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Force of Nature
Anh-Minh Le | Photo: Cody Pickens | May 4, 2017
Stella & Dot’s Jessica Herrin muses on dropping out, disrupting an industry and her theory of evolution in business.
In 1999, Jessica Herrin and Jenny Lefcourt, co-founders of wedding-gift registry website Della & James, appeared on The Oprah Winfrey Show during a segment about following your passion to find your fortune. The pair had met at the Stanford Graduate School of Business and in May 1998, toward the end of their first year of business school, received a $1 million investment from top venture capital firm Kleiner Perkins Caufield & Byers. That fall, neither Herrin nor Lefcourt returned to campus. Over the next couple of years, their nascent company raised an additional $40 million in funding. Then, in 2000, Della & James merged with WeddingChannel.com, which was subsequently bought by one-time rival The Knot.
It seemed like a startup fairy tale come true, but Oprah viewers were only privy to part of the story. “After that [episode aired], a lot of women reached out and asked for business advice,” says Herrin. “And I thought: Whatever you do, don’t do what I’m doing. It looks good on TV, but the reality is, this American dream is kind of an American nightmare. I work 90 hours a week, literally eat every meal at my desk; I have employees and leases. And when women were asking me, I didn’t think they wanted that; they didn’t want that life. I understood what people were really asking was: ‘How can I be my own boss? How can I do something creative that uses all of my talents?’ I became obsessed with finding a better answer to that question.”
The answer began percolating while Herrin was still at WeddingChannel.com. “That experience helped me figure out that you could be commercially successful, but not be soulfully connected to what you do and not really be living your calling,” she says. After stepping away from Silicon Valley for several years, she returned to the startup scene with Luxe Jewels—which would eventually be renamed Stella & Dot—an accessories purveyor whose 2015 revenue topped $220 million. Stella & Dot follows the direct-selling model pioneered in the 1940s by Tupperware and its parties. In 2015, according to the Direct Selling Association, the estimated retail sales for such businesses reached more than $36 billion in the United States; of the 20 million people involved in direct selling, more than 77 percent were women. Flexibility and work-life balance are touted as the draws. Stella & Dot’s salespeople, or stylists, hold trunk shows where they can earn up to 35 percent in commissions on sales. Today, there are 30,000-plus stylists in six countries and, to date, more than $300 million has been paid in commissions.
Meeting in her Hillsborough abode—impeccably decorated by interior designer Kendall Wilkinson, with an enviable contemporary art collection sourced from Dolby Chadwick Gallery—Herrin strikes me as both relatable and inspirational. On a typical weekday, she wakes up at 5am to squeeze in some exercise and work before getting her two adolescent daughters off to school. Her schedule might call for nonstop meetings at Stella & Dot’s Brisbane headquarters or a visit to its Sausalito design studio, but she aims to be home by 6:30pm for dinner with the family. At 44, Herrin has an extensive list of professional accolades, having been named one of Forbes’ and Bloomberg TV’s Women to Watch, as well as an Ernst & Young Entrepreneur of the Year. She is a potent combination of intelligence, enthusiasm and confidence. It would be easy to begrudge her if she weren’t so damn warm and personable.
In 2006, Herrin had made quite a first impression on Blythe Harris too. At the time, Harris—whose background includes studying at Parsons Paris, and working in LVMH’s watches and jewelry division—was designing jewelry for Banana Republic. The two women had known each other for about a year before Herrin coaxed Harris into coming on board as a partner and chief creative officer. “She’s very, very persuasive,” laughs Harris. “I loved my job and was very happy with my job, but I found her to be so impressive and her vision to be so amazing.” Harris viewed the buying experience for fashion jewelry, which often entails goods kept under locked cases, as flawed. Hence, Herrin’s approach to selling in a relaxed, social environment struck a chord. As did her mission “to empower women to have flexible, entrepreneurial opportunities,” says Harris. Soon after she joined the company, Luxe Jewels was rebranded as Stella & Dot, taking its name from Herrin’s and Harris’ grandmothers.
Although Herrin wasn’t initially interested in venture backing, Stella & Dot nonetheless attracted attention from Sand Hill Road. “Seven years ago, Sequoia Capital was researching a variety of consumer businesses using a direct-selling model, and we believed we could find a company that would leverage technology to revolutionize the industry,” says Alfred Lin, a partner at the VC firm, whose portfolio also includes Airbnb, DoorDash and Houzz. What made Stella & Dot stand out? According to Lin, it “very quickly scaled to $100 million in sales in three to four years’ time with little paid-in capital and was already profitable.” Sequoia invested $37 million in 2001.
Much like Herrin used technology to reinvent the wedding-registry sector, she has done the same for direct selling. For example, a virtual business center offers online training; and an iPad app, Dottie, has proven to be an effective selling tool for its stylists, increasing earnings by 20 percent, says Lin. In the beginning, Herrin focused on peddling jewelry because it “fits and flatters”—meaning, the pieces could be easily worn and shared. Stella & Dot’s flagship brand has expanded to other stylish wares, such as handbags, scarves, sunglasses and tunics. In 2015, a personalized jewelry line, KEEP Collective, launched; and last year, EVER Skincare debuted. “It was always intended to be a platform for women to earn flexible income,” says Herrin. “So it was never about the product, although we definitely lead by creating great product. It was always about the mission: Does this make a simple and rewarding business for the everywoman who can come in and thrive and have the business they want to—without risk, without a lot of capital, without inventory, without all the things I found wrong with business models of the past.”
Jessica Herrin, née DiLullo, was born in New Jersey alongside two older siblings—a brother who is a fire captain in Gilbert, Ariz., and a sister who is a retired police officer in Southern California. Their parents divorced when Herrin was young, and the trio was raised mostly by their single dad, Larry DiLullo. She dedicated a chapter in her 2016 book, Find Your Extraordinary: Dream Bigger, Live Happier, and Achieve Success on Your Own Terms, to her father, who along with her paternal grandmother, Angelina DiLullo, are among Herrin’s entrepreneurial inspirations.
Herrin’s grandmother was born in the U.S., but after her sister and mother died within a week of each other from the flu, she emigrated to Italy, where family helped raise the rest of the children. In the midst of the Great Depression, Herrin tells me, Angelina returned to the States at the age of 20, got a job in a factory, wed and had two sons. Her husband died a short time later, leaving her with a 1-year-old and a 3-year-old, not to mention only a fourth-grade education and minimal English skills. “That woman—for 4-feet-8—she was the most powerful and fierce person you could ever meet,” says Herrin. Her father, she continues, “became the man of the house at 3 years old.” He started working at an early age, getting a paper route in the first grade to help put food on the table. He later obtained a master’s in engineering from Arizona State University, and after deciding that he wanted to build a house with a cousin, taught himself every skill required to do so. “An entrepreneur is someone who creates something out of nothing and faces endless amounts of obstacles and perseveres,” says Herrin. “I really see my grandmother and my father as the ultimate entrepreneurs.”
Herrin’s own entrepreneurial path included earning an undergraduate degree in economics from Stanford and then working at a technology company aggregating price and availability data for computer resellers. It was the mid-’90s and, recognizing the potential of e-commerce, she began brainstorming online shopping possibilities. “A gift registry was really aggregating price and availability and putting it online—just like I was doing for computer parts,” she says. In 1998, Herrin and her Stanford GSB classmate Lefcourt entered the business plan for Della & James into a competition. One of the judges was Dave Whorton, a partner at Kleiner Perkins, who was impressed by the duo’s proposal. A phone call from him set things in motion. “I went [to business school] to become an entrepreneur, not to get a piece of paper or a pedigree,” says Herrin. “And I really believed at the time that our business idea was something you needed to act upon immediately. So we went for it, and we dropped out. I saw that not as risky, but efficient. I had accomplished what I had gone there to do.”
As part of her research for Della & James, Herrin signed up for a slew of bridal magazines. “When my then-boyfriend’s friends would get in the car and see the bridal magazines, they would say, ‘Run! She’s trying to drag you down the aisle!’” Herrin recounts. “And I would say, ‘No, I swear—this is business research.’” However, she quickly adds: “I actually did end up dragging that man down the aisle.” She and Chad Herrin—who met while working at the same software company in Austin, Texas—married in September 1999. Later that month, he enrolled in business school at Stanford. Upon his graduation, she quit her job at what was by then WeddingChannel.com, and the couple spent a few months traveling. Afterward, they landed in Austin again, where Chad got a job in venture capital. “It seems like the craziest Silicon Valley story—that as a serial entrepreneur, you would leave your Silicon Valley startup, travel the world, follow your husband to Texas and become a middle-manager at Dell. But that’s what I did,” Herrin says. “We wanted to start a family.… I wanted to start another business, but wanted to incubate that around our growing family.”
Herrin devoted nights and weekends to working on her next big thing. Since she was pregnant with their older daughter, Charlotte, at the time of the first Luxe Jewels test trunk show, Herrin jokingly describes the now 13-year-old as her co-founder. (Sister Tatum was born 2 1/2 years later.) “Charlie was my inspiration—I wanted to make my maternity leave an eternity leave,” says Herrin. “And not because I did not want to work full time—I did—but I wanted to do it on my own terms. And that meant that I had to create my own culture and my own work.”
Stella & Dot bills itself as a social selling company—taking elements of the decades-old direct-selling business model, such as a flexible schedule and personal service, and bringing technology into the mix. (The Avon ladies of yore didn’t have Instagram and Facebook to assist with marketing efforts, or Square to handle payments practically anywhere.) But Stella & Dot is also considered a multilevel marketing program, a label that can come with serious baggage. With MLMs, income is derived two ways: selling products to friends and family; or recruiting new salespeople, from which additional commissions are collected.
It is this second scenario that raises concerns for Robert FitzPatrick, the author of False Profits: Seeking Financial and Spiritual Deliverance in Multi- Level Marketing and Pyramid Schemes. Although Stella & Dot does not require its stylists to enlist others—or in the company’s lingo, assemble a “team”—FitzPatrick questions, “How many people are earning a profit without recruiting? … You’re calling it direct selling. Show me some people who are earning money without having to recruit. Because if they have to recruit, you’re just selling a pyramid scheme here.” Direct seller Herbalife recently came under fire for this very reason. In a pyramid-scheme investigation, the Federal Trade Commission charged that the company—which specializes in diet, nutritional supplement and personal care products—was rewarding its distributors based on recruiting rather than sales. In 2016, the FTC fined Herbalife $200 million and mandated a restructuring of its operations.
According to Herrin, Stella & Dot does not dole out commissions for signing up new stylists. “[Sellers] earn team commissions only when they have helped that person become successful and that person too has real customers,” she says. “Leaders themselves must be active sellers with real customers, and we have strict rules to ensure they are not just earning off of recruits.” Herrin was well aware of the negative perception of MLMs when she started out, but in true go-getter fashion, it was not a deterrent for her. “When I got into this industry,” she recalls, “I thought, You know, there’s so much stigma because there are these existing business models. Do I really want to do something where even if I change everything, people will still lump us in that category? It has a bad rap—and for good reason, it has a bad rap. And that’s not the reason not to do it: because I’m worried about how other people will judge me. That’s the reason I have to do it: because it has to be better and women deserve a legit flexible business.”
With Stella & Dot, new stylists pay $199 for a starter kit composed of $350 worth of accessories of their choice, to be displayed at trunk shows where customers can try them on and gauge the quality of the merchandise. All Stella & Dot goods are designed in-house, with jewelry samples made by hand in New York, and prints for textiles handpainted in Sausalito. Perfect samples are then sent overseas for fabrication. Every year, two lines are released—spring and fall—along with smaller capsule collections for summer and the holidays. The jewelry and handbags are priced from $16 to $300. Items not presented at a trunk show can still be purchased through the Dottie app or a stylist’s personalized website (an option that Stella & Dot can set up for $129). According to company figures, the average trunk show yields slightly more than $1,000 in sales, which translates to $250 to $300 in earnings for the stylist. Since stylists do not maintain any inventory, Stella & Dot ships directly to the customer—and this is key for Herrin. “Any business where you’re requiring your business owner to buy inventory, that’s channel-stuffing,” she says.
Throughout our interview, more often than not, Herrin refers to the stylists as “business owners,” bolstering the notion that they are entrepreneurs, building individual businesses tailored to their needs and goals. “You can work this business your way,” confirms Jen Maravillas, who was a Stella & Dot customer before she became a stylist three years ago. (Among her favorite designs is the $148 Avalon tote; a stranger once stopped her in the aisle of Safeway to inquire about purchasing the handbag right there, on the spot.) The mother to two girls, ages 11 and 8, Maravillas primarily works as a San Mateo police sergeant. “The flexibility is why I continue to stay. If I had to fit into a specific mold, there’s no way I could balance it the way that I’m able to.” Her first trunk show drew nearly 100 guests; sales exceeded $10,000; and she earned about $3,200 in commissions. “I’ve never had a show like that again,” she says, noting that $1,200 to $2,000 in sales is the norm for her. Maravillas has earned three incentive trips for reaching various sales goals; the most recent trip was to Costa Rica in March (with her firefighter husband in tow). “If you give to this business, you get tenfold,” says Maravillas, whose extra income will help pay for her daughters’ college education.
San Jose’s Christina Saur Papoulias started out as a Stella & Dot stylist in December 2010 with the goal of selling enough to buy a $500 double stroller. “It seems so silly, but it was a nice incentive,” she says. She was able to buy the stroller after a few trunk shows, and soon realized that her Stella & Dot income was matching that from her 30-hours-a-week nonprofit job. So she quit the latter after six months with Stella & Dot. Since then, she has had a third child—her kids range in age from 4 to 9 1/2—and now works “not a single day more than I want to, not a single hour more than I want to,” she says (15 hours per week is typical for her, ramping up to 25 to 35 hours during the busier holiday season). “I feel like I have the best of both worlds in that I get to work; I get to have a career that I love; but I also have the flexibility to go on field trips, to deal with the kids, and to stay in my pajamas all day if I need to. I have this amazing accessibility to my family that is exactly what I wanted for this stage of my life.”
Stella & Dot currently has stylists in the U.S., Canada, the U.K., Ireland, France and Germany. Herrin anticipates stretching beyond those countries in 2018. “It’s about so much more than people earning income,” she says. “It’s a professional growth community where we’re constantly doing training on everything from goal setting to time management to confidence. It makes an impact on people’s lives, and we want to spread that as far and wide as we can. But no matter how big the company is or how many brands we have or how many countries we’re in, it’s about the individual success stories of our business owners.”
A decade into Stella & Dot, the desire to facilitate that success—to answer the questions that those Oprah viewers posed to her all those years ago—compels Herrin to keep innovating. “Change is life in business,” she says. “So we continue to evolve to give better service to the customer and better tools to our stylists. We’re very focused on mobile and social; we’re expanding our product categories; we’re increasing our rewards. We continue to compete with the earlier version of ourselves. That’s always my goal—to put the earlier version of ourselves out of business.”
Originally published in the May issue of Silicon Valley