RH’s Big Business Bet – WSJ

Friedman, 64, is chairman and CEO of RH, the publicly traded company formerly known as Restoration Hardware..

Friedman When he first joined the bankruptcy business in 2001, his inventory included things like garden gnome sprinklers and Mini Etch A Sketches. Now, RH has a market value of nearly $6.5 billion, prominent retail locations with multi-story displays of luxury goods and two private jets (RH1 And RH2) and boat (RH3) – all of which will be available for charter later this year. RH’s hospitality arm alone, including 14 in-store restaurants, is projected to exceed $200 million by 2022.

“This restaurant will be 15,” Friedman says of the Dining Room, the first RH restaurant not in RH. It has 90,000 square feet of retail and its own rooftop restaurant, “it’s 78 steps away from one,” he says, pointing in the direction of the RH New York.

The dining room focuses on wood-fire cooking and opens in the new 25,000 square foot RH Guesthouse New York, a six-story lodging concept – a brand first – with six rooms and three suites. September. There’s also a 2,600-square-foot “mansion” that Friedman, who lives in Marin County, California, rents out when he visits Manhattan or whenever he wants. (All prices are provided upon request.)

Sitting in the corner waiting for a fresh steak, Friedman talks about the genesis of the Strange House, referring to a list he’s been compiling for more than three decades. The subject: the mistakes he had made in other hotels that he hoped to improve.

Hotel bathrooms have long embarrassed Friedman. “No one wants to share a bathroom,” he says. So all guest rooms have two. Nocturnal also gets edited. “Why do I have to eat Pringles and M&Ms at 2am so my stomach doesn’t growl?” His solution is a pantry with a built-in refrigerator, fresh bagels, cured meats, sliced ​​cheeses and crêpes. He reconsidered the hotel gymnasium, a hospitality that often invites embarrassment and discomfort, rather than hospitality. “When I woke up in the morning, it generally felt like I had been hit by a bus,” Friedman said. “My face was all puffy. My hair was all twisted and stuck. And I’d get up and look in the mirror and go, ‘Oh my God, I can’t get in an elevator and say good morning to someone who looks like that.'”

All guest rooms are made of stainless steel and include gym equipment—kettlebells, dumbbells, leather-covered rollers and bosu balls—into a custom European white oak cabinet for guests to practice in private.

There is no lobby. The platform’s intuitive login is handled by a single host that doesn’t ask for your credit card or reservation information. A subterranean champagne and caviar bar with marble tables and mohair chairs seats 32, but no hard liquor is served on the premises. The rooftop pool has day beds for those staying at the hotel. Children are not allowed in the guesthouse, Friedman said, and are “loud and aggressive guests.”

Friedman presented the guesthouse idea to the board of directors in 2011, showing them a photograph of the wedge-shaped building whose address would become 55 Gansevoort Street in Manhattan’s Meatpacking District. In the year Built in 1887 in a vernacular style, the structure once housed an art gallery and nightclub. His face looks like it’s broken.

“They thought I was crazy,” Friedman recalls. But he continued. “It’s called the art of wearing them,” he says. “You just keep going back. You’re showing up. You’re listening to people. RH finally signed a long-term lease on the property in 2015.

“I’m a very lucky person to do what I do,” Friedman said. “I was never exposed to luxury and got kicked out of junior college my first year.” Friedman, a billionaire whose fortune consists largely of RH stock, is a testament to his career growth and persistence. “No one can beat us,” he said, echoing recent team sessions that lasted until sunrise. “Last night we sat here and worked on the breakfast menu until 4 a.m. and tasted dozens and dozens of different types of lox.”

Friedman was 5 years old and living in San Francisco when his father, Meyer, died. His late mother, Angelina, had bipolar disorder and schizophrenia. “She couldn’t always keep up,” Friedman said. The family moved apartments 21 times and ended up on welfare checks. While Friedman was attending California’s Santa Rosa Junior College and carrying a D average, a counselor told him he was “wasting taxpayer money, and his regular academics ended at 19.” He decided to focus on that. He knew he would excel. “I was a stock boy at the Gap,” he says. “I won an award for being the best filer in the company and I worked to get there [the next] 11 years. Eventually, Friedman controlled 63 stores in Southern California.

“You can’t bet against Gary,” says Mickey Drexler, the former CEO of Gap Inc. and J.Crew, who now builds Alex Mill, founded by his son Alex Drexler in 2010. Founded in 2012 by a clothing company. Mickey Drexler met Friedman when Friedman was 25, working as a store manager at Gap in San Francisco. Friedman’s unfiltered opinion, his enthusiasm and his merchandising ideas were a rare combination of skills, and he was invited to executive-level meetings to share his views. The two men still speak frequently, and Drexler will be among the first visitors to the Guesthouse.

“I don’t always agree with Gary,” says Drexler. “I don’t agree with him opening up all the big stores…it seems like a disaster for retail square footage to go down and try to do enough volume in the big places. Drexler laughs. “He proved me and many others wrong,” said Friedman, noting that Drexler initially questioned trying to work with Guesthouse again. “I thought, Gary goes again, he’s taken too many risks. But it is another example of the vision.

Satisfied with my second steak, and two more dishes—crispy waffles and caramelized bananas to match the dining room’s burnt caramel velvet dishes—Friedman is ready to tour the inn’s 10 rooms.

One of the first rules of the Guesthouse is not to post photos. Friedman decided not to publish any photos of the guest house. There is no reservation site with visual; Prospective guests should inquire about room availability on RHGuesthouse.com.

“We think privacy is something that everyone has given up on social media and the Internet has taken away because you can Google anyone,” Friedman says. “So we think privacy will be an important luxury market.” (RH himself has no social media accounts, and neither does Friedman, although you can sometimes see him on his fiancée, Australian singer Bella Hunter’s Instagram feed.)

Since the project’s inception, Friedman has been fending off the same line of questioning from those looking to make the effort commercial: Won’t the guest house be just a glorified showroom for RH wares? “I tell them, ‘It won’t have our furniture,'” Friedman said. “It’s not about furniture.”

Three main materials are used in the design of the guest rooms: European white oak throughout the living and sleeping areas, Italian travertine in the bathrooms and stainless steel lighting, faucets and handles. The continued use of floor-to-ceiling oak combined with the decision not to hang any art on the walls makes the bedrooms feel like built-in rooms. A slideshow of dozens of design renderings of the room over the years—Friedman says there are hundreds more—shows the process of elimination, resulting in a room full of symmetry and minimalism.

While Friedman says simplicity guides the design ethos at the guesthouse, the RH expansion plans are more complex. Over the next several years, as RH continues to grow in the United States, the company is looking to expand by hundreds of thousands of square feet, opening its first stores in Europe. RH’s first English location — RH England, a country house in historic Aynho Park — is set in a 17th-century building 65 miles northwest of London, with nearly 70,000 square feet to be split between retail and six hospitality concepts. A second English location will subsequently open in Mayfair, London. RH Paris, with its rooftop champagne and caviar bar, plans to debut on the Champs-Élysées. Milan, Madrid, Brussels and Dusseldorf are expected to follow, as well as the first RH store built in a French chateau.

In Aspen, Friedman is already working on RH’s second guest house and its first Bath House & Spa. RH also aims to launch its first residential real estate venture in Aspen, with six four- to six-bedroom units available for purchase, all fully furnished. “You get the feeling it’s not going to stop there,” Drexler said. Friedman said he is looking to join a group of top hoteliers. Friedman cites Edith Hotels co-creator Ian Schrager, LVMH CEO Bernard Arnott, Four Seasons founder Isadore Sharp and Anouska Hempel as major influences on the design of the Blakes Hotel in London.

“Anyone who makes a dent in that universe … if they walk in our door, we should force them to hang their hat,” Friedman said. “We have to do things to make them go, ‘Bravo, we didn’t think of that.’ “