tv The David Rubenstein Show Peer to Peer Conversations Bloomberg March 20, 2019 9:00pm-9:30pm EDT
♪ david: they said you are now in charge of greece. jean-paul: the people at l'oréal had proposed the job to almost everyone. [laughter] jean-paul: and no one wanted to take it. [laughter] david: people are happier when they use your products. jean-paul: by creating beauty products, you make people happy. david: can you tell the difference in brands? jean-paul: not from far away. but -- david: you take a four-week vacation. is that a requirement to be french? jean-paul: mandatory. david: what would you say is the secret to a being a good business leader? jean-paul: the most important thing is to love what you do. >> 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. all right. ♪
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 over the years, you go back several thousand years, there was cosmetics and other beauty products in egypt and other places in the middle east. jean-paul: yep. david: what are we doing to make people more beautiful today than they did thousands of years ago? jean-paul: you know l'oréal did not exist many many thousands of years ago. but maybe you don't know, in fact, the first beauty product that we had 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, long story. david: were they sold the at department stores? or where did people by those? [laughter] david: they don't know. [laughter] jean-paul: there were kind of flintstone department stores. [laughter] david: i assume mostly for women in those days? 100,000 years ago, or 5,000 years ago? jean-paul: i was not there. [laughter] david: ok. jean-paul: i am not sure. i am not sure, maybe on the contrary. at that time maybe both men and women were using colors. been ai am not a next an expert.
in cosmetics. it may be hard for people to believe. but i went yesterday to a store to buy some of these cosmetics. jean-paul: thank you very much. david: the first thing is i smell the fragrance of perfumes, and everything in cosmetics is always on the first floor of a department store. why is that? jean-paul: first, because beauty products bring traffic, so department stores or other stores, for them it is a great opportunity to bring people to their store. and 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. what about online? is that a big part of your business now? jean-paul: yeah, it is growing , very very fast. it was almost nothing five or six years ago. and now, depending on the countries, it can be between 5%, 10%, even 20% or 30%. david: are there certain countries where cosmetics, perfumes, hair dyes, skin lotions are sold more frequently than in other countries? is it the united states where people as a percentage use it as it as a percentage more
than in europe or asia? jean-paul: it depends. every part of the world has a difference. for example, in the u.s., people use a lot, women use a lot of makeup. in europe, they use a lot of fragrances. and in asia, they use a lot of skin care. so there are some specialties across the world. david: so let's talk about l'oréal itself. the company is based in france. but your biggest market, is that united states? jean-paul: yeah. in fact, the business in france is still small, 7% of the total. the u.s. is the number one market, at least 25%. and now asia is becoming strong very strong too. asia, china will certainly become bigger and bigger. of course there are billions of consumers there. david: let's go through how you came to l'oréal. you grew up in -- jean-paul: paris. david: and did you say when you were a young boy, 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 type of job i would like to do. and i had three ideas. one was to be a psychiatrist. psychiatrist. how you say it? yeah, psychiatrist. david: a psychiatrist? jean-paul: yes. david: psychiatrist. jean-paul: difficult for french. david: you didn't miss anything. jean-paul: yes, or a movie director. david: ok. jean-paul: or business. in the end i chose business. the funny thing is in my job every day, i do a little bit of the three. [laughter] jean-paul: because marketing is about understanding really the desires and dreams and wishes of the people. it is a lot about movie direction, too, because you create images and everything. so it is, i am pretty happy i 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. yes. i know that you are a finance expert. but me, i have to admit i am very bad in finance. so i chose the finance major because it was trendy at the time. and but every business case we had about finance, i always recommended to change the advertising. [laughter] jean-paul: so, so the guy said at the end, jean-paul, you are really gifted, but not for finance. do marketing. david: all right, so how did you come to l'oréal? you graduated college? jean-paul: yeah. so i went to business school. and at the end of the business school, in fact, once i knew i was made for marketing i really looked for the most interesting marketing. and i found and i still think that beauty is what i call the supreme art of marketing. because it is really about, of course, understanding all the
technicalities, but it is also about intuition, perception, creation. it is the most interesting marketing. david: all right. after a brief period of time they said, you are now in charge of greece. jean-paul: yeah, i did not arrive like that. you know, it was a bit more shaky than that. you know, first, i started as a salesman. because at l'oréal, you always start as a salesman for one year, one and a half year. then i did some marketing, finally, and there was a bit turbulent. and once i was called by the big head of hr at l'oréal at that time. so i was a bit afraid because i thought maybe they were going to fire me or something. and the guy said, mr. argon, we want you to go to greece and take over the subsidiary as general manager. so i was extremely, wow, proud, happy, surprise. david: you were 24 years old. jean-paul: 24 years old. so i went there and then i realized, number one, that the business was extremely tiny.
number two, in a terrible state. but number three, more importantly, that, in fact, the people at l'oréal had proposed the job to almost everyone, and am that no one wanted to take it. [laughter] jean-paul: because they were not crazy. i was the only one a bit -- david: so 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 in greece, i loved it. and really what is interesting is that i really learned everything in greece. i learned marketing, sales, human resource, finance. that is why, by the way, that is is not that good. [laughter] jean-paul: and then i came back and i became the general manager of the l'oréal paris brand in france. david: ok. and later you were put in charge of asia? jean-paul: i went to asia, started all the subsidiaries in asia, in china, korea.
david: china, for example, people were using cosmetics and other beauty products, they've were just not using l'oréal? is that right? jean-paul: at that time, no. because we had no subsidiary, no team, no nothing. and by the way, it was a bit late, because we started everything in 1997, which was a bit late. many competitors was already there. and so we started with a team of 10 people in an apartment. and i am very happy to say that now that we are number one in china, and china is a major part of our growth and business. david: and then after china and asia, you came to the united states. you were put in charge of the united states? jean-paul: yes. david: and was your english then as it is now?i jean-paul: thank you for the perfect. [laughter] jean-paul: for example, psychiatrist is still difficult for me. [laughter] jean-paul: i have a few words that are still a bit difficult, but i am working on it.
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. and, as i said, i told my wife before i came here, you know, we'll go to new york. it is fantastic. you will love it. it is safe. it is quiet. it is easy. and in fact, we arrived the weekend before. and the kids started school the the before. it was a monday, and september 11 happened on tuesday. david: so you later moved back to france and you became the ceo in 2006. jean-paul: yep. david: and the chairman and ceo in 2011. jean-paul: yeah. david: and since you have been ceo, the stock is up 200%. jean-paul: more. [laughter] david: more. [laughter] jean-paul: sorry. 400%. david: 400%. yeah, ok. wow. that is pretty good. [laughter] jean-paul: and it is not finished. david: ok. and the market value of your company today is about $140 billion? jean-paul: yeah. david: what was it before you took over? jean-paul: four times less. david: that is pretty good.
people are happy when the usual products? jean-paul: absolutely. david: the happiness quotient is -- jean-paul: it's very important. because we're also convinced at l'oréal that it's a great, great industry. you know, it is a great job. you know, 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 did. now, one of the things you have been very focused on is gender equality. jean-paul: yeah. today two thirds of the employees at l'oréal are women. and it is 50% of the board. it is one third of the executive committee. it is 50% of all management. david: ok. jean-paul: and so we are really doing everything it takes. david: ok. some of your major competitors -- i don't know if you want me to mention them, but other very
good companies like estee lauder or unilever. jean-paul: i heard about them. david: yes. [laughter] david: the products, the c.e.o.'s are often men. and the people in charge of the beauty products are men even though they don't use the beauty products. does that strike you as somewhat unusual or is that going to change? jean-paul: it will change. it was in the beginning more men. and definitely, you know, in the next few years women will take over. i mean, and certainly, maybe not in the very next future, but certainly a woman will become a c.e.o. of l'oréal. [applause] david: on sustainability, that has been another major push of yours. what are you trying to do in sustainability and in terms of your carbon footprint? jean-paul: the carbon disclosure project, the cdp, the authority in terms of the environment, has awarded l'oréal for the third year in a row the aaa recognition, a for forest, for water, for carbon impact.
we are also in this matter recognized as the number one company in terms of sustainability. david: one of your other pushes has been for strong ethics. jean-paul: yeah. david: why is ethics so important to you? jean-paul: when i took over as ceo, i understood that ethics would be something very important for the future. and again, you know, i decided with the team that l'oréal should be, could be number one in ethics. if i may say two words here. is that, of course, 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. equality also.ualit but we could've said, ok, it is difficult for us, so let's forget it and do something else. on the country, what we said said is that is not that difficult, so let's be exemplary and number one in the world. david: ok. so let's talk about some of your products. your brand names.
jean-paul: yeah. david: the l'oréal brand name, is that, you sell a lot of products under that name? jean-paul: it is 25% of our sales. you know, we have 30 more brands, 35 international brands. and l'oréal is just one of them. and in fact, it is the only brand that we did not buy. david: ok. jean-paul: it was the brand we started with. and all of the other brands in that we have in the portfolio we purchased. david: for example, this is lancome. you bought that? jean-paul: yes. david: is that upscale, not upscale? jean-paul: of course, it's beautiful. look. [laughter] jean-paul: it's very upscale and it's extremely successful. it is the number one luxury beauty brand in the world now. david: ok. jean-paul: so very successful. david: all right. there is another brand, urban decay. now that does not sound like a name for somebody who would think this is a great product. "decay" is not usually a word something peoplens
like. so why is urban decay a good name? jean-paul: i agree. it's a bit surprising. but clearly it's not for the same consumers. the consumers who love lancome don't use urban decay. it is pretty edgy, surprising, pretty disruptive. so there is a segment of consumers who love that. david: now maybelline. you own maybelline? jean-paul: yes. david: where is that sold? is that sold in department stores? jean-paul: no, it is sold in drugstores, mass stores, walmart, target. david: so if some 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: well, ok, i guess that is the point though. ok. jean-paul: i cannot access to the bag. david: you have all these products and you are a man and you don't use these products. presumably your wife uses some of these. jean-paul: of course. david: but you don't use these products. how do you make a judgment about whether it is a good product or
not? who makes the judgments for you? jean-paul: the president of the brands. we are pretty decentralized. we have an organization at l'oréal where we are strategically centralized but 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. no. david: does your wife sample any of them for you or not? jean-paul: she couldn't not try the thousands of products we are launching every year. david: no matter how old a woman might be, she could be over 100, she is still using cosmetics and makeup and so forth. jean-paul: absolutely. david: you observe that as well? jean-paul: yeah, yeah. 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 fantastic. because not only, the longer you live, the longer you will use beauty products, but also the older you are, the more you need great quality products. david: so people are happier when they use your products? jean-paul: absolutely. david: and the happiness
quotient is -- jean-paul: it is very important. we also are very 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. david: ok. jean-paul: it is a very positive thing. david: so do you think anybody can spend too much money on cosmetics? jean-paul: no, you know, it is not expensive. david: not possible. [laughter] jean-paul: no, that is the good thing. the budget that is 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. i think also it contributes a lot to your quality of life. david: ok. jean-paul: i think it is a cheap way to improve really your quality of life. david: what products do you have for people who are, 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? [laughter] jean-paul: kiehl's. david: oh really? jean-paul: kiehl's. it is fantastic.
kiehl's 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. david: so what -- jean-paul: everything. [laughter] david: what is the best way to get a job with l'oréal? jean-paul: call me. [laughter] david: really? great. well, it might be tough to get a hold of you. jean-paul: no, no, very easy. you can email me. and i look at my email every day and i answer them every day directly. ♪
somebody in the office in august in paris, you can never get them in the office. so what do you, how is that? is that a custom or something? jean-paul: mandatory. david: mandatory, you take four weeks off? jean-paul: no, but is a habit. but you know, when i was here i used 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, the french werehes crazy to take four weeks vacation. and i have to say after a while, i like it. [laughter] david: you know president macron? jean-paul: yeah. david: so when you are with president macron and his wife, does she ever say, is l'oréal product a good one for me? or 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. david: ok. [laughter] jean-paul: no, no. i am serious. i was with her, in fact, last week. david: she had all l'oréal. ok. ok. so 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 they may be a bit different but i think it is not the most important. the most important is the quality of the relationship between the people. i had the experience when i was here in 2004, there was a time in 2004 when there was this, you know, french bashing story with the freedom fries, etc. and 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 lot of business people in france and other places, 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: i know that for me, the most important thing is to love what you do. you know, i was very lucky because when i joined l'oréal, when i was 21, after a few weeks, a few months, i knew that
this company was made for me. you know, it was obvious. and when you feel like that, when you love what you do, when you're so happy to wake up every morning and do what you have to do, i mean, i think after that it's an easy journey. david: so do people always try to get free products from you? i mean, in other words, lots of people say i am having a show, or we are having some charity thing and we would like some free products? do you have a division that decides whether to give free products for various things or not? jean-paul: you know, when they want free products from us, it means they liked them, so it is ok. we encourage that. david: all right, here are some questions, if we could. how is l'oréal approaching e-commerce, especially products that are difficult to market digitally, for example, color match foundations, perfumes, and how do you compete with nimble, digitally-native brands that are building engaged communities online? jean-paul: we compete very well. for example, in china,
e-commerce is representing for example for our mass products almost 50% of 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 our sales. so, in fact, we are competing very well. david: what is the best way to get a job with l'oréal? jean-paul: call me. david: really? [laughter] david: great, well. well, it might be tough to get a hold of you. jean-paul: no no, very easy. you can email me. and i look at my email every day and i answer them every day directly. david: wow. jean-paul: it is very easy. firstname.lastname@example.org. david: suppose somebody wants not an entry-level job. they wanted senior job? [laughter] jean-paul: whatever job. can you tell, if a
woman comes close to you and she has perfume on, can you tell if it is a l'oréal? jean-paul: perfume? david: perfume. jean-paul: yeah. normally, yes. not always, but normally, yes. david: and if she is wearing cosmetics, you can pretty much tell if she's wearing l'oréal? jean-paul: it is a bit more difficult. you have to get very close, which sometimes is a bit tricky. complicated. is there anything that makes you nervous at night -- you can't sleep -- because the world is 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: yeah. maybe it's not serious, but it's the truth. david: well, you are fortunate to be able to sleep that long. so, ok -- jean-paul: i saw that, i saw that jeff bezos -- david: yes, i did interview him. he said eight hours is what he needs a night. he is still young. when he gets in his 60's, i doubt he will make it through the night, sleeping without
waking up, but, ok, you never know. so i want to thank you very much for giving us an insight into what it is like to run a major beauty products company. jean-paul: thank you. david: and i want to thank you for all the advice you've given me about the 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. ♪