Managing Marc Jacobs

At each stop Jacobs won critical accolades, but profits were nonexistent. By 1993, Duffy and Jacobs were back on their own. Margins were tight and collections tiny, and the high-quality construction that the duo demanded kept profits elusive. Duffy, who repeatedly mortgaged his home to keep the company running, now calls that period "very romantic." As he puts it, "Obviously it was very hard financially, but I remember thinking, 'I'm never going to have this much freedom or enjoy this this much.' "

But freedom, it appears, wasn't everything. And so Duffy and Jacobs decided to take a dramatic step: They bartered their autonomy in exchange for a financial lifeline. In 1997 they signed on as studio director and artistic director, respectively, of Louis Vuitton. Bernard Arnault, LVMH's CEO, hired Jacobs not only to revive Vuitton, the centuries-old leather manufacturer, but also to launch its first-ever line of clothing.

Duffy pushed for the Vuitton job, rather than similar opportunities at LVMH units Christian Dior or Givenchy, because Vuitton had always been the profit engine of LVMH and the steady leather-goods business would provide a cushion. Moreover, once he persuaded Arnault to buy Marc Jacobs International - Arnault at first wanted only Jacobs, not his company - Duffy reasoned that LVMH was likely to be a steadfast booster for Marc Jacobs because it was making its first American investment and wouldn't want to see it fail.

The partnership has clearly paid off for Louis Vuitton. In addition to producing well-reviewed clothing collections, which now make up about 20% of Louis Vuitton's sales, Jacobs reinvented the classic Vuitton monogram handbag line by collaborating with fringe designers and artists like Steven Sprouse and Takashi Murakami.

Sprouse, for example, created Speedy Graffiti, a handbag that looked as if it had been spray-painted with the words LOUIS VUITTON. The 2001 collaboration was an instant hit, as was the Murakami bag, which replaced the traditional brown-and-gold palette with 33 different colors on black or white backgrounds. The latter took in $300 million during its 2003 debut year.

But from virtually the moment they signed on in 1997, Duffy and Jacobs were unhappy at LVMH. They believed their own company's growth was being stifled, and LVMH was more interested in building up Vuitton than in their brand.

Unable to win the funding they sought inside LVMH for Marc Jacobs, Duffy played political hardball. He courted outside interest from Tommy Hilfiger's former partners. And Jacobs complained to the Wall Street Journal in 2004, "I think Gucci treated Tom Ford better than LVMH has treated me." Not long after, the sides signed a truce. Jacobs and Duffy extended their contract by ten years, and LVMH agreed to fund a major store expansion for Marc Jacobs to transform the line into a global brand. With its new resources, the Marc Jacobs operation entered the black for the first time two years ago.

Jacobs enjoys operating in a loose structure and sees no reason to change his and Duffy's "nonformula formula." Though the two work for a $20 billion corporation, they still fancy themselves rebels who abhor the notion of, say, attending a budget meeting. Duffy in particular has clashed with LVMH executives. But if Duffy hasn't always succeeded in getting what he wants, he has managed to shield Jacobs from the wearying grind of corporate bureaucracy.

For its part, LVMH seems inclined to tolerate Duffy's and Jacobs's provocations. LVMH CEO Bernard Arnault and Louis Vuitton CEO Yves Carcelle declined to be interviewed for this article, but the company provided a longtime LVMH executive, Bertrand Stalla-Bourdillon, who was shifted last year to CEO of Marc Jacobs to oversee Duffy and Jacobs. He takes a tone of avuncular indulgence, as if he were discussing a misbehaving yet charming child. "There is so much respect in the quality and the art in Marc Jacobs," says Stalla-Bourdillon. "And then there is also, as we say in French, désobéissance - 'to disobey.' Which I like."

It's safe to say he'll accept the désobéissance as long as Jacobs and Duffy continue to generate $2 billion in profits annually for Louis Vuitton.

An example of Duffy's don't-bother-asking-so-they-don't-get-a-chance- to-say-no approach is the way that he and Jacobs are toying with producing a third, even lower-priced line to compete with the Gaps and H&M's of the world. Jacobs and Duffy are excited by the idea, but LVMH isn't interested because it's a luxury-goods company. When asked about a third line, Stalla-Bourdillon is dismissive: "Maybe it's better not to think about that subject."

But Duffy hasn't been waiting around for LVMH. "It's happening right now," he says. "It's 70% of the units we sell in our stores." It turns out he's referring to the $20 million line of specialty items - those $20 T-shirts and the other "junk" he can barely keep in his stores. "It's the same thing that happened with our home-ware line," says Duffy, "They said no, so I went to the Czech Republic and had them make crystal and china and just put them in the store."

Eventually, he says, LVMH will hear about the third line enough times that it will want to explore creating a new set of stores. "Then I'll say, 'All right, explore it.' And then I'll show them that it's already here."

For all that Duffy has done for Marc Jacobs the company, it pales in comparison to what he has done for Jacobs the person. For years Jacobs's hard-partying ways were legendary, even in an industry where carousing is de rigueur. Over time, though, Jacobs found it harder to keep functioning. There were a few public incidents: Jacobs was kicked off airplanes for disruptive behavior. More typically, he would hole up in a hotel in a haze fueled by vodka, heroin, or cocaine (or some combination thereof) and not show up at work for days.

When he'd finally come into the studio, he'd ask his staff to work through weekends to make up for the delays he had caused, and then again fail to turn up. Through no small effort by Duffy, the collections would be finished. Then Duffy would have to cajole the exhausted and demoralized design team not to quit.

In 1999, Anna Wintour and model Naomi Campbell told Duffy the problem was no longer tolerable; he needed to intervene. Duffy finally persuaded Jacobs to get help and escorted his friend to a rehab facility that year. The designer sobered up and enjoyed a string of hit collections and greater renown.

And then there was last February in London. After Jacobs kept Duffy waiting in the lobby of Claridge's a few hours before the Marc by Marc show, Duffy took a cab to the nearby Dorchester hotel and confronted Jacobs in his room. "Marc, I know what's going on," he told his partner. "The day after the Louis Vuitton show, you're going back to rehab." Jacobs tried to buy time, but Duffy was unbending. He threatened to quit if Jacobs didn't agree to return to rehab and told him, "I'm not willing to watch you kill yourself." Once again, Jacobs acceded.

So Duffy made arrangements and accompanied Jacobs to a treatment facility in Arizona the day after the Paris show. He also told Jacobs, "You have to be honest with everybody and tell them that you're going back to rehab." But before they could decide just how public they wanted to be, the New York Post's Page Six got wind of the story. Duffy confirmed the news, although he chose to do so by leaking it to Women's Wear Daily, a publication he perceived as friendlier than the Post.

The media strategy worked: the ensuing coverage was overwhelmingly sympathetic to Jacobs but it was a wrenching episode. "If the company dies, I'll live," Duffy says. "If Marc dies, I don't know what I would do. He means so much more to me than any company."

Jacobs puts it in starker terms: "If it weren't for Robert, I'm sure I'd be dead by now," he says. He's sitting in the eighth-floor office that the two share in SoHo. The partners work across from each other at a single cluttered desk. It is two months since Jacobs emerged from rehab. A sprightly 5-foot-8, Jacobs is deeply tanned and looking vibrant and lithe from two hours a day of yoga and other workouts. He has a Caesar-style haircut, three diamond stud earrings, and a tattoo on his wrist that reads perfect.

Between drags off chain-smoked Marlboro Lights and sips of a mossy concoction of cucumber, celery, and kale, Jacobs analyzes his partner: "He's not just the financial person. Robert is also a creative person who understands the aesthetics and creative choices the design team and I make," he says. "He's interested and curious and passionate and adamantly behind me. Even if he doesn't like something, he understands why we've come to a certain conclusion, and Robert will fight with whoever he needs to fight with to get things done so that my - our - vision will come off in the end."

Exhaling a tight line of smoke, Jacobs adds, "Marc Jacobs is not Marc Jacobs. Marc Jacobs is Marc Jacobs and Robert Duffy, or Robert Duffy and Marc Jacobs, whichever way you want to put it." 

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