. You've been on the board of numerous companies, including, by the way, a men's underwear brand. That's how I associate Tommy John. And you founded your own company. You mentioned Ralph Lauren. Tell me a little bit about what did you want to be when you grew up.
Nolan: I wanted to be a baseball player when I grew up. I grew up on Long Island. My dad's an electrician and I'm the only person in my family to graduate from high school. So, you know, the dreams I had were were not education dreams or business dreams, because it just seemed like a, you know, too far a stretch for me, the way and the environment that I grew up in. But because I could throw a baseball well, I won, that wound up paying for college for me and, you know, my dreams, I was a big dreamer, like I dreamed about being successful and having things that I kind of envision come true. But if I'm being honest, the business world was a far stretch for me. I had no exposure to it whatsoever, really, until I got out of school, but started my career in the publishing industry with a company called Ziff Davis and then transitioned into Time Warner for a very brief period of time, and then Condé Nast is where I spent the majority of my publishing career. I became a magazine publisher at really young age. I was 26 years old, which is, you know, looking back, crazy, to think that somebody gave me the keys to the P&L of a successful business…
Brady: You were publisher of Golf World, right?
Nolan: …at that age. Yeah. Golf World magazine. That's right. And I loved it. It was a passion of mine. I wound up playing baseball and golf in college, and it was great. And I had the ability and I worked for some great people and I had an amazing team there that really allowed me to be vulnerable and successful and work hard, and it was great. And then a little after working there for several years, I wound up at Ralph Lauren, as you mentioned. I ran their golf and tennis business, which was great, and learned the business from [Chief Operating Officer] Roger Farah, who I think is one of the best operators I've ever been around, and to this day, a mentor of mine and then learned the brand from Ralph. We spent a lot of time together and it was awesome just being in the room with those two individuals and then the broader group, and from there I left and kind of had an itch I wanted to scratch to be an entrepreneur. I heard Ralph talk a lot about being a great entrepreneur, and S.I. Newhouse and all these people that I had been around, and I hooked up with a private equity firm and launched a holding company called Prospect Brands because that was the street I grew up on. And we bought distressed assets, and it was, you know, one of my dreams was I wanted to be a CEO. I did that probably a little too premature.
Brady: Well, what did you learn from that experience? You said earlier you learn more from failure. And I'm not going to call Prospect Brands a failure, but you're in a different role today. Tell me about that experience and what you took away from it.
Nolan: You know, I think, I didn't really know what it meant to be a chief executive. I think what it means in hindsight is just being a great teacher and a coach. And I was so, so busy with trying to prove to everybody that I deserved to have that role and I could be successful in it. And I didn't listen probably as well as I should have to the team, to the market, to my family in a lot of instances and, you know, tried to force a square peg into a round hole in some instances with some of the businesses that we owned. And it just, it didn't work. And one of my strengths, I would say, is I just have a dogged determination and, you know, I'll persevere and see things through and a lot of times it serves you really well. But in some instances, you’ve got to listen to the environment around you and your people around you and what it's telling you. And sometimes it just says, no, hey, this isn't working or the way you're doing it isn't working. So I think I learned you’ve got to pivot more quickly, trust your gut sometimes. So I wouldn't say it was a monumental failure, but it certainly wasn't a great success. But what was borne out of that was while I was working at Prospect Brands, I got a phone call from Norwest Venture Partners who had just made an investment in this jewelry company called Kendra Scott in Austin, Texas, that I had never heard of. And that's when I joined the board to your earlier point, it was in 2013 now.
Brady: Yeah.
Nolan: Wound up changing my life in a lot of different ways. And philanthropy was a big part of it. And then in addition to that, as you mentioned, I’m on, have been on the board of Tommy John for a number of years now, which is ironic because my name is Thomas John and my mom used to write Tommy John in my underwear. So maybe I, maybe I should have come up with that idea instead of Tom Patterson.
Brady: You know, I'm struck when you're talking, Tom, you're in a company that is 95% women, and you're mentioning things like soft skills and emotions and work-life balance. And I don't want to get into gender stereotypes here, but I'm sure you must get asked a lot about being a man leading a company of women for women. Tell me a little bit about how you are sensitive to that.
Nolan: Yeah, I wouldn't say I have any sensitivity to it. I just kind of react to the reality of it. I mean, when I first joined the organization, we were 99% female. So it's one of the reasons why my email is just Tom at Kendra Scott because I was the only one when I first started. Now we have first last name. But, you know, look, I think it was different for me. It wasn't, it wasn't something I was used to. I came more from, I have a like a sports mentality kind of the way I grew up, I’m a hard charging person. It was a different sort of softer skill set, necessary here, I think in order to be successful. It's made me a much better leader in the sense of recognizing and leaning into the importance of work-life balance. You know, how important it is to, you know, the superpower that working moms have. I don’t think it necessarily has anything to do with gender in that regard. Because, you know, I'm a father as well. And, you know, I want to be able to spend time with my family. And I think this organization really recognizes that, leans into it in a meaningful way.
Brady: Yeah. Mother's Day is a day off, right? Don't you give everybody Mother's Day?
Nolan: That's right. We do.
Brady: But not Father’s Day.
Nolan: Yeah. Yeah. So we gave Mother's Day, I think just because of the nature of our organization being so female, it made sense to do that. And it has been celebrated. In fact, you know, the media hadn't really talked about it as much as I would have hoped that they would. But I know the employees certainly appreciate it. And the flexibility I think, that we afford our workforce to be able to spend time with their families. And at the end of the day, we put points on the board. Right. The growth in our business has been extraordinary. We've been an outlier amongst outliers, specifically in the consumer space. And I think a lot of it has to do with we have this recognition of accountability to each other and that's our family pillar and this relentless desire and need to win. But we balance it with kindness and heart and compassion and understanding and flexibility so that, you know, I'm fortunate, too, and I live this myself. I don't miss a lot of sports games for my kids, and I try to make things that matter for my family, but I always show up for our organization. Yeah. And, you know, it's always about winning and it's about doing what we said we're going to do as a company and as individuals. And I think that makes a big difference.
[Music starts.]
Alan Murray: I’m here with Jason Girzadas, the CEO of Deloitte US, who had the good sense to sponsor this podcast. Jason, thank you very much for joining me.
Jason Girzadas: Thank you. It’s a pleasure to be here.
Murray: Jason, the majority of Fortune 500 companies have made commitments to reach net zero to address climate, but it’s still unclear how they actually get there. What’s the role of technology in meeting those ambitious goals?
Girzadas: There’s a broad recognition that the cost of climate change is far greater than the cost of not investing in it. Organizations will continue to utilize technology to move on the journey towards a decarbonized future and a more circular economy. We’re already seeing the benefit of technology through an increase in alternative energy sources. The advances in battery and storage technology are evident. You’re seeing the growth and increased performance of EVs at lower price points. So the impact and value of technology is being felt already, and that’s only going to continue. It’s pretty clear that climate change requires innovations that don’t exist today. But we do think that there will be new opportunities for innovation to be further accelerated through the development of ecosystems around emerging technologies.
Murray: There’s clearly a lot to do on this front. You talk to a lot of CEOs about this. Do you feel there’s a real sense of urgency on meeting these commitments?
Girzadas: The urgency is there. The call to action around climate change and the path to sustainability is there, and the impact of climate change is real. I think the narrative is shifting one from it being a cost and an inconvenience to decarbonize our economy to one where it’s actually a opportunity. The climate organizations that we serve are in their own way, charting a path to a sustainable future.
Murray: Jason, thanks for your perspective and thanks for sponsoring Leadership Next.
Girzadas: Thank you.
[Music ends.]
Brady: Let me talk about one of the things that's always fascinating to me is when you have a strong founder and I think everyone would agree that Kendra Scott herself is a strong founder. She is still the majority shareholder, executive chairwoman. What's the relationship she has to the company now? Because it's very hard to make the place your own when the person who founded it is still lingering down the hall.
Nolan: Yeah, I mean, I have the fortunate context of only working for founders and having been a founder. So I think there is a very pervasive and specific founder mentality. There's a great book called The Founders Mentality that if you haven't read, it's worth reading. And it's very true, right? I mean, the way a founder looks at a business is it's their child, right? Especially founders whose names are on the building and I've worked for two of those. And one of the reasons when I first came here, and I think for Kendra to hand the reins over to me as CEO was incredibly humbling. But also it was a bit of a surprise because it's like giving custody of your child to somebody. So that was rooted in trust over the last several years that we worked together before that. Now, now almost a decade.
You know, she plays an unbelievably important role in the organization. She's very active in the organization. You see her on Shark Tank. I mean, she has written a very successful book. She runs all design and philanthropy and brand for the business. And she's here a lot and she's very visible and very vocal. But at the same time, I think the one thing that she would say and has said publicly is, you know, she recognizes where she needs to fill holes. And I think it's a sign of a great leader to fill those holes with people that accentuate your talents and fill in some of the gaps that you have, and I think she's done that really well.
You know, for me, I mentioned earlier I had a sister who passed away 15 years ago. She's kind of taken on a surrogate sister relationship to me, which means, you know, we bicker every now and then, but we're mutually aligned, almost always on the big macro strategic initiatives we want to have as an organization. And treating people the right way, I think that's paramount. Everything we do as an organization is making sure that the customer is our boss, right? We all work for her and him like they sign our paychecks, like that drives every decision we make. And then we want to treat our people well, we want our people to be seen and heard.
Brady: You mentioned "him." Do you have many male customers?
Nolan: Yeah, sure. We have a pretty significant, particularly around the holidays, represents about 20% of our customer base. We have a men's line that we launched a couple of years ago called Scott Bros. And much of our jewelry is unisex, can be worn by both those who identify as female and male. But gifting as it relates around the holiday specifically, we've leaned into, we do a lot of sports sponsorships, which, I'm really excited about personally, but it's worked and I think the brand stands out and everything that we do, not just from a product perspective, but how we treat people, customers, and also people internally.
Brady: I would say Barbie was your best collab last year if I had to guess, but I'm just guessing. But let me ask, I want to ask a bit of advice before we go on to the growth, because I think obviously what happens from here is fascinating. But you've mentioned you've worked for a lot of founders, you've gone from being president to CEO now with the strong founder. What advice do you have for how to work with founders? Because many people find themselves in that situation.
Nolan: Yeah, I want to just zoom back in to something you mentioned earlier, the constituency makeup of our organization, because I think this is important. It dovetails nicely into the question you just asked. Coming into this organization, this is the first company I think I've worked for where I wasn't personally passionate about the product. Right. Like working at Golf World magazine, like it was my favorite magazine, and working at Ralph Lauren was a brand I idolized as a kid. Tommy John, I’m the customer. Like, Sweetens Cove, the golf course that we own, the bourbon that we launched, I'm passionate personally about those things.
When I came here, I wasn't an expert in the space. I wasn't personally passionate specifically about the product that we were making. So I had to be curious. And I had to ask a lot of questions. I could never act and, to this day, I still try not to ever act like I know what's going on, [like]I know everything. And I think that was a quality I didn't like in leaders that I had worked for over the years. So I think that that part is really important to be curious, ask a lot of questions. And I think, as it relates to working for founders, similar, right? Nobody and I say nobody, but I certainly don't like know-it-alls, right? I like people that ask me questions about myself and my family. It shows that you have an interest in me, whether it's, you know, perceived or real. And I think, you know…
Brady: It's real, Tom, it's real. One thing I'm intrigued is you've gone out, you're looking for funding, you're expanding in the brick-and-mortar space, which I found fascinating. I think your aim is to have 200 stores. What is it about the in-person live retail experience that makes you want to expand on that at a time when many others are, frankly, contracting?
Nolan: Yeah, so we've been bullish. I've been bullish on retail from the go here. We are an experiential brand, an experiential business. I think one of the things that the world saw coming out of COVID was people were starving for experience. They were starving for one-to-one personal interaction. You know, everybody was tired of Zooming and tired of being virtual and tired of being stuck in their house and not being able to go to restaurants. So when you look at the performance of publicly or privately traded companies that are rooted in experience, whether it's travel or cruise lines or hotels, they've outperformed other segments of the market because the world wants to get back out again. I also think just the flexibility that was built coming out of COVID with businesses is that people can work from home. They can be able to be more flexible to go out and find those experiences. Brick-and-mortar is really important to us. You know, again, I learned this at Ralph. I mean, he created a world of when you walk into the mansion of Madison Avenue, you're stepping into another dimension, a lot of where it's like.
Brady: You're stepping into a different income class too.
Nolan: Yeah totally. So we've done that in, last year in 134 stores, we did 21,000 events. Events are so important to us and it's not just important to us because it creates a connection with a customer. The majority of those events were rooted in philanthropy.
Brady: So what kind of events? Could give me a sense of what a jewelry event is like?
Nolan: So oftentimes they’re in our stores, so we have a Color Bar in each one of our 139 stores today where you can walk in and create your own jewelry. So a lot of the times we'll do Color Bar parties and it could be a birthday party for my 16-year-old daughter. It could be somebody who's in a local community and in the Charlotte Birkdale [Village] store who is suffering from a disease or needs help. And we will run an event for them. An individual not always an organization. And 20% of those proceeds will go back to help whatever cause or help that individual needs. So it varies.
Oftentimes we go out of the store and we'll do events at Sloan Kettering. We'll bring a mobile Color Bar and we'll do Color Bar parties to help cancer patients, pediatric cancer patients. We'll do events at golf clubs for member guests or charity organizations. So an event is really defined by the person that wants to have the experience. We use our stores as a conduit to be able to bring those events to local communities. But the fact that we did 21,000 of those last year is really important and it helps bring the brand to life. It allows people to step into Kendra's house to understand what she cares about, who she is as an individual. And there's a tactile nature to retail that's really important. People want to look and feel and touch the product.
And one of the reasons for our success in retail early on was when you went into jewelry stores 10, 15 years ago. It was a really intimidating and scary experience. You know, you'd walk in, everything was under a case. Oftentimes people were judgmental. They wore white gloves. It was like super intimidating. We invite people into our stores. The team is remarkable. Our retail team is absolutely incredible. They're warm and they're inviting and they're happy and they're friendly. We invite people to try things on. Everything's above case. We want them to touch it, feel it, and experience it, and it's led to a lot of success. So we'll open 15 stores in fiscal year 2024. Our plan and goal here is to open 300 stores now in the U.S. …
Brady: Oh, 300?
Nolan: Yeah, then we're dipping our toe international in the next coming years as well. But the retail stores are important to us. And I think one of the things that separates us from others, not just jewelry brands or lifestyle brands, but all brands, is that when you walk into a Kendra Scott store, whether you're in Ardmore, Pennsylvania, or Soho or Southern California or Atlanta, Georgia, we feel like we're a part of the fabric of the community. And it's because of the events, it's because of our reach out into the community, it's because of the charitable nature of our business so that we become more than just selling goods to somebody, it’s selling an experience, and it's selling something greater than that.
Brady: I totally agree. I know we have to finish up here, but I cannot let you go without asking about golf. You know, my late husband was obsessed with it. My sons play it. What is it about golf that you like? Tell us the beauty of the game.
Nolan: Well, first of all, I'm sorry to hear about it.
Brady: Oh, thank you.
Nolan: You know, look, I don't know where if I'm being, truthfully, I don't know where I would be without the game of golf. I didn't grow up playing it because it wasn't something that was, I just didn't grow up in that world so I didn't understand what it could do. I think it is a wonderful test of character of people. You know, there's that old adage of, you know, if you cheat at golf, then, man …
Brady: Yeah, cheat at life.
Nolan: …you’re not a good person. Like, what else are you cheating at? I think it's just the truest measure all by yourself, right? You can't rely on anybody else. I mean, even though there's teams, I played on a team golf, but you're relying on yourself. And I think the fortitude and perseverance that you have to have to be successful, successful at a high level at it is really important. But at the same time, you know, somebody that's a tour player can play golf with a 25 handicap and have just as much fun. You’re outside. It's exercise. There's a new goal every single hole you get to and you know, I'm a goal person, so I like accomplishing goals. I think it's wonderful from a family perspective. You mentioned your late husband and your sons play. Like it's such a great experience. Like for me, I have an 18-year-old son who's going to college to play golf next year, and what else could I do with him where he's going to want to be captive with me for five hours and enjoy the time together? So it's such a great reward as a parent to be able to do that. And I, you know, I love what the USGA and other organizations are doing to bring the game to different types of people across the country because, making it more affordable and accessible for people I think is critical because you learn a lot about yourself. I mean, I learned a lot about business just by caddying and hearing how business people spoke to each other. I mean, it changed my life.
Brady: Yeah. No, I think it's…what’s your handicap? Am I allowed to ask?
Nolan: I mean, I'm like a one nowadays.
Brady: Great. Well, great founders always, in my experience, have great partners, as do great brands. So, thank you so much, Tom Nolan. Great to chat with you and we'll see you on the course or in the stores.
Nolan: Yeah, thanks, Diane. Appreciate it. Thank you for having me.
Brady: Leadership Next is edited by Nicole Vergalla. Our audio engineer is Natasha Ortiz. Our executive producer is Chris Joslin. Our producer is Mason Cohn. Our theme is by Jason Snell. Leadership Next is a production of Fortune Media
Leadership Next episodes are produced by Fortune's editorial team. The views and opinions expressed by podcast speakers and guests are solely their own and do not reflect the opinions of Deloitte or its personnel. Nor does Deloitte advocate or endorse any individuals or entities featured on the episodes.
