Chip & Joanna Gaınes
Lessons from the most powerful couple in TV, Texas, and Target
“We made a bet on what Jo and I have always bet on. We bet on ourselves.” –CHIP GAINES
Mesh cap backward, face unshaven, Chip Gaines talks with the bluster of a guy at a party who has a story, or a colorful analogy, for everything—which he does. Joanna, his wife and co-founder of the couple’s rapidly expanding media and retail brand, Magnolia, sits beside him with an occasionally bemused expression, her black hair tumbling around the shoulders of a creamy sweater as she looks for opportunities to steer the conversation.
Two full years before they shocked their fans by announcing the end of their hit HGTV show, Fixer Upper, they already knew they were going to have to leave it. The move would be risky. It was late 2015, and the Gaineses were in only the third season of the show that had transformed their lives almost overnight, taking them from local house flippers in Waco, Texas, to regulars on the covers of celebrity-gossip magazines.
Fixer Upper, which chronicled home renovations that Chip and Joanna did around Waco, was an instant sensation when it launched in 2013. By 2015, the show was setting ratings records at HGTV and helping make the network one of the top 10 on cable. Such high visibility allowed the couple to build other businesses around their growing celebrity. In 2014, they launched a tiny homewares store, Magnolia, that became so popular shoppers lined up for hours in the summer sun to get in. Former first lady Laura Bush came by, with Secret Service agents in tow.
In the fall of 2015, the Gaineses supersized the store after relocating it to a long-dormant cottonseed mill complex that covers two city blocks. They launched a Magnolia-branded furniture line with the company Standard Furniture and fielded calls to do other licensing deals.
So why ditch the show so quickly? Why shut off their most successful marketing channel, the spark that lit a blaze of popularity? The answer, as with most things Chip and Joanna, involves a combination of country humbleness—the official reason for the 2017 announcement was their desire to focus on family—and worldconquering ambition. What Chip and Joanna are great at, it turns out, goes well beyond homebuilding and decorating.
Self-made entrepreneurs, the Gaineses are naturals at forging powerful connections with their audience, in ways that others don’t. And then building—and building—upon that foundation.
It’s a chilly January morning, and Chip and Joanna are seated at a gently weathered wooden table at the far end of a library-like meeting room painted an opulent shade of dark green from the paint line they launched in 2018 with Ace Hardware. There’s also a rose-hued sofa from Anthropologie, for which Joanna designs a line of products, a floor-to-ceiling gilded mirror (again Anthropologie), and a faux-antique rug from Magnolia’s rug partnership with Dallas company LoLoi. This unmarked building near a highway off-ramp is where Chip and Joanna work with a small team of executives and creatives; another nearby
building houses operational departments like accounting and HR. The Gaineses have some 750 people working for them these days. Before Fixer Upper, they had two.
The story that led to their 2015 realization goes like this: Fixer Upper began when a reality-TV producer named Katie Neff happened upon a blog featuring one of Joanna’s homes and plucked the couple out of obscurity— charmed by Joanna’s aesthetic and the couple’s life on a farm with four kids (now five), in Waco of all places. In the show’s first two seasons, Chip and Joanna played their parts obediently as network people urged them to stick to the established home-renovation-show formula. “They’d say, ‘Why are you two always together?’ ” Chip remembers. “‘We need you to be doing construction, Chip, and you to be doing design, Joanna.’ ”
But then came the ratings, along with rooms full of head-scratching execs trying to understand why the show was doing so much better than they’d predicted. Everyone—the Gaineses included—had expected Fixer Upper to attract a wholesome, heartland audience, but it was actually lighting up screens all around the country. “It was defying all of those logical boundaries that were put on it,” Chip says. And that led him and Joanna to an epiphany.
“We realized people care about home, no matter where it is,” he explains. HGTV had intended Fixer Upper, like so many other shows of its ilk, to present homes as physical assets—that is, houses. In this case, monochromatic “modern farmhouses” with shiplap walls and farm sinks. But what really attracted people to Fixer Upper, the couple surmised, was the idea of home, the place where you live with your loved ones. Chip and Joanna’s family life and values were the real story, not their work.
The Gaineses had discovered the core of their brand’s appeal. They were authentic folks juggling family and work and succeeding. They were happily married but they bickered. People could relate. Joanna, whose mother is Korean, was a refreshing foil to the stereotype of the blond-haired Texas woman, while Chip seemed like a good-old-boy prankster. They were glamorous but real. And it wasn’t a put-on. That their homes had similar crossover appeal—not too country, not too city—just tied the whole thing together.
By the third season of the show, the network people were coming around to a similar understanding, and they started asking Chip and Joanna to play up their relationship. Now, Chip says, the directions were more like “We need you to always be together. Chip, if you’re hanging drywall, we need Joanna to be standing there making cupcakes.” But to the Gaineses, that still missed the point. They won’t admit to squabbling with the TV bosses, and they’re even more resistant to claiming a grand strategic insight. But, in the two years that followed, Chip and Joanna aggressively reshaped their business around their vision. And the more they did that, the less the show felt like the core of their operation.
“The show was limiting our involvement in what was taking place here in this office,” Joanna says.
“We were pouring so much time into doing this thing
that had to fit in this format, and it was a conflict with our growing business.”
“As things started getting complicated,” Chip says, “we made a bet on what Jo and I have always bet on. We bet on ourselves. We knew there was a real chance that everything else would go away without the show. But would it be a complete kick in the pants to end up operating a great construction company in Waco? No. I’d be honored. And, as soon as we accepted that, much greater opportunities started presenting themselves.”
Chip segues to one of his analogies. “You think about the kinds of entrepreneurs who build these universes: Elon Musk, Steve Jobs. You have to believe in yourself to accomplish all of that, because it’s not going to happen if somebody else is feeding you answers. That’s not how universes are built.”
The center of the Gaines universe lies at Magnolia Market at the Silos, the shopping and dining destination Chip and Joanna built in downtown Waco around that old cottonseed mill. On a recent Saturday, families picnicked on the lawn, and the line to get into the Silos Baking Co. stretched around the corner. That’s the case pretty much every day (except Sunday, when the Silos is closed). As soon as the Silos opened in October 2015, Chip says, it dwarfed anything he and Joanna had ever made in construction. In 2012, when Fixer Upper started, the company’s business was 100 percent construction. By 2016, it was 80 percent retail.
The Silos complex today includes a dozen food trucks, a vegetable garden, the bakery, a coffee shop, and 12,000 square feet of retail space selling scented candles, baskets, signs quoting Scripture, and all manner of fan paraphernalia. This year, the Gaineses are expanding the Silos, adding what they call a retail village, as well as a furniture showroom, a Wiffle ball field, more gardens, and a relocated historic church.
Magnolia Market at the Silos is essentially a Chip and Joanna theme park. And people travel by the busload from Georgia, Iowa, and beyond to experience it. “Tourism to Waco doubled overnight when the Silos opened,” says Carla Pendergraft of the Waco Convention and Visitors Bureau. Several new hotels have opened in Waco, and more are on the way. According to Ray Perryman, who leads the economic analysis firm the Perryman Group, the Gaineses have utterly transformed a city of 138,000 people into something of a boomtown. (See “Welcome to Waco,” page 54.)
The seeds of that transformation were planted long before Fixer Upper, back when the couple met in 2001. Joanna, who moved to Waco during high school and attended Baylor, was working at her dad’s Firestone franchise when Chip came in to get his brakes repaired. He had moved to town to play baseball at Baylor, but by the time he met Joanna, he had become a small-time serial entrepreneur, buying and renovating a few cheap houses near campus. He had a wash-and-fold service, too, and a lawn-and-landscape business. As Joanna recounts in The Magnolia Story (the first of several bestsellers they’ve written), Chip was the kind of entrepreneur who couldn’t help but spot opportunities and chase them: “Every time I thought I’d heard it all, he would tell me about something else that he’d done to earn a buck. It was like every time he opened a door, he encountered another door, and another, and he just kept opening every door.”
They married and started flipping houses together. Chip would find the properties and manage construction; Joanna would do the interiors and manage the books. She didn’t have any experience as a designer, but the work appealed to her—and her finishes and decor struck a chord around town. The couple initially bought houses on the proverbial wrong side of the tracks—always funneling their profits from one into the next—but within a few years they were flipping houses in the city’s toniest neighborhoods. They called their business Magnolia Homes.
By 2010, Chip and Joanna decided to plow everything they had into one project, building a whole neighborhood of 38 homes that would be called Magnolia Villas. As they always had—and as many contractors do—they borrowed heavily to get the project under way. Only this time, the numbers were much larger. They paved the roads and opened a real estate agency, and they were all set to start building—when the collapse of the housing market finally hit Waco. The local bank cut Chip and Joanna’s line of credit by half, which put the Villas project, and the couple’s entire livelihood, in jeopardy.
They managed to get an acquaintance to lend them $100,000, and then presold one of the homes, but they remained overstretched for the better part of two years. “There were hundreds of thousands of dollars in expenses
due every week,” Chip remembers. Joanna’s main memory from the period is of long hours staring at the computer screen, trying to make the budget work.
The Gaineses eventually built some of the Villas and sold some of the lots to other developers—and the experience taught them a few important lessons. One was the value of living to fight another day, Chip says. “For us, it’s a motivator to say, ‘Today couldn’t get any worse, but if we fight through this, tomorrow there’s a greener pasture.’ ” They also learned the importance of staying diversified. And they learned that skill sets don’t always scale. Chip offers another analogy, a lengthy one about a calf roper and an elephant.
“There’s no roping that thing,” Jo cuts in to clarify. “We were trying to rope an elephant, and it kicked our butts.”
That is, until the day in 2012 when the producer called and wanted to talk about a show.
They have the best timing of anyone I’ve ever worked with,” says Doug Olson, president of Meredith Magazines, which publishes Chip and Joanna’s Magnolia Journal. When the couple met with Olson and other Meredith execs for the first time, in late 2015, Chip and Joanna were already thinking about their post–Fixer Upper future. “They were going to launch a magazine when no one was doing magazines,” Olson remembers. But crucially, he says, “they didn’t want do it the way people have done it for the past 50 years.”
Joanna recalls her decision to create a magazine as a bolt of inspiration. “I woke up one day and said, ‘Chip, I want a magazine,’ ” she says. “We’d just realized we were going to be done with Fixer Upper, and I wanted a way to connect with our people.”
The only problem, to her, was that she didn’t particularly like magazines. There were too many ads, and they got in the way of the bond she sought with her fans. If she was to create a publication, she wanted everything about it to feel intentional—“that the message is not just noise.” That exacting focus and perfectionism—Chip calls her a cyborg—are two of her key entrepreneurial traits.
So she and a few employees created a mockup magazine and brought it to Meredith headquarters in Des Moines. The mockup had no ads, and Joanna told the group of publishing execs—who make most of their money on advertising—that she didn’t want any in her magazine. She also didn’t want a website for the publication, since Magnolia already had a site that included a blog alongside a growing e-commerce operation. She wanted the magazine printed on heavy, expensive paper. “This isn’t about making money,” she said at one point during the eight-hour meeting. “This isn’t your typical glossy fan magazine.” Rather, alongside a few dispatches from the Magnolia world—an essay from Chip, photos of Joanna’s garden—the magazine would print recipes, travel tips, home projects, and inspiring stories about people from all over. Like the lineups of Martha Stewart Living and O, the Oprah Magazine rolled into one.
Editorial aside, many of Joanna’s ideas about the magazine flew in the face of industry orthodoxy at a time when publishers needed to contain costs and look for revenue everywhere. The compromise they reached: The magazine has a maximum of 25 ad pages per issue, costs $8 per issue, and comes out four times a year—in print only—on very nice paper. Meredith (which publishes dozens of popular consumer titles, including People, InStyle, Travel + Leisure, and Martha Stewart Living) charges higher ad rates for Magnolia Journal than for any other title. And it was instantly profitable when it hit newsstands in late 2016. “It’s been our most successful magazine launch,” says Olson, “and the most successful in the industry since Oprah’s.” By the time Magnolia Journal debuted, the Gaineses were deep in discussions with Target about another way they could reach their audience without a TV show: by selling a line of affordable homewares. Target was creating a blitz of new house brands, and market research showed that in the home category, more than half of their shoppers wanted products that fit Joanna’s modern farmhouse aesthetic. As with the Meredith negotiation, Joanna made some bold asks. She wanted a team from Target to come experience the Silos—which a dozen or so did, led by chief merchandising officer Mark Tritton (now CEO of Bed Bath & Beyond). She also wanted her products to have their own space in Target stores, with its own look and feel, its own cash registers, and Magnolia-focused training for salespeople. She didn’t get the registers, but Target did give her something it had never tried before: Hearth & Hand (the brand Target created with Joanna) has its own front-andcenter space, demarcated by a black, peak-roofed frame designed to mimic the inside of the grain barn at the Silos.
Target EVP Jill Sando, who has been involved in the
“We knew there was a real chance that everything else would go away without the show. As soon as we accepted that, much greater opportunities started presenting themselves.”
deal since its inception, says that Hearth & Hand has been “incredibly successful, and we continue to expand the collection.” (Target doesn’t break out the financials of its brands.) Now, once a quarter, 12 to 16 people from Target’s design team fly to Waco to spend a day working on textile, furniture, and decor ideas with Joanna—either reviewing her concepts for the next round of products or presenting completed designs of the last. “She looks at every item from every direction,” Sando says. “The attention to detail is exhaustive.”
Olson echoes the point: “Joanna is very much the editor in chief of Magnolia Journal,” he says. “She’s more hands-on than any partner we’ve ever had”—including Rachael Ray and Martha Stewart.
That sounds like the beginnings of a micromanaging culture that could backfire, but, Olson says, “they’ve got the Midas touch. Everything they do is way more successful than when someone else is doing it.”
Abit of King Midas’s superpower will come in handy with the Gaineses’ next—and largest yet—endeavor. Just a few months after Chip and Joanna announced the end of Fixer Upper, HGTV’s parent company, Scripps Networks, was acquired by Discovery. Its CEO, David Zaslav, promptly scheduled a trip to Waco at the start of 2018.
Before taking Zaslav on a tour of the Silos and a new breakfast restaurant they were constructing, the Gaineses met with him one morning at 8:30. (The mogul had risen at 3:30 to fly in.) “He said, ‘What will it take to get you back?’ ” Chip remembers. “And, like everyone, he initially thought more money. ‘What’s the talent agreement?’ And we were like, ‘You know, none of those things are what we’re interested in debating.’ ”
What the Gaineses wanted was creative control. They had nothing against doing TV, but they wanted to do it on their own terms. Rather than try to match the Gaineses with a preexisting show format, Zaslav asked the couple what they were passionate about. “The magazine,” Joanna said. “I live and breathe that thing, and it’s not just about me and Chip.”
When Zaslav returned for a second visit a few months later, he had a proposal. The company’s DIY Network, an HGTV spinoff, was struggling. Viewership was down more than 20 percent that year, to an average of just over 200,000 viewers in prime time—whereas Fixer Upper had averaged 2.9 million viewers in its final season. How would the Gaineses like their own network? What’s more, when Joanna asked Zaslav what he envisioned for programming, he didn’t say. “The question is what do you want?” he answered.
The Gaineses had found their new partner—someone who viewed them as entrepreneurs, not just stars. “My job is to stay out of the way and have them be who they are,” Zaslav says. And who they are, he contends, is immensely powerful. “At a time when there’s so much anger in the culture, they represent everything that America wants: faith, family, food, home, kindness, authenticity. We are yearning
for a simpler time, and they embody that.”
When the Magnolia network launches this October, the joint venture will reach more than 52 million households, and it will eventually include an app and a streaming service. Like the magazine, Magnolia will carry fewer ads than its competitors, per Joanna’s insistence. “She felt there were too many interruptions on TV,” explains Allison Page, the new network’s president. “We are going to have longer program times than any network I’ve worked on—which creates a better viewer experience and a better experience for advertisers.” And, naturally, that scarcity has driven up ad prices, she says. Programming will run the gamut from cooking shows to episodes of Fixer Upper to revivals of wholesome old series—in the hopes that whole families will once again gather ’round the tube. Chip describes the mix as roughly a third lifestyle, a third entrepreneurial, and a third inspirational. As we talk in the office, a crew sets up outside to shoot scenes for a show in the latter category about an endurance athlete whose wife lost her battle with cancer.
Once again, the Gaineses have traded up. Back when they were flipping houses in Waco, they would identify a cheap home, add their design vision to it, and sell it for a profit, which they’d invest in the next project. They did the same with their own fame. When Fixer Upper started, they acquired a certain level of visibility and connection with their audience. Then they redesigned their renown, built it out, and flipped it.
Which is not to say the network play will necessarily work. Starring in a single show and producing a magazine are an order of magnitude smaller than programming a 24/7 TV channel. Does the world have that big an appetite for Chip and Jo?
In any case, the Magnolia brand will have to evolve. The modern farmhouse aesthetic has become de rigueur among homebuilders across America. You know the style: white or gray siding, maybe a metal roof, subway tiles in the kitchen, a sliding barn door somewhere else. Just a few years ago, it seemed so fresh, such a balance of contemporary and rustic. Today, there are signs that the trend is starting to wane. An article in The New York Times recently questioned whether we’ve reached “Peak Farmhouse.”
That’s no surprise to the Gaineses, who have already started to distance themselves from the look. Their own home is an actual farmhouse, and Joanna contends that because everyone in Waco knows her house, the locals who had their homes renovated on Fixer Upper wanted to mimic it. “They’d say, ‘I want your backsplash.’ And because they were paying clients, I’d say, ‘Yes, ma’am.’ ” And besides, Joanna adds, design elements like subway tiles and shiplap are timeless, sensible classics; she wasn’t trying to start a trend. “But if you look at the projects we’re doing now”— renovating a castle they bought last year, for instance— “there’s nothing farm about it.”
Chip is blunter. “We don’t want to be pigeonholed into that concept. Everybody knows this is a 10-year trend, and the trend started five years ago. We’re nervous about that.”
And yet, it’s not like they can afford to shed the modern farmhouse entirely. When I ask Target’s Sando about Joanna’s evolving aesthetic and whether Hearth & Hand might evolve accordingly, she resists: “We have stayed anchored to the position of the brand.”
Doug McNamee, a former Baylor athletics official whom the Gaineses hired to be their president in 2018 (he was also their first client on Fixer Upper), points out that home renovations aren’t a part of the Magnolia business anymore. “Their demand would be all over, and to mobilize a construction team and send them to, you know, Nashville—you can’t scale that. That’s nuts.”
McNamee, who envisions Magnolia as a billion-dollar company, thinks its future is in retail and restaurants. And perhaps hotels: Chip and Joanna bought a building in downtown Waco last year that they’re turning into a hotel, due to open in 2021. They operate several vacation rentals in town already. The Gaineses are adamant that they’ll never replicate the Silos anywhere else, but McNamee sees the possibility for a chain of stores more like Pottery Barn. Joanna suggests her bakery could go nationwide.
Any such plans will require the TV network to succeed. Magnolia has been busy launching new projects since Fixer Upper ended in April 2018. The company is tightlipped about revenue, but does allow that, without the fire hose of attention that TV stardom brings, it has been flat in the past year. Not that being on TV is the point of the business, Chip is quick to clarify. He calls it the “engine” that drives everything else.
The TV crew has started depositing its equipment on the other side of the room we’re in, and a handler cuts Chip off to remind him that he and Joanna are needed for the shoot. Their next big opportunity, whatever it will be, depends on designing this one just so—and then building it out.
“Joanna’s more hands-on than any partner we’ve ever had”—including Rachael Ray and Martha Stewart.