Mindy Grossman has taken the helm of interactive multichannel retailer HSNi and endured the rough waters of an IPO. In just seven years, she has transformed her company into an upmarket retail empire.
HSNi: The sell-a-vision success
It was the summer of 2008, the American economy teetered on the edge of what would become one of its deepest recessions in history, and Mindy Grossman was attempting a feat few other US executives were even considering at the time: taking a company public.
I realized that entrepreneurs not only start companies from the ground up, they also transform businesses and create new opportunities.
“My CFO and I were running around raising the financing and debt for a company that was all about selling things to consumers in a very uncertain climate,” says Grossman, CEO of Florida-based HSNi. “The day after we went public, the world fell apart.”
Previously a part of New York-based IAC/InterActiveCorp., HSNi, which operates HSN (formerly the Home Shopping Network) and Cornerstone Brands (the mail-order catalog and online company), watched its stock price close at US$10 on its opening day.
“It was complete chaos that had nothing to do with our business,” says Grossman, who joined IAC as HSN’s CEO in 2006 after a six-year stint as Nike’s Vice President of Global Apparel. “Our company was performing, but no one was covering new initial public offerings [IPOs].”
HSNi’s shift from being a large-cap stock to a small-cap stock and the investment community’s concerns that it would break its debt covenants didn’t help the situation.
“It was one of the most intense leadership moments for me,” says Grossman. “It was my first time being a public company CEO, but I had an incredibly supportive board of directors.”
Grossman, who started her career in the menswear industry in 1977 and went on to occupy senior positions at Tommy Hilfiger, Warnaco and Polo Ralph Lauren Corporation, also followed her own instincts, focusing only on what could be controlled and blocking out the rest of the noise.
But, just four months after the IPO, the firm’s stock price hit a low of US$1.43 - a level below its accounts-receivable balance at the time. The firm was operating in a chaotic environment, but Grossman says that HSNi managed to survive thanks to its agility and its status as a “cash-generating machine.”
I had no retail or TV experience … but I had a vision of what we wanted to do.
While a few of the company’s luxury businesses felt the impact of the recession more heavily than HSNi did as a whole, the company grew in 2008 and 2009.
“We actually came out of this a stronger, more resilient company and have proven the success of our business model,” says Grossman.
Like many entrepreneurs, Grossman has grown with the company she took public. In 2006, she was a Nike executive looking for a new opportunity that would bring her closer to her family and away from a heavy travel schedule.
“My daughter was in her last years of high school and I was doing a crazy global commute,” she recalls. Nike had just installed a new president and CEO (both of whom still run the company), and a glance up the corporate ladder told Grossman her prospects of leading the multinational corporation weren’t favorable. “Being on the succession plan with these very healthy, young guys wasn’t very compelling.”
The assumption in the business community that Grossman would go and run another large fashion company or a similar vertical business was shot down when she learned that IAC Retail was on its eighth CEO in 10 years and in need of a new one.
Grossman was intrigued. She had been looking for a position at a direct-to-consumer business that could effectively leverage emerging new technologies, and she wasn’t afraid to surprise people with her next move.
After two weeks of doing nothing but watching HSN and other shopping channels on her home TV, Grossman had an epiphany. While flipping between Food Network and HSN, she lingered on the latter to catch an appearance by celebrity chef Wolfgang Puck.
“Wolfgang’s segment was funny, engaging, informative and just as engaging as Food Network,” says Grossman. “HSN wasn’t about selling; it needed to be an editorial, programmed, lifestyle business that brought stories to life.”
That vision, which Grossman calls her “light bulb moment,” would carry her through those early days in a position outside her comfort zone. “I had no retail or TV experience, and I’d never run a direct-to-consumer company,” she admits.
“But I had a vision of what we wanted to do, and I understood brands, culture and the interconnections between them.”
Grossman realized she had to broaden the audience base. That meant the channel had to stop hawking frumpy tracksuits and deep-fat fryers and start luring fashion-forward customers. She also realized that, as IAC Retail’s eighth CEO in 10 years, she would have her work cut out for her.
“People were just waiting around for the next leader to come in, so no strategies were being executed sustainably,” she says. “Everything here was just frozen.”
She set out to energize her company from the bottom up, starting with an employee orientation course - just like any other new member of staff. When it came to her turn to introduce herself, she said, “Hi, I’m Mindy. I’m the new CEO.”
Such a humbling beginning lent Grossman credibility when, the next day, she introduced herself at a company-wide town hall meeting (she continues to hold town hall meetings with staff several times a year). Six months later, she again stood up in front of IAC Retail’s managers and employees - this time to introduce a new vision for the HSN brand and the company as a whole. “I wanted everyone to know where we were going and how we were going to get there.”
Tapping advanced technology
Technology would wind up playing a key role in HSN’s transformation. Using a digital platform, a database of more than 59 million customers, social networking and other technology tools to drive intimacy and connection, the company has positioned itself as a tech-savvy player in the home shopping space, which it shares with the likes of QVC Inc., ShopNBC and Jewelry Television.
“We’ve had a series of firsts,” says Grossman. “We’re still the only retailer in the US with shop-by-remote. We were [also] the first to stream live HD video across all screens, to have a mobile app, a touchscreen wall and a retail gaming platform.”
Rolled out in 2011, HSN’s gaming platform - known as HSN Arcade - has proven particularly popular among customers, who can play games online while simultaneously watching HSN streaming live in HD for free. Grossman says people were initially skeptical about HSN Arcade’s development and launch, but the company saw an opportunity to tap into the growing population of female gamers.
“We know our customer, and we know that she loves to shop, share on networks and play casual games,” she explains. “Why not give her a place where she can do all three, knowing that if she comes and engages with our brand, she may buy?”
We were the first to have a mobile app, a touchscreen wall and a retail gaming platform.
As a leader who infuses everything she does with passion, purpose and impact, Grossman has surpassed the results of her predecessors and molded herself into a true entrepreneur. She attributes her success to a few early decisions, such as making that new employee orientation session her first stop, as opposed to heading right into the executive suite.
She also claims to worry only about what she can truly control, an attitude that has helped her avoid the plight of predecessor CEOs who rotated through the doors of IAC.
But, when she first learned she was being considered for the EY Entrepreneur Of The Year® Award, she didn’t feel qualified for the honor. “I’m not the entrepreneur,” Grossman recalls saying at the time. “But then I realized that entrepreneurs not only start companies from the ground up, they also transform businesses and create new opportunities.”
She says the National Entrepreneur Of The Year Awards in Palm Springs put her in direct contact with a number of enterprising individuals. The founders of a future HSNi portfolio company were among them.
“While in line waiting to receive my award, I met the founders of Chasing Fireflies Children’s Boutique,” she says. “When I got back to my hotel room that night, I called my CFO and told her that I’d just met the women whose business would become our first acquisition.”
The crystal ball
The future looks promising for HSNi. It continues to leverage its huge database by providing customer-oriented content, as well as managing a portfolio of lifestyle brands (including Chasing Fireflies) through Cornerstone - which operates seven e-commerce sites, distributes more than 300 million catalogs annually and has 11 retail and outlet stores.
It’s a platform that goes beyond the original “yell and sell” direct TV advertising methods that spawned the Home Shopping Club (the firm’s original iteration) in 1982. In 2009, its first full year as a public company, HSNi posted US$2.75b in sales. Last year, that number was US$3.3b, up 6% over 2011.
“We’re at the most exciting inflection point in the company’s history on a number of levels,” says Grossman, who, after seven years of investing in core infrastructure and business repositioning efforts, is braced to leapfrog her company yet again. She is targeting strategic portfolio acquisitions along with more organic growth.
“We’re aggressively going after the integration of culture and entertainment in our businesses,” says Grossman (see sidebar, page 27). “We really want to be at that incredible cross section of media, technology, entertainment and commerce. We’ve laid the foundation, and now it’s time to accelerate beyond that.”