I’ve always been interested in making sure that kids have as much opportunity in the world as I have had, as my son has had. If I could start a movement, it would be one that made sure that kids, children, teenagers are afforded the same opportunities as others who have more, ensuring they’re on a more level playing field. It would be about giving young people equal educational and career opportunities. Several years ago I was the keynote speaker at a Year Up graduation ceremony. I followed the class valedictorian. He spoke so eloquently, without any notes, about the neighborhood where he grew up, a single mom, virtually no job opportunities after high school, going dressed in a coat and tie to go to his Year Up classes with his neighbors assuming he was going to court (as a defendant). And it struck me that this young man grew up a mile away from where we raised my son, who had every opportunity that life could offer. As they say at Year Up, it’s all about closing the opportunity divide.

I had the pleasure to interview Michael Stone. Michael is the Chairman and Co-founder of Beanstalk, a leading global brand licensing agency that is a part of Omnicom Group. He is also the author of The Power of Licensing: Harnessing Brand Equity (Ankerwycke, 2018) and inductee to the 2019 Licensing International Hall of Fame.

Thank you so much for joining us Michael! Can you tell us a story about what brought you to this specific career path?

There was a famous philosopher, Joseph Campbell, who said, “If you can see your path laid out in front of you step by step, you know it’s not your path.” My career path has taken twists and turns, and I rarely could see around the bend. I set out to be a lawyer. I worked for Georgia Legal Services during law school, which serves the poor. After graduation, I clerked for a federal court district judge and then found a job in a law firm. I learned that I didn’t like being a litigator, representing clients in whose positions I didn’t believe. But, I was lucky to handle several legal cases representing National Football League Properties, the licensing arm of the NFL.

Definitionally, licensing is when a brand owner permits — or licenses — another company to create, market and sell a product of service that features its brand name and logo in exchange for royalties. I wanted to be an entrepreneur — to own and run a business, be my own boss — and licensing seemed like a good path. I knew that there was a lot of sports and entertainment (television, characters, motion pictures) licensing at the time. But I noticed that there was very little corporate licensing. I thought, “Corporations have names that are as famous as Fred Flintstone and George Jetson, so why can’t they be licensed?” I wasn’t the first to think this (my Dad was actually a pioneer in this area), but that became my focus, to establish a company that would represent corporate clients which could benefit from licensing their brands.

I’m not sure I recognized that licensing could and would become one of the most effective and sophisticated marketing strategies for brands, particularly in today’s complex marketing and retail ecosystem. But that’s what it is, and I remain so captivated by seeing licensing through that lens that I wrote a book about the power of licensing brands.

Can you share your story of Grit and Success? First can you tell us a story about the hard times that you faced when you first started your journey?

I think what people have to understand about licensing is that it’s not a typical service business where a client retains you for a project and you get paid a fee for the work. The licensing compensation model is a risk/reward model. You do a lot of work up-front and realize the financial rewards down the road by sharing in royalties from the sale of licensed products. Establishing a licensing agency is tricky because you’re going to be doing a lot of work and not receive any revenues associated with that work, generally, for a year or longer. I was lucky because my business partner at the time and I could practice law together and earn a living, a very modest one, while we tried to establish a licensing agency. But it took a long time.

We were also fortunate as one of our first clients was the 1983 Brooklyn Bridge Centennial Commission. We were the licensing agency for the official event, and the products had to get to market in New York City in a hurry to be on the shelf in time for the celebration. It was a quick turnaround program that generated revenue for us in a shorter than usual time period, and we learned a lot. Even so, it was a tough way to start a business, and I know that personally. I hit rock bottom financially. Although my wife worked and had an income, we basically ran out of money. Would-be entrepreneurs should be prepared for that. We got two eviction notices at our apartment, cashed in all of our U.S. savings bonds that we got for our wedding, none of which had matured yet, and maxed out all of our credit cards. It was a very scary time.

Where did you get the drive to continue even though things were so hard?

I didn’t want to go back to the practice of law. My best option was just to keep going and make this thing work. I had to make a living. But I also saw the creativity, strategy and elegance of maximizing a brand via product and service licensing. Nearly every dimension of the business called to me.

What I tell people who ask me about starting a business is to give it two years, two very difficult years. Any business — a fee-based service business, a manufacturing business, an online/ecommerce business. Two years. And you also have to be able to look into the future and see that the ship is going to turn around. Although we weren’t making any money those first two years, I could see down the road. I could see that this ship was going to turn and that we were ultimately going to be at least modestly successful. If after two years you can’t see the ship turning around, you’re in the wrong business.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?

When we were representing the Brooklyn Bridge Centennial, I got called for my very first media interview. It was an important news magazine (whose name shall remain anonymous) that wanted to interview me about the Centennial. At one point in the conversation, the reporter asked, “How many people have walked across the Brooklyn Bridge over the past 100 years?” I didn’t know that it was acceptable to respond to a reporter, “I don’t know.” I thought I had to answer all the questions. Foolishly, I made up a number. Not only did that number end up in the story, but for several years thereafter, it showed up in all sorts of articles about the Brooklyn Bridge. I learned that it’s okay to say, “I don’t know.”

What do you think makes your company stand out? Can you share a story?

I think it’s our commitment to and passion for our clients. And that comes from a certain place. I was a practicing lawyer when I began my career in licensing. As a lawyer, I was trained to represent my clients to the utmost, even if I disagreed with their position. The code of ethics requires a lawyer to represent his or her client with zeal. We took that training as lawyers to representing clients as licensing agents. At the time, when there were very few licensing agents, that was a relatively new way of approaching licensing. That’s always been, to this day, the secret sauce of Beanstalk. Our philosophy and culture is — and has always been — about servicing our clients and managing the relationship between the client and its licensees. That’s why we emphasize our talent — including having more people than other firms — because you need resources to service licensing programs properly. That’s all part of representing the client with zeal and fulfilling the Beanstalk brand promise. We really care about our clients and never shy away from committing the necessary resources.

The Walmart-exclusive marykateandashley fashion line of tween girl apparel and accessories is a good example of our philosophy. We signed up the key licensees quickly in the first six months of our relationship with the girls’ company. All of our eggs were in one basket — Walmart. Everything depended on the success of those licensees, the services that we and the client were providing those licensees and the success of Walmart. In order to maximize management of the program, we placed two full-time employees at Walmart HQ in Bentonville, Arkansas, to ensure that we were advancing the program to be as successful as it could be.

Similarly, for our work with P&G, we currently have three full-time employees at P&G headquarters in Cincinnati. Our people are there to service P&G, make sure that the licensing program, across multiple brands, is running as smoothly as possible and interface with different people in the P&G organization to ensure that all is working properly — and that the client is delighted with our work.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

Beyond making sure you maintain a healthy work-life balance and take your entitled vacation time, I would say don’t get disappointed. In the licensing business, as in other disciplines involving services and negotiations, you have to kiss a lot of frogs. And it’s only the occasional frog that turns into a prince or princess. It can get discouraging, and cause burn out. It’s a long time before you can develop and nurture licensing programs that are mature and profitable. As I said, you’re going to get a lot of “no’s.” But you just have to put your shoulder to the wind and understand that eventually some frogs will turn into a magnificent prince or princess.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?

It’s not actually a particular person (although I learned from a lot of very smart people) but a company: The Coca-Cola Company. I went to business school at “Coca-Cola University.” I learned the licensing business from The Coca-Cola Company. They taught me that the purpose of licensing is really as a marketing communications tool. I traveled all over the world with them for 15 years. I devoted probably 50% or 60% of my time to working with Coca-Cola in many of those years. And they were so far ahead of every other company that was engaged in strategic licensing of their brand — managing a program, identifying the right licensees and doing thorough due diligence. It was through Coca-Cola that I came to understand how a company could use licensing as a marketing tool. People in the industry know I love to talk about Coca-Cola, although they haven’t been a client for over 10 years. I was lucky, Coca-Cola understood what they were doing and were resourced properly. They led me. I followed. I learned, and we trusted each other. This included contract negotiation. They had a lawyer devoted full-time to licensing, and he drafted and negotiated what I still consider to be one of the tightest license agreements in the industry.

More recently, I concluded that The Coca-Cola Company was among the first companies to use ancillary products as marketing and communications tools (which is what I consider the main objective of licensing). Asa Candler, the founder of modern day Coca-Cola, wanted consumers in the 1890s (and several decades that followed) to think of his product as more than a beverage. He wanted them to think of it as a lifestyle and he wanted the brand to be ubiquitous. He used ancillary products that consumers could use in their everyday lives — cigarette holders, tin trays, notebooks, calendars and more — to communicate those two messages. Those are the same two goals of the company today, and the brand’s worldwide licensing program supports this with over 300 licensed products, from fashion apparel to housewares to home décor and so much more. You can draw a straight line from Asa Candler in the 1890s to the licensing program in 2019.

How have you used your success to bring goodness to the world?

We got to a point at Beanstalk where I understood how important company culture is and how important it is for a company to give back. We set up the Beanstalk Hands-On Program many years ago. It allows employees to have up to a week of paid time off, not counted as vacation, to work at a charitable organization of their choice. There are some rules: employees can’t work at an organization that is politically or religiously motivated and they have to be working directly with the population in need, not sitting in a back room folding flyers. And we match expenses.

I learned after a number of years that although everyone at Beanstalk was proud of the Program, few participated in it. People, in general, want to do good, yet most don’t know where to go to do good. They know how to write out a check and donate, but they don’t know how to get involved. We started looking for organizations local to our global offices with which we could become involved and offer employees opportunities to work with populations in need. Over the past several years, we have focused on an organization named Year Up, which provides education and job opportunities to high school graduates from inner cities, helping them cross the “opportunity divide.” Many of our employees become involved in the program and with the students. In fact, I became so enamored with the organization that I’m now on the Board of Year Up New York. The culture at Beanstalk is to motivate employees to do good and give them opportunities to do good.

What are your “5 things I wish someone told me before I started my company” and why? Please share a story or example.

First, I wish someone had told me to hire for attitude, not for skill. In the early days, I was always looking for people that had experience in licensing, but that’s really not what you need. Licensing can be taught. Attitude cannot.

Second, people and talent first, service second, profit third. Satisfied, engaged employees will drive profit. Don’t chase the money.

Third, I wish someone had told me how important it is to have a company culture. I didn’t know anything about culture when I started. I didn’t know companies even had culture. I didn’t know that the CEO was supposed to drive a culture. It took me a while to learn that and then to develop the culture at Beanstalk that we have today.

Fourth, not every question has a “yes” or “no” answer. Len Schlesinger, a professor at Harvard Business School, teaches that the answer to every question is, “It depends.” Of course, the follow-up question is, “On what?”

Fifth, it would have been nice to know when I started that its incumbent on the agency to lead the client, not vice versa. The client can lead you down all sorts of rabbit holes and waste all sorts of time.

And, as a bonus, sixth, I was thrown into a leadership position, and understanding the role that a leader must play to stimulate change and engage the agency’s clients and employees was something I had to learn on the job. And part of being a leader is to stay ahead of the competition by being open to change, reinventing the paradigm. For instance, why is it customary for licensing agents to be compensated at 30% of the royalties that their clients receive? Who came up with that compensation model? No one knows. It doesn’t necessarily make sense. Some time ago, we started working with clients in different ways and learned to project how much work, how much time, how many people, the cost and the size of the opportunity with a potential new client. We were then in a better position to craft compensation that fit the opportunity. That became one of Beanstalk’s points of differentiation. No licensing agency was doing that. You can’t be complacent because new companies are going to come along, and they’re going to think about things differently.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

I’ve always been interested in making sure that kids have as much opportunity in the world as I have had, as my son has had. If I could start a movement, it would be one that made sure that kids, children, teenagers are afforded the same opportunities as others who have more, ensuring they’re on a more level playing field. It would be about giving young people equal educational and career opportunities. Several years ago I was the keynote speaker at a Year Up graduation ceremony. I followed the class valedictorian. He spoke so eloquently, without any notes, about the neighborhood where he grew up, a single mom, virtually no job opportunities after high school, going dressed in a coat and tie to go to his Year Up classes with his neighbors assuming he was going to court (as a defendant). And it struck me that this young man grew up a mile away from where we raised my son, who had every opportunity that life could offer. As they say at Year Up, it’s all about closing the opportunity divide.

How can our readers follow you on social media?

https://www.linkedin.com/in/michael-stone-016b4323

https://twitter.com/beanstalkgroup?lang=en

https://www.linkedin.com/company/beanstalk—brand-licensing-agency

This was very inspiring. Thank you so much for joining us!


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