Rags to Riches: Paul Mitchell

The bottles are unassuming: a simple black and white design with one man's name on them, Paul Mitchell. Founded on two products, "Shampoo One" and "The Conditioner," the Paul Mitchell Hair Care brand has expanded to a line of more than 90 products sold in 90,000 salons in the United States alone. What's the story behind Paul Mitchell's success?

Few of the millions of hair stylists, and the well-styled, realize that Paul Mitchell Hair Care was founded by two persons. In 1979, John Paul De Joria and Paul Mitchell came up with an idea that would revolutionize hair care. The two wanted to create a product line made especially for hair stylists, by a hair stylist, Mitchell. By 1980, they had taken their idea, plus $750 borrowed from family and friends, and formed a partnership.

While Paul Mitchell Hair Care eventually grew into a multi-million dollar business, it was not before overcoming some serious hurdles. To quote De Joria, the pair should have declared bankruptcy "at least fifty times in that first year." What's the reason for the product's simple black and white packaging? The two couldn't afford colored ink. They stored their products in the trunk of a car, carried them from one salon to the next, and demonstrated them to stylists, one-on-one.

Next, they offered something entirely new to the hair care industry. They guaranteed their product 100%. De Joria and Mitchell assured stylists that they would sell all the products they purchased, or they could return it at full cost. Clearly, the product sold vigorously and continues to do so. According to the company, John Paul Mitchell Systems grosses $800 million in retail sales annually.

The company's styling philosophy is now taught in Paul Mitchell schools. Stylists are trained in Mitchell's styling techniques while salon owners are personally trained in the system in order to qualify as a "Signature Salon." Keeping the product exclusive (it isn't guaranteed unless it's purchased from a Signature Salon) has helped increase both brand awareness and consumer demand for it.

Beyond financial success, De Joria and Mitchell have worked hard to build goodwill in the community. The company supports a number of sporting events and environmental and philanthropic efforts. Paul Mitchell has opposed animal testing since the beginning of their company and donates millions to cruelty-free causes. They've also donated millions to schools in support of the creative arts.

Despite their phenomenal success, De Joria and Mitchell continue to face business challenges. The brand they've worked hard to build is now under attack from bootleggers. Online stores, beauty supply companies and even large retail chains have been inundated with "look-alike" products and knockoffs. De Joria estimates that bootlegging costs the company millions in revenue each year. Besides lost revenue, off-market products could cost the company something even more important: its reputation for quality. De Joria says that the knockoffs would not give customers the same results as authentic Paul Mitchell products, even though they may look the same.

The problem has become so pervasive that the company has launched an anti-bootleg campaign online and on TV. In the ads, John Paul De Joria warns consumers that if the product didn't come from a Paul Mitchell salon, it is not the real thing.

In times when consumers are trying to save money at every turn, convincing them not to buy cheaper versions of the product could be an uphill battle for the company. Paul Mitchell and John Paul De Joria once gambled everything they had on their products. Betting on consumers' preference for genuine products over cheap and inferior substitutes may help them win the war against bootleggers.