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Did either of you think a show based on us renovating houses like, how are people going to be interested in that?
100%.
I think we thought.
That was exactly the way we felt.
Oh, wow.
People in Waco are going to get to see our work on television.
Central Texas.
Never thought.
My grandma.
But did you even ask them, like, how do you turn that into a TV show?
Yeah.
And I didn't know, of course, because how could you know?
You'd never been on television.
You didn't know anything about television.
I have an actual phobia of cameras.
I was terrified.
Welcome to How I Built This a show about innovators entrepreneurs, idealists and the stories behind the movements they built.
I'm Guy Raz and on the show today how Chip and Joanna Gaines turned their house flipping business in Waco Texas, into a massive lifestyle brand called Magnolia.
If I said Waco, Texas just 10 or 15 years ago, you'd likely think of two things possibly Baylor University, but more likely the standoff between federal agents and the Branch Davidian cult in 1993 that ended in tragedy.
For years, that's what defined Waco.
People even called it wacky Waco.
But today you're just as likely to meet someone who associates Waco with classic American home decor.
And that's almost entirely because of two local residents, Chip and and Joanna Gaines.
If you know them, it's most likely because of their TV show called Fixer Upper, a reality show where Chip and Joanna renovated homes on a tight budget.
And if you've renovated your home over the past 15 years and it included reclaimed wood or shiplap or barn doors or a large apron sink, you can thank Chip and Joanna, because they are widely credited for popularizing the now ubiquitous farmhouse look.
A few weeks ago, I flew out to Texas to see how these two people changed the city of Waco.
In the center of town, there's a sprawling property called the Silos.
It was a disused cottonseed oil refinery that was redeveloped by the Gaineses over the past decade.
And today, it's the center of activity in Waco.
There's a coffee shop, a bakery, food trucks, a row of stores filled with cool, curated items for sale and, of course, a large furniture and home goods store called Magnolia, which is also the name of Chip and Joanna's business.
There's a TV network, a magazine books restaurants, home decor lines, even packaged baked goods now sold at Target.
And what's most striking is how it all started.
No pitch deck, no business plan, no investors.
Chip and Joanna met in 2001.
They got married two years later, and from the start, they worked side by side.
Joanna ran a small home goods shop, and Chip flipped houses.
And together, they built something bigger than either of them ever imagined.
Now, before all of that, both Chip and Joanna's fathers ran their own businesses.
Chip was partly raised in Dallas, where he grew up playing baseball and his dad owned a sporting goods business in town.
I mean, I was in heaven.
You know, there were always baseball gloves.
There were always cleats.
There were always all these, you know incredible, you know tennis rackets and tennis balls.
Unlimited supplies of tennis balls.
And so as a kid, what else do you need, you know?
And so we thought we were the richest kids in town.
We just loved it.
But dad, he tried his hand at that business idea.
And as I got to know him better and as an entrepreneur myself, my dad and my father-in-law Joe's dad are similar in the sense that they're really grinders.
These guys are workers.
So your dad was a football guy, but you were a baseball kid.
Yeah, that's true.
And a pretty good athlete in high school.
I mean, you were like... this was your life, right?
Yeah.
From the time you were a kid, Little League, Pony League traveled baseball, whatever it was back then.
I don't even know if they did travel in the same way.
Totally, yeah.
It was called Connie Mack back in our day.
You know it was kind of a thing that we would do, but yeah, that was a unique kind of And did you dream already, like when you were in high school, of being a professional baseball player?
I did, yeah.
And good enough.
I know you started out playing at a local community college but then you got recruited to play for Baylor's baseball team, obviously better known for football, but still like i mean, you're talking about d1 baseball university, let's go, let's go.
It was the great 94, you.
You're about to become a baseball player.
Baylor what it was the dream.
What happens?
Why are you a professional baseball?
Well, reality struck.
It wasn't a great ending to a beautiful story.
I was a sophomore transfer to Baylor.
Long story short, I had a terrible practice.
I ended up getting cut from the team and I essentially immediately transitioned into, darn it.
I was hoping Baylor University was going to work out.
My dad and I started getting on the phone.
We were going to go to TCU.
We were going to go to a smaller school.
We were going to go somewhere else and kind of Pick up the career.
I mean, your whole identity in your life up until that point, you're like 19, 20-year-old kid.
It's baseball.
Yeah.
And then that's it.
It's gone.
And so you wrote about this in your book.
You were depressed.
This was like a depressing moment.
And a kid that even to this day I mean I don't really know that.
I know what depression is as a 50 year old, grown ass adult, you know.
But I knew what depression was that season.
It was sad.
I mean I, I would go, I would park my truck at the baseball field bro, and walk to my apartment and take naps, so that anybody that was driving around that maybe knew me would see my truck at the baseball field.
I mean, I was in a real pickle.
I mean, I was depressed.
I was sad.
But, you know, fate had other plans.
It's interesting how failure is like a gift, like who knows, right?
And because I know that while you were in college this is the mid to late nineties you start to do these.
What now?
In hindsight, we know we're like entrepreneurial things right.
Sure. firecrackers and a laundry business at one point.
Totally.
It was pretty simple for me, kind of like a simple economics, because I started a lawn care company which was kind of my primary.
While you were in college.
While I was, I was probably a sophomore, junior year, something like Just to make money.
Just to make money.
Yeah.
And I would just sit.
I would sit in these freaking classes at Baylor and I would look out the window and I would watch these guys literally mowing the grass at this beautiful university that I was at.
And I was just like, man, I'd get my right arm to be one of those guys mowing grass at this place.
I hate this.
Like I hated school.
And 95 degree weather.
Well, yeah.
On a cool day, on a cool day.
Yeah.
Those were the good days.
But so I did pretty much just that.
I followed one of those mowing guys back to their truck and then their truck back to their little warehouse.
And I talked to the guy.
His name's Uncle David, David Stodgill.
And I asked him to let me work with him.
And he was like, what? oh, you know, you don't have any experience.
You don't know what you're doing.
So I mean, no, no, no, no, no.
And finally one day he just says, it's kind of fine.
And so he started me off on one of these crews and I was the driver.
You know, I was like didn't know my head from a hole in the wall.
But one thing led to another.
Years later, he told me that hiring me was like losing two of his best guys.
And so that's the kind of lawn worker I was.
I mean, you even sold a business in college, a laundry business.
Yeah.
Probably not for a whole lot of money, but still, you start a business and somebody bought it from you, right?
Your client list or whatever.
You were doing, you were just collecting people's laundry and taking it to a commercial store.
Well, we actually did it.
We built in-house a little coin laundry mat, but without the coins.
So the customer would essentially sign up for a prepaid service.
I mean, I brag about this a lot.
I invented a real live industry because I was doing this here in Waco and now it's a thing.
Like you can go to a college and you can sign up for essentially a laundry plan.
Well, that's what I was noodling all those decades ago.
I was trying to figure out how could we get a parent to sign up for a plan that was, let's say, 199 bucks.
And hilariously, even now, gift cards and how some of them go unredeemed.
I mean, geez.
It's a float business.
The Profit actually came from 20 or 30 of those kids buying those 199 plans and never showing up one time.
What was it?
You mentioned like sitting in your classroom and just kind of dreaming.
But I mean, there was something about starting these businesses.
Like not every college kid does that, right?
And I want to ask you about this house that you bought around the time you graduated, because the idea was you'd buy it, renovate it, gut it, renovate it and then flip it.
First of all, how did you know, like, how did you know how to do stuff in a house?
Did you grow up being taught that?
Dad and I were super handy.
Like putting up drywall and stuff like that?
Not that extreme, you know.
But if we needed a fence built in the backyard, dad and I would build the fence together.
And you just learned from him. just helping him.
And he was a country guy that he's one of these guys that just grew up in a very rural environment.
So he knows just a little bit about everything, you know?
And so we weren't ever hanging drywall but we'd build fences.
You know, he'd want a bird house or a dog house and we'd build that together and we'd kind of figure it out.
And so it's, In all of those endeavors, you know, I had a laundry business.
I had a lawn business.
I bought several fireworks stands in East Texas.
I mean, bro, but all of that put together into one pot made about $30,000 to $50,000 a year.
And as a college kid, so I'm going to school.
It's a lot of money in the mid-90s.
Mid-90s.
A lot of cash.
Who knows?
Who knows what it would be?
In Waco, that went far.
Totally.
So that's kind of how it shook out.
And then I graduated from Baylor University and had two very obvious options.
Stay the course, which was me continue to operate these.
I think I still had the wash and fold at the time.
I had a lawn business that was kind of starting to pick up steam a little bit.
So I could stay the course, or I could move to Houston and work for Xerox in this somewhat prestigious sales job.
And again you're selling copiers, so I don't want to overstate it.
This was a real honor.
And that could have led to a corporate job like management.
I mean, you're good at sales.
You got a computer.
I got a little pager.
That's a real job.
I mean, I got a real, it was real money.
It's the late 90s sales job.
I wish I remember the number, but I think between 60 and 80 grand.
So here I am to your point, working my tail off.
It's always a hundred degrees everywhere I go.
Uh, you know, maybe making two-thirds of that, half that on most years, that maybe if i'm lucky, you know.
But i didn't do it and so i'm here, i am making 30 40, 50 grand a year in waco and i buy this house.
I'm gonna just do the rough numbers and who knows if this is accurate or not, but i buy this house for about 50 grand.
We put about 50000 into the house and I sold that house for about 150000.
So that A plus B equals C. And that thing took me probably three and a half, four months.
And it was a lot of hard work and whatnot, but I made 50000 in that two or three four month period, which was similar to my entire 12 month.
You know income the year before that.
How did you know what to do in the house?
I mean, you mentioned like building fences with your dad and dog houses and bird houses, right?
That's like some basic carpentry, but- how did you know?
Like okay, here's this house, you know it has to look nice.
How did you know what to do?
How'd you know where to start?
I think, and the very, very first unit, if i can recall correctly, it was simply like if the carpet was nasty which it was, there was.
There was not debatable stuff here.
I mean, it was like graffiti on the wall.
So of course you got to pull down the drywall because it's it's been painted in some weird way.
The carpet was disgusting, so i just ripped it all out, brought it back to the studs.
I had hired some guys and just hired some guys and we just started figuring it out literally like this is like pre-youtube.
You couldn't like go on youtube and i wish there were.
You're the most relational guy.
Like when i was thinking of you asking this question, i was, like you know, with chip, even though he may not have known how to do the house from start to finish, the key with any renovation or any project or even any business, is your relational skills find the people, find the right people, do them right, they do you right, and so they were teaching chip, chip was teaching them.
So i think it was more relational than understanding like a plus b equals c.
So even in that first house, like would you say, you had a sense of like what looked good.
No, no ideas.
You're just like this carpet's nasty.
We need to go replace it.
So let's just get, go to home Depot or whatever.
A hundred percent.
And it was exciting.
You know, it was exciting.
It was sexy.
I mean, there weren't really house flipping shows, you know, there wasn't a thing yet.
There was, this was, not a con I mean my father-in-law I get married and my father-in-law I own probably seven or ten rental properties when we got married I had a pretty robust little uh renovation business and her her dad would take me on these Sunday drives and ask me if I had gotten a job yet like how the job market was and as if I'm looking for jobs and and I was always so thankful for him because it never really hit me like in this wildly offensive way Which hilariously, it probably should have.
But I just was grateful that he cared about us and cared about me and all those things.
But it was just like, I had a job.
It was just very unorthodox, very untraditional.
All right.
I want to pause your story for a moment and turn to you, Jenna.
Because I know you moved to Waco when you were in high school.
You grew up in Wichita for a number of years.
And-
You had a Korean mom.
Your dad met your mom when he was stationed there in Korea.
He was, he was in the army.
Yes.
He was drafted at 18 years old.
Um, skinny and like John Lennon.
Um, did your mom speak English?
No English.
Wow.
He, he goes to this party.
They meet, um, And my mom loved him because he was so quiet.
Well, what she didn't realize is he was stoned, which is why he was so quiet.
She said, I see all these guys talking and trying to be the center of attention.
And I see this guy in the corner just sitting there quiet.
And she says, I told my friend, that's the guy I'm going to marry.
So your mom growing up because you were living in Wichita and then you lived in Austin for some time.
But I know that, I mean, probably there weren't many families like yours, right?
There really weren't.
And I think your grandma lived with you for some time.
Did your grandma speak much English?
She spoke zero English.
We actually lived right outside of Wichita in this little town called Rose Hill.
And there were no other Asians.
So like everyone, you know, it was obvious we were unique.
We were different.
And then my grandmother comes to live with us and she didn't know any English, but she would come to all of my sporting events and the kids would try to talk to her and she would just kind of nod her head.
Could you talk to her?
I knew a little bit of Korean just because of my mom, just listening to them, and I always wanted to try to understand what she was saying.
But I remember the moment it hit me that I was different and the moment I chose to decide to play more on this side than that side, i remember we went to a korean church in kansas and seeing all these korean people and um, they were kind of the, the kids were kind of rude just, and they kept calling me um, i said papa, i should know this halfie.
And so there they were kind of being like oh, they're half.
So they were, you know, kind of being a little mean, like we were different.
And then when I go to school I felt that same.
So I really remember wrestling with where do I fit?
Because when I go to this all Korean church, I'm different.
And then when I go to the school, I feel different.
And I felt like I chose I'm going to go more on the side where I'm not going to own that Korean side of me.
And my mom, I mean she's working through her own thing secretly quietly, as she's trying to figure out how she fits into some American culture.
And so, you know, that's, that's the choice I made as a little girl.
And so that's why I'm like, I'm not hard on myself for that.
You do what you do to survive.
And for me, it was play along.
So even through high school, you felt that same.
Oh yeah.
I was, I never played.
I never talked about the Korean side.
Yeah.
And I was so proud of my mother.
Like it was, but to me again, she was very, cultured.
Like she, she was beautiful.
I was so proud of her.
But when I moved to Waco you you go from you know a school of 500 kids in your class to 25.
You fit in pretty quick.
Like it's a small private school.
Everyone's your friend.
So it was.
It was an.
It was a soft landing for me, coming from a school where I I just felt lost and I was totally insecure coming to Waco.
It just felt like, okay, I've, I've got my footing pretty quick.
And it was a fun experience for me.
You guys moved here.
Your dad opened up a tire shop, Firestone Tire Store.
And this is important because he also had TV commercials and he would have his family in the commercials.
And you can see those.
They're still available.
And they're amazing.
Yeah.
They're amazing.
You did great.
I love how you held your hand in a perfect little triangle.
Shouldn't be on TV.
He's proud of his family.
He's proud of his family and it's a local business and he's got.
But I think that's is it true.
That's where you first saw Joanna on those commercials.
That's true.
Yeah.
So she was a local legend.
I mean this girl was like, I mean she goes into all this, all shuck stuff and the half Korean.
And how sad it was to be a seven-year-old in Wichita, Kansas.
But she was a fox.
I mean, make no mistake.
She was a hot rod.
She moved into town.
She started going to school at this little private school and all the boys loved her.
She became...
So she was she was the hot rod.
My dad had these commercials that we would do.
And I was at the same time going to Baylor and doing communications like broadcast journalism.
So he was like hey, why don't you use what you're learning there and help me produce these commercials if you want to be the talent in them?
And so that's where I kind of stepped up to. be the spokesperson of Jerry Stevens Firestone.
Yeah, because it's your voice, right?
My voice, yes.
When you hear the end, yeah.
Oh, and she's got a great voice.
And you were doing college radio too.
I was doing- You were a newscaster.
AWBU.
I was there at 5 a.m. doing the radio.
Who was listening at 5 a.m.?
No one.
But I was learning so much and I loved it.
But that's where I thought, oh, I can't wait to do broadcast journalism.
I'll have a teleprompter.
I love the idea of being able to voice something, but someone else write it.
I mean, you did an internship in New York with Dan Rather.
Yes.
48 hours.
I mean, and it was a really big deal for Waco.
I mean, and also like Dan Rather, Texan.
Did you ever interact with him?
I did.
Was he particularly, because he seems like the kind of guy who would love Texans that he would.
I wore a Baylor sweater.
We had one like 2 a.m. shoot in a, the courtroom.
And I remember he came up to me because I was wearing my Baylor sweatshirt and he said are you from Texas?
And so that's, so every time he saw me, he called me Baylor.
Right.
That was your nickname today.
Your ambition was to be a broadcaster, to be like a TV anchor.
I think I, you know, I had two ambitions.
One was to take over my dad's store because I wanted to be.
He had three daughters and he I heard him at one point say man, I always wish I had a son, because I could hand this over to him.
And then, but also was doing the broadcast journalism on the side.
And I went to New York and I think after the internship, maybe day three, I was like okay, I don't want to do journalism anymore.
After five years in college.
In New York.
A she's from all these small towns you're describing cbs new york in the in the early 2000s.
That was a oh by late 90s, totally the stuff i saw.
She talks about toxic environments, you know, which has become somewhat common.
I mean, this was a complicated place.
You were just like holy moly.
These people were super rough.
Well, i think it's just the, the nature of the beast with news.
It's the the.
The first thing that was said to me is you know, i need you to find beautiful people who do awful things, And I was like wait what?
Okay.
And then I became the person over the cold case division.
So I had to, like, call people.
Oh, sad.
Did anybody just chew you out over some sore subject?
No, but you're reopening this trauma for people.
And there's no, like... here, this is how you go in, and you're pathetic, and you're nothing.
It's just like, we want this story.
Right, you call them up.
And again, it's not that it's that.
I was conflicted.
I'd come home and be like, I don't know if I want to have this life.
I don't know if I can carry the weight of these stories.
I felt so alone.
I felt unseen.
I was in this huge city.
I wanted to come home.
The only place I felt safe, like alive and seen, was in these tiny little local boutiques that I would go to on the weekends.
In New York.
In New York.
And I'd step in and I still remember the sounds, the smells like and just like the intentional displays.
And I'd go in and it'd be an escape for me.
And I felt at home and I loved it.
Didn't buy anything.
I would just go and browse.
And I feel like after that internship, I remember thinking one day I'd love to do that.
Have like a little boutique meet.
Make people feel at home, no matter where they're at when they step in.
I want to create that experience that I felt that was such a sweet spot for me in a hard place.
And so that was.
That's really where I say Magnolia started.
That dream in my heart was in New York City during that internship.
But meantime, you graduate and you're going to go work at the shop, at the tire shop.
Yeah, meantime, I'm like, I guess I'm doing it.
Start to get sort of apprenticed to eventually take it over one day.
She smelled like a tire.
So she looked like you.
She looked like a swimsuit model.
I love the smell of tires.
But smelled like a tire.
Tires smell like home.
For me, it was quite the combination.
And I'm assuming you went to the tire shop to get tires for your car.
Yeah, but only because it was her tire shop.
Because you knew she was there from the commercials.
I didn't care at all about Jerry Stevens Firestone.
You knew that she was there.
She was there.
And there was a chance.
If you went to that shop, there was a chance. you could meet Joanna Stevens.
There was this point in my career.
Now I come back.
I'm like, I don't want to do this.
I'm going to help my dad.
I used to do his books.
Like I was his bookkeeper for seven or eight years.
Well, I started thinking if I'm going to take over, I need to actually understand that.
What is a tire?
What size tire?
How do I, when a male comes to the counter and he sloughs at me like, can I talk to somebody else?
How do I prove that guy wrong and overwhelm him?
Because I know what a 235, you know, I know the size tire.
I know all of the language alignment.
So I was learning the business.
So I happened to be at the front.
When this guy decided to get his sixth pair of tires that he didn't need.
I got break jobs weekly if I could afford it.
So in that, I mean, you go there with the intention, obviously, of trying to meet Joanna, right?
Sole purpose.
And then we strike up a conversation.
Magic happens.
The first thing he says.
Aren't you the girl in the commercials?
Yes. which was truly the most annoying thing that anybody said to me.
You would say that all the time.
Yes.
And I kind of rolled my eyes like, oh, here's one of these guys.
But we sit outside for 30 minutes.
I mean, we talked.
It was so cute.
And hilariously, she looks like she's 20 now at mid-40s.
I look like I'm 80 at 50.
And so rewind the tape to that day.
She thought I was an old guy.
I thought he was probably 38 married with kids.
So I'm sitting here going, I mean, this married guy is really friendly.
Should I be concerned?
She thinks I'm some creep like with a family and kids just hitting on her for no logical reason.
So all that to say the next day, I see a note on my desk.
Chip Gaines says to call you back because I would.
And so call him back.
He asked me on a date the next day.
And it was amazing.
It really was.
It was an amazing first date.
The one thing I liked about him is everyone had left.
All of our friends that went to Baylor all went to Dallas also.
They moved.
No one stayed in Waco.
And I remember saying, why are you still here?
You're out of college.
And I just remember him saying, I love the community.
I love the people here.
And I want to put my roots in this town.
And I just remember thinking, that's great.
That's risky for a guy outside.
So I loved that, that he thought differently because everyone else was kind of doing opposite.
So I just remember that stuck with me, that he saw something special about Waco.
But even back on that first date, I just remember there was this unique depth to joe that i had never really experienced before.
I mean, just our conversations were super rich and that we just in a very short amount of time we got a lot of things covered and it was just really awesome.
You must have also really trusted her and and found something in her that Not just in terms of your interpersonal relationship, but like in terms of her instincts.
Because I think like six months in your relationship, you leave town.
You go to Mexico, I guess, to learn Spanish.
And from what I read, you basically say to Joanna, hey, can you run my business?
Can you run these?
Several businesses.
And complicated businesses.
Can you collect the rent from the people?
How did that happen?
Why did you have the confidence to give this 22-year-old or 23-year-old?
I'm an idiot.
So I will say that isn't all that special.
It does sound amazing the way you've described it.
And oh, man, there must have been this moment.
I wasn't really a I was a complete idiot, you know, so I just wanted to do this thing in Mexico.
She was kind enough to kind of support me to do it.
You went to study Spanish.
I went to study Spanish.
And you were like, I'm just going to leave my businesses and go study Spanish.
Try to basically do a crash course, three month immersion Spanish course.
And she was like you should do it because I just had these Hispanic guys that I just love like brothers and we were always so close and it was powerful, but I couldn't communicate super clearly to them and they were limited in their ability to communicate to me.
So I thought this is going to solve my problems, you know?
And so, but the idea that I trusted her to do these things, I would have trusted a monkey.
I mean, I was a complete idiot.
I was encouraging him as well, but what happened in his, in his businesses, is like every a plus B has to happen, or then see you know, so it's complete.
So if you don't get rental money, then you can't pay the sub.
So I started realizing, okay, rent's due on the fifth.
So I would go to these foot.
They all were football players that lived in these houses.
So I'd knock on the door and they'd be like, are you here to clean the house?
I'm like, No, I'm here to collect rent.
And they go, we'll give it to you tomorrow.
And I couldn't collect rent from these guys.
So now it's like five houses in.
I can't get the rent money.
Well, if you don't have rent money?
We've already wrote checks to some of our subs for these other things.
Now checks are bouncing.
So you know where Chip could go and say give me the money, and he'd get it, or he'd call their parents.
I didn't know how to do all of that.
I wasn't good at it.
I would just take no and be like, okay, I'll wait for tomorrow.
Well, what happened is I didn't collect rent.
So then a lot of things started to business starts to collapse overnight at the Firestone.
So now these subs are coming to my dad's Firestone.
Her dad is, I mean, above reproach.
He is very straight forward.
We're getting NSF checks sent to the Firestone.
And my dad's like, what is, I mean, he sits me down.
He's like, what's happening?
And who is this guy?
And so I, you know, Of course, I tried to cover Chip.
I was like, well, it's because I didn't collect rent money.
But it was just, you know, it was a fragile.
My parents were like, why did you leave her in that spot?
Her parents were saying the same.
I was like, I thought it was going to go a little smoother.
Here was the moment.
I remember as my eyes are now awakening to the reality of like all hell's breaking loose.
And it's happening at my dad's office.
And now it's like, oh, I'm in trouble now.
Chip's parents are mad.
Everybody's mad.
I was running out of money there.
She's running out of money here.
I had to Western Union him money.
So we were doing this weird thing.
And finally, I just said, hey, listen, it all kind of hit.
I need you to come home.
I called him two days earlier and said if you don't pack your things up right now and head this way, it's over.
I remember getting home from Mexico and I went to her parents' house first.
So I'm coming back from this exhausting, almost traumatic.
I mean, it was me and my dog and all this stuff.
Broke down truck.
And my truck barely made it back.
I mean, there were moments to where I could have not made it back.
And I hear this knock on the door at about 1130 at night.
And my mom answers it.
It's Chip with his backpack.
He has a lasso on it.
He's got all those little things he bought along the way.
A lasso.
A lasso.
And my mom till this day will say when I opened the door I saw the look on his face of embarrassment of.
I know I disappointed.
She saw that look and then immediately wanted to – it's okay.
And I think –
Him coming in the house, sharing the story.
It's like my parents could care less what happened in the weeks before that.
They knew he had a good heart.
And I think from that moment is when my parents really fell in love with him, because he was humble about it.
I messed up.
I'm back.
His intentions were great.
Some mishaps happened and now he's back and we're going to fix it.
I mean young people right, don't always think about practical things when they decide to get married.
But sometimes they do.
And I wonder because you guys got married in 2003.
Did you see in Chip –
Not just a life partner but a business partner?
Did you – like in you, I can imagine that in Joanna you saw this – she has a great head on her shoulders.
She knows how to do accounting and bookkeeping.
She's run her dad's entire business.
Like this is – I am marrying up, right?
And I don't mean to say that you weren't either, but did you see in Chip like – somebody who did you see a spark in him, maybe that other people didn't see that he was going to be able to build something interesting?
I think for the girl who played it safe her whole life.
I was attracted to this guy who did not play it safe but who had a really good heart.
And I feel like, for me and my faith with God, I feel like I'd rather a man of great faith where he trusted in the friendship of God.
He trusted in the nature of God and because of that, he could do anything.
And for me, I had faith, but my faith was a little more calculated.
Like, okay, God, I'll say yes.
When I see the green light turn green three times, you know, like mine was not as faith.
It was more of this religion.
So there's that.
There's a piece to that I was so attracted to that his relationship with God was one that I'd never seen before.
It was real and it was tangible and it was risky.
And I liked that.
Pretty soon after you got married, you started to work together, right?
I mean, you're flipping houses and you're doing this together.
So I have to assume that you're not, at some point you stopped working at the tire shop.
When we, as we're engaged and We're engaged.
And this is when Chip, I had a legal pad just like this, but bigger.
And I like four pages back.
I wrote down all my dreams when I was supposed to be working for my dad.
I was like doodling shop front exteriors and names.
And the dreams go back to the time in New York, like a boutique or something like that.
And I think, as I was bored at my dad's, I was conflicted because I was like I really want to honor my dad, but I also just don't love tires anymore.
You know, I just, I couldn't get into it.
And when Chip saw this and he flipped back, he said I don't understand why you have all these dreams on paper.
Why wouldn't you go for them?
And I was like, why would I go for them?
These are just like, this is my daydreaming.
And this is as we're engaged.
And he is only... coach could do.
I call you coach.
I mean, now we're partners, but still, I feel like he's like my life coach.
He was like, just pick one of those and let's do it.
Let's do it.
And so I got enough of the courage in me to do it and found a building.
And then I went to my dad and I said, dad, I want to buy this building.
I want to start my own business.
I don't want to do the Firestone.
This was like year nine, almost 10.
Heartbreak.
And I said, I'm so sorry.
Even for me, I remember.
And the irony, again, back to the fate or God, all those things mixed into a pot.
I mean, here's a business that already works and sustainable, and it's clearly made a living for your dad and mom.
Why not?
And the fact that you and I looked at that opportunity and kind of equally decided to pass on it is just mind boggling.
It doesn't even make any sense. sure doesn't make sense for you because you really were a big fan.
I could have been the son that your dad never had in that practical way.
And that, that, I think my dad even saw that as the writing on the wall.
Like this is perfect.
He got this entrepreneurial guy my daughter, who knows the business.
This is going to take this thing to the next level.
So when I told him that, I mean I think it was a bit heartbreaking for him, but he also, in that moment of being a good dad, was like I want you to do what you feel called to do.
Describe what you wanted to do in 2003.
What, what did you say it was going to be?
A little home store with like decor candles.
Just wanted a little boutique.
Yeah.
Was there going to be?
I mean, did anybody push back and say you know, Waco is not the right place to do this?
It's not, you're not going to find people who are going to spend that kind of money.
No one pushed back on Waco.
They would push back on me though.
And and and not in, not in a mean way.
Your mom and dad everybody, everybody was like you don't do design.
You, you've never had a store before.
You've only known tires.
Like, are you sure you should do this?
And this is one of my favorite stories about my dad.
Cause now I'm saying this is like year nine and going into almost year 10 of working for my dad at Aspire Stone.
Um, and I say okay dad Hey, I'm going to try to start getting you know used to this.
Like you know, buy and sell goods thing while I'm here.
Can I put product in your coffee, like on your coffee table in your waiting area, and put a tag on it and just see.
And he was like Oh, if people would buy it, as were me and chip are renovating this dumpy little building um.
So i remember one thing i was super proud of i would go to garage sales on the weekend.
I would spray paint stuff, sand it down a little bit and then like bump it up like double the price.
I found this wicker sled.
That was like yay, like you know, two feet and it was five dollars and i thought, oh my.
So I went to Michael's or Hobby Lobby.
This was sad.
This was an embarrassing moment.
This is why everyone was talking me out of it.
Yeah.
I think, okay, I'm going to go buy fake Ivy.
So I fake Ivy the whole sled.
And then I put battery-operated Christmas lights around it.
And I put $25 on it.
And I showed his mom.
I showed his sister.
I showed my family.
I showed my friends.
And every time I chose someone, they all kind of gave the same...
Huh?
Is what they would say.
Not that's beautiful.
So I put it in my dad's waiting area at the Firestone.
I put 25 on it and I was going to show everybody how you can take a 5 thing, put a little money into it, sell it for 25.
Was it like Christmas season?
It had to have been, right?
We were moving into the fall season.
So every day I go in, as I'm working for my dad, I see this sled still there.
I'm like, dang it.
Two weeks later, I walk in.
There's no sleigh.
Sleigh, sled, whatever it was.
And my dad's at the counter, and he hands me an envelope.
It's $25 cash.
And I'm like, what?
And literally at that point I was thinking to myself if I don't sell that damn sled, I'm not doing this business.
This is a sign.
I shouldn't do this.
The day I say that to myself, my dad hands me this envelope, $25 cash.
And I thought, okay, it's a sign.
It's meant to be.
A year later, my dad sells that Firestone to back to corporate.
So now they're running and I'm helping him move out.
And I find that little sled up in the attic.
He had...
But what he doesn't know, it was the right moment in time.
Because if he would not have sold that thing, I would have quit and said, I'm not doing this, Chip.
So when you decide to open that store, how did you even know how to source material?
Where were you going to get the stuff from?
Well, right up the street is Dallas Market, and I learned real quick this cost is 5, and then you sell it for 10 to 12.
And so I was learning this as I was going.
I went to market the first time with my mom, and I had $25,000.
That was my line of credit for inventory.
But the first day at market I remember you know, the lady would look at me and say okay, how many of these do you want?
And I'd say four.
And she, you only want four of these?
And I was like well, I don't know if the customer.
So at the end of that day I remember my mom pulled out.
I got physically sick.
I was so nervous.
Like, I just blew $25,000 in product that I don't even know people like.
I have all this inventory now.
I had her pull over on I-35, and I threw up.
I was so sick physically.
Like...
I am not built.
What am I doing?
And so it's like, it's funny at every mile marker doubt would hit, like, what are you doing?
You're not built for this.
So all that to say that first year was a lot of, I don't feel equipped.
I don't feel like I should be doing this.
I mean, one of the things I regret is not keeping my open sign.
That was an A-frame sign by the road.
Gosh, this was another ugly one.
I don't know which is now open the wicker thing or your first.
So my A-frame sign, I paint a Magnolia and I write the word O-P-E and then the N didn't fit.
So I put the N under it, like literally like a seven-year-old write a letter.
And so you look at this A-frame sign, it says now open N at the bottom.
I mean, what just some of these things I'm like, how did, how are we here?
Oh my gosh.
When we come back in just a moment, the store finally opens and Chip and Joanna tackle their biggest construction project yet, which looks great on paper until the housing crisis hits.
Stay with us.
I'm Guy Raz and you're listening to How I Built This.
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Hey, welcome back to How I Built This.
I'm Guy Raz.
So it's 2003, and Joanna is about to open her very first home design store in Waco.
And well, She looked me square in the eye and I feel like your parents were with us and she said nobody is going to come to this.
Like, I'm going to open this, and I'm essentially going to be embarrassed.
And I just kept going, going like we don't know you know we.
Why don't we assume the best you know?
Let's we could go the other direction.
And we opened that thing at like nine o'clock in the morning.
And I'm telling you, if there's a BMW in Waco, Texas, it was at that grand opening.
There was 30 cars in the Mercedes BMW.
I'm like, what, who are these people?
And this is at, 10 a.m., they all pull in at the same time.
And the reason they pull in was not because of my now open sign.
It was because of the Magnolia sign that Chip had surprised me with a week earlier that went on the building where he went to a junkyard and bought all these old channel letters and put together the word Magnolia.
And everyone said, we just love that sign.
We're trying to figure out what's in here.
Those 10 women that were doctor's wives, attorneys.
They come in and I feel like bought everything in that one day.
And that was what I needed.
Not that they came in every day, but that one day of like, if you build it, they will come.
They sure came.
They spent money.
I did the math on the utilities and, you know, my payment to the bank, all the thing.
And I had to make $250 a day.
So I just told ship, if we make $250 a day, we can stay in business.
I remember that first day we did about 2800 and Now again.
I didn't do 2800 every day, but what I found is, in those ebbs and flows I would sit there.
There were some days where no one would come in at all.
It was kind of located in a weird spot.
But what I was learning because of those three hard years of not knowing what I was doing, that was my college.
This was my degree.
Do you feel like you had just an intuitive sense of what was nice?
I mean, how did you know?
No.
No.
Well, I want to counter that because this is true about Joe and she's always been this way.
If you gave Joe 15 bucks, she would go out and read your mail and she would find you exact.
You would find some little $15 trinket that meant nothing to anybody.
And somehow it would speak to you in this really profound way.
And Joe has always had that awesome gift.
You feel like it wasn't intuitive.
Well, I feel like that I do because it's like I try to figure out your story and that feels different.
What I think as far as intuitive is like what looks good versus what doesn't look good.
Those days I was guessing.
So you're saying you didn't have great taste at the beginning of all of this.
I did not have.
And I am not just saying that.
I did not have great taste.
The store, so meantime, you are focused on flipping, right?
On flipping.
Yeah.
And at what point, and you're running the shop, right?
And at what point were you sort of getting in like giving Chip advice on how to make a house look nice?
Like, again, you're not, you weren't an interior designer.
You weren't like an apprentice to an interior designer.
You look just like Chip.
You weren't an apprentice to a construction worker.
Did you start to do that pretty early on?
I think about year two of being in the shop.
Women would ask me to come into their homes and help them design a mantle, design a tablescape for Thanksgiving.
Again.
Every time I said yes, I would learn something new, even though in my mind I was like I don't belong here.
And then all of a sudden, something unlocked for me which is like it's going to look different in every home.
And if you play to the home story and the family story, you can make a really beautiful thing.
And so the tricky thing about what Chip was doing is he was flipping houses.
There's no story of family, but there's a lot of story of the home.
And so that's what I think we worked together on.
I think for us together, that's where the magic hit.
And we were both just having fun in the space.
Did you...
Do you remember trying things in the early days and then looking at it and saying wow, this looks terrible.
Or were you already starting to put the pieces together?
I think we tried and failed is the answer to that question.
We tried and failed, but people were still buying the properties.
Right.
And so I do think that there was an element of success that kept me feeling like OK at every level.
I'm upgrading a bit.
And then it became kind of became this cool thing of like.
About year three I had my second baby and there was something instinctively in me to just shut the shop down.
I could not hold two kids on the hip.
It was too hard.
There wasn't enough duct tape to wrap these babies around.
I felt like I was letting go of my dream.
I remember that was sort of one of those moments for you.
It was a God moment where I was like, if I let this go, is it gone forever?
And I remember, I'll never forget.
As I was turning the key for the last time, as I locked the door on the last day I was open, I felt like God said it's going to come back in a way, bigger way, because of your trust.
Just trust me.
And so that's where I started looking at the plans from home saying hey, what if we add a beam here?
And so that's how we really started to partner together is I'm now at home.
I'm not at the shop.
We're partnering on these projects.
We're taking the kids with us.
And now this becomes like our new business was Magnolia Homes, which is now we renovate.
And again, like you are – I mean you've got this great business.
You're buying homes, renovating them, flipping them.
Now this is becoming a thing, right?
This is like 2006, 2007.
Property values all over the country are skyrocketing.
Totally.
Now we know it was a bubble happening.
Totally.
We didn't know it at the time.
And you had been in that business for a long time.
And so presumably taking on more risks because it makes sense.
And then the financial crisis hits.
Totally.
Yeah.
I mean, I have to imagine you guys get hit pretty hard.
Yeah.
We were over our skis.
We were knee deep in a develop.
We've never done a development before.
We always did one house kind of one or two at a time.
And we found six acres of land and chip had this vision of doing 38 patio homes.
We're called a pocket community.
I was so excited.
And so it looks like a dreamy little neighborhood with big magnolia trees, 38 houses, all 1500 square feet ish, you know, And we were doing big, big real projects.
I mean we kind of stepped out of sort of an entry-level flip kind of construction company to where we were doing renovations that were hundreds of thousands of dollars for houses that were nice houses.
So we're doing this development, streets, curbs, and gutters, and...
It hits.
And so that was a rough three to four years of just every day was like Dewey.
Is this when we do the bankruptcy thing?
And you had four kids in a five-year period.
Four kids.
At one point, four and under.
Like, I think three of them were still in diapers.
Babies.
We were in trouble doing that, trying to keep this, and then also doing renovations, and doing everything just hit at once.
But again, because of our naivety, it was like, we didn't even know that you could file bankruptcy.
So that really wasn't on the table because we didn't know anything about it.
Everybody was being super gracious because we weren't the only people going through this.
And again, If we're the dirt bags that are always screwing everybody, I'm sure everybody would have locked us out and that would have been the end of it.
But they always knew we were trying, and we owed somebody $500, and we'd give them $100.
And then we'd owe somebody $5,000, and we'd give them $1,000.
And we just kind of kept sort of stair-stepping, making the best of these worst-case scenarios.
And again, it was exhausting.
I wish I could say it was six months, and it was this lesson learned, and that was the end of it.
Yeah.
Years of doing this, just virtual bankruptcy.
We were always broke.
We were always begging people for one more minute, one more day.
Is that because you were over leveraged?
Like you had too much, like you would purchase too much property at too high of a price, and then the crisis hit.
Not really.
We were always pretty conservative in that way.
So all of our properties were in good shape.
So we had lots of equity in several properties which really, even as you're describing it, that simply that's probably what saved us.
We probably were refinancing some of these pretty good bets that we had had for now going on nearly a decade.
But it was just this bank development note.
And I mean, I remember it like it was yesterday because again- How much was it?
It was $500,000 to do the infrastructure on this- And that loan was-
So we basically had gotten to, I'm speculating on this part.
I remember the amount, which was 500,000.
So we had gotten this line of credit for $500,000.
We probably had $300,000 worth of that line of credit. in the dirt.
So in infrastructure, streets were in, you know, curbs and gutters, no buildings.
A lot of electrical stuff was already preemptive.
Yeah.
But there was not a single house.
And, and I remember, the bank called and they said listen man this, this note has basically been decreased by 50.
So we were at like a $250,000 cap of which we had $300,000 already implemented.
I mean, done.
And we need this obviously couple hundred thousand to get it across the finish line.
But we didn't have long.
I mean, six months, something like this at that moment.
So what did you do?
Yeah, I can't even remember exactly how it played out, other than I remember that Joe and I were literally like we have got to finish this development, because if we get it across the finish line and that's all the fundamental stuff then start building houses.
Maybe just maybe we get out of here alive.
Go ahead.
I'm just thinking you're a young couple.
You've got four young kids.
I mean, and- a business that looks like it could collapse if... And it really was collapsing.
It wasn't like it could and might.
It was collapsing.
But I just remember Joe and I just had this epiphany in our marriage.
Because again, it was pretty early in our marriage in that sense.
We kind of we kind of envision it sort of like a tug of war, to where she and I are always tugging against one another.
And then there's a problem or an issue, you know, we're just kind of all every man for himself.
It feels like in those moments, but if we could ever get aligned and pull against the thing that we're trying to overcome and literally align and and and, almost like swear to God, we're going to align on this pinky promise.
Let's be together.
We noticed this sort of energy.
It was like this one plus one started equaling 10, and It wasn't, you know, always easy, but we just decided to stop sort of bickering at each other and nipping at each other's heels and instead just support one another wholly.
And I think we started just getting creative.
Chip would sell some things.
He would.
I started doing these home shows where, Because I still had my vendor contacts, so I would buy about 12000 to 15000 of inventory, put it in the house that we were doing and tell everyone come look at our newest remodel and have a one-day show and sell 25000 to 30000 of product in that home.
Well, then that would then pay off something.
So we just started getting scrappy.
We started getting creative.
And I feel like that's just where we don't wish that upon ourselves.
But in those moments we saw things differently because we were going to quit.
And you were living in a lot of the, I mean, you lived in nine houses in the first 10 years.
So you were living in the house that you were renovating, raising kids, doing demo work, you know right.
Like some of the parts of the house are like plastic sheeting.
Yeah.
To protect the kids from the dust.
And then you'd move to the next house and you'd do the same thing.
And by move, it was because we couldn't afford boxes.
It was putting everything in trash bags on the back of Chip's trailer.
You could always see, oh, the gains are moving again.
It could be a trailer with just trash bags.
All of our clothes.
I mean, it was a show, for sure.
We were the Waco hillbillies, for sure.
I mean, on one level that's a really practical way to like run a business right you're going to live in the place where you're renovating and then you move to the next place.
On another level, you can look at it like from from an outsider's perspective and you know you could have looked at your family and thought, you know they're not giving their kids any stability, they're just constantly moving like that's true.
Yeah, was any part of you i don't know worried about that about, about living that way?
We didn't have friends that had really made it and that were at the country club looking at us like what are y'all doing?
It was pretty much just you and I And my parents and her parents both had very similar circumstances to where they had very tight seasons of their lives.
We know the feeling.
And we didn't have really any external mirror to look against and say, oh my gosh, we're really failing even the kids, to your point.
The stability piece, I think, is interesting.
But when I think about, when I look back to pictures of us when we finally moved to our 10th house, which was the farm, The kids were about five, six and under.
So even the resilience of kids at that age, they were just always along for the ride with us.
They had no option.
I just remember car seats.
We're always driving around.
We're always at projects.
We almost felt like pioneers.
I mean, you think about pioneers literally hauling their families across looking for a better life.
You can't explain it.
But I will say what evolved out of that journey was...
We were living in this dream home of mine in this historic part of Waco, Castle Heights.
And when all this hit, we were like, okay, we have to start choosing.
So I had just finished decorating and designing that big house that we loved.
It was like a model home.
It was a dream of a place.
And then we move into this thing that just had no character, no story.
It was a house from the 80s.
Um, but I started tweaking everything about that house.
So my kids would be happy and my kids would feel seen and they would feel like they could live in this house.
And that's honestly where the epiphany came.
For me with design is like don't ever design for pretty, design for the people that are living in the house.
So it's practical and make it pretty if you want.
But for me, I think it was. seeing my kids thrive in that space.
That wasn't the beautiful house in castle Heights.
It was just like, you had that one room that was almost like this arts and crafts room.
Yeah.
So even though we were kind of dying on the vine and not sure if we were going to make it my, I feel like my kids felt for the first time at home somewhere.
By 2011, 2012-ish.
You've pulled out of this crisis and the business is stable and you've got – you're sort of a robust business supporting your family.
At that moment in your lives, right?
It's not that long ago.
Was any – could any part of you have imagined – what was going to happen to your lives.
No way.
You were in Waco.
Obviously you had a reputation with your design.
I, you were the local magazine and people would come to your houses that you flip to see them.
And it was cool.
The store I mean, the story of which is which is well known by people who know a little bit about you is that you write, you start to write a blog and put photos up and that gets noticed by a production company that is doing reality TV shows.
This is like now the sort of the really the boom time of reality TV.
And they reach out to you and say, hey, we'd be interested in meeting with you.
They didn't know, I mean, they didn't know what you would be like on camera.
They certainly didn't know about your husband.
And what was your reaction?
What do you remember thinking?
I thought it was a scam.
This is going to be some kind of a.
You've got to pay somebody 5000 and they're going to come down and produce some nonsensical thing.
Joe was telling me about this.
I was like, baby, you can do it if you want.
He said, don't call her back.
And she called on my cell phone and was like hey, what do you think about us just coming for a day and just filming what you do a day in the life?
And I said, okay.
And so I told Chip, I was like, Chip, this could be kind of fun.
And he said, don't call her back.
It's a scam.
I remember sitting on the couch going. should I listen to him?
Even now again, as a 50-year-old that prides himself, there's been several moments through all of this to where somebody had to see into the future and make a bet or make a prediction on that future.
I'm so thankful for Joe.
When they came and they filmed you and then they sort of came to you and said hey, we think this could be something.
Did either of you think...
A show based on us renovating houses?
Like, how are we going to, why are people going to be interested in that?
100%.
Was that?
I think we thought.
That was exactly the way we felt.
Oh, wow.
People in Waco are going to get to see our work on television.
Central Texas.
Never thought.
My grandma.
But did you even ask them, like, how do you turn that into a TV show?
Yeah, the whole thing.
We didn't know anything about anything.
We didn't have a TV.
We didn't watch reality television.
Even as they captured us via these, you know, cameras, we were just like, what is this?
What is this going to be about?
And back to the point I think you were alluding to, I would be the secret weapon.
Thank God for me because I've got the gift of gab.
I didn't know, of course, because how could you know?
You've never been on television.
You didn't know anything about television.
I have an actual phobia of cameras.
Oh, really?
Not modern day.
Modern day, I've worked it out.
So you were not comfortable?
The least comfortable.
He turned into a totally different, when I watched him, I was like, what is, he would sweat.
He would, he couldn't get his words out.
He couldn't breathe.
Well, they would turn the thing on.
And so there was a red dot above the camera and you're laughing and I would see that for, And it would just terrify me.
A and B.
I need like immediate affirmation.
I need that sort of interaction where, when you're looking at a camera and saying something funny and nothing happens as a result of that, then I get in my head going, oh gosh, that didn't land.
That wasn't funny.
I need more of this.
I need less this.
And I just, I became the guy that like, what do you do with your hands?
I didn't know where to put my hands.
If I put my hands in a weird place.
That was weird.
I would always like protect my genitalia as if somebody was going to throw a soccer ball at my nuts.
So day one, he removed himself from that side of the camera.
I was terrified.
And then I stepped up because I was like well, this poor company is here and one of us have to talk.
I remember little Duke, who's now our middle child at the time.
He was our third out of four.
And so this middle kid that was literally a toddler was just holding on to Joanna's leg.
And as she would walk around the kitchen trying to describe what was happening, she was literally kind of limping with this kid that was literally, you know, hanging on her foot and she was moving around as if he was like this ankle weight or something like this.
I i mean, i've seen obviously many episodes.
In that first episode you've got the, you know you're doing the demo work and you're tearing down that wall and like you're in the top of that, that Almost like the electrical wires are coming down and stuff.
Did you have a sense that it would be – I mean, it was picked up.
HGTV orders based on the pilot, I think a season, 12 episodes.
I mean, what did you think at that point?
Did you think – did you have a sense of how successful it would be?
Did you know where it was going to go?
I think we were still – we were so naive that we didn't know –
I think if anything, we thought, oh, this will secure another, hopefully, 12 jobs for us.
For us, it was on the business side of, oh, we'll have 12 more renovations.
It was never about the TV side of the business.
It was always, what is this TV show going to enable us to do on the business side of it?
So we were always laser focused on the business part.
I think it premiered in 2014, season one.
When did you first realize that this was... bigger than you realized or than you imagined.
I mean, I mean, you're in Waco, you're doing your job, but you're being followed around by a camera.
And then it, you know, there's always obviously some production work.
This was a season or two.
Yeah.
It wasn't straight out.
After the first season, we said, yes, we did a home show in San Antonio.
Gosh, $2,500 speaking engagement.
And I was like, Oh, we're doing this.
Let's do it.
We went to this thing and there were two or three other types of us that we actually kind of knew about.
Generally speaking, we're like, Oh, I know that guy.
We were kind of awestruck by these other characters.
Who were also on TV shows, HTV.
I guess, yeah.
But when we stepped out.
Oh, yeah.
We looked and had no, like, really thought maybe 30 people.
Thousands and thousands and thousands of people were there for us.
Way in the back.
And we would leave and there would be...
15 or 30 or 50 for all the other alternatives.
And I don't want to overstate that because I'm not trying to.
But you were shocked at the number of people who came to.
The meet and greet hours.
You did not know.
You didn't realize that you were having that kind of impact.
I could not believe that many people would come to a home show.
And these people that were running this thing came to us at the end of this meet and greet and they were like we are so sorry.
We should have had a better strategy.
We had no idea it was going to be like this.
And I think that's honestly when people say what separated us or why did the show become so relevant to so many people?
I think it was just that we really do this for a living.
You know, we did this for a living.
We do this for a living.
We really are married.
We really have these kids.
I mean, you know, there was nothing artificial about it.
And I think something about that really spoke to the audience, spoke to the moment, you know.
Whether or not you liked it, you're becoming television stars.
Totally.
Which is not was not on your bingo card in 2012.
But you are still grinding, running a business.
It was a weird thing for us to try to navigate production and our business.
And those two things were always um at odds, because when you're doing a real project, which we were doing, this was not a made up thing with made up clients.
It was a real project.
We were indebted to that client, the timeline, all the things.
Well, now you have production step in and it's like, okay, we need to expedite that.
So if this is a six month project, we need it done in eight weeks.
We need it done in 12 weeks.
That times 12, puts a pressure on your business like nothing else.
And then we look back in the rear view mirror and we're like, we don't know how we made it.
And maybe that's why we don't remember much, because it was such, there was so much that we were juggling at the time.
We were doing these renovations for the show that were in this expedited timeline.
We were doing renovations outside the show and we were still trying to finish that dang development.
Maybe we were done by then.
I don't even know.
I feel like that was always with us.
Always a part of it.
Yeah.
Your lives were now on television.
So people start, as they come to Waco Texas, to maybe to see you guys.
Just wanted to see you at your desk or at your office.
And then you had people saying, Hey, I need this job finished.
Right.
Um, I mean there must've been.
I mean maybe it was all a blur, but it must've been.
It was a blur, but I will say there were not enough hours in the day.
I mean, we look back and I think we were running at 18 to 20 hour work.
We were kind of already doing that.
What's so weird is like before all this hit, we were already navigating life with too much on our plate, a lot of kids and just always just pushing forward and going.
And I felt like it didn't feel like much more.
It was now that I look back, but really it was just like, this is what we're good at.
We're good at juggling things.
We're good at keeping our family close.
We're We were just being very selective at what we said yes to, what we said no to.
But we were also, to be completely honest, having a lot of fun.
So I think for us, we surround ourselves with our dear friends.
They were doing business with us.
I mean, we were doing this with the people we loved.
We really found great people.
And I think that that was the secret sauce.
As I look back in the rear view mirror of it all, none of them were all that great at the literal thing that we had hired them to do.
They just had never been trained for it.
Nobody was a warehouse manager.
Prior to us and this relationship.
But we had these people that adored us, that were like, if you need me to figure out that warehouse, I'm going to figure out that warehouse.
And they kind of did, you know?
And so in that way, I would say the thing we didn't do great was that we didn't ever ask for help.
We never asked for money.
We never went through the private equity piece of this.
Had we gotten tens of millions of dollars earlier, the downside would have been somebody would have owned 50 of our business.
That would have been true, and we could have done that.
The upside would have been we would have been able to build this much more efficiently and much quicker.
And so we look back and wonder you know?
We know that that was a good decision not to have done that piece.
So that part is true, but it was just like it took us.
Every dollar we made we reinvested into this business.
So even though we were making millions and millions of dollars and we used to make hundreds of thousands of dollars, so this wasn't a little bit of an upgrade financially.
This was a massive upgrade financially.
A lot of people don't realize that most, most people in reality shows don't actually get a lot of money, get paid a lot of money.
Right.
That's true.
And and certainly documentaries.
Now, this may be different because this is a massive show and probably over time.
It really wasn't all that different.
I mean, we made money from the TV side of this business, but everything else dwarfed that.
And that honestly became again all these conflicts that were brewing, because our production company cared about the television and the production industry elements and you cared about the clients and the business and the project and it had to be done.
Right, all these things were complicated, it was nobody's fault like we.
We never sued our production company, our production company never sued us and we look back in the rearview mirror and we're like thankful for for that production company.
But but it was.
We thought we were all pulling in the same direction and we found out soon after that we were.
In fact there were two different objectives, priorities are different.
Right, because you guys have a business and you, The production company is a show that they want to make a hit.
100%, yeah.
And they want more of your time, and you can only give a limited amount of your time.
100%.
And the cart was out of whack in the sense that which came, you know, the cart before the horse.
But that's what's beautiful about success.
You know, as we continue to be more and more successful the production company – became less and less powerful in that relationship.
And we didn't know that.
I mean, you talk about bluffing through all of these experiences.
We didn't know that they were not the boss of us, because nobody sits you down and says hey, this is an incredible success.
You guys are doing great.
Here's these things.
They almost want to hold that from you to some extent.
How did you know?
When did you start to think, you know, This could be bigger.
We could have a media company.
We could have a whole line of products, which is going to come later.
But was there a conversation or a grand strategy, or did that all just kind of happen over time in the way it happened?
We didn't have a strategy.
I knew I had a dream.
I had a dream of one day I'd love to partner with Target.
I also love retail.
That's what I started at in 2003.
So I knew I wanted that to be something that was like the main thing of our brand.
I thought oh, I want it to go back to the roots, which was home decor candles, all the things that you fill your house with.
I think those are the two dreams I quietly had in my heart.
We found out really quickly and again thank God that the construction business was the means to the end.
I mean, the other things were the much bigger opportunities.
I thought, as it related to this show- You thought you were gonna be developing properties- 100%.
Buildings and- I would tell Joe things like our pillow talk started consisting of, Joe, you watch.
I'm gonna be the largest home builder in Waco, Texas by the time this is done.
But it turns out that that wasn't not gonna be the core of your business at all.
It was going to be about- designed about products, about Our construction company.
Modern day, we still have a construction company and it's exactly as big as the construction company that this all started with.
I've got the same 12 guys.
We do about the same 12 to 18, 24 projects a year.
I mean we haven't gotten any bigger and we hadn't gotten any smaller from the very beginning, but everything else in every other category that she heads has dwarfed that little construction company by 10X or more.
And that was just totally unanticipated.
Totally unanticipated.
When we come back, in just a moment, one of the most powerful dealmakers in TV pays a visit to Waco Texas.
Stay with us.
I'm Guy Raz, and you're listening to How I Built This.
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Hey, welcome back to How I Built This.
I'm Guy Raz.
So by 2016, Chip and Joe have grown Magnolia way beyond home construction.
They've launched a magazine, published their first book, put out a line of furniture and home decor and paint, and they've just opened The Silos, a gathering space in the heart of Waco.
I think the vision even of the silos at the time was how do we create an experience for a guest that creates a moment for them to pause, to have a meaningful moment with their family?
And so when you see the silos now, you see those setups, like everywhere where there's nice moments to pause.
Yes, there's a retail store there and some cottages that have shops.
But at the end of the day, we love seeing people just on the lawn lingering.
Yeah, and i and i think with the silos.
I want to talk about the silos for a moment, because this is a.
I visited there earlier today.
It's an amazing property.
It's literally two giant cotton seed oil silos that are disused and i guess most of it was a parking lot and dirt.
You bought it.
You've renovated it.
It's a beautiful space with shops and cafes and a wiffle ball field and just places for people to hang out and food trucks.
And the thing that struck me when I was there was when I was younger.
Waco, Texas was associated with the Branch Davidians and David Koresh, and that horrible thing that happens.
Most young people don't even know what that is today.
Now, if you ask the average person about Waco, they would say Magnolia.
I mean, tourists come from even overseas.
I think about the idea that we have inadvertently rebranded a city and it means a lot to us because you know i joked about this and i really am being facetious.
But we were in a thing in new york and and the lady said something about if you can make it new york, you can make it anywhere, and i just kind of like hilariously and quickly quit.
I was like I'd like to counter that thought, which is, if you can make it in Waco Texas, you can make it anywhere.
Because if you're in New York, you got all the money in the world at your disposal.
You got all the resources available from an academic standpoint.
Oh, my gosh.
And the media and all the things, etc.
We didn't have any of that going for us in Waco.
And yet and still.
We had opposite of that.
We had a real negative persona.
And yet people would come from Alaska, come from Tennessee, come from Dallas or Houston or Austin great cities in their own right and come to Waco Texas, and be like wow, this isn't at all what I expected.
That, coupled with the magazine, coupled with our television show, it started.
It almost immediately became very clear that something extremely unique was occurring.
But I guess my biggest insecurity is you keep alluding to was there this grandiose plan, this big idea?
And sadly, I'm just like, this stuff was just happening.
I don't think sadly.
I don't think it is sadly.
To me, that was like... But why do you say not sad?
Because I will say I've got a big chip on my shoulder and I would love to remove it.
But when I think about the Mark Cubans of the world and the Elon Musk, it's like they had these beautiful plans.
They executed these things perfectly.
I feel like...
There was more luck mixed into this than I would like to admit.
No, Mark Cuban started as a bartender, and then he got into selling computers and then eventually started this business Broadcastcom, which he then was able to sell to Yahoo and sold his stock in time.
He could not have planned that out.
I see.
So he would argue like us, these things were not preempted.
I mean, he wanted to be successful for sure.
He was ambitious, but- you can't architect it out.
So I mean, as you become more famous, there's more scrutiny and people start to look at you, know even where you go to church and oh, the pastor said this and must reflect on.
So all of these things, all of the, The things that are personal for most people, that you don't – that aren't public.
I have an argument with my wife.
I love my wife.
We've been together for 20 years, but we had an argument two days ago.
That's not public, right?
It's in our house.
But now because you're so visible, it changes.
It means that the scrutiny is different.
How did you –
How did you begin to – and maybe it's still hard sometimes when you see things that are critical or that are – accuse you of saying or believing something or being the kind of person that you don't recognize in yourself?
How do you manage that?
I think in the beginning when it hit, it was like a – it was such a surprise to us.
Like, wait, what?
Like, you know, you don't even realize like –
People care about like what's happening right now.
And so when the first one hit, I mean, I remember thinking, man, I hate being misunderstood.
But I also felt this.
This was in like 2016.
It was a BuzzFeed article about the church that you're members of and that the allegation was it was anti-LGBT and all the – and so this became kind of a – personal beliefs that no one knows.
No one, no one sat with us, and even Joanna, because she spoke to this a little bit earlier, but she just remembers that little girl and and sort of being less than to someone, being a little bit other, and she has always just had an enormous heart for for communities that feel that kind of way, because she can understand what it feels like to walk into a lunchroom and feel like all eyes on you.
And for that to be misconstrued and for Jo to really feel like and again, Jo has dear friends that are in the LBGTQ community and she just didn't love the fact that it was very difficult for her to try to articulate to the world actually who she was and what she stands for.
So I can spend time over there arguing or even trying to be understood for even a second.
But then that takes away from my actual job, which I feel like is to find beauty, to highlight that.
Because you're never going to win there.
And I think...
Again, we are complicated humans.
We're all complicated.
So to just peg me as a this or to peg someone as a that is just like come on, we're way more complex.
It's interesting because I think when we are, when you are, when somebody is the target of these things, it becomes amplified in your mind, right?
Like, and the irony is there was that story in 2016.
Then there's been a recent story where you had a same sex.
Six couple on one of your shows.
And some evangelicals and Christians were upset with you because you are Christians.
But it's interesting because overall, the overarching brand, like 99% of people who come to Waco to come to the silos or who are fans, you know, my sister-in-law who happens to be Korean is a massive fan.
Wow.
Those things don't matter.
Those controversies.
They matter to a tiny number of people, but their voices can never really amplify it.
It does feel like that.
Tens of thousands of people in a moment can feel like the entire world.
It can.
And really, and to your point, and I think we've learned a little bit about that.
The fact that the BuzzFeed thing started it out with us and that we got categorized as sort of like anti-LBGTQ, and how inaccurate that was.
And then to flip the script.
And now we've had a couple on one of our shows that we executive produced that was in the community.
And now we're being rebuked.
Now we're being rebuked by the Christians that we adore and love and have grown up with in so many ways.
And then it's just like, y'all, we're not going to be all things to all people.
We're just not.
And we don't want to be, and we're okay with not being.
What we really prefer is a big, huge table with lots and lots of people with lots of diverse opinions.
And we all get better as a result of those conversations.
But yeah, when I think about all of that, it's like here, here's the issues that sometimes you know that come up.
And I, and I think about the result of being, what's the word added, whatever, like you're like, we're going to come at you is if I were to talk to a therapist, I don't know.
I don't go to.
I probably should go to a therapist, but if I were, I wonder if some of the top issues are this feeling of abandonment and shame.
Like if there's a top five fear, I don't want to feel abandoned and I don't want to feel shame.
And if, for a second, we feel that we feel like, oh no, they're abandoning us or we should be shamed right now?
And if I feel that and then I take that to another layer of a people group and then they feel abandoned by the church or they feel shame.
It's like the God I serve is the opposite.
He brings you in and he invites you in with his love.
And so if it is a feeling of abandonment or shame, then that's not what I want to be a part of.
I want to.
I want to ask you about a decision you made in in 2018 to end your the you know fixed rep at that time, to stop making that show.
A lot of people were, you know, sad because the show was averaging like 19 million viewers a week.
From your perspective, I mean, I understand the dynamics were tricky because you're a production company, that one thing, and you guys were moving in a different direction.
But was a part of you scared or worried that by not doing the show every year your business might suffer, your brand might suffer?
Were they considerations that ever occurred? you ever had that crossed your mind?
I sought sincere counsel to that exact question.
And I would say it was unanimous that if you leave this television show, all of these things that you've burnt are going to cease to exist.
But that's what I love about my experience before that, which was I want to stay home with my two babies.
I'm going to shut the shop down.
And I felt like God had said, this will come back in a bigger way just because of your act of faith.
It comes back.
We are now in the silos.
We have a show, all this stuff.
And even though everyone was saying, don't shut it down.
If you shut it down, no one's going to know you.
You're going to be out of people's minds.
Your business is going to suffer.
Everybody's going to buy your stuff.
But I felt, we felt the confidence that we've seen this before.
When you let something go, it doesn't mean that may go away, but it doesn't mean.
It just means something.
You feel in your heart it's time to stop something.
Yeah.
And you move forward with that.
There's something good that comes from that, even in that no.
But I would say that those risks that we made along the way, those bets that we made on ourselves, that it was like we're going to trust, that we believe that we're supposed to stop moving forward with the show fixer-upper.
I mean, it allowed us to do much better, greater things, but we would have never known that at the moment and truly we stopped, we took a year off, we didn't do any meeting.
We didn't even want to see.
No, nothing.
We were done, no real even meetings with anybody about what was quote-unquote.
Next, you know there's been several iterations, kind of rumors like you're describing, of like what exactly, and that we knew that david zasloff and we were going to do this network together.
Did not know, did i ever dream of a network?
No, did we never dreamed?
This was David Zaslav who runs Discovery.
He came to Waco.
You didn't have ownership over your own show.
Right.
And now you have an opportunity to own something.
And every other conversation we had was, hey, will you and Chip do a show for X, Y, or Z?
And for us, we were like, we're not sure we want to do a show again.
When we sat down with David, he's like, what do you want to do?
What do you love?
And so I remember we were saying we love the magazine because we can highlight other people's stories.
We love that.
And then he... started brainstorming about this idea of a network.
He said he and Oprah had done it maybe 10 years prior.
And obviously the own network, Oprah Winfrey network came of that relationship between he and Oprah.
And he kind of laid out a bit of a roadmap that would be some similar version to where we would essentially take over a network.
We didn't know at the time, but it ended up being the DIY network.
And we rebranded that the Magnolia network.
And that was a a bit of a collaboration between me, Joanna, and David just on the fly.
He was like, it seems to me that you guys love the business of television.
You just don't necessarily love the being on television part.
And he introduced us to a whole new universe that we honestly didn't even know existed.
You become, at this point, owners, finally, of your own on-screen personas.
Sure.
Back to my point before, when the production company was sort of the boss of us, we just felt always like we knew that it was misaligned, but we didn't know how or why.
Where this felt like the alignment finally got correct and we felt just extremely powerful.
I mean even the idea of being able to go and find shows that we're passionate about, that we want to showcase and highlight.
I mean, it felt exciting.
How do you decide – I mean, now you've got all of these many different businesses, right?
There's the – you're still flipping houses sort of- Sure.
Yeah.
Which is a smaller part of your business.
But how do you decide which businesses to do?
I mean, because the most valuable thing you have is your time, and your time is limited.
Totally.
Right?
And the demands are intense, right?
So, for example, if there is a project you decide to do and within two years it's not, it might be really fun, but it's actually not making any money.
Would you continue to do it?
Probably not.
I mean honestly.
For us, you know, the fun part is is making money, you know, and and figuring out businesses that make sense and that have the opportunity to scale.
And when they don't, they don't, and that's all right, you know, but we usually gravitate away from those businesses.
Oh, but I mean.
A good example is the silos, which I visited.
Is a beautiful space.
You can imagine, you know, on a saturday it's jammed.
But to maintain that place is is just to make it so beautiful.
To keep it beautiful costs a lot.
You could spend all of your time um, you know, having the, the chip and joanna gaines paint line and which could be, you know, a business that is a hundred times bigger than than that.
Yeah, totally.
That's right.
Yeah.
But the silos clearly is something you're passionate about and you love.
That's totally true.
Yeah.
But I would say if it didn't make money and it wasn't viable, I don't think we would do it forever.
I mean, I don't think we do it forever, but we also get the, how everything plays together.
There is a reason we do this.
And so the silos is a place that we see people come together and we love that.
That's a, thing that we can host.
And so that feels like an honor.
So last year kind of had this like weird epiphany that food is the easiest way to connect with people.
And if we feel like right now culturally connection is missing and people miss each other, they miss that connection.
We can focus a lot on the retail side on selling a candle, or we can focus here around food and getting people around the table.
And I think Instinctively, we felt like we want to grow food.
And this is the first time you're doing – I mean, obviously you have cupcakes and baked goods at the silos, but you are rolling out cookies and banana bread and – Biscuits.
Biscuits.
Yes, cinnamon rolls.
Nationally.
Yes.
Chocolate chip cookies.
In the frozen section.
Is it with –
It's going to be exclusively with Target for a year.
And so I feel like, with that it's just, it's crazy, because you know, we've written, I've written a design book Homebody, and then the cookbook.
More people.
We thought Homebody was going to sell.
Outsell Homebody um any of the books cause it's design and that's how people know me.
But the cookbooks proved otherwise.
And I think, because that there's a thing there that gets you, it's more attainable, where I think design in a lot of ways can be aspirational, can be intimidating, inspirational and intimidating.
Following a recipe is possible.
Hey, I can at least try this.
Right.
And so I'm in a nostalgic season of my life as my kids are going off to college.
For me, Being in the kitchen, it grounds me.
And I think the idea that all the work and effort I'm putting into it for that in moment at the table, it's like something I just feel more than ever because my kids are getting older.
Those times are limited now with all the kids driving and in sports.
And I don't think we know this in our 30s and 40s.
I wonder if that's true.
Maybe some people are insightful enough.
But at 50 that I've experienced this year for the first time, it's like this...
I don't know.
I notice these things that you're describing more clearly now than I ever have before, in the sense that we don't have all the time in the world and time is not infinite.
You know, it's fleeting.
And I would just say we've become super particular about how we say yes.
And I don't think we felt that particular or restrictive in our 40s or 30s before that.
But when you look out 10 years from now, Where do you see the business going?
I mean it's already – you've got a TV network that you're owners in, and the magazine and the shops and the line with Target and the new food line.
I mean the possibility – and you probably pitched all the time.
Hey you guys, let's do a Chip and Joanna prefab homes or Magnolia prefabricated homes that you just built in a factory and are put on.
Totally.
What do you imagine this will be in 10 years?
I mean, do you want it?
Do you want to be bigger and bigger and bigger?
Is that in the cards?
I mean, I think if we're kind of in the daydreaming stage now and I think about you visited the silos today take the very best pieces of that.
So not all of it, but the very best pieces.
And how do we take that to other places?
There's a lot of places that we're always surprised because it's like these consistent cities.
And we're like, what if we...
Nashville, Salt Lake.
Yeah, we've got these cities that just seem like our people, you know.
So I think the dream is again.
I mean Chip and I.
I mean we've been doing this now for almost 25 years.
We've never taken a break.
And it hit us last year.
Like we both physically felt it where we couldn't see past it. right here.
We couldn't see vision.
Our team was asking what's next.
We were like, what do you mean what's next?
What about what's all here?
Why does there have to be a next?
We were like offended by it for some reason.
I hate that question.
I just asked you that question.
I hate that question people ask me.
But now we're in a healthy stage where I like love to dream.
But last year, Chip was like, he called it and was like, we're going to take three months off.
And in that three months, I think we regrounded ourselves in why we do this.
What we're doing is creating these moments and memories not only with our team and our family, but with also the guests and the readers and the viewers.
And then when you ground yourself in that, then you can start seeing vision for what's next.
Now it's like so many things we're dreaming about.
And we're like, okay, now we're probably scaring the team.
They're like, oh crap, we woke them up.
So who knows?
Or not.
Or we just perfect what we have here.
We always mess with that or not thought.
Is it, would we be satisfied if this were it?
And we keep coming to this really beautiful conclusion.
We really would be.
The vision was always what you've seen. know what i mean i never thought about having 50 restaurants across the country i never thought about having multiple versions of this uh magnolia market or magnolia silos across the country and it was like this was it and and when i say this was it as if it's some kick in the pants what a dream what a what a what a dream and especially coming from where we started 10 short years ago broke we owed a real bank a five hundred thousand dollars of which we could have never repaid even if we had sold everything so then to ask the question quote-unquote what's next it's just like what's what's next what's not next you know joanna when you think about this journey that you guys took you know The guy who goes to Mexico and says, run my business.
And here you are now, almost 25 years later.
How much of all this do you attribute to the work you put in, the grind?
And how much do you think is just chance or luck?
You talked about God.
How much do you think of all this is that?
I always think, when I think about my kids and when they're older and they get the full story of what this is, I think they're still kind of learning.
Do they even care right now?
I mean, they're teenagers, so they're like, what?
They think we're pretty dumb.
They're humbling for sure.
We're probably not cool to them.
But when I think about what's the story of Magnolia, the first thing I think of is it's a journey of faith and miracles.
I feel like, when I think about who I am as a person and the real Joe, she wouldn't have done any of that.
When I think about Joe with God and obviously with Chip, I'll go to any mountain, I'll do whatever.
And so for me it's just showing how a risk averse girl can live a very adventurous risky life with this guy.
But I also think you got to work your butt off.
He talked about our dads being grinders.
We are grinders and that's who we are.
And we find a great deal of fulfillment in that.
Like I love work so much.
Chip loves work.
But at the end of the day, for me to be the CEO of Magnolia isn't because I am qualified.
It's because I said yes to all the right things and I moved forward in faith and I'm like wow, look what that got me.
And I think that's the story I want to tell people is like, you know, I the the life I used to live was like don't say yes until it makes a hundred percent sense.
And, but I missed out on so many things because that's really how life works.
Chip, same question for you.
Luck, hard work, grind.
Um, I mean, I have my thoughts, but those don't matter here.
No, I appreciate your insight.
You know, even when I was sharing my insecurity about how this has come about, to some extent I feel like I've got a chip on my shoulder, in the sense that I wished I had a business plan that laid all of this out.
And then I could say, look, you know, we were really smart.
But instead, there was so many miracles along the way.
Joe really said it best.
All I can say to add to that is Gaines's were built for hard things.
You know, we were built to do hard things.
And I think that we believe that God is with us and that with him, anything is possible.
And I just wonder about the next 10 years and I'm super optimistic and excited.
You know, do you feel that?
Do you feel that excitement and optimism about the next 10 years?
I feel like the last 10 years kind of happened to us.
And these next 10 years, I don't want to manhandle them, but I do want to craft it.
Yeah, like Chip has always said, design the life you love, Joe.
And I think in that way, it's like we want to shape it.
We have the foundation set to do whatever.
And so I'm excited about that.
That's Magnolia founders Chip and Joanna Gaines.
Thank you.
Yeah.
Thank you.
Thank you.
How much do we owe you for the couple hours of therapy here?
Hey, thanks so much for listening to the show this week.
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This episode was researched by Chris Messini and produced by Catherine Seifer, with music composed by Ramteen Ereblui.
It was edited by Neva Grant.
Our engineers were Kwesi Lee and Patrick Murray.
Our production staff also includes Andrea Bruce, Alex Chung, Elaine Coates, Casey Herman, Nora Gill, Sam Paulson, Carrie Thompson and Ramel Wood.
I'm Guy Raz, and you've been listening to How I Built This.
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