HSN's Fashionista

How CEO Mindy Grossman has taken HSN from ThighMasters and elastic-waist pants to Serena Williams and top designers

"I knew we had to move quickly on the things we needed to stop doing," Grossman says Rebecca Greenfield

By Susan Berfield

It's 30 minutes to airtime, and Serena Williams—muscled, styled, economical in her movements—sits on a leather couch admiring her navy blue quilted flats. "These are incredibly comfortable shoes," she says. This is not the casual remark of a celebrity killing time in the green room. This is Serena Williams-as-saleswoman, practicing her pitch. Over the next 24 hours, Williams will be live on HSN (HSNI)—the television shopping service formerly known as the Home Shopping Network—for a total of eight hours, hawking pieces from her clothing and jewelry collection to women across America—some 15,000 bracelets, 4,000 flats, 1,900 pairs of jeans, plus sweaters, dresses, T-shirts, and handbags. Every minute she is on air will be measured in dollars, every hour will be scripted, product by product, to build momentum. When it's over, Williams is expected to have sold all of it. On HSN, celebrities have to produce.

The fact that Williams is here at all, linking her reputation to an outlet once known for pushing Suzanne Somers' ThighMaster, shows how far HSN Chief Executive Officer Mindy Grossman has taken the company. When Grossman was recruited for the job in 2006 by Barry Diller, chief executive of HSN's then-corporate parent IAC/InterActiveCorp, she told Diller that she would accept only if he gave her the freedom to turn the place upside down. She had an impressive background, which included nine years at Polo Ralph Lauren (RL), where she launched the Chaps and Polo Jeans lines, and six years at Nike (NKE), where she built up the women's apparel business. She wanted to transform HSN by making it more modern and tasteful: Maybe it would never be hip, it certainly wouldn't try to be edgy, but it could at least be relevant. "I got excited about what it could be, not what it was," she says during an interview at the Pierre Hotel in Manhattan. "There was not a lot of pride in the culture, and that was shocking to me, especially given where I had come from."

HSN and its ubiquitous low-fi cable channel had become a symbol of American consumption gone terribly wrong. The clothes were uninspired; the beauty products didn't live up to their claims; the gadgets arrived broken. It was a second-rate version of its main competitor, QVC. "I knew we had to move quickly," says Grossman, "on the things we needed to stop doing."

Within her first year at the company, she dumped about a dozen brands she had never heard of. Gone were the pants with elastic waists and anything that viewers could easily find elsewhere. Then she set out to create a studio environment that wouldn't scare off the designers she hoped to feature. For that she turned to Andrew Sheldon, a British television executive. He streamlined the sets, cleaned up the green rooms, hired full-time makeup artists and hair stylists, and modulated the hosts' presentations. "Before, there was a lot of finger pointing. They spoke too quickly and too loudly," he says. "Selling doesn't mean you have to shout 'Buy it! Buy it!' "

HSN is still only a fraction the size of QVC, which had $7.4 billion in 2009 revenue. (John Malone's Liberty Media Interactive (LINTA), which owns QVC, also owns one-third of HSN; under the terms of a standstill agreement that expires in August, it will have the right to buy more, or all, of the company.) But HSN is now a credible competitor, and just as important, it has achieved a measure of cultural status. "I've never tried to motivate my staff by saying we're going to be bigger than someone else," Grossman says. "I'm more a Mac than a PC."

Even during the depths of the recession, when many retailers' sales fell dramatically, HSN's grew, rising 3 percent in both 2008 and 2009. In the first three months of 2010, sales increased 9 percent, to $519 million, compared with 2009, and HSN shipped nearly 10 million items to customers. HSN's corporate parent, HSNi, which includes the shopping network and Web site as well as a separate catalog division, is a $2.8 billion business. Its stock has more than doubled in value since it was spun off from Diller's IAC (IACI) in August 2008, just before the retail economy collapsed.

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