tv The David Rubenstein Show Peer to Peer Conversations Bloomberg March 16, 2019 9:00am-9:30am EDT
david: you said you are in charge. jean-paul: no one wanted to take it. [laughter] david: people are happy when they use your products. jean-paul: you make people happy. david: can you tell the difference in brands? jean-paul: not from far away. david: a four-week vacation, is that a requirement to be french? >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright. ♪ david: i don't consider myself a journalist. and nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job of running a private equity firm. how do you define leadership? what is it that makes somebody tick? as archaeologists have discovered, you go back several thousand years, there was cosmetics and other beauty products in egypt and other places in the middle east. what are we doing to make people more beautiful today than they did thousands of years ago? jean-paul: l'oréal did not exist many many thousands of years ago. maybe you don't know, in fact, the first beauty product we discovered, was discovered 100,000 years ago. so 100,000 years ago, men,
women, started to use kind of makeup, kind of beauty treatments, so it is a long story. david: were they sold the department stores? where did people by those? they don't know. [laughter] jean-paul: there were flintstone department stores. [laughter] david: i assume mostly for women in those days? 100,000 years ago. jean-paul: i was not there. [laughter] david: ok. jean-paul: i am not sure. maybe both men and women were using colors. david: i am not the expert in cosmetics. i've bought some cosmetics. jean-paul: thank you. david: the first thing is i smell the fragrance of perfumes, and everything is on the first floor, why is that? jean-paul: first, beauty
products bring traffic, so for department stores or other stores, for them it is a great opportunity to bring people to their store. when they enter the store, they are at the beauty space, and it is a great business opportunity. and secondly, why it smells fragrant is because people are testing the products, and it smells great. you should go more often to a department store. it is a great place to be. david: right after this i will probably go back to another one. how about online? is that a big part of your business now? jean-paul: it is growing very fast. it was almost nothing five or six years ago. now, depending on the countries, it can be between 5%, 10%, 20%. david: are there certain countries where cosmetics, perfumes, hair dyes are sold more frequently than in other countries? is that the united states were they use it as a percentage more in europe or asia? jean-paul: it depends.
every part of the world has a difference. for example, in the u.s., women use a lot of makeup. in europe, they use a lot of fragrances. and in asia, and they use a lot of skin care. so there are specialties across the world. david: let's talk about l'oréal itself. the company is based in france. your biggest market is the united states? jean-paul: yes. the business and france is still small, 7% of the total. the u.s. is the number one market, 25%. now asia is becoming strong too. asia, china will become bigger and bigger. of course there are billions of consumers there. david: let's talk about how you came to l'oréal. you grew up in -- jean-paul: paris. david: did you say i want to run l'oréal one day? jean-paul: not really. when i was really young, 15
years old, i was trying to understand what job i want to do. and i had three ideas. one was to be a psychiatrist. psychiatrist how you say it? yeah . how you say it? david: a psychiatrist? jean-paul: yes, or a movie director. david: ok. jean-paul: for business. in the end i chose business. in my job every day, i do a little bit of the three. [laughter] jean-paul: because marketing is about understanding the desires and dreams and wishes of the people. it is a lot about movie direction too, because you create images and everything. so i am pretty happy i was it able to put it all together. david: when you went to school you took a finance class in school. the professor said you are good in marketing, not finance, is that right?
jean-paul: yes, yes. i know you are a finance expert. but me, i have to admit i am very bad in finance. i chose the finance major because it was trendy at the time. but every business case we had about finance, i always recommended to change the advertising. [laughter] jean-paul: so the guy said at the end, jean-paul, you are gifted, but not for finance. do marketing. david: how did you come to l'oréal? you graduated college? jean-paul: yeah. i went to business school. at the end, in fact, once i knew i was made for marketing i really looked for the most interesting marketing. and i found and still think that beauty is what i call the supreme art of marketing. because it is really about
understanding all the technicalities, but also intuition, perception, creation. it is the most interesting marketing. period ofer a brief time they said, you are now in charge of greece. jean-paul: yeah, i did not arrive like that. it was a bit more shaky than that. first, i started as a sales man. you always start as a sales man for one year, one and a half year, then i did some marketing, finally, and there was a bit of turbulence. called by thes big head of hr at l'oréal at that time, and i was afraid because i thought maybe they were going to fire me or something. and the guy said, jean-paul, we want you to go to greece and take over the subsidiary has as general manager. i was extremely, wow, proud, happy, surprise. david: you were 24 years old. jean-paul: 24 years old. so i went there and realized,
number one, that the business was extremely tiny. number two, in a terrible state. but number three, more importantly, the people at l'oréal had proposed a job to almost everyone, and no one wanted to take it. [laughter] jean-paul: because they were not crazy. i was the only one. david: you did the job. jean-paul: yes, i loved it. david: and you must have done well because you got promoted. what did you do next? jean-paul: after that i came back. i spent five years increase. i loved it. i really learned everything in greece. i learned marketing, sales, human resources, finance. by the way, that is why my finances not that good. then i came back and i became the general manager of the l'oréal paris brand in france. david: and later you were put in charge of asia? jean-paul: i went to asia and trauma started all the
subsidiaries in asia. david: in china, people were using cosmetics and other beauty products, just not l'oréal? jean-paul: at that time, no. at the time we had no subsidiary, no team, no nothing. it was a bit late, because we started everything in 1997, which was a bit late. many competitors were already there. so we started with a team of 10 people in an apartment. happy to say t now that we are number one in china, and china is a major part of our growth and business. david: after china and asia, you were put in charge of the u.s.? jean-paul: yes. david: and was your english perfect then as now? jean-paul: thank you for the perfect. [laughter] is still: psychiatry difficult for me. i have a few words that are still difficult. david: it is pretty good. how long did you live in new york? jean-paul: five years. in fact, i just arrived two days
before september 11. i told my wife before i came here, you know, we go to new york. it is fantastic. you will love it. it is safe, quiet, easy. in fact, we arrived the weekend before. the kids started school today the day before, on monday, and september 11 happened on tuesday. david: you later moved back to france and became ceo in 2006. jean-paul: yes. david: chairman and ceo in 2011. jean-paul: yes. david: since you have been ceo, the stock is up 200%. jean-paul: more. [laughter] david: more. [laughter] david: ok. jean-paul: 400%. david: 400%. wow. that is pretty good. jean-paul: and it is not finished. [laughter] david: the market cap of your company today is $140 billion. what was it before this?
jean-paul: four times. david: people are happy when the usual products? jean-paul: absolutely. it is important because we are convinced at l'oréal that it is a great industry. you know, it is a great job. you make by creating beauty products, you make people more happy, you make people have a better self-confidence, self-esteem. it is a very positive thing. ♪
♪ david: let's talk about some of the things you'd did. now, one of the things you have been focused on is gender equality. jean-paul: two thirds of the employees at l'oréal are women. it is 50% of the board. it is one third of the executive committee. it is 50% of all management. so we are doing everything. david: some of your major competitors -- i don't know if
you want me to mention them, but very good companies like estee lauder. jean-paul: i heard about them. [laughter] david: the ceos are often men. and the people in charge of duty products are men, even though they can use the beauty products. does that strike you as unusual? jean-paul: it will change. it was in the beginning more men. definitely, you know, in the next few years women will take over. not in thely, maybe next future, but a woman will become ceo of l'oréal. [applause] david: sustainability is another major push. what are you trying to do? jean-paul: the carbon disclosure project, the cdp, the authority in terms of the environment. for theded l'oréal third year in a row the aaa recognition for the third year in a row.
we are on this matter recognized as the number one company in terms of sustainability. david: one of your other pushes has been for strong ethics. why is it so important? jean-paul: when i took over as ceo i understood have fixed be ethics would be something very important for the future. again, i decided with the team that l'oréal should be, could be number one in ethics. if i may say two words. if you think of l'oréal, it is not that difficult for us to be a great company in terms of sustainability. ethics is not really a problem in our industry. and gender equity also. we could have said it is not difficult, so let's forget it. and the country, what we said said is that is not that difficult, so let's be the exemplary and number one in the
world. david: ok. let's talk about your products. your brand names. the l'oréal brand name, is that, you sell a lot of products under that name? jean-paul: it is 25% of sales. internationalad 35 brands, and l'oréal is just one of them. in fact, it is the only brand we did not buy. it was the brand we started with. and all the of their brands in the portfolio we purchased. david: this is lancome. you bought that? jean-paul: yes. david: is that upscale, not upscale? jean-paul: it is beautiful. it is upscale, extremely successful. it is the number one luxury beauty brand in the world. david: ok. jean-paul: very successful. david: there is another brand, urban decay. that does not sound like a name for somebody who would think this is a great product. decay is not usually a word that means something --
so why is urban decay a good name? jean-paul: i agree. it is not for the same consumers. the consumers will love lancome don't love urban decay. it is pretty edgy, surprising, disruptive. so there is a segment of consumers who love that. david: you own maybelline? jean-paul: yes. david: where is that sold? in department stores? jean-paul: no, it is sold in drug stores, walmart, target. david: so if a woman is in front of you and wearing maybelline lipstick, could you tell it is not l'oréal lipstick? in other words, can you tell the difference in the brands? jean-paul: not from far away. but -- [laughter] david: ok, i guess that is the point, ok. jean-paul: -- david: you have all these products and you are a man and don't use these products. presumably your wife uses these. but you don't use these products. how do you make a judgment about whether it is a good product for
not? jean-paul: the president of the brands. we are decentralized. we are operationally very decentralized. there is for each brand a team, what we call an international marketing team. there is a president for each brand. david: they don't have to come to you for each product to get approved? jean-paul: no. david: pleasure wife sampled them for you? jean-paul: she couldn't not try the thousands of parts we are launching every year. david: a woman could be over 100 and she is still using cosmetics? jean-paul: absolutely. and by the way, it is a great opportunity. with the aging of the population for the beauty industry and l'oréal in particular, it is great. not only the longer you live, the longer you will use beauty products, but the longer you live, the more unique great quality products. david: people are happy? jean-paul: absolutely. david: and the happiness
quotient is -- jean-paul: it is important. we are convinced at l'oréal that it is a great industry. it is a great job. you make by creating beauty products, you make people more happy, have a better self-confidence, self-esteem. it is a very positive thing. david: so do you think anybody can spend too much money on cosmetics? jean-paul: no, it is not expensive. [laughter] jean-paul: no, that is the good thing. the budget allocated to beauty products is very limited. it is between 2% or 3% of your income, so it is ok. it is fine. and it makes your life more beautiful, and it contributes a lot to your quality of life. i think it is a cheap way to improve really your quality of life. david: what products do you have for men who are in their 60's who don't want to look like they are in their 60's? what do you have for them? jean-paul: -- it is fantastic. it is an american brand.
we bought it. david: what does it do for you? jean-paul: sorry? david: what does it do? jean-paul: for me personally? look. everything. [laughter] david: what is the best way to get a job with l'oréal? jean-paul: call me. [laughter] david: really? great. it might be tough to get a hold of you. jean-paul: no, no, very easy. you can email me. i look at my email every day and i answered them every day directly. ♪
french. when you want to have somebody in the office in august in paris, you can never get them in the office. how is that? is that a custom or something? jean-paul: no, but is a habit. i usedw, when i was here to take two weeks vacation. and when i was in asia, i think i did not take any vacation. and when i came back to france, i thought the french were crazy to take four weeks vacation. while i liked it. [laughter] david: when you are with president macron and his wife that she say is this a good product? does she ever ask for any beauty tips? jean-paul: i can say that brigid macron loves the l'oréal products. [laughter] jean-paul: i am serious. i was with her last week.
david: ok. i wanted to ask you today, how do you think the u.s.-french relations are? jean-paul: i think the relations between french and americans are excellent. at the political level, there may be a bit different, but not the most important. the most important is the quality of the relationship between the people. experience when i was here in 2004, there was a time in 2004 when there was this french bashing started with freedom fries. even at that time, when the relationship in terms of political agenda were tough, the relationship at the people level were always great. david: for a a lot of business people in france, you are a role model. you have done a terrific job with l'oréal. what would you say is the secret to being a good business leader? jean-paul: for me, the most important thing is love what you do.
i was very lucky because when i joined l'oréal, after a few weeks, i knew this company was made for me. you know, it was obvious. and when you feel like that, when you what you do and you are happy to wake up every morning and do what you have to do, i think after that, it is an easy journey. david: so do people always try to get free products from you? lots of people say i am having a , or we are having some charity thing and would like free products? do you have a division that decides where the give free products outboard not? jean-paul: when they want free products from us, it means they liked them, so it is ok. we encourage that. david: here are some questions. how is l'oréal approaching e-commerce, especially products difficult to market digitally, for example, color match foundations, perfumes, and how do you compete with digitally-native brands that are building engaged communities online? jean-paul: we compete very well.
for example, in china, e-commerce is representing for almost 50% ofcts the business. globally speaking, our e-commerce has grown by 40% last year, which is fast, much faster than the market itself. and it represents now more than 10% of sales. in fact, we are competing very well. david: what is the best week to get a job with l'oréal? jean-paul: call me. [laughter] david: great, well. it might be tough to get a hold of you. jean-paul: no no, very easy. you can email me. i answer them every day directly. it is very easy. david: suppose somebody wants not an entry-level child, but a senior-level job? jean-paul: what ever job. david: ok, if a woman comes close to you and she has perfume on, can you tell if it is a l'oréal? jean-paul: perfume?
yeah. normally, yes. not always, but normally, yes. david: if she is wearing cosmetics come into contact if she is wearing l'oréal? jean-paul: it is a bit more difficult. you have to get very close, which is sometimes a bit tricky. david: is there anything that makes you nervous that knife at night because the world's troubled in certain areas related to your company? jean-paul: i think my number one strength is i sleep very well. [laughter] david: really? jean-paul: i sleep eight hours a night, every night, and nothing wakes me up. david: really? jean-paul: maybe it is not -- but it is the truth. david: well, you are fortunate to be able to sleep that long. jean-paul: i saw that jeff bezos -- david: he said eight hours is what he needs a night. he is still young. when he is in his 60's, i doubt he will make it through the night without waking up, but you never know.
so i want to thank you very much for giving us insight into what it is like to run a major duty beauty products company. i want to thank you for the advice for things i can do to look better. jean-paul: thank you for having me. it is a great honor for me. [applause] jean-paul: thank you. thank you, david. ♪
♪ from new york city and our viewers worldwide, i'm jonathan ferro. bloomberg real yield starts right now. ♪ jonathan: coming up, risk asset mounting up higher. despite few signs of economic recovery worldwide. very little in the economic data, testing the fed's patience ahead of next week's meeting. and investors bullish europe. a contrarian trade. we begin with the big issues. there are signs the global economy is bottoming. >> goldilocks. >> goldilocks. >>