John Paul Mitchell Systems

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John Paul Mitchell Systems

9701 Wilshire Boulevard
Beverly Hills, California 90209
(310) 276-7957
Fax:(310) 248-2780

Private Company
Employees: 89
Sales: $165 million (1996)
SICs: 2844 Toilet Preparations

A recognized leader in the beauty industry, John Paul Mitchell Systems markets more than 35 different haircare products in 29 countries, selling its products exclusively at authorized hair salons. John Paul Mitchell, a celebrated hairstylist, and John Paul DeJoria, a struggling salesman, founded John Paul Mitchell Systems in 1980. Together, until Mitchells death in 1989, the two men shaped their entrepreneurial creation into a market winner, succeeding through Mitchells haircutting demonstrations, DeJorias renowned marketing skills, and the companys signature Awapuhi shampoo, made from Hawaiian ginger root. John Paul Mitchell Systems used a three-stage marketing system to drive its sales in the late 1990s. The company shipped its haircare products to distributors who delivered the merchandise to hair salons where consumers purchased the companys products, all packaged in white bottles with black lettering. John Paul Mitchell Systems distributor-to-salon-to-consumer approach has been credited for much of the companys success.

Backgrounds of the Founders

The simple black-and-white packaging of John Paul Mitchell Systems products reflects the start-ups modest beginnings and the starkness belies the colorful personalities behind the company. From its outset, Johnpaul Mitchell Systems was a unique enterprise started and stewarded by unconventional corporate leaders, a characterization from which John Paul Mitchell and John Paul Jones DeJoria did not shirk and even embraced. DeJoria and particularly Mitchell had enjoyed success in their careers before starting John Paul Mitchell Systems, but both were, for different reasons, at turning points in their lives, and John Paul Mitchell Systems represented a way forward, a vehicle to disengage them from the past.

Born in Scotland, Mitchell grew up during the 1940s in London, where his father was employed as chief engineer at Buckingham Palace. In London, Mitchell pursued a career decidedly unlike his fathers, becoming one of the citys flamboyant hair stylists. Studying under the tutelage of the famed Vidal Sasson, Mitchell became one of the most sought after hair stylists in London during the early 1960s, earning the esteem of the citys swinging high society. His rise to the ephemeral top of the salon scene was fueled in large part by the dozens of traveling clinics he conducted. He transformed haircutting presentations into artistic performances, which entertained and attracted clientele and cast Mitchell in the spotlight as an indefatigable showman.

By the mid-1970s, Mitchell was, in his own words, one of the most recognized hair artists in the world and profoundly disenchanted by his own success. Life in the limelight had disagreed with him and he was totally burned out on the whole success trip. To distance himself from the flash and frenetic pace of working as a hair artist, Mitchell went into seclusion. He decided to live his life according to a new philosophy. The new lifestyle he eagerly embraced would one day underpin the philosophy of John Paul Mitchell Systems itself.

To lose himself from the hair-styling crowd, Mitchell moved to Hawaii in 1975. There, he struggled to find a new perspective on life, a new course for his future. For nearly a year, Mitchell remembered, I lived in a one-room beach shack, doing nothing but yoga, meditation, and vegetarianism. Hawaii healed me. On those few occasions when the hairdresser accepted visitors, Swami Muktananda, an Eastern mystic, was his company of choice.

As Mitchell was experiencing life as a tropical-bound, soul-searching recluse, his future business partner was on an entirely different path. His experiences, too, would have considerable influence on the personality of John Paul Mitchell Systems.

Unlike Mitchells prolific rise to stardom and success during his years before the formation of John Paul Mitchell Systems, John Paul Jones DeJoria spent his years before the companys creation desperately trying to climb the rungs of successand quite frequently losing his purchase. Ten years Mitchells junior, DeJoria was a Los Angeles native who left the U.S. Navy in 1964 to enroll in dental school. His plans for dental school were scotched, however, when he was unable to raise the tuition money, forcing him in a different career direction altogether. DeJoria began selling encyclopedias, then he switched to selling copying machines. Insurance became his next focal point as a salesman, a door-to-door job that lasted three months. Next, he sold medical linens, but nothing seemed to work for the young DeJoria. By age 26, he was ready to have a go at the publishing business, and landed a job at Time, Inc. as a sales manager. DeJorias stay at Time came to an abrupt end when he remarked to his bosses that his office would be more productive if he was permitted to raise commissions and thereby devote less time to supervising his sales force.

Forced to find another job, DeJoria was at a crossroads in his selling career. I suppose the reason the jobs lasted such a short time, he later mused, was that I didnt like what I was selling. DeJorias next job, however, introduced him to products he did enjoy selling. The one constant threadsalesthat ran through an otherwise erratic career life intersected with the world in which Mitchell excelled. DeJoria joined the ranks of the haircare industry.

With the help of a friend who worked at an employment agency, DeJoria secured an interview at Redken Laboratories in 1971. Redken, a pioneer in the distribution of shampoo through hair salons, was a member of a business society tailored to the tastes of DeJoria. I saw all these salesman in beautiful Italian suits, a friend of DeJorias remarked, and I knew it was the place for John. DeJoria quickly affirmed his friends appraisal, rising in a short time to rank as one of Redkens top salespeople. Generating $1,000 in sales a day, DeJoria leaped up the corporate ladder at Redken, becoming a sales manager within six months, and after 18 months, was appointed national manager of the companys schools and training salons. However, DeJoria then hit a brick wall. They said I wasnt a businessman, DeJoria later explained, that I had gone as far as I could. Remaining in the beauty business after his departure from Redken, DeJoria served two more stints as a salesman for beauty products companies, with one job ending when he found himself in the untenable position of making more money than the guy that owned the company. By 1980, DeJoria was ready for a new challenge and yet in need of constancy, searching for a career opportunity that would enable him to use his talent as a salesman to its full advantage.

Founding and Rapid Growth

In 1980, DeJoria was in Hawaii and there became reacquainted with Mitchell. The two had met for the first time nine years earlier. Its a show-business industry, DeJoria explained, and Paul [Mitchell] and I crossed paths often. Each looking to move in a new direction, DeJoria and Mitchell decided to start a business together, with Mitchell cast as the hair-products expert and DeJoria as the marketing expert. The partners pooled their resources and came up with $700a paltry sum to launch a new enterprisebut neither was disheartened by the modest start. In fact, Mitchell and DeJoria were invigorated by the prospects of a new beginning and hoped to create a business fundamentally different from any other in existence. With the formation of John Paul Mitchell Systems, Mitchell and DeJoria created a business vehicle to express their unique perspectives, a corporate megaphone that each would use to articulate his personal philosophy.

Considering the precarious financial foundation Mitchell and DeJoria stood on when they embarked on their business plan, any means of saving money was searched for and embraced. The need to get the business up and running for under $1,000 led to two money-saving alternatives in particular that would distinguish the company in the years to come. First, the partners decided to use generic white bottles with black lettering as their packaging, a move that saved them a considerable amount of money and, as it turned out, served as an effective marketing tool years later when the company was collecting more than $100 million in sales a year. The second money-saving decision was more ingenious, a move that enabled Mitchell and DeJoria to realize their entrepreneurial dream shortly after they hatched their business plan. Instead of underwriting the cost of a production facility, they convinced a small Los Angeles-based hair- and skincare maker named Star Laboratories Inc. to produce their products for them. By sub-contracting production, Mitchell and DeJoria were able to begin producing and marketing John Paul Mitchell Systems products before the end of 1980, saving much-needed cash for the development of their shampoo and other haircare products.

Every dollar saved by cutting corners wherever possible was invested in developing new products, including shampoo that featured the ginger plant Awapuhi. The investment paid large dividends quickly, as John Paul Mitchell Systems shampoo became a best seller. To market the companys products, DeJoria drew on the approach he had witnessed at Redken, selling John Paul Mitchell Systems products only through professional salons. At first, Mitchell performed haircutting presentations in individual salons, then DeJoria remained behind after the show was finished, vowing not to leave until the last bottle of John Paul Mitchell Systems product was sold. Moving from salon to salon in this way, Mitchell and DeJoria traveled throughout Hawaii, scoring considerable success and creating a stable foundation for their fledgling enterprise. Once the pair had firmly established themselves in Hawaii, they were ready to make the leap to the mainland, where sales of the companys haircare products would flourish.

The overwhelming initial success of the company stood conventional wisdom on its head. Traditional corporate leaders and industry observers may have smirked at the small and lean upstart coming out of Hawaii, but by the early 1980s no one could ignore the explosive growth of the company. This was even more true by the mid-1980s, after expansion had taken the company as far away as China, where John Paul Mitchell Systems products were introduced in late 1986. John Paul Mitchell Systems was a corporate phenomenon, operating with a small staff, little overhead, and capable of generating $5 million in sales a month. In 1986, the company ranked 71st in Inc. magazines top 500 companies, with sales hovering at the $100 million mark. Despite this, there were only 27 employees on the companys corporate payroll. The true personnel strength of the company was elsewhere, vested in the 34 distributors scattered throughout the United States, the seven distributors operating overseas, and primarily in the 350 John Paul Mitchell Systems Associatesthe hairstylists who promoted the companys products by giving demonstrations at beauty schools and hair shows. Mitchell, by this point, had settled into semi-retirement on Oahu, conducting the majority of his business from the porch above his hot tub. Although the company bore his name, Mitchell was beginning to recede from the day-to day affairs of the company, leaving DeJoria in full command. A personal tragedy two years later left no doubt as to who was in control of John Paul Mitchell Systems.

DeJoria in the 1990s

Mitchell was diagnosed with pancreatic cancer and died in 1989, stripping the company of one of its integral spiritual leaders. Despite the loss of Mitchell, the performance recorded by John Paul Mitchell Systems hardly missed a beat, as the company entered the 1990s with DeJoria firmly in control. In the early 1990s, DeJoria declared,I am the American dream, a living testament to the quintessential rags-to-riches story. Before entering into a partnership with Mitchell, DeJoria had relegated himself to living in a car, yet a decade later he stood atop an exceptionally successful company that was collecting more than $100 million in sales a year. Much of his success during the 1980s was attributable to his partnership with Mitchell, whose marquee name enabled the company to make strides quickly, yet considerable credit went to DeJoria as well. His tireless marketing work created a consistent, long-term money earner, providing the framework that truly supported John Paul Mitchell Systems. As the 1990s progressed, the strength of this framework would be reflected in the continued success of the company.

By the late 1990s, as the company neared its 20th anniversary, John Paul Mitchell Systems continued to distinguish itself as a success story. With sales topping $150 million, the company reigned as a market leader, its 35 different products winning consumers over in 29 countries. The companys three-stage distributor-to-salon-to-consumer marketing system was heralded as the key to its success, convincing DeJoria, who presided as chairman and chief executive officer, that he would never market the companys products at the traditional, retail level. Instead, as the company prepared for the 21st century, it looked to the 700 Paul Mitchell Associate Hairstylists it relied on to fuel the success of the company in the years to come.

Further Reading

John Paul Mitchell Systems: Teamwork Pays Off, Drug & Cosmetic

Industry, August 1997, p. 22.

Palmeri, Christopher, Often Down But Never Out, Forbes, March 4, 1991, p. 138.

Jeffrey L. Co veil