Magnolia: Chip & Joanna Gaines. From House Flipping to Household Name

0:09 Did either of you think a show based on us renovating houses, like how are we gonna Why are people gonna be interested in that, too? Hundred percent. I think we thought exactly the way we felt. Oh wow, people in We go are gonna get to see our work on television. Central Texas. Never thought.

0:25 My grandma. But didn't even ask them like how do you turn that into a TV show? Yeah. And I I didn't know, of course, because how could you know you'd never been on television, you don't even know anything about television. I have an actual phobia. of cameras. I was terrified.

0:49 Welcome to How I Built This. A show about innovators, entrepreneurs, idealists, and the stories behind the movements. They built. I'm Guy Roz and on the show today, how Chip and Joanna Games turned their house flipping business in Waco, Texas, into a massive lifestyle brand called Magnolia.

1:21 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 Joanna Gaines.

1:58 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 baker, food trucks, a row of stores filled with cool curated items for sale.

2:52 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.

3:16 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.

3:32 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 uh, 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 I we thought we were the richest kids in town. We we just loved it. But dad, you know, he tried his hand at that business idea.

4:07 And and and 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. Yeah. These guys are workers. So your dad was a football guy, but you were a baseball kid. Yeah, and and 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

4:30 Pony League. travel baseball whatever it was back then. I don't even know if they did travel in the street. Totally, yeah. Yeah. It's called Connie Mac 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're in high school of being a professional baseball player? I did. Yeah. And good enough if I know. You started out.

4:50 playing at a local community college, but then you got recruited to play for Baylors. baseball team. Obviously better known for football, but still like I mean you're talking about D one Baseball. University. Let's go. It was the dream.

5:08 About Become a baseball player, Baylor, what It was the dream. What happens? Why aren't you a professional Baseball. Well, you know, it it it it reality struck. I don't have a great uh it wasn't a great

5:20 ending to a beautiful story. You know, 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. You know, I was hoping Baylor University was gonna work out. My dad and I started getting on the phone. We were gonna go to TCU, we were gonna go to a smaller school, we were gonna go somewhere else and kind of Pick up uh pick up the career. I mean your whole identity in your life up until that point. Your life 19, 20 year old kid. It's baseball. Yeah. And then that's it. It's gone.

5:53 And so you wrote about this in in in your book, but this is you were depressed. This was like a depressing period. And a kid that even to this day, I mean, I don't really know that I know what depression is. As a fifty 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 go and take naps. So that in 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 um you know, fate had other plans. It it's interesting how failure

6:34 is like a gift. Mm-hmm. Who knows, right? And Because I know that while you were in college, this is the the mid to late nineties.

6:44 You start to do these What Now in hindsight. we know we're like entrepreneurial things, right? Sure. Selling

6:51 Firecrackers and Um and a laundry business at one point. Totally. It was pretty simple for me, kind of like uh uh simple economics. Because I started a lawn care company, which was kind of my prime. While you were in college. While I was I was probably a sophomore junior year, something like that. 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.

7:24 Mowing grass at this place. I hate this. Like I hate it. School in 95 degree weather. Yeah. Well, yeah. On a cool day. On a cool day. Yeah, those were the good days. But so I 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 Stodchill. And I asked him to let me work with him. And he was like, Well, 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 was it's kind of fine. And so he started me off on 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. But and so that's the kind of lawn worker I was. But I mean you even sold a business in college. A larger business. Yeah.

8:18 Probably not for a whole lot of money, but still you start a business and somebody bought it from you. Yeah. Your client list or whatever. Yeah. You were doing you were just collecting people's laundry and Taking it to a commercial So like Well, we actually did it. You know, we we we we built in house a little uh coin laundry mat.

8:38 But without the coins, you know, so the the the customer would essentially sign up for a prepaid service. I mean, what ended up I mean, I brag about this a lot. I I invented a a real live industry because I was doing this here in 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, you know, hilariously, even now, you know, gift cards and how some of them go unredeemed. I mean, geez, I mean the float business the profit actually came from twenty or thirty percent of those kids buying those hundred ninety nine dollar plans and never showing up one time. What was it? You you mentioned like sitting in your classroom and just kind of dreaming. But I mean you There's something about starting these businesses. Like not every college kid does that, right?

9:34 And I wanna I wanna ask you about this house that you bought. Around the time he 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 h like how did you know how to do stuff in house? Did you grow up? being taught that drywall and stuff like that. Not that extreme, you know, but if we needed a fence built on a on the in the backyard, dad and I would build the fence together. And you just learn from him. Just helping him. Yeah. And he was a country guy that he's one of these guys that just grew up in a very rural

10:07 environment. So he knows just a little bit about everything, you know, and so we were never 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 in all of those endeavors, you know, I had a laundry business, I had a uh uh lawn business. I bought several fireworks stands in East Texas. I mean, bro, but all of that put together into one pot made about thirty to fifty thousand dollars a year. And as a college kid, so I'm going to school money in the mid nineties. Mid nineties it who knows? Who knows what it went in Waco that went far. Totally. So that's kind of how it shook out. And then I graduated from Bailey University and had two very uh 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 that was kind of starting to pick up steam a little bit. So I could stay the course.

11:03 Or I could move to Houston and work for Xerox in this somewhat prestigious sales job. You know, and again, you're selling copiers, so I don't want to overstate it, but for salespeople in my Neck of the woods. This was a real honor. And that could have led to a corporate job like management. I mean sales. You got a computer, even a little bit. I got a little pager. That's a real I mean I got a real I it was real money. 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 100 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.

11:48 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 r rough numbers and who knows if this is accurate or not, but I buy this house for about 50 grand. We put about fifty thousand dollars into the house and I sold that house for about a hundred and fifty thousand dollars. 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 fifty thousand dollars in that two or three, four month period, which was similar to my entire twelve month, you know, uh uh uh income the 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 yeah. How did you know like, okay, here's this house, you know it has to look nice.

12:35 How did you know what to do? How did you know where to start? I I think in 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 gotta 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 free YouTube. You couldn't like go on YouTube and figure I wish there were many. You're the most relational guy. Like when I was thinking of you asking this question, I was like Yeah, with chip

13:13 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 feel like 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.

13:40 No no ideas to idea. 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. And it was exciting, you know, it was exciting, it was sexy. I mean, there weren't really house flipping shows, you know, thing yet. There was this was not a com I mean, my father in law, I get married, and my father in law, I owned 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 Sunda drives and ask me if I had gotten a job yet, like how the job market was and is if I'm looking for jobs. And I 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 I had a job. It was just very unorthodox, very untraditional.

14:34 All right, I want to pause your story for a moment and turn to you, Jenna. Um I know you were you moved to Waco when you were in high school. He grew up in Wichita for a number of years and You had a Korean mom.

14:49 Your dad met your mom when he was stationed there in Korea. He was he was i in the army, right? Yes. He was drafted at eighteen years old. Um scanny. And look like John Lennon. Um Did your mom speak English? No English. Wow. He he goes to this party, they meet, um

15:08 And my mom loved him because he was so quiet. Well What she didn't realise is he was Don't which is why he was so quiet. She's like she said, I see all these guys talking and trying to like get 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 gonna marry. So

15:27 Your mom. growing up. I mean because you were living in Wichita and then you lived in Austin for some time, but but I know that I mean Probably There weren't many families like yours, right? There really weren't. I think your grandma lived with you for some time.

15:41 Did your grandma speak much English? We spoke zero English. We we actually lived right outside of Wichita on this little town called Rose Hill. and um there were no other Asians. So like everyone, you know, it was obvious we were unique, we were different. Um and then my grandmother comes to live with us. Um and she didn't know any English, but she would she would come to all of my sporting events and the kids would try to talk to her and she would just kinda nod her head. Um 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.

16:21 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 to us and they were kept calling me Um, is it happen? I should know this. Happy.

16:40 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 I felt like I chose I'm going to go more um on the side where I'm not gonna 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 thing too. Yeah, I was I I never played I never talked about the Korean side. Yeah. Um

17:32 And I was so proud of my mother. Like it was but to me again she was very culture, 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 five hundred kids in your class to twenty five. You fit in pretty quick. Like it's a small private school. Everyone's your friend.

17:51 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 I got my footing pretty quick. Um, and it was a fun experience for me. You guys moved here, your dad Opened up a tire shop. Fire stone.

18:11 store and um 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. You did great. I love how you held your hand in a perfect little triangle. Shouldn't we have TV. And he's proud of his family. He's proud of his family and and he and it's a local business and he's got and but

18:36 I think. That's is that 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 in uh 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 I mean 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 um communications like broadcast journalism. So he was like, Hey, why don't you use what you're learning there and help me

19:19 produce these commercials if you want to be the talent in them. And so that's where I kinda stepped up to be the spokesperson of Jerry Stevens Fire. Because it's your voice, right? When when you're the end, yeah. Oh great voice. And you were doing college radio too. I was doing your newscast. AWBU. I was there at five AM doing the radio who was listening at five AM But I was, you know, 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.

19:54 In New York. With Dan Rather. Yes. Forty eight hours. I mean and it was a really big deal for Waco. I mean for Baylor, yeah. Dan Rather, Texan. Did you ever interact with him? D was he particular like'cause he seems like the kind of guy who would love Texans that he would I I wore a Baylor sweater. Um We had one like

20:15 two AM shoot. And uh a 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 call me Baylor. Right.

20:29 That was your nickname to Dane. Your ambition was to be broadcaster to be like a TV anchor. I I think I you know I had two ambitions. One was um to take over my dad's store because I wanted to be he had three daughters and he'd I I heard him at one point say, Man, I always wish I had a son'cause I can

20:50 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 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. By early late nineties. Totally. The stuff I mean, 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 the person over the cold case division. So I had to like call people. You know, and again as this nineteen. Did anybody just chew you out of the street? No, but you're you're you're reopening this trauma for people and there's no there's no like

21:47 Um here, this is how you go in. And you just knock on the door. It's just like we want the story. I I was conflicted. I'd come home and be like this I don't know if I wanna 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.

22:10 The only place I felt 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 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.

22:32 And I feel like after that internship, I remember thinking, one day I'd love to Do that. Have like a little boutique, maybe. No matter where they're at, when they step in, I wanna create that experience that I felt that was Such a a sweet spot for me and a hard

22:48 Yeah. Um, and so that was I that's really where I say Magnolia started that dream in my heart was Um in New York City during that internship. But meantime you graduate and you're gonna go work at the shop at the tire shop. Yeah, meantime I'm like, I guess you're doing it. Start to get apprenticed to eventually take it over one day. And she smelled like a tire. So she looked Like you. She looked like a swimsuit model. I love the smell. But smelled like a tire. And I'm telling you like home. For me, it was a g it was quite the combination. And I'm assuming you you went to the tire shop to get tires for your car.

23:22 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. It was at this point in my career now. I come back, I'm like I don't want to do this. I'm gonna help my dad I used to do his books, like I was his bookkeeper for like seven or eight years. Well, I started thinking, if I'm gonna take over, I need to actually understand

23:53 What is a tire? What size tire? How do I when I'm 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 two thirty five, you know, I know the size tire. I know all of the language, alignment break. So I was learning the business. So I happened to be at the front. When this guy decided to get his like sixth pair of tires that he didn't need jobs like weekly if I could afford it. So in that I mean you you go there with the intention obviously of trying to Meet Joanna.

24:27 Right. And soul purpose. And then we strike up a conversation, first thing he says. Aren't you the girl in the commercials? Which was truly the most annoying thing that anybody said to me. Yeah, I say that all the time. Yes. And I I kinda rolled my eyes like oh here's one of these guys. Um but we sit outside for Thirty minutes. Thirty minutes.

24:49 It was so cute. And hilariously, she looks like she's 20. Now it mid forties, I look like I'm eighty at fifty. And so rewind the tape to that day. She thought I was an old guy. She thought I was like married guy. Married with kids. So I'm sitting here going this married guy's really friendly. Should I be concerned. She thinks I'm some creep like with the family and kids just hitting on her for no logic. So all that to say the next day I see a note on my desk.

25:18 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. Yeah. 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. They 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 the people here, and I wanna put my roots in this town and I just remember thinking, that's That's risky for a a guy outside you know, so I loved that that he thought differently'cause everyone else was kinda doing opposite. So I just remember that stuck with me, that he saw

25:56 Um something special about Waco. But even back on that first date, I just remember there was this unique Yeah. 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

26:20 trusted her and and and found something in her Um That Mm-hmm. Not just in terms of your

26:26 in her personal relationship, but like in terms of her instincts, because I think like six months into your relationship You leave town, you go to Mexico. I guess to learn Spanish and and from what I read you basically say that to to Joanna Hey, can you run my my Can you run these real business business. Can you collect the rent from the people in Like how how did that happen? Why why did you have the confidence to

26:52 You know, give this twenty two year old, twenty three year old like I'm an idiot. So I will say that isn't all that special. You know, it does sound amazing the way you've described it and oh man, there must have been this one. I wasn't really equipped to be a complete idiot. You know, so I just wanted to do this thing in Mexico. She was kind enough to kinda support. You went to study Spanish. I went to study Spanish. And I'm just gonna leave my businesses and Yeah, study Spanish. Try try to basically do a crash course, three month immersion uh 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 gonna solve my problems, you know?

27:40 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 ever A plus B has to happen or then C, you know, so complete. So if you don't get rental money Then you can't pay the so I started realizing, okay, rents 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.

28:26 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 business starts to collapse. Oh, overnight. At the Firestone. So now these subs are coming to my dad's place. Firstone. And I mean her dad is I mean of reproach. He is very Straight. We're getting NFC NF checks sent to the Fire Stone and my dad's like, What is I mean, he sits me down. He's like, What's happening and who is this guy? Um, and so I s you know of course I try to cover chip. I was like, well it's'cause I didn't collect rent money.

29:08 But it was just, you know, it was a 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 gonna go a little smoother. 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, ooh, 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. Western union him money, like from I mean, so we were like doing this weird thing and finally I just said, Hey, listen. I I it was all it all kind of hit. I need you to come home. I 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.

29:51 I remember getting from Mexico and I went to her parents. 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 there were moments to where I could have not made it back. And I hear this knock on the door at about eleven thirty at night and my mom answers that his chip with his backpack, he has a lasso on it. He's got all his like little things he bought along the way. A lasso. And my mom till this day will say when I opened the door, I saw the look on his face of

30:24 embarrassment of I know I disappoint he s she saw that look And then immediately wanted to just 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 them because

30:44 He was Humble about it. I messed up. I'm back. His intentions were great.

30:51 A mishaps happened and now he's back and we're gonna fix it. A I mean young young people, right, don't always Think about practical things when they're when they decide to get married, but sometimes they do, and I wonder because you guys get married in 2003. Did you see in chip?

31:09 Not just a life partner, but a business part did you like In you, I could imagine that in Joanna you saw this pr She has a great head on her shoulder. 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 won't and I don't mean to say that you weren't either, but

31:27 Did you C and ship like somebody who did you see a spark in him maybe that other people didn't see that that that he was going to be able to build Something interesting.

31:41 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

31:54 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 time. 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

32:19 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 get married. You start to work together, right? I mean, you're flipping houses and you're doing this together. So

32:33 I have to assume that You're not at some point you stop working at the tire shop. When we As we're engaged. We're engaged and um this is when chip

32:44 I had a legal pad just like this, but bigger. And I 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 And the dreams go back to the time of 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. You know, th th 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.

33:18 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 wanna buy this building.

33:38 I want to start my own business. I don't wanna do the Firestone. This was like year nine, almost ten. Heartbreak. And I said I'm so sorry. Even for me, I remember and 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 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. For sure it doesn't make sense for you because you really were a big fan of it. And that that my dad even saw that as the writing on the wall, like this is perfect. He got this entrepreneur guy.

34:20 My daughter who knows the business, this is gonna take this thing to the next level. Totally. 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 can you do. Described what you wanted to do in two thousand three. What what did you say it was gonna be? Um a little home store with like Decor candles.

34:44 Um just wanted a little boutique. Yeah. Was there going to be I mean Did anybody push back and say, you know? Waco's not the right place to do this. It's not you're not gonna find people who are gonna 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. No everybody. Oh 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?

35:12 And this is one of my favorite stories about my dad because now I'm saying this is like year nine going into almost year ten of working for my dad at a spirestone. Um And I say, okay, Dada. Hey, I'm gonna Try to start getting, you know, used to this like

35:26 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 if people would buy it. As we're me and Chip are renovating this Dumpy little old building. Um, so I remember one thing I was super proud of. I would go to garage sales on the weekend.

35:48 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.

35:57 And uh it was five dollars and I thought, Oh my gosh, I'm gonna so I went to Michaels or Hobby Lobby. I This was sad. I bought it. This is why everyone was talking me out of it. Yeah. I think, okay, I'm gonna go by fake Ivy. So I fake Ivy the whole sled. And then I put some Christ. Battery operated Christmas lights around it. And I put twenty-five dollars 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

36:25 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 gonna show everybody how you can take a$5 thing, put a little money into it, sell it for$25. Was it like Christmas season? I it had to have been, right? It was we're moving into the fall season. Okay. So as I'm Every day I go in as I'm working for my dad, I see the sled still there. I'm like, dang it. Two weeks later, I walk in, there's no sleigh, sleigh, sled, whatever it was.

36:54 And my dad's at the counter and he hands me an envelope with twenty five dollars cash and I'm like 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. Day I say that to myself, my dad hands me this envelope,$25 cash.

37:11 And I thought, okay, it's a sign. It's meant to be. Sweet. A year later, my dad sells that Firestone to back to corporate. So now they're running. And he 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 Bake.

37:32 Yeah, it's sold that. 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? Like how did you Where were you gonna get the stuff from? Well, right up the street is Dallas Market, and I learned real quick this cost is five dollars and then you sell it for ten to twelve dollars. And so I I was learning this as I was going. I went to market the first time with my mom. And I had twenty five thousand dollars that was my line of credit for inventory. But I the first day at market

38:03 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 cost 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 twenty five thousand dollars in product that I don't even know if people like. I have all this inventory now. Had her pull over on I thirty five and I Grew up. Oh, I was so sick physically. Like

38:29 I am not built what am I doing? And so it's like it's funny in 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. Um I mean if 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.

38:53 It's I don't know which is now open. The wicker thing or your first thing. So my A frame sign, I 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. Yeah. And so you look at this A frame sign, it says now Ope in 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.

39:28 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. 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 gonna come to this. Like I'm gonna open this and I'm essentially gonna be embarrassed. And I just kept going, like we don't know. You know, we uh why don't we assume the best? You know, let's it could go the other direction. And we opened that thing at like nine o'clock in the morning.

40:21 And I'm telling you if there's a BMW in Waco, Texas, it was at that grand opening. There were thirty cars in the wall. Mercedes BMW. I'm like, what who are these people? And this at 10 A. 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 they were everyone said we just love that sign. We're trying to figure out what's in here. Those Ten women that were doctor's wives.

40:56 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 the payment to the bank, all the thing and I had to make two hundred fifty dollars a day. So I just told Ship, if we make two hundred fifty dollars a day, we can stay in business.

41:21 I remember that first day we did about twenty eight hundred dollars. Now, again, I didn't do twenty eight hundred dollars every day, but what I found is in those like ebbs and flows I would sit there, there were some days where no one would come in at all. It was kinda located in a weird spot. But what I was learning because of those three Hard years of not knowing. What I was doing.

41:41 That was my college. That was my 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 don't I wanna counter that because this is true about Joe and she's always been this way. If you gave Joe Fifteen bucks.

42:01 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. I mean you feel 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 and that feels different. What 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 to be I did not have great taste. The the store me so meantime, you are focused on flipping. Right, on flipping. Yeah and at what point and you're you're running the shop. Right.

42:48 And at what point were you sort of getting and like giving chip advice on how to make a house look nice. Like Again. You're not you weren't an an interior designer. You weren't like an apprentice to an interior designer. Just like Chip, you weren't an apprentice to a construction worker. Did you start to do that pretty early on?

43:08 I think about year two of being in the shop, women would ask me to come into their homes and help. help them design a mantle, design a tablescape for Thanksgiving and 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 Gonna look different in every home. And if you play to the home story and to the family story, you can make a really beautiful thing. And so

43:33 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 And then

43:51 looking at it and saying, Wow, this looks terrible. Or or or were you already starting to What the pieces together. I think we tried and failed is the answer to that question. I think it's for sure. And so I do think that there was an element of success that kept me feeling like, okay, at every level I'm upgrading a bit. And then it became

44:15 kinda 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 I could not hold two kids on the hip, sell it was too hard. And so I've been a little bit more. Duct tape to wrap these babies around. Letting go of my dream.

44:35 One of those things. It was a God moment where I was like, if I let this go, is it 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. Um, I felt like God said it's gonna come back and in a way bigger way because of your trust. Like your just trust me. And so that's where I started like looking at the plans and from home. saying, hey, what if we add a beam here? What if we 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.

45:13 And again, like You are I mean you've got this Great business. You're Buying homes, renovating them, flipping them.

45:22 Now this is becoming a thing, right? This is like two thousand Six, seven. property values all over the country are skyrocketing that is totally is there that now we know it was a Totally we didn't know it at the time. And you were you had been in that business for a long time and so presumably taking on more risks because it makes sense.

45:43 And then the financial crisis hits. Totally. And I mean I have to imagine. You guys. Get hit.

45:51 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 Thirty eight patio homes. Called a pocket community. I was so excited. And so it looks like a dreamy little neighborhood with big magnolia trees, thirty. And we were doing big, big real projects. I mean we were we kind of stepped out of sort of uh 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 do we.

46:37 Is this When we do the bankruptcy. Four kids. Um, at one point four and under. Like I think three of them were still in diapers. Babies. Um And so he were in trouble. 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 dirtbags 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, you know, we owed somebody five hundred dollars and we'd

47:19 Give them a hundred. And then we'd owe somebody five thousand and we'd give them a thousand. And we just kind of kept sort of stair stepping, making the best of these worst case scenarios. And and again, it was an exhausting. It was I wish I could say it was six months and it was this lesson learned and that was the end of it. Years of doing this, just virtual bankruptcy. We were always broke. We were always begging people for one more minute, one more day. Like you purchase too much property at too high of a price and then the crisis hit or

47:52 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 but it was just this bank. Development. Note and I mean I remember it like it was yesterday because again, it was five hundred thousand dollars to do the infrastructure on this and that that loan was was called so we basically had gotten to I I I want I'm speculating on this part that I remember the amount which was five hundred thousand so we had gotten this line of credit for five hundred thousand dollars. We probably had three hundred thousand dollars worth of that line of credit in the dirt. So in infrastructure, streets were in, you know, girt curbs and gutters were 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

48:53 decreased by fifty percent. So we were at like a two hundred and fifty thousand dollar cap. three hundred thousand dollars already implemented. I mean done and we need this obviously couple of 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? I I got yeah, I can't even remember exactly how it played out other than

49:18 I remember that Joe and I were were literally like, we have got to finish this development because if we could 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 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-a-war to where if 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.

50:04 But if we could ever get aligned and pull against the thing that we're trying to overcome and literally align and and almost like swear to God, we're gonna align on this pinky promise, let's be together. We noticed this sort of energy. It was like this one plus one, it started equaling 10. 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. Holy And I think we started just getting creative. Chip would sell some things, he would I started doing these home shows, um, where because I still had my vendor contact, so I would

50:42 buy about twelve thousand to fifteen thousand dollars 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 twenty five to thirty thousand dollars a 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 We saw things differently. And you were gonna quit. And you were living in a lot of the I mean you lived in nine houses in the first ten years. So you were you were living in the houses that you were innovating.

51:15 Raising kids. Doing demo work. You know, right? Like some of the Parts of the house are sh Like plastic sheeting to protect the kids from the dust. And then you'd move to the next house and you do the same thing. You could 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

51:39 It was a show. For sure. We were the Waco Hill Billlies, for sure. I mean on on on one level, that's a really practical way to like run a business, right? You're gonna 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 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. True. Yeah. I don't know, worried about that, about about living that way? We didn't have friends that were really 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

52:24 seasons of their lives. So it wasn't like we were being judged by our parents because our parents were like, when we were thirty, we were broke like this. 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. of us when we finally moved to our tenth house, which was the farm. The kids were about Five, six, and under. So even then, you know, the the resilience of kids at that age, they were just always along for the ride with us. Like they had no option. I just remember car seats, we're always driving around, we're always at projects. Looking for a better life. You can't explain it. But I will say

53:10 what evolved out of that journey was We had we were living in this dream home of mine in this historic part of Waco Castle Heights. And w when all this hit, we were like, okay, we can't we know we have to start choosing. So we I just finished decorating and designing that big house that we loved. It was like m the model home. It was a dream. And then we move into this thing that's just like had no character, no no story. It was a house from the eighties. Um

53:35 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

53:55 Seeing my kids thrive in that space. It wasn't the beautiful house in Castle Heights, it was this. I remember you had that one room that was almost like this army. So even though we were kinda dying on the vine and not sure if we were gonna make it, my I feel like my kids felt for the first time at home somewhere. By 2011, 2012 ish. You're you've pulled out of this crisis and the business is stable and you've got

54:21 You know, right? You're Sort of a 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 gonna happen to your lives.

54:35 Okay. You were In Waco, obviously you had a reputation with your design eye, you were in the local magazine, and people would come to your Sh houses that you flipped to see'em and and it was cool. Um The store I mean the

54:51 The story of which is which is well known who by people who know a a little bit about you is that you write you you start to write a blog. And put photos up and And that gets Noticed.

55:03 by a production company that is doing reality TV shows. Really the boom time of reality TV. And What they they reach out to you and say, Hey We'd be interested in meeting with you.

55:17 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. Right. Um and what was your reaction? What do you remember thinking? I thought it was a scam. This is gonna be some kind of a you've gotta pay somebody five thousand dollars and they're gonna come down and produce some nonsensical thing. Joe was telling me about this. I was like, baby, you can do it if you want.

55:40 And she called on my cell phone was like, Hey, what do you think about us just coming for a day and just Just filming you. 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.

55:51 And he said, Don't call her back. It's a scam. I remember sitting on the couch going Oh, should I listen to him? And even even now, again, as a fifty 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 that for J. When they came. 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 Uh

56:21 A show based on us renovating houses? Like how are we gonna How how why are people gonna be interested in that? Hundred percent. Was that I think we thought exactly the way we felt. Oh wow, people in Waco are gonna 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 were j we didn't know anything about it. We didn't have a TV. We didn't watch reality television. Even as they captured us via these these, you know, cameras. We were just like, What is what is this gonna be about?

56:57 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 gift of gab. I I didn't know, of course, because how could you know you'd never been on television, you don't even know anything about television. I have an actual phobia of cameras. Oh really? The new Modern Day. Modern day I've worked it out. But 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 You couldn't get his words out, he couldn't breathe. Well the the they would turn the thing on and so there was a red dot above the camera in your left. And I would see that freaking red dot and it would just terrify me. A and B, I need like

57:40 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 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 gonna throw a a sign. Day one he removed himself from that side of the camera. So it was like And then I stepped up'cause I was like, Well this poor company is here and one of us have to talk. At the time he was our third out of four. And so this middle

58:27 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 as she was moving around as if he was like this ankle weight or something like this. I I mean I've seen uh 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. Yeah. We almost

58:57 Like the electrical wires are coming down and stuff. Did you have a sense That it would be I mean It was picked up. H G T V orders.

59:07 Based on the pilot, I think a season, twelve episodes. Um I mean, what did you think at that point? Did you think D did you have a sense of how successful it would be. Did you did you I think we were still we we were so naive that we didn't know

59:26 I think if anything we thought oh this will secure another hopefully twelve jobs for us as were, you know, for us it was on the business side of twelve more renovations side of the business. It was always what is this TV show gonna 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 twenty fourteen, season one. When did you first

59:51 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 twenty five hundred dollars 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 And I know that guy, we were kinda awestruck by these other characters. Who were also on TV shows, H TV, when we stepped out. Oh.

1:00:31 Yeah. We looked and had no idea. Really thought maybe thirty and three. Thousands and thousands of people were there for us. And we would leave and there would be fifteen or thirty or fifty for all the other alternatives. And I don't want to overstate that because I'm not trying to it was just you were shocked at the number of meeting that they had not needed hours. We were there. No, you didn't realize that you were having that kind of impact. Could not believe that many people would come to the world. 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 add a better strategy. We had no idea it was gonna 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.

1:01:25 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 And the on your bingo card.

1:01:39 In twenty twelve. But You are still grinding. Running a business. It was a weird thing for us to try to navigate

1:01:50 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.

1:02:07 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. Um 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.

1:02:46 Your lives were now on television. So people started to come to Waco, Texas to Maybe to see you guys. 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 have been I mean

1:03:03 Maybe it was all a blur, but it must have 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 eighteen to twenty hour work. We were kinda already doing that. What's so weird is like before all this hit, we were already navigating life with too much on our plate. Yeah. 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 were just

1:03:36 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 We surround ourselves with our dear friends. They were doing business with us. I mean, we were doing this to 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, you know, the nobody was never been trained for it. Nobody was a warehouse manager prior to us and this relationship, but we had these people

1:04:12 that adored us that were like, if you need me to figure out that warehouse, I'm gonna figure out that warehouse. And they kinda did, you know, and 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, you know, 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

1:04:59 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. And that's because The combination of being on to national television. And Cause I have to assume, by the way, and I think we should just

1:05:18 P. Straight about this. A lot of people Don't realize that. Most

1:05:24 Most People in reality shows don't actually get a lot of money, get paid a lot of money for real shows. That's true. And and certainly documentaries. Now this was may maybe 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. elements and you cared about the compliance and the business and the project and it had to be done right. All these things were complicated. And it was d nobody's fault. Like we we never sued our production company, our production company never sued us. And we look back in the rear view mirror and we're like thankful for for that production company. But but it was

1:06:10 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. The production company has a show that they want to make a hit. Hundred percent. Yeah. And They want more of your time and you Can only give it a little bit.

1:06:31 Hundred percent. And the cart was out of whack in the sense that which came Yeah, the cart before the horse. And 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

1:07:04 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 gonna come later, but but Was there a conversation or a grand strategy, or did that all just kind of happen over time? the way it happened. We didn't have a strategy.

1:07:22 Um, 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 is two thousand three. 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 I think those were the two dreams I quietly had in my heart. We found out really quickly, uh 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 were going to be developing properties, buildings and I would tell Joe things like our pillow talk started consisting of Joe, you watch. I'm going to be the largest home builder in Waco, Texas, by the time it turns out that that wasn't not going to be the core of your business at all. It was going to be about

1:08:15 Design 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 twelve guys. We do about the same twelve to eighteen, twenty-four 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 has dwarfed that little construction company by ten X or more. And that was just un totally unanticipated.

1:08:49 Totally unanticipated. When we come back in just a moment, one of the most powerful deal makers in TV. Pays a visit? Waco, Texas. Stay with us, I'm Guy Roz, and you're listening to How I Built This.

1:09:17 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.

1:09:38 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. Um 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

1:10:00 Seeing people just on the lawn, lingering. And I and I think with the silos, I want to talk about the silos for a moment because this is a I I w 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.

1:10:20 Um 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

1:10:34 Younger. Waco, Texas was Associated with the branch Davidians and David Korash and that horrible thing that happens. And most young people don't even know what that is today. Sure. Now if you asked the average person about Waco, they would say Magnolia. I mean tourists come from Even overseas. Yeah. 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

1:11:05 said something about if you can make it in New York, you can make it anywhere. And I just kind of like hilariously and quickly quipped. I was like I'll I'd like to Counter that thought with if which is if you can make it in Waco, Texas, you can make it anywhere. Cause 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, et cetera, et cetera. 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

1:12:00 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. Sadly, I think that's To me that was like um 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. Oh, and I even started as a bartender and then he got into Selling

1:12:38 computers and then eventually started this businessbroadcast dot com, which he then was able to sell to Yahoo and sold his stock in time. Like he could not have planned that out of the would argue like us these things were not preemptive. I mean he wanted to be successful. Sure. Okay. He was ambitious, but you can't 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, you know, even where you go to church and oh the the the pastor said this and must reflect on So all of these things, all of the The the things that are personal for most people that you don't that aren't public, you know, I have a sp argument with my wife. We you know, I love my wife. We've been together for twenty years, but we had a an argument two days ago.

1:13:21 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

1:13:40 that are, you know. accuse you of being a kind the kind of person that you don't recognize in yourself. How how do you

1:13:51 How do you manage that? I think in the beginning when it hit it was like a Such a surprise to us. Like Wait, what? Like, you know, you don't 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

1:14:08 I hate being misunderstood. Yeah. But I also felt This was in like twenty sixteen I think there's 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 bigger story about 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.

1:14:33 And and sort of being less than to someone, being a little bit other. And she has always just had an enormous heart. 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 Joe to really feel like and and again Joe 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.

1:15:08 actually who she was and what she stands for. So I can spend time over there arguing and or even trying to be understood for even a second. Um, but then that takes away from my My actual

1:15:23 to find beauty to highlight that because that's you're never gonna win there. And I think Again, we are complicated human 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 we're Way more 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

1:15:47 And the irony is there was that story in 2016, then there's been a recent story where you had a same-sex couple on one of your shows, and and some evangelicals and Christians were upset with you because you are Christians. But it's interesting because overall the overarching brand, like Ninety-nine percent of people who Come to Waco to come to the silos or who

1:16:10 our fans, um, you know, my sister in law who happens to be Korean is a massive fan. They don't those things don't matter. Those controversies seem they matter to tiny number of people, but their voice is universally amplified. Tens of thousands of people in a moment can feel like the entire world can really and to your point. And I think we've learned a little bit about that. And the fact that the Buzzfeed thing started it out with us. And that we got categorized as sort of like anti LBGTQ and 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.

1:17:02 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. Um but 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

1:17:26 being what's the word, added, whatever. Like you're like We're gonna come at you is almost referring to it. 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 they're putting we're sh 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.

1:17:57 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.

1:18:12 I I wanna I wanna ask you about a decision you made in in twenty eighteen to end. your the you know fixed repper at that time to stop making that show A lot of people were you know, sad because the show was averaging like nineteen million viewers a week.

1:18:30 From your perspective, I under I mean I understand the dynamics were tricky because you had a production company that wanted 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

1:18:49 Yeah. 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 built are gonna be cease to exist. That's right. That's what I love about my experience before that, which was I wanna stay home with my two babies. I'm gonna shut the shop down. And I felt like God had said this will come back in a bigger way just because of your your act of faith. It comes back. We have we're now in the silos, we have a show, all this stuff. And even though everyone was saying don't shut it down. Totally your business is gonna sufferer 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

1:19:34 That may go away, but it doesn't mean it it just means you feel in your heart it's time to stop something. And you move forward with that. There's something good that comes from that, even in that no. But I 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 gonna trust. Then. We believe that we're supposed to uh stop.

1:19:59 moving forward with the show fixer upper. I mean It allowed us to do much 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 nothing. We were done. No real even meetings with anybody about what was quote unquote next. You know, there's been several iterations.

1:20:23 kind of rumors like you're describing of like what exactly and that we knew that David Zaslov and we were gonna do this network together. Did I ever dream of a network? No, did she we never dream? This was David Zazlov who runs Discovery. He came to Wakeout and he's he came here and and you started to talk about well, maybe we do something together where you actually'cause you didn't have presumably equity in that previous show. you didn't have ownership over your own show. Right. And now

1:20:51 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 it's 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

1:21:12 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, Joanne, 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 that he introduced us to a whole new universe that we honestly didn't even know existed.

1:21:57 You become at this point. Owners. Finally, of your own. on-scre 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, you know? How do you decide, I mean now you've got all of these

1:22:32 Many different businesses, right? There's the you're still flipping houses or kish. Yeah. Which is a smaller part of your business. But how do you decide? um which businesses to do. The most valuable thing you have is your time. And your time is limited. Totally. Right. And the demands

1:22:51 are intense. So for example Yeah. There's 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.

1:23:03 Would you continue to do it? Probably not. I mean honestly. For us, you know, the fun part. Is

1:23:11 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.

1:23:29 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.

1:23:43 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 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 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

1:24:11 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 kinda had this like weird epiphany that Food is the easiest way to connect with people. And if we feel like right now culturally the connection is missing and people miss each other, they miss that connection. Totally. We can

1:24:30 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. And this is the first time you're doing I mean obviously you s you m have cupcakes and baked goods at the cells, but You are rolling out. Cookies and but banana bread and biscuits. Yes, cinnamon. Nationally. Yes. Um is it with

1:24:56 It's w it's gonna be exclusively of a target, right? Uh for a year. Um and so I I feel like with that it's just It's crazy because you know, we've written I've written a design book, Home Body, and then Cookbooks. The cookbook. more people we thought Homebody was gonna sell, out sell 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

1:25:24 It's more attainable where I think design in a lot of ways can be aspirational. Can be intimidating. Inspirational and intimidating. Calling a recipe is Hey, I can at least try this, right? And so I'm in a nostalgic season in my life as my kids are going off to college. For me. being in the kitchen, it grounds me. And and I think the idea that all the work and effort I'm putting into it for that in moment at the table is like something I'm just I just feel more than ever because my kids are getting older. Those

1:25:52 Times are limited now with all the kids driving and in sports and so And I don't think we know this in our thirties and forties. I wonder if that's true. Maybe some people are insightful enough, but in at fifty that I've experienced this year for the first time. It's like it's it's like this, I don't know, I 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 I don't think we felt That's particular or restrictive in our forties or thirties before that.

1:26:31 But when you look out Ten years from now. Wh where do you see the business going? I mean it's already you've got a T V network that you're you know your owners in and Um you know, the magazine and the shops and and a line with Target and the new food line and

1:26:49 There I mean there the possibility and you're probably pitched all the time. You know, hey you guys Let's do a a Chip and Joanna prefab homes. Or Magnolia prefabricated homes that you just, you know, built in a factory and are totally put on and What do you imagine?

1:27:07 Yes. will be in ten 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 we're kind of in the day dreaming

1:27:22 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 But something there. Yeah, we've got these cities that uh just seem like our people, you know. So I I think the dream is again, like I mean, Chip and I, I mean we've been doing this now for almost twenty five years. We've never taken a break. And it hit us last year. Like we both physically felt it where we

1:27:53 Couldn't see past. right here. We couldn't see vision. Our team was asking what's next. We're like, what do you mean what's next? What about what's all here? Wait, why does there have to be a next? Yeah. We were like offended by it for some reason. I just asked you that question. I hate that 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 gonna take three months off. And in that three months, I think we we re-grounded 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 guest and the readers and the viewers.

1:28:27 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'em up. Yeah. Um, so who knows? Or not. Or we just 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.

1:28:55 You 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. Especially coming from where we started 10 short years ago broke. We owed a real bank 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

1:29:30 What's what's next? What's not next, you know? Joanna, when you think about This journey that you guys took, you know. This guy who goes to Mexico and says, Run my business. And uh you know

1:29:44 And here you are now. Yeah, twenty Almost twenty five years later. How much of of all this do you 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.

1:29:58 How much do you think I I always think when I think about my kids and when they're older and they get the full story of like what this is and you know, I mean I think they're still kinda learning and you know, do they even care right now? I mean they're teenagers, so they're like what it what? You know They think we're pretty dumb. They're humble for sure. Probably not cool to them. But when I think about like what do we what's the story of Magnolia, the first thing I think of is it's it's a journey of faith and miracles. Um, I feel like When I think about

1:30:32 who I am as a person and the the real Joe. She wouldn't have done any of that. When I think about Joe with God and obviously with Chip. I to I'll go to any mountain, I'll do whatever. Um, and so for me it's just showing how a risk averse girl can live a very adventurous, risky life.

1:30:50 With this guy. But I also think you gotta work your butt off. He talked about our dad 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.

1:31:05 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.

1:31:30 Chip, same question for you. Luck, hard work, grind. Um I mean I have 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 wish I had a business plan that laid all of this out and then I could say, look, you know, we were really smart.

1:31:57 But instead, there was so many miracles along the way. Joe really said it best. All I can say to add to that. is gains is were built for hard things. You know, we were built to do hard things. I think that we believe that God is with us. And that with him Anything is possible.

1:32:15 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 I feel like The last ten years kinda happened to us. Um, and these next ten years we Not I don't want to like manhandle them, but I I do want to craft it. Um yeah, like Chip has always said, design the life you love, Joe. And

1:32:40 Um I think in that way it's like we wanna shape it. We have the foundation set set to do kinda whatever. And so I'm excited about that. That's Magnolia Found's chip. And Joanna Gaines. Guys, thank you.

1:32:54 Yeah, thank you. How much do we owe you for the uh couple hours of uh therapy here? Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at gyros.com or on Substack. This episode was researched by Chris Massini and produced by Catherine Cypher with music composed by Ramteen Erablui. It was edited by Neva Grant. Our engineers were Quasi 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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