Shortly after 8 a.m. on a hot and muggy morning in late July, thousands of women jammed the foyer outside Hall A of the Dallas Convention Center. They were there for the Mary Kay Emerald Seminar, one of five consecutive three-day conventions the company holds each summer in Dallas.
Inside the arena, rock music blared, a fog machine was pumping, and two dozen dancers filled the stage. Women in business attire began screaming like preteen girls at a Jonas Brothers concert. But they weren’t just excited about the song-and-dance on stage; they were on fire for Mary Kay.
Top-selling sales consultants—each raking in at least $125,000 in commissions during the past year—were trotted out onstage. Then came the handful of “Mary Kay Millionaires” who have brought in seven-digit-plus commissions during their time with the cosmetics firm. The No. 1 seller for the Emerald Seminar, Gloria Mayfield Banks, took the mic: “How many of you came here to reignite your dream?” she asked, then urged the crowd to look to their friends and encourage them to, “Dream big!”
The audience was nearing church revival-pitch when Mary Kay president and CEO David Holl stepped up to the podium and announced his goal to hit $5 billion in annual revenue by the Addison-based company’s 50th anniversary—just three years away. It’s double the $2.5 billion the company generated in 2009, but Holl is a true believer. “I know to never underestimate the power of a woman, a passionate woman on a mission,” Holl said. “Never underestimate the power of a passionate company on a mission.”
The crowd went wild.
When he’s not igniting evangelistic fervor among the Mary Kay faithful, Holl maintains a low profile, despite having been at the helm of the multibillion-dollar company since 2006. When asked, many Dallas executives have a hard time recalling the name of Mary Kay’s CEO, incorrectly assuming the person at the top is Richard Rogers, son of the company’s late founder Mary Kay Ash. (Rogers serves as executive chairman.) More often, they assume the top officer is a woman.
It is likely that Ash, who died in 2001, would have approved of Holl’s promotion to the CEO post. Rhonda Shasteen, former chief marketing officer at Mary Kay, says Ash “would never put a woman in that position just because she was a woman. In Mary Kay’s personal life, men were put into positions just because they were men, not because they were best person for job. She set about to have a company that wouldn’t do things that way. David is the CEO because, at that moment in time, when that decision needed to be made, [he was] the best person for the job.”
“The Man Question”
Holl says he gets “the man question” a lot. “My answer is kind of simple,” he says. “I have a strong wife, I have three daughters; it was fate that I was going to work at a company for women.”
Looking back, Holl says he had no indication his career path would lead to the cosmetics empire. Born in 1960 in Decatur, Ill., the son of a lifelong General Electric employee, Holl and his four siblings grew up in New York and South Carolina. He went to Clemson University and graduate school at the University of South Carolina Moore School of Business. Then, in an attempt to flee the state and make some money, Holl took an oilfield job in Houston. He hated it.
“After six months, I wanted to leave, but my dad was still working [at GE] and had been there for 38 years; he said, ‘Why don’t you give it a year?’ So I gave it 11 months before I left and came [to North Texas] to work for Citibank,” Holl says. He and his wife, Suzanne, lived in Dallas, then moved to New York before settling in Denver. In the early 1990s, Suzanne’s father became ill, and the Holls moved back to Dallas to be near him. During that time, an executive recruiter friend of Holl’s told him about an open finance position at Mary Kay.
“I’ll be the first to admit, when I was in graduate school, not once did I think I would be working for a cosmetics company, much less a direct-selling cosmetics company; that wasn’t a big goal of mine,” he says. “I was happy at Citibank ... so the fact that I wasn’t dying to have the job helped the whole process. I think [other job candidates] recognized it up front, but it took me until once I got here before I realized the opportunity that I stepped into.”
Holl knew of Mary Kay Inc. from his work as a banker—the cosmetics conglomerate had enjoyed a decent reputation after its $450 million leveraged buyout in 1985—and he learned about the strength of the company’s culture when he read one of Mary Kay Ash’s books, Mary Kay on People Management. But little did Holl know when reading that book that he’d one day take over the company Ash created.
Perpetuating the Dream
With only about 4,500 corporate employees worldwide, Mary Kay’s business model revolves around the work of its so-called “independent sales force,” which consists of an estimated 600,000 “independent beauty consultants” in North America and a total of 2 million consultants in more than 35 markets worldwide. In general terms, the tiered system begins with the beauty consultants on the bottom, then directors, and national sales directors. There are about 450 national sales directors worldwide.
Beauty consultants typically hold parties where potential customers sample products. Because each consultant is in business for herself, she’s able to mark up Mary Kay products to whatever price point she chooses. Lipstick, for example, usually costs a consultant about $6, but the suggested retail price is $12, thus allowing Mary Kay corporate to say its sales team regularly makes a 50 percent commission.
After beauty consultants “share the opportunity” with outsiders and transition them from customers into salespeople (commonly referred to as the consultant’s “offspring”), and when an undisclosed revenue point is reached, the consultant is on her way to becoming a director. It’s a complicated system, with specific requirements and rewards for each level. Some consultants may qualify for items like costume jewelry, whereas a national sales director may earn the right to drive a signature pink Cadillac Escalade (in what equates to a two-year lease paid by the company). It’s a business model that works: The consultants purchase the inventory directly from Mary Kay Inc., and the company doesn’t have to worry about carrying the costs of 2 million employees.
Many of the company’s success stories come from women who pursued a career selling Mary Kay in an effort to support their families or create new lives for themselves. Karen Piro started selling Mary Kay in 1975 and rose through the ranks to become an independent executive national sales director (the “executive” comes from the fact that Piro helped several other members of her group achieve national sales director status).
When Piro began selling Mary Kay in Iowa, the company was relatively unknown in that part of the country. “I wore my Mary Kay pin and people thought it was my name,” she says. “The world was my oyster and I had a reputation to build. Now I have a reputation to protect.”
After Piro and her family relocated to Dallas 18 years ago, she continued to build her business. (Mary Kay does not give beauty consultants geographic boundaries, so it’s every woman for herself, anywhere in the country.) Piro has earned lifetime commissions totaling more than $10 million. The money is good, and a far cry from the salary she earned as a second-grade teacher in Iowa, but Piro says her job satisfaction comes from the leadership role she plays within her unit.
“It’s like guiding a volunteer army, really, because it’s their business,” Piro says of her recruits. “I don’t have to hire people or fire people. I’m nobody’s boss; I’m just here to guide and mentor.”
After 35 years with Mary Kay, Piro maintains that Holl’s leadership is taking the business in the right direction.
“He’s one of those rare individuals who has business savvy, great character, and people skills all rolled into one,” Piro says of Holl. “We’re so glad he is perpetuating Mary Kay’s dream.”
Those are exactly the characteristics Holl brings to his community service work, says Cathy Bryce, immediate past president of the YWCA of Metropolitan Dallas, where Holl is a longtime board member. “He is wise, thoughtful and deliberate—a very knowledgeable leader,” Bryce says. “When he is involved, he adds value immediately and consistently.”
Bryce says Holl has a quiet, humble leadership style.
“He is just not full of himself at all. Sometimes that’s a challenge, when you’re the head of a company as large and successful as Mary Kay,” Bryce says. “He’s refreshingly authentic—a treasure of a leader in Dallas. He quietly makes a difference. It’s never about David.”
Fierce Brand Loyalty
All told, more than 30,000 Mary Kay consultants flock to North Texas for the company’s convention in Dallas each year, pumping an estimated $72 million into the local economy. The convention seminar productions are elaborate and obviously expensive for the company to host, but the priceless element that makes Mary Kay work is the contagious enthusiasm of the independent sales force.
“Certainly the cosmetic side of the business is a very important factor in Mary Kay’s success, but that’s a given; you have to have that just to stay in the game,” says Shasteen, a 26-year veteran of Mary Kay who served as the chief marketing officer until she retired from the company a few months ago. “What drives us is passion. There’s a deep sense of attachment and belief in the brand, among both the corporate employees and the independent sales force. … Today so many companies are looking for that, and Mary Kay has had it all along. The leadership team clearly understands that’s what drives the business, and that’s the critical success factor.”
That’s not to say the company is without problems. One of the top hits on Google for a search of “Mary Kay” brings up PinkTruth.com, a collection of blog posts by former consultants who became disenchanted with the company. Some claim the recruiters aren’t clear about the steep hidden costs of starting one’s own Mary Kay business, and others dismiss the cosmetics giant as an unsustainable pyramid scheme. In a model with more than half a million independent reps in the United States, there’s bound to be the occasional blowback. But Holl doesn’t let it faze him.
“I think every company nowadays has to be aware of all the different ways your message gets out there and the way it’s perceived, and blogs are certainly one of them. You’ve got to have thick skin,” Holl says. “But the fact is, we’ve got 2 million people that are active in our business and a lot of people [who] are now inactive. We do our own exit interviews; by far the vast majority have a great experience within Mary Kay and stay customers. There’s always going to be some negativity out there, and we just have to focus on what we’re doing right.”
One thing the company is “doing right” is expanding into previously untapped markets.
Holl says when he joined Mary Kay as vice president of finance in 1993, revenue was just under $1 billion and the company had a U.S.-centric business model. Three years later, Mary Kay expanded into China. Two years after that, the Chinese government shut down direct-selling operations. Instead of abandoning the market, Mary Kay kept employees in China on the payroll and focused on developing leadership. The company managed to circumvent the direct-selling ban by building “beauty centers” around the country where beauty consultants could meet with clients. There are now nearly 100 beauty centers in China, and China has become Mary Kay’s second-largest market. Its fastest-growing market, on a percentage basis, is Brazil.
The company opened operations in India about three years ago, but the logistics of navigating the country’s infrastructure have been prohibitive in terms of reaching clients and providing product delivery. Holl says his team has also identified Vietnam, Lithuania, and Peru as potential markets for Mary Kay, but the company is considering whether it would be more beneficial to expand into these new markets or to increase the resources available in India, where Holl says Mary Kay “hasn’t even begun to tap the potential.”
In America, the executive leadership team is busy bringing Mary Kay into the 21st century by changing the way its sales force communicates with customers. On its website, Mary Kay connects new customers to beauty consultants, who in turn have the option of mailing products directly to their customers instead of depending solely on the in-person delivery method of the past. Mary Kay is also all over Facebook, with close to 200,000 fans; the Facebook site mirrors the corporate website, with interactive makeover features, instructive videos, and product updates.
The foray into the online marketplace is a drastic change. But Holl is quick to point out that the power still lies in the hands of the independent beauty consultant. He says Mary Kay chose to tread lightly when it came to shipping directly to the end user because it didn’t want to give the impression that it was taking steps toward making beauty consultants obsolete. The opposite is true: Holl says the company is focusing on increasing the number of consultants and increasing the amount of products those consultants sell.
“We don’t come close to capturing the customers’ beauty purchase,” Holl says. “We’re less than 20 percent of what they spend on products that we sell that they could purchase through us.”
Holl declined to provide specifics—regarding both the number of consultants the company aims to add and increases in per-consultant sales. But he is counting on the initiatives, along with continuing expansion into huge markets like China and India, to drive Mary Kay’s growth and help it hit that $5 billion annual sales goal in 2013.
Honoring the Past
Although the company may be getting a bit of a makeover, one thing that won’t be changing is the enduring presence of its late founder.
In his office on the 13th floor of Mary Kay headquarters, just down the hall from where Ash’s office sits exactly as she left it, Holl recalls a mistake from his early days as company president. Ash had died two years before, and her photograph was deleted from the corporate newsletter. Someone wrote and asked why the photo was removed; Holl says he immediately realized that the letter writer was right. So instead of discarding old photos of Ash, Holl and his team set about replacing those images with lesser-known photos of the much-loved entrepreneur. The sales team wasn’t ready to let her go.
At the company’s 600,000-square-foot corporate headquarters off the tollway in Addison, huge portraits of the company’s founder, always perfectly coiffed and with a full face of makeup, dominate the lobby’s walls.
There’s a large museum on the ground floor, filled with memorabilia Ash collected throughout her life. Today, nearly 10 years after her death, Mary Kay enthusiasts still travel from all over to get a glimpse of Ash’s signature pink office, where drawers in the adjacent bathroom still hold her personal makeup. When company employees reach their 10th anniversary on the job, part of their reward always includes time in Ash’s office.
“Obviously we can’t replicate [personal time with Ash], but what we can do—they come into Mary Kay’s office and sit down, and Mary Kay’s ex-assistant Jennifer Cook, who runs the museum, or somebody else who worked directly for her, will come in and talk about what’s in her office,” Holl says. “With a company like ours, the fact that 50 percent of our [corporate] employees have been here longer than 10 years … speaks to the benefits, speaks to the environment that they’re working in, and it also means that there are people who have been here a long time and are not shy about coming up to me” and sharing their opinions about the company.
Although he’s been the leader of the company for much of the last decade, David Holl has no intention of becoming the face of Mary Kay Inc. “There is only one Mary Kay Ash,” he says.
The Legendary Mary Kay AshMary Kay Ash is one of Dallas’ best-loved success stories. She married her first husband, Ben Rogers, at 17. They had three children but the marriage didn’t last. As a single mother with a family to support, Ash began working in direct sales, and did so for 25 years.
At 45, Ash began drafting a book for women, outlining how to navigate the challenges of business. Writing the book inspired Ash to become an entrepreneur, and the idea for what was originally called “Beauty by Mary Kay” was born. One month before she was set to open a 500-square-foot storefront in Dallas, Ash’s then-husband died of a heart attack. On Sept. 13, 1963, she opened the business anyway, with $5,000 and the help of her 20-year-old son, Richard Rogers. By year’s end, the company made a small profit. One year later, wholesale revenue approached $200,000; by the end of its second fiscal year, the company was raking in $800,000.
Last year, 46 years after Ash founded Mary Kay, wholesale revenue for the privately held company hit $2.5 billion.
David Lei, Ph.D., assistant professor of business strategy and entrepreneurship at Southern Methodist University’s Cox School of Business, says Ash, who died on Thanksgiving Day in 2001, is still an iconic role model for budding business leaders.
“There is little doubt that she remains an inspiration to millions of entrepreneurs, in much the same way as Ebby Halliday and others who pulled themselves up in the wake of extremely difficult times, different expectations regarding gender roles, and certainly the roller coaster rides of so many business cycles,” Lei says. “Her sheer grit, perseverance, vision, and exceptional interpersonal skills vaunted her into the ranks of some of America’s greatest business legends.”
CEO SnapshotDavid Holl President and CEO, Mary Kay Inc.
PERSONAL: Born in October 1960 in Decatur, Ill. Married to Suzanne for 23 years. They have three daughters: Rachel, 14; Sara, 17; and
EDUCATION: B.S. in finance from Clemson University, M.B.A. from the University of South Carolina’s Moore School of Business. Earned the business school’s distinguished alumnus award in 2008.
CAREER: Before joining Mary Kay, Holl was a financial analyst for Union Texas Petroleum in Houston, then became vice president at Citibank in New York. He began working at Mary Kay in June 1993 as vice president of finance, and was named chief financial officer and treasurer in 1996. Holl became president and chief operating officer in October 2001, and was promoted to CEO in April 2006. He also serves on the company’s board.
GIVING BACK: Holl serves on the board of the YWCA of Metropolitan Dallas; he’s also a member of the CEO Council of the World Federation of Direct Selling Associations, The Nature Conservancy, the Personal Care Products Council, and Southwestern Medical Foundation.