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Sept. 20, 2022

Cristina Nuñez (True Beauty Ventures) - How to invest in beauty and personal care brands

Cristina Nuñez (True Beauty Ventures) - How to invest in beauty and personal care brands

Our guest today is Cristina Nuñez, Co-founder and General Partner of True Beauty Ventures. Some of their investments include Maude, Crown Affair, and K18. Today’s episode focuses on how to invest and build a beauty and personal care brand. Without further ado, here’s Cristina.

Some of the questions I ask her:

  1. Why start a fund only focused on beauty and personal care?
  2. What do you look for? Does a company have to be omnichannel from day 1 in order for you to be interested? How do you think about this intersection of influencer x brand
  3. What makes great packaging great that pops in retail?
  4. What’s amazing about beauty and personal care products from an investor's perspective?
  5. How do you make DTC work as a beauty and personal care?
  6. What are some of the trends that you get excited by?
  7. How do you think about added value?
  8. What’s the initial check size do you underwrite?
  9. What does differentiated distribution mean to you?
  10. What does product innovation mean to you? Does the product need to have product innovation in order for you to invest?
  11. What’s the case for having a vertically focused fund? What’s the long term goal?
  12. What do generalist/non-vertically exclusive funds tend to not understand about your category?
    1. Realized that people take care of themselves
  13. What has worked in the beauty and what doesn’t work in beauty?
  14. What has to be right in order for you to invest?
  15. Why a concentrated portfolio?
  16. What’s one thing you would change about VC?
  17. What’s one book that inspired you professionally and one book that inspired you personally?
  18. What’s one piece of advice for founders?
Transcript
WEBVTT 1 00:00:02.040 --> 00:00:17.000 Hello and welcome to the consumer VC podcast, where we discuss the intersection of 2 00:00:17.120 --> 00:00:21.000 venture capital and consumer I'm your host, Mike Gelb, and if you enjoy 3 00:00:21.079 --> 00:00:24.519 the show, you can also subscribe to my newsletter, where you will receive 4 00:00:24.760 --> 00:00:28.879 every new episode a week early. Head to the consumer VC DOT COM to 5 00:00:29.000 --> 00:00:35.520 subscribe. All continent episodes are intended for informational entertainment purposes and is not investment 6 00:00:35.560 --> 00:00:40.200 advice. Our guest today is Christina Nouniz, Co founder and general partner of 7 00:00:40.280 --> 00:00:45.240 true beauty ventures. Some of their investments include Maud, crown affair and Kate. 8 00:00:45.679 --> 00:00:50.600 Today's episode focuses on how to invest and build a beauty and personal care 9 00:00:50.640 --> 00:01:02.079 brand. Without further ADO, here's Christina. Okay, so, Christina, 10 00:01:02.200 --> 00:01:03.840 thank you so much for joining us here on the show. How are you? 11 00:01:04.239 --> 00:01:08.480 Thank you so much for having me. I'm doing great on this hot 12 00:01:08.480 --> 00:01:12.840 summer Miami Day. That's great to hear. That's great to hear. Thanks 13 00:01:12.879 --> 00:01:15.640 you again. I know that this has been a long time coming. We 14 00:01:15.719 --> 00:01:19.879 had a couple of capsulations on my end, so I really appreciate you being 15 00:01:19.920 --> 00:01:22.879 with me and my schedule. Why, to get started on, why did 16 00:01:22.920 --> 00:01:26.959 you start a fund solely focused on being in personal care. What was the 17 00:01:26.000 --> 00:01:30.519 opportunity you saw? It's such a great question because we get asked this all 18 00:01:30.519 --> 00:01:36.319 of the time, and there's a couple of reasons. One is because of 19 00:01:36.359 --> 00:01:42.760 a massive white space opportunity that my co founder and I identified early on, 20 00:01:44.040 --> 00:01:52.400 where there were very few institutional investors that were focused on not only beauty and 21 00:01:52.439 --> 00:01:57.040 wellness as a specialization, but early stage investing in this sector. There were 22 00:01:57.079 --> 00:02:05.040 plenty of angels go around and maybe some early stage vcs that dabbled in beauty, 23 00:02:05.079 --> 00:02:09.599 but there really wasn't anyone focused exclusively on the sector, and certainly not 24 00:02:09.759 --> 00:02:17.639 someone with a ton of experience either institutional investing or operating and with experience in 25 00:02:17.680 --> 00:02:23.280 beauty. So, quite honestly, it was a wide open playing field for 26 00:02:23.400 --> 00:02:30.080 us to come in and really make an impact, and our backgrounds are investing 27 00:02:30.120 --> 00:02:36.800 in beauty, operating in beauty, spending years exclusively looking at this space. 28 00:02:36.840 --> 00:02:42.319 So we knew firsthand that the opportunity existed. What we didn't know is how 29 00:02:42.439 --> 00:02:47.280 quickly we'd be able to launch this and be successful at deploying capital and the 30 00:02:47.280 --> 00:02:52.639 appetite that there was for what we had to offer to to this industry. 31 00:02:52.719 --> 00:02:58.039 So that was actually really surprising but also exciting for us. So you saw 32 00:02:58.080 --> 00:03:00.879 a lot of appetite then from Shell lps, or got a lot of traction 33 00:03:01.080 --> 00:03:07.319 from lps actually raised because there was some alignment or agreement there that there was 34 00:03:07.360 --> 00:03:10.479 really an opportunity with an early stage at personal care. Yeah, I mean 35 00:03:10.520 --> 00:03:20.360 there was a lot of uh demand from on the founder side because, honestly, 36 00:03:20.400 --> 00:03:24.039 they had very few places to turn when they were when they had launched 37 00:03:24.039 --> 00:03:30.400 a business and we're looking for a million or two million of capital. There 38 00:03:30.400 --> 00:03:32.879 are very few places that they could turn to. So the appetite was very, 39 00:03:34.000 --> 00:03:37.159 very strong. The demand was very strong from founders. When we were 40 00:03:37.159 --> 00:03:45.159 speaking to lps initially it was a bit challenging for those that didn't understand at 41 00:03:45.199 --> 00:03:52.360 the time the value of sector specialization and the value of having sector specialists and 42 00:03:52.479 --> 00:03:59.520 experts investing in this space alone. And so in some cases some LPS didn't 43 00:03:59.560 --> 00:04:02.360 understand ended and that was okay. In other cases those that got it, 44 00:04:03.199 --> 00:04:09.599 really really did get it and understood that you need sector specialists to really be 45 00:04:09.639 --> 00:04:15.479 able to identify what good looks like in this category, because there are so 46 00:04:15.520 --> 00:04:19.759 many brands that are launched in this space and it is arguably a very saturated 47 00:04:19.879 --> 00:04:24.839 space if you don't know what to look for and to be able to really 48 00:04:24.879 --> 00:04:30.920 identify the winning brands. And so those lps jumped on the opportunity and really 49 00:04:30.959 --> 00:04:35.079 wanted to get behind my co founder and I as experts to be able to 50 00:04:35.120 --> 00:04:41.279 invest successfully here. Was it also a case as well, as you look 51 00:04:41.360 --> 00:04:45.600 back a little bit, maybe beauty and personal care at the early stage Um, 52 00:04:45.639 --> 00:04:47.800 the investing landscape past, maybe ten years or so? where? Ten 53 00:04:47.879 --> 00:04:51.759 years ago and beyond, we saw the rise of the online channel, e 54 00:04:51.800 --> 00:04:57.879 commerce. A lot of tech investors got very excited about these types of companies, 55 00:04:58.000 --> 00:05:00.560 not just, of course, in beauty personal care, but across you 56 00:05:00.600 --> 00:05:03.160 know, consumer that has waned a bit over the past few years. Of 57 00:05:03.199 --> 00:05:06.800 course, these weren't funds that were beating and personal care, you know, 58 00:05:08.000 --> 00:05:13.079 exclusively focused, right. They were more either generalist consumer or just generalist period. 59 00:05:13.360 --> 00:05:17.199 But was that also part of the opportunity in that you saw actually a 60 00:05:17.199 --> 00:05:21.920 lot of firms leave investing in beauty and personal care early? Yeah, I 61 00:05:21.920 --> 00:05:31.079 mean I think the fact that beauty became a segment that consumers would increasingly purchase 62 00:05:31.360 --> 00:05:36.800 online. I think that opened the door to a lot of new investors coming 63 00:05:36.839 --> 00:05:44.000 into the space and for sure investors that maybe were traditionally VC focused on tech 64 00:05:44.519 --> 00:05:46.639 all of a sudden this is a really new, interesting category and they saw 65 00:05:46.680 --> 00:05:51.000 brands like glossier, as an example, that really tried to become tech companies 66 00:05:51.040 --> 00:05:55.800 themselves, and I do think that opened the door to a lot of investors 67 00:05:55.800 --> 00:06:00.399 to participate in this space. But I also think that beauty in and of 68 00:06:00.439 --> 00:06:05.720 itself is a category that, while online is a great experience and can be 69 00:06:05.759 --> 00:06:13.079 a great experience if done if executed correctly by the brand, it's still category 70 00:06:13.120 --> 00:06:19.000 that consumers like to shop and experience in store and it's something that we have 71 00:06:19.040 --> 00:06:25.920 always fundamentally believed in the importance of Omni channel for beauty brands and the fact 72 00:06:26.000 --> 00:06:30.319 that you need to focus on the experience online and offline, how they come 73 00:06:30.360 --> 00:06:36.959 together as well, because the ability for a beauty brand to scale exclusively in 74 00:06:38.199 --> 00:06:43.519 online is limited after a certain point. You see many beauty brands that have 75 00:06:43.680 --> 00:06:47.480 to push into wholesale, even if they intended to be digitally native in it 76 00:06:47.560 --> 00:06:54.920 of themselves, and there's so many dynamics at play that Um for why that's 77 00:06:54.959 --> 00:06:58.800 the case. One of them is, if you look at the way that 78 00:06:58.839 --> 00:07:03.360 the consumer is opping today, for those that are going in store, they're 79 00:07:03.439 --> 00:07:10.319 shopping across price points. They actually want an experience where they could maybe shop 80 00:07:10.399 --> 00:07:15.720 high and shop low for beauty, and you're actually seeing this really interesting blurring 81 00:07:16.319 --> 00:07:25.720 of distribution channels in retailers right now, whether that's the Sephora partnership with coals, 82 00:07:25.959 --> 00:07:30.519 or it's the Alta partnership with target, or Walmart with space and K, 83 00:07:30.720 --> 00:07:38.160 which is a prestige skin beauty retailer, or now CVs is offering prestige 84 00:07:38.560 --> 00:07:41.920 beauty in store. It's such an interesting dynamic. But I think what it 85 00:07:42.360 --> 00:07:47.160 shows is that the consumer really wants to be able to shop and experiment and 86 00:07:47.319 --> 00:07:54.160 play and learn in store and while online can be a great way to educate, 87 00:07:55.079 --> 00:08:01.399 you lose that kind of tangible experience Um when you're only looking at online 88 00:08:01.560 --> 00:08:07.439 or or shopping on social platforms. And so yes, the rise of tech, 89 00:08:07.800 --> 00:08:11.600 the rise of online for beauty has definitely boosted the category. But, 90 00:08:11.680 --> 00:08:16.279 as you mentioned, I mean the return to wholesale is real and it's something 91 00:08:16.319 --> 00:08:20.199 that I think is important for this category and will always be continued. Will 92 00:08:20.240 --> 00:08:24.600 continue to be important to this category. When you think about retail, because 93 00:08:24.639 --> 00:08:28.759 I'm glad you brought up these kind of blurring the lines and retailer's part room 94 00:08:28.800 --> 00:08:35.120 with one another right it. Does that make your job tougher when you're analyzing 95 00:08:35.159 --> 00:08:39.320 brands that are in retail to potentially invest in, because the customer, the 96 00:08:39.360 --> 00:08:43.320 actual customer type might be blurred, as you say, or not in a 97 00:08:43.360 --> 00:08:48.360 specific category might be hard to describe? Is that challenging to you, or 98 00:08:48.600 --> 00:08:52.120 is it lend itself as an opportunity in that the brand actually can be maybe 99 00:08:52.159 --> 00:08:56.519 broader than like a specific demo? It does make it a bit more challenging. 100 00:08:56.559 --> 00:09:03.759 There's a famous quote by Leonard Lauder where he said that you are defined 101 00:09:03.960 --> 00:09:07.320 by your distribution. Brand is defined by its distribution. So it used to 102 00:09:07.399 --> 00:09:13.039 be that if you are prestige or luxury, you know you were sold in 103 00:09:13.200 --> 00:09:18.759 certain channels of distribution. So if you were luxury, you know you were 104 00:09:18.799 --> 00:09:22.559 sold in department stores, Um as an example, and you really stuck to 105 00:09:22.600 --> 00:09:26.600 your lane because that defined who you were and you started off in those higher 106 00:09:28.000 --> 00:09:31.120 points of distribution before you made your way into you know, others. But 107 00:09:31.679 --> 00:09:35.480 I think to your point it does make it a little bit more challenging because 108 00:09:35.480 --> 00:09:41.480 it potentially calls into a question who the brand is and who the consumer is. 109 00:09:41.600 --> 00:09:50.480 When before you can maybe bucket the consumer into really easy demographics or psychographics. 110 00:09:50.000 --> 00:09:54.720 Now it might be a little bit harder because the consumer may want to 111 00:09:54.799 --> 00:09:58.639 mix and match and they may be comparing a mass brand and holding it up 112 00:10:00.120 --> 00:10:03.720 x to a prestige brand and trying to compare ingredient list and look at the 113 00:10:03.720 --> 00:10:09.960 benefits and then compare it to the price. And the consumer is so savvy 114 00:10:09.000 --> 00:10:13.360 in this space that you know, you you, you can't pull the wool 115 00:10:13.440 --> 00:10:20.240 over the consumer's eyes. They will be checking, you know, your reviews, 116 00:10:20.279 --> 00:10:24.399 your your website, they'll be in reddit chats and they're going to be 117 00:10:24.440 --> 00:10:30.480 trying to really uncover does what is the value of this brand? What is 118 00:10:30.519 --> 00:10:35.200 their value proposition? Do they actually deliver on the promises that they make two 119 00:10:35.279 --> 00:10:41.600 consumers and then kind of compare and contrast across everything that's out there. So 120 00:10:41.080 --> 00:10:45.399 it does. It does make it a little bit more challenging but Um, 121 00:10:45.440 --> 00:10:48.320 you know, it's also another opportunity to access a consumer. For example, 122 00:10:48.320 --> 00:10:54.000 if they're going on a target run and they happen to be in the skincare 123 00:10:54.120 --> 00:10:58.759 section and you happen to be in the Alta shop and shop experience. There's 124 00:10:58.759 --> 00:11:03.799 an opportunity for you to access that consumer who may not have gone to a 125 00:11:03.840 --> 00:11:07.879 standalone Alta store because maybe there wasn't an old store, but there was a 126 00:11:07.879 --> 00:11:13.919 target location. So it is a great opportunity for brands to access more consumers 127 00:11:13.320 --> 00:11:18.799 and a way for them to to be able to market to them in merchandise, 128 00:11:18.879 --> 00:11:22.399 to them in store, if given that opportunity. And you know, 129 00:11:22.440 --> 00:11:26.759 there's a whole host of reasons why. Sometimes that can be challenging because selling 130 00:11:26.759 --> 00:11:31.559 in retail is expensive, but then again, online marketing has become increasingly more 131 00:11:31.639 --> 00:11:37.360 expensive. So it's Um it gives it gives brands another outlet, in another 132 00:11:37.399 --> 00:11:41.960 way to access folks. I'd imagine that is somewhat challenging, right, because 133 00:11:41.960 --> 00:11:45.200 if you are, for example, a luxury brand, right, yes, 134 00:11:45.320 --> 00:11:48.759 you do have, you know, more accessibility if your brand is in, 135 00:11:50.000 --> 00:11:52.519 you know, target or is featured Um an Alta and then that's, you 136 00:11:52.519 --> 00:11:56.240 know, in a target store at the same time, and so you have 137 00:11:56.480 --> 00:12:01.159 more access, more distribution, but the same time, do you lose maybe 138 00:12:01.159 --> 00:12:05.799 that sense of of luxury in terms of where you're positioned, and so I'd 139 00:12:05.840 --> 00:12:07.840 imagine that that could be tricky as you're kind of analyzing, you know, 140 00:12:07.879 --> 00:12:16.080 brand equity from from your standpoint. It's tricky and it's also tougher to educate 141 00:12:16.200 --> 00:12:20.840 in certain channels because you don't have the merchandizing opportunity on shelf to tell the 142 00:12:20.919 --> 00:12:28.960 story. And then you may not also have a beauty advisor or any salesperson 143 00:12:28.039 --> 00:12:33.759 there to also explain what the brand is, why it's so special and really 144 00:12:33.080 --> 00:12:37.120 why the value proposition is what it is. And if you don't have that 145 00:12:37.200 --> 00:12:41.720 opportunity, it can be it can be really hard, especially if a brand 146 00:12:43.279 --> 00:12:46.960 is a higher price point brand, because now you have the hurdle of price 147 00:12:46.000 --> 00:12:50.279 point to be able to convince consumers of why they're paying for this. What 148 00:12:50.480 --> 00:12:54.679 is the efficacy that they are actually going to get from using this product? 149 00:12:54.720 --> 00:12:58.039 Why is it differentiated? What is the story behind why it was created? 150 00:12:58.120 --> 00:13:07.320 A lot of these luxury brands have really great founding stories or clinical testing and 151 00:13:07.559 --> 00:13:13.000 other benefits that they can articulate and if they don't have that opportunity on shelf 152 00:13:13.080 --> 00:13:18.559 because of the merchandizing opportunity, then that's a that's also a challenge. So 153 00:13:18.639 --> 00:13:26.399 we opened this by you saying how saturated beauty and personal care is, and 154 00:13:26.720 --> 00:13:30.320 it's hard, of course, when you don't maybe come from the industry. 155 00:13:30.399 --> 00:13:33.960 And this is the opportunity you're seen as well, since you're vertically focused in 156 00:13:33.039 --> 00:13:35.919 terms of you're able to pick the right brands that are going to succeed. 157 00:13:37.360 --> 00:13:39.919 What do you look for in a brand? And also, if you are 158 00:13:41.039 --> 00:13:46.320 to find by your distribution, does that mean you have to be Omni Channel 159 00:13:46.360 --> 00:13:48.720 from day one in order for you to be interested, or Omni Channel period 160 00:13:48.759 --> 00:13:52.799 in order for you to be interested? I'll answer that question first, because 161 00:13:52.840 --> 00:13:56.559 that's that's a quicker one. I do think Omni Channel is the best path 162 00:13:56.679 --> 00:14:01.919 for a beauty brand, but most definitely lea. You can start online first. 163 00:14:03.000 --> 00:14:07.120 In fact, we encourage founders to be super focused and how they launch 164 00:14:07.759 --> 00:14:11.200 and to not try to launch in a massive way right out the gate. 165 00:14:11.879 --> 00:14:18.200 To start off with your DTC, maybe a few e commerce partners that are 166 00:14:18.360 --> 00:14:24.919 brand building partners for you, before you expand into large retail, whole wholesale 167 00:14:24.919 --> 00:14:31.639 distribution with an anchor partner, which is what we always encourage so starting offful. 168 00:14:31.200 --> 00:14:35.559 You know, it's very difficult for a brand to launch full alldoor distribution 169 00:14:37.000 --> 00:14:41.840 in a Sephora or an Alta right out the gate unless you are perhaps founded 170 00:14:41.879 --> 00:14:48.240 by a large celebrity founder, is an example, or a big influencer, 171 00:14:48.440 --> 00:14:52.840 and that's happening more and more today. But if you're not one of those 172 00:14:52.879 --> 00:14:56.679 brands, it is pretty hard to get Sephora Alta's buy in to have such 173 00:14:56.720 --> 00:15:03.360 a large push. So definitely online lower barriers to entry. You could put 174 00:15:03.720 --> 00:15:07.879 a website up and start to build out your online following before you launch retail. 175 00:15:07.919 --> 00:15:13.799 That's a strategy that we've seen executed many times Um. But I think 176 00:15:13.799 --> 00:15:16.919 when I take a step back, and you know I say the industry is 177 00:15:18.000 --> 00:15:22.240 very saturated, it is the case, but the reality is there are so 178 00:15:22.480 --> 00:15:28.559 many pockets of growth and opportunities to invest in beauty. You just have to 179 00:15:28.639 --> 00:15:33.200 be able to have the right framework and the right investment criteria to filter all 180 00:15:33.240 --> 00:15:37.799 of that other stuff out. Beauty is large, it's growing, it's highly 181 00:15:37.879 --> 00:15:45.200 fragmented and the large players are losing share to the indies and the indies are 182 00:15:45.200 --> 00:15:50.679 growing faster. The indies are the ones pushing innovation growth, they're building out 183 00:15:50.840 --> 00:15:58.519 really great customer bases, they're going after innovation in sustainability and ingredients and all 184 00:15:58.559 --> 00:16:00.919 this great stuff. So that's where the fun is, that's where the activity 185 00:16:02.039 --> 00:16:04.000 is, and so what we try to do is we spend our time looking 186 00:16:04.080 --> 00:16:07.799 at hundreds and hundreds of brands. I think in the last two years since 187 00:16:07.840 --> 00:16:12.919 we've launched the Fund we've looked at maybe nine hundred and fifty brands in this 188 00:16:14.080 --> 00:16:18.720 space alone, and so trying to figure out what we want to spend time 189 00:16:18.799 --> 00:16:22.240 on and what we actually we say what we filter in, not what we 190 00:16:22.320 --> 00:16:26.240 filter out, because the bar is so high when we bring those brands in 191 00:16:26.279 --> 00:16:30.720 and we actually spend time talking to founders, going into diligence and I am 192 00:16:30.799 --> 00:16:33.519 really trying to figure out if this is something we want to invest in. 193 00:16:33.600 --> 00:16:38.440 We look for several factors and they're not going to be groundbreaking because I'm sure 194 00:16:38.440 --> 00:16:41.639 a lot of investors look for the same thing and in this category and other 195 00:16:41.679 --> 00:16:47.759 categories. But first and foremost it starts with the brand and the founder and 196 00:16:48.120 --> 00:16:52.720 because there are so many brands and beauty, we look to see how differentiated 197 00:16:52.000 --> 00:16:56.919 is this brand, what is the positioning and how does it compare to everything 198 00:16:56.919 --> 00:17:00.519 else that's out there, everything else that's on shelf? And the founder, 199 00:17:00.559 --> 00:17:04.319 WHO's behind them? What is their founding story? Why do they think this 200 00:17:04.400 --> 00:17:08.720 needs to exist in the world, and how dedicated and passionate they are about 201 00:17:08.720 --> 00:17:12.359 what they do every day? So spending a lot of time, spending time 202 00:17:12.359 --> 00:17:17.640 with the founder, identifying what drives them, what their point of differentiation is. 203 00:17:18.200 --> 00:17:22.319 And then, honestly, we spend so much time just reading and digesting 204 00:17:22.440 --> 00:17:26.839 everything about the beauty industry that most of the time, even before any founders 205 00:17:26.839 --> 00:17:29.680 reach out to us, we already have them on our radar or we already 206 00:17:29.720 --> 00:17:33.559 have the brands on our radar that we think are creating a splash, that 207 00:17:33.640 --> 00:17:37.119 are doing something different. We also have our ear to the ground, Um 208 00:17:37.119 --> 00:17:40.759 and speaking to all the merchants at, you know, every major retailer, 209 00:17:40.839 --> 00:17:45.400 to also figure out what's on their radar. But once we get past brand 210 00:17:45.519 --> 00:17:48.880 and founder and the second area that we spend a lot of time on is 211 00:17:48.240 --> 00:17:52.480 product, because at the end of the day, I mean you're selling a 212 00:17:52.480 --> 00:17:57.000 product that in some cases really can change people's life and if they can't live 213 00:17:57.039 --> 00:18:03.119 without your product, Um, the loyalty and the attachment is amazing in this 214 00:18:03.160 --> 00:18:06.839 space and so really understanding. Do they deliver on what they say? What 215 00:18:06.920 --> 00:18:10.680 are their ingredients? Are they, you know, formulated in a clean way, 216 00:18:10.680 --> 00:18:14.680 if that's part of their positioning, where they focus more on clinical results 217 00:18:14.680 --> 00:18:17.880 and what testing has been done, and how can you actually prove that this 218 00:18:18.119 --> 00:18:21.119 works? Because you can get everybody to buy a product once, but then 219 00:18:21.319 --> 00:18:25.559 to get them to come back and continue to replenish that product means you need 220 00:18:25.599 --> 00:18:30.359 to have something that actually delivers on the product benefits. And then another piece 221 00:18:30.400 --> 00:18:36.559 we've spend some time already talking about is distribution, because it is so important 222 00:18:36.599 --> 00:18:41.920 that a brand is focused and narrow on its distribution. First. You definitely 223 00:18:41.920 --> 00:18:44.200 don't want to bite off more than you can chew, and I can't tell 224 00:18:44.200 --> 00:18:48.880 you how many times we see small brands that are so proud of all of 225 00:18:48.880 --> 00:18:52.880 the points of distribution that they're in. There in two thousand points of distribution, 226 00:18:52.960 --> 00:18:56.119 and then their revenue is teeny tiny and all that means is that you're 227 00:18:56.160 --> 00:19:02.640 not really productive in the distribution you're in and you may not even be important 228 00:19:02.680 --> 00:19:07.079 to the retailers that you're working with. So we like narrow but more productive 229 00:19:07.079 --> 00:19:10.640 distribution. And then on the DTC side, I mean we look at all 230 00:19:10.680 --> 00:19:14.920 the metrics there and oftentimes when, since these brands are early, they may 231 00:19:14.920 --> 00:19:18.720 not have a lot of proofpoints in retail yet. So spending time on the 232 00:19:18.839 --> 00:19:22.720 data that we get from from them on DTC in terms of their customer repurchase 233 00:19:22.839 --> 00:19:26.880 rate and how many times, not only how many times have they come back 234 00:19:26.920 --> 00:19:30.960 to purchase, but how recently have they come back to purchase, and looking 235 00:19:30.000 --> 00:19:33.640 at a O v s and LTV s and all the major, you know, 236 00:19:33.960 --> 00:19:38.720 check marks that we have to check on on DTC is is important and 237 00:19:38.759 --> 00:19:41.480 I think all it does is it validates that there is something there, there 238 00:19:41.559 --> 00:19:45.119 is some momentum, and then can the brand cross over into retail? Is 239 00:19:45.160 --> 00:19:48.279 the bet that we take if they're not there yet UM, and we have 240 00:19:48.440 --> 00:19:52.400 definitely have our ways of vetting that. And I can go on and on, 241 00:19:52.519 --> 00:19:56.400 but I think you know it's it's one of those things where there's as 242 00:19:56.480 --> 00:20:00.559 much data as we can get from these early stage brands and could be a 243 00:20:00.640 --> 00:20:03.680 science to it and we we've seen lots of pattern recognition. We have a 244 00:20:03.680 --> 00:20:07.519 ton of reps in the space to identify what good looks like. But ultimately 245 00:20:07.559 --> 00:20:12.920 it's it's a gut call to it's it's more art than science and it's trying 246 00:20:12.960 --> 00:20:17.319 to figure out, and all of our experience and seeing the playbooks that have 247 00:20:17.480 --> 00:20:21.319 been executed in beauty, which are the ones that would work and can this 248 00:20:21.440 --> 00:20:26.119 brand execute one of those? What if you find a brand it's maybe performing 249 00:20:26.160 --> 00:20:30.599 really well online, has great margins, but you actually are not convinced maybe 250 00:20:30.599 --> 00:20:37.640 the packaging or the brand identity is working would work on the retail side it 251 00:20:37.680 --> 00:20:40.279 would that be a risk that you might be willing to kind of take in 252 00:20:40.359 --> 00:20:42.640 order to how the brand go through a rebrand, if the founder is comfortable 253 00:20:42.720 --> 00:20:47.400 doing that. How do you approach that that scenario? Our backgrounds, my 254 00:20:47.400 --> 00:20:51.720 my co founder, rich Gerston and I, we come from private equity and 255 00:20:51.759 --> 00:20:56.519 so in private equity your typically invest a little bit later stage and that's part 256 00:20:56.559 --> 00:21:00.759 of the value add. You roll up your sleeves, you identify opportunities to 257 00:21:02.559 --> 00:21:07.880 fix a company, whether that's rebranding, you know, obviously, enhancing management 258 00:21:07.880 --> 00:21:12.440 teams, optimizing supply chains. You really you spend a lot of time with 259 00:21:12.599 --> 00:21:18.480 these brands, which is why in private equity typically invest in fewer portfolio for 260 00:21:18.559 --> 00:21:21.960 your portfolio companies, you're also deploying larger checks. But we actually have tried 261 00:21:22.000 --> 00:21:26.039 to do here with true beauty. is a bit of a hybrid approach actually, 262 00:21:26.079 --> 00:21:32.039 because we do believe in strong value adds. So we actually have fewer 263 00:21:32.079 --> 00:21:37.000 companies because we want to invest more meaningfully from a check sized perspective and we 264 00:21:37.039 --> 00:21:40.160 want to spend more time with the brands. So when we look at an 265 00:21:40.160 --> 00:21:45.519 opportunity like what you just described, where there's something that's so special, they 266 00:21:45.519 --> 00:21:51.519 have an amazing product, of fantastic founder and perhaps they just need a small 267 00:21:51.519 --> 00:21:56.440 tweak and that could be a bit of a brand refresh or maybe a move 268 00:21:56.519 --> 00:22:00.759 to a new packaging vendor. Again, we have so many resources at our 269 00:22:00.759 --> 00:22:07.640 disposal with our network within beauty that's easy for us to do those small lifts. 270 00:22:07.680 --> 00:22:11.680 We will definitely pursue. When it comes to this brand has to be 271 00:22:11.759 --> 00:22:17.640 completely reworked. The positionings off, the value proposition isn't strong. We have 272 00:22:17.680 --> 00:22:22.960 to reformulate and all of that is a bit more heavy lifting that. You 273 00:22:22.000 --> 00:22:26.720 know, there's so many options at our disposal, so many interesting brands out 274 00:22:26.720 --> 00:22:30.200 there, that it's not something that we will undertake necessarily. We would rather 275 00:22:30.319 --> 00:22:36.319 find something that has momentum and just needs a little bit of, you know, 276 00:22:36.559 --> 00:22:41.160 tweaking and is a burning ember and it just needs kind of more fuel 277 00:22:41.240 --> 00:22:44.839 to be added to the fire Um. And that's kind of that's been our 278 00:22:44.880 --> 00:22:49.519 strategy, is identifying those brands that have those characteristics, because ultimately just is 279 00:22:49.839 --> 00:22:52.759 a lot of heavy lifting to, quote unquote, turn a brand around. 280 00:22:52.799 --> 00:22:57.319 So that's not that hasn't been our focus to date and won't be, I 281 00:22:57.359 --> 00:23:00.640 guess, on my example that doesn't kind of bother you at all, just 282 00:23:00.720 --> 00:23:04.279 because that's kind of like in the nature of the game and that that is 283 00:23:04.279 --> 00:23:07.599 like part of the value add you actually bring to some of these brands. 284 00:23:07.640 --> 00:23:11.240 And of course you're taking the approach of having a concentrated portfolio, so you're 285 00:23:11.240 --> 00:23:15.759 spending a lot more time with the brand correct. Yeah, spending a lot 286 00:23:15.759 --> 00:23:19.880 more time and you know, I think a lot of investors say their value 287 00:23:19.920 --> 00:23:26.720 add, but at least in early stage investing and with other vcs that perhaps 288 00:23:26.799 --> 00:23:33.960 have twenty, thirty plus portfolio companies, it's really hard to do that. 289 00:23:33.039 --> 00:23:37.599 I'm actually amazed that those that would actually be able to provide that level of 290 00:23:37.640 --> 00:23:42.480 support to their companies. I think we've actually tried to create a more concentrated 291 00:23:42.480 --> 00:23:48.359 portfolio so that our time can be spent with the teams, with the with 292 00:23:48.440 --> 00:23:55.440 the founders. We have for credible team members. We all have extensive beauty 293 00:23:55.480 --> 00:23:59.839 experience, so we can all get our hands dirty with with the brands and, 294 00:24:00.359 --> 00:24:03.400 honestly, the way we look at it is one of the best ways 295 00:24:03.400 --> 00:24:07.279 that we could add value is mistake avoidance. We have a lot of reps, 296 00:24:07.319 --> 00:24:11.960 we've seen these playbooks executed, we know the space incredibly well. We 297 00:24:12.119 --> 00:24:18.440 know the way that retailers think and behave with brands. If we can just 298 00:24:18.759 --> 00:24:25.400 come in and spend time with our founders and actually call out potential problems even 299 00:24:25.440 --> 00:24:30.599 before they become problems, that's mistake avoidance, because mistakes cost time, mistakes 300 00:24:30.640 --> 00:24:37.319 cost money. It's very difficult to come back from some big mistakes and one 301 00:24:37.319 --> 00:24:41.200 of those is distribution. I can't tell you how often we talk to brands 302 00:24:41.240 --> 00:24:45.839 that are like, I'm launching these three retailers and I'm launching them all at 303 00:24:45.880 --> 00:24:49.880 once, and for us that's a major red flag. Um, we'd rather 304 00:24:51.000 --> 00:24:56.240 you focus on one and do it incredibly well and be build something with that 305 00:24:56.319 --> 00:24:59.599 retailer. So they can also build your brand equity and help you get to 306 00:24:59.599 --> 00:25:03.640 where you and ago. That's one example, and so I think the concentrated 307 00:25:03.680 --> 00:25:07.799 portfolio allows us to do that and I think do it really well. Yeah, 308 00:25:07.880 --> 00:25:11.079 I mean it reminds me of a conversation to have a Quayton Christopher, 309 00:25:11.480 --> 00:25:15.920 how he said that when did the target, completely mismanaged target, just thought 310 00:25:15.000 --> 00:25:18.160 it would sound really well and you know, have like high velocities and kind 311 00:25:18.160 --> 00:25:22.279 of all that stuff like that. And and because there was so focused on, 312 00:25:22.400 --> 00:25:25.119 you know, the DDC business, that they almost made the jump a 313 00:25:25.119 --> 00:25:27.319 bit too soon. Yeah, and to your point, I mean are they 314 00:25:27.400 --> 00:25:34.160 are they retail ready? Do they have the right packaging to articulate the story 315 00:25:34.400 --> 00:25:38.559 on the packaging itself, again, because in target you may not have the 316 00:25:38.599 --> 00:25:42.680 merchandizing on shelf to be able to do that. So your packaging says at 317 00:25:42.680 --> 00:25:45.599 all. Do they have the right size impression for the consumer? I mean 318 00:25:45.640 --> 00:25:52.200 there's so many interesting factors there that I think some brands don't take into consideration 319 00:25:52.319 --> 00:25:56.599 and so there's a lot to dig in on just distribution. But you know, 320 00:25:56.680 --> 00:26:00.000 we love it, we live and breathe it. Spend so much time 321 00:26:00.079 --> 00:26:03.319 in the industry that you know, I think we can be really good thought 322 00:26:03.319 --> 00:26:11.319 partners for brands, whether they're embarking on big retail distribution launches or product and 323 00:26:11.359 --> 00:26:18.680 new category innovations or starting to think about international distribution, etcetera. What makes 324 00:26:18.400 --> 00:26:23.440 great packaging? What's gonna pop in retail per se? Oh Gosh, there's 325 00:26:23.680 --> 00:26:27.200 so many things. And again it also depends on the category and also packaging 326 00:26:27.240 --> 00:26:32.759 today is a bit controversial. I mean, when you think about maybe five 327 00:26:32.880 --> 00:26:37.240 or ten years ago, right luxury in particular, it was all about the 328 00:26:37.279 --> 00:26:42.160 packaging and the box within a box and how it gets delivered in all the 329 00:26:42.200 --> 00:26:49.039 paper and inserts, and today that's actually to the more modern consumer, in 330 00:26:49.079 --> 00:26:53.200 particular Gen Z, that's a huge no, no, it's all it's just 331 00:26:53.319 --> 00:26:57.920 waste. So to show you know, you you need the packaging, of 332 00:26:57.960 --> 00:27:03.240 course, to be able to tell your brand story and for it to look 333 00:27:03.680 --> 00:27:06.839 very nice and have a good consumer experience, but you want to balance that 334 00:27:06.920 --> 00:27:10.519 with, you know, what is the impact that you're leaving on the planet? 335 00:27:10.880 --> 00:27:15.319 Um, and so it's hard. I do think what we've seen over 336 00:27:15.359 --> 00:27:21.839 the last few years is a bit of a move towards very simple, clean 337 00:27:22.519 --> 00:27:26.759 packaging in terms of aesthetic branding and look and feel, and it was really 338 00:27:26.920 --> 00:27:32.920 pushed by the move into digital and having these very, you know, digitally 339 00:27:33.000 --> 00:27:37.480 savvy brands come out and every you know, the font was was big and 340 00:27:37.960 --> 00:27:44.359 San Seraph and things started to really look alike. That doesn't translate very well 341 00:27:44.400 --> 00:27:48.480 in retail, and so it's interesting my team and I, you know, 342 00:27:48.519 --> 00:27:53.000 we always do tours either at Sephora or at Alta. I mean we're touring 343 00:27:53.559 --> 00:28:00.039 the makeup section at Sephora and I was like, Gosh, every brand and 344 00:28:00.119 --> 00:28:03.319 the clean, more modern brands, they all kind of look the same. 345 00:28:03.799 --> 00:28:08.359 They all look a bit they're very clean. Clean I mean by just the 346 00:28:08.599 --> 00:28:14.720 the aesthetic and the branding, but that could also be quiet. And so 347 00:28:14.799 --> 00:28:19.440 how do you grab consumers attention with and tell the product benefit and the brand 348 00:28:19.599 --> 00:28:26.480 story when you are very simple and clean in terms of your presentation on packaging 349 00:28:26.599 --> 00:28:32.440 and just the overall look and feel, where you're very simple and hardly have 350 00:28:32.599 --> 00:28:37.160 much text on the packaging itself? It's a challenge. Yeah, I mean 351 00:28:37.200 --> 00:28:41.119 it seems too that that part of the challenge as well is when you're selling 352 00:28:41.160 --> 00:28:44.839 online, since we're all strolling through our phones we're all looking at our phones 353 00:28:44.880 --> 00:28:45.960 and has to be kind of very clear. You want the brand us to 354 00:28:45.960 --> 00:28:49.799 be very, very clear presentation in the phone, you know, and might 355 00:28:49.839 --> 00:28:56.319 come across, as you know, not as enthusiastic or maybe as like interesting 356 00:28:56.359 --> 00:28:59.599 per se. But then on retail I'd imagine it's like the complete opposite right 357 00:28:59.680 --> 00:29:02.880 and of what you want. I was having this exact conversation with one of 358 00:29:02.920 --> 00:29:11.359 our brands because they launched in in Sephora and the brand looks stunning, beautiful 359 00:29:11.480 --> 00:29:15.680 imagery. Honestly, the presentation in stores beautiful. It almost looks like it 360 00:29:15.720 --> 00:29:19.720 would look on instagram. But you have to remember that you're also selling. 361 00:29:21.319 --> 00:29:25.640 You you're supposed to sell in store and you're supposed to educate, and you 362 00:29:25.720 --> 00:29:30.960 do that through education really. And so there are tactics to what a brand 363 00:29:30.000 --> 00:29:33.200 should look like, how they should sound, what they should say in terms 364 00:29:33.240 --> 00:29:37.400 of text and what should be in their imagery, before and afters, as 365 00:29:37.440 --> 00:29:44.039 an example. There's all these really important retail tactics that also have to be 366 00:29:44.079 --> 00:29:48.960 included in that presentation, not just being something that's aesthetically pleasing like you would 367 00:29:49.000 --> 00:29:53.799 find on social or on Instagram, as an example. That's a really, 368 00:29:53.839 --> 00:30:02.279 really good point. How have you seen brands successfully approach consumer education within this 369 00:30:02.359 --> 00:30:06.960 space? You know, it's Um there's no one way, but I do 370 00:30:07.160 --> 00:30:11.839 think the consumer is looking at your site, of course, but they're also 371 00:30:11.880 --> 00:30:18.559 looking at your social they're looking at your emails and now text and I think 372 00:30:18.640 --> 00:30:23.160 one of the best ways to do it is to be consistent and if you're, 373 00:30:23.319 --> 00:30:29.160 you know, have a very specific point of differentiation and value proposition, 374 00:30:29.759 --> 00:30:33.000 make sure that you reiterate that every single time. And, of course, 375 00:30:33.039 --> 00:30:37.240 if you're specifically marketing a product, let's say it's a product launch, you 376 00:30:37.240 --> 00:30:41.680 obviously want to emphasize that product and the benefits and why a consumer should purchase 377 00:30:41.720 --> 00:30:47.079 this, but always reinforcing what the brand is and what it stands for, 378 00:30:47.359 --> 00:30:52.960 and I think that having that consistency across channels is really important. I also 379 00:30:52.079 --> 00:30:56.119 think, as we know, you know, especially with the rise of Amazon 380 00:30:56.799 --> 00:31:03.079 reviews and you GC and what the consumer is saying and activating the community and 381 00:31:03.119 --> 00:31:08.319 having them tell the story for you not just in the brand's voice but by 382 00:31:08.319 --> 00:31:12.240 the consumer themselves, in a way that is, you know, authentic, 383 00:31:12.240 --> 00:31:17.279 where it's not just you're paying influencers to tell it and I think that is 384 00:31:17.319 --> 00:31:22.799 also hearing it from other consumers figuring out ways as well to kind of activate 385 00:31:23.319 --> 00:31:27.839 word of mouth. But and again, that has always been the holy Grail, 386 00:31:27.960 --> 00:31:33.279 because most consumers still shop because of a friend, a recommendation from a 387 00:31:33.359 --> 00:31:34.920 friend, and they look at you and say, Gosh, your skin looks 388 00:31:34.960 --> 00:31:38.079 amazing. What are you using or your hair? What did you do? 389 00:31:38.279 --> 00:31:45.519 You know people want recommendations like that, so putting out amazing product that delivers 390 00:31:45.160 --> 00:31:48.160 one of the best ways to do it. How do you also think about 391 00:31:48.200 --> 00:31:55.319 this intersection between influencer and brand? Using influencers to help promote your brand, 392 00:31:55.559 --> 00:32:00.440 influencers starting brands as kind of like convergence? How do you allies brand? 393 00:32:00.440 --> 00:32:04.359 Maybe first we can start with it's like an influencer where to start their own 394 00:32:04.359 --> 00:32:07.240 brand within this space. Yeah, I mean we see it a lot. 395 00:32:07.480 --> 00:32:13.200 We're seeing influencers and celebrities start brands and kind of going back to what I 396 00:32:13.240 --> 00:32:16.720 said around what are the key criteria, it starts with brand and it starts 397 00:32:16.720 --> 00:32:22.759 with founder, and when you have the perfect mix of the right brand and 398 00:32:22.759 --> 00:32:28.599 and and brand positioning with the right founder, that's kind of where the magic 399 00:32:28.680 --> 00:32:32.000 happens. And so whether or not at your celebrity or you're a big influencer. 400 00:32:34.319 --> 00:32:37.279 Why do you? Why did you start this? Why do you why 401 00:32:37.400 --> 00:32:42.720 is your product so special, why is it differentiated and why should it exists 402 00:32:42.720 --> 00:32:45.720 in the world? Those questions still need to be answered. And the consumer, 403 00:32:46.119 --> 00:32:52.039 I think what's happening is there's been so many brands launched with celebrity and 404 00:32:52.519 --> 00:32:58.720 influencer and sometimes those stories just don't make sense. I think the consumer is 405 00:32:58.759 --> 00:33:04.440 becoming a little weird of it, and so it's almost creating an additional hurdle 406 00:33:04.720 --> 00:33:07.880 for a brand to overcome. It's like you've got to prove yourself even more 407 00:33:08.119 --> 00:33:14.799 if you have a celeb or, you know, big influencer behind you. 408 00:33:14.839 --> 00:33:17.240 In the consumer's eyes, you've got to prove to them why, why you 409 00:33:17.240 --> 00:33:22.079 your product is great, because they almost will question it a little bit in 410 00:33:22.119 --> 00:33:24.680 today's world. So it just makes it harder. Um. That being said, 411 00:33:25.119 --> 00:33:31.839 we will look at opportunities that have a celebrity and influencer behind them and 412 00:33:31.839 --> 00:33:36.799 if we can actually identify that there is a real reason for this to exist 413 00:33:36.839 --> 00:33:40.640 and the the real founding story, it becomes interesting to us, assuming it 414 00:33:40.680 --> 00:33:44.960 also has some of the other criteria you know, the good product, good 415 00:33:45.000 --> 00:33:49.920 margins, the right distribution, et CETERA. I think the explosion as of 416 00:33:50.000 --> 00:33:54.440 late has just Um, it's been. It's been a lot for the consumer 417 00:33:54.480 --> 00:33:58.240 to handle, where it's just like, Oh Gosh, another celebrity is launching 418 00:33:58.240 --> 00:34:01.039 a brand. How you're about it is it's a bit tired right now. 419 00:34:01.279 --> 00:34:06.079 The consumer maybe is a bit tired right now of fatigue. It's a little 420 00:34:06.079 --> 00:34:08.679 bit, a little bit of fatigue. So from your standpoint, there has 421 00:34:08.719 --> 00:34:13.920 to be more than just hey, look at the amount of distribution or my 422 00:34:14.000 --> 00:34:16.079 reach that I can get this brand up and coming. There has to be 423 00:34:16.119 --> 00:34:22.800 something deeper there and more meaningful in order for an influencer to actually start a 424 00:34:22.800 --> 00:34:25.519 company. Currently, yeah, absolutely, in the and you know, if 425 00:34:25.519 --> 00:34:32.440 you think about the product assortment and you know the people behind the brand, 426 00:34:32.559 --> 00:34:39.199 to do they have great teams that can execute on the strategy and can bring, 427 00:34:39.559 --> 00:34:45.480 you know, real innovation and product to two consumers all the time. 428 00:34:45.599 --> 00:34:50.719 I mean, I think you forget that even though there's a famous face, 429 00:34:50.880 --> 00:34:53.400 it allows you to launch right, but it doesn't mean that you're going to 430 00:34:53.519 --> 00:34:58.400 scale and it doesn't mean that you're actually going to be building a brand and 431 00:34:58.440 --> 00:35:02.800 a business behind you still need to do all of the things that a regular 432 00:35:02.840 --> 00:35:07.679 startup needs to do um and so you just got to have a really good 433 00:35:07.679 --> 00:35:10.519 team behind you. So the bar for US is high as an investor. 434 00:35:10.760 --> 00:35:15.599 The Bar for consumers is becoming high too. So it's it's something to watch. 435 00:35:15.679 --> 00:35:21.480 I've actually been really surprised by how much how retailers have launched so many 436 00:35:21.519 --> 00:35:23.559 of these brands, because I do think after a while you know in their 437 00:35:23.599 --> 00:35:30.920 assortment it it's competing right, you're competing for for the same consumer. In 438 00:35:30.000 --> 00:35:37.039 some respects that makes a lot of sense. What were some of your learnings 439 00:35:37.960 --> 00:35:44.440 durying covid and this current period? I think obviously a students of the industry 440 00:35:44.440 --> 00:35:52.880 of beauty and in particular, we know how beauty tends to perform during challenging 441 00:35:52.920 --> 00:35:58.360 times and troublesome times, least during the history of looking at how beauty is 442 00:35:58.400 --> 00:36:02.239 performed during economic turns and recessions. We did not know what would happen during 443 00:36:02.239 --> 00:36:08.639 a global pandemic. That was that was definitely new, but like we kind 444 00:36:08.639 --> 00:36:12.639 of were predicting and when we were raising money, mind you, we were 445 00:36:12.719 --> 00:36:17.719 raising we started fundraising in the summer of twenties. We're raising right smack at 446 00:36:17.719 --> 00:36:22.719 the beginning, you know, a few months after shut down for in the 447 00:36:22.840 --> 00:36:28.159 US, and so we experience a lot of these questions why beauty and why 448 00:36:28.320 --> 00:36:34.000 now? And the reality is that it is it's a definitely a discretionary category, 449 00:36:34.039 --> 00:36:38.800 but it's also not something that people really want to give up, whether 450 00:36:38.880 --> 00:36:43.760 or not times are tough, Um, whether or not they are, you 451 00:36:43.800 --> 00:36:46.639 know, going the the economy is going through a downturn, people want to 452 00:36:46.800 --> 00:36:52.199 feel good and people like small, affordable luxuries like beauty. During Covid, 453 00:36:52.519 --> 00:36:57.239 what we learned was that people also realized that they needed to take care of 454 00:36:57.280 --> 00:37:02.320 themselves, and taking care of themselves could mean how they treat their skin or, 455 00:37:02.639 --> 00:37:05.679 you know, they couldn't go to the salon. So I was like, 456 00:37:05.719 --> 00:37:07.360 how do I take care of my own hair? But then it also 457 00:37:07.440 --> 00:37:10.159 factored into wellness and what am I eating, what am I how am I 458 00:37:10.199 --> 00:37:15.079 sleeping and all these other things, and obviously the stress that covid put us 459 00:37:15.119 --> 00:37:19.840 all through became also front of, you know, top of mind, as 460 00:37:19.880 --> 00:37:22.960 well as mental health and all these other areas. So actually, people turned 461 00:37:23.159 --> 00:37:28.320 to beauty, turned to wellness, as a way to survive during some of 462 00:37:28.360 --> 00:37:32.840 these during the covid times, and those trends have continued. Sure, we've 463 00:37:32.880 --> 00:37:40.000 returned more to social settings and we're able to go back to salon and we're 464 00:37:40.039 --> 00:37:44.480 going, you know, we're spending more time at work or in an office 465 00:37:44.480 --> 00:37:47.800 than we were before, but habits were formed during that time and what we've 466 00:37:47.800 --> 00:37:52.599 seen through the trends and the data is that the beauty industry continues to grow 467 00:37:52.920 --> 00:37:57.920 and, you know, certain categories that really got hurt during covid, like 468 00:37:58.039 --> 00:38:02.079 makeup, because it was a social category, are ticking back up again and 469 00:38:02.320 --> 00:38:08.000 haircare and skincare made major strides during that time too. So That's interesting as 470 00:38:08.039 --> 00:38:14.559 well because during Covid I think a lot of people experienced new habits. Right, 471 00:38:14.800 --> 00:38:19.840 but it's good to know that, despite maybe some new habits, that 472 00:38:19.840 --> 00:38:22.480 that that have happened as things begin to open up, certain you know, 473 00:38:22.559 --> 00:38:29.480 categories have come back or performing better and something that we had to actually adjust 474 00:38:29.559 --> 00:38:34.639 for a bit because in some cases, some some beauty categories did so well 475 00:38:34.719 --> 00:38:38.760 during covid was we actually had to adjust for covid bumps. And in DTC 476 00:38:38.960 --> 00:38:45.559 in particular, because of now the return to store and and people maybe shopping 477 00:38:45.639 --> 00:38:52.320 less online. Small brands who were really you know, had really good performance 478 00:38:52.400 --> 00:38:58.079 during one. You had to adjust for that because it actually wasn't the norm, 479 00:38:58.519 --> 00:39:00.920 and so it was that was an interest being learning to come out of 480 00:39:01.519 --> 00:39:07.639 Covid as well. But you know, I think again, I'm very bullish 481 00:39:07.679 --> 00:39:09.880 on the industry, of course, Um, but I do think, whether 482 00:39:09.920 --> 00:39:15.920 it's a global pandemic or, you know, potential recession, I think people 483 00:39:15.960 --> 00:39:22.000 do turn to beauty for not only how it makes them look but also how 484 00:39:22.039 --> 00:39:25.480 it makes them feel, and there's a really strong emotional connection to this category 485 00:39:25.679 --> 00:39:30.360 and that's something that you really don't find in others. I really like how 486 00:39:30.400 --> 00:39:34.119 you said that, how you know some of these brands are extremely well DC. 487 00:39:34.400 --> 00:39:38.159 During a pandemic, there's almost a correction that's happening. And so do 488 00:39:38.159 --> 00:39:42.719 you ever have to tell brands like hey, like your growth rate, like, 489 00:39:42.800 --> 00:39:45.920 let's like pump the brakes on BBC, because you know that was during 490 00:39:45.960 --> 00:39:50.360 covid. Yeah, I mean and and and the talk about the you know, 491 00:39:50.400 --> 00:39:55.039 the efficiency that they were getting from their paid marketing as well. You're 492 00:39:55.079 --> 00:40:00.880 not seeing that today, and so I get growth projection all the time and 493 00:40:00.960 --> 00:40:05.760 you see the too, going to fifteen and going to thirty, going to 494 00:40:06.320 --> 00:40:07.920 hundred, and the reality is, I mean that you know, when you 495 00:40:08.000 --> 00:40:14.400 just factor in the DTC piece, if you're not getting the level of efficiency 496 00:40:14.840 --> 00:40:19.920 and you continue to spend at increased levels, then your top line can continue 497 00:40:19.960 --> 00:40:23.599 to grow, but then you're not actually making money or have a viable e 498 00:40:23.679 --> 00:40:29.519 commerce model that way, and I think brands have had to recalibrate in that 499 00:40:29.599 --> 00:40:34.400 area. We're advising a lot of our portfolio companies on how to acquire customers 500 00:40:34.400 --> 00:40:38.599 more profitably and how to do that in ways that's not on facebook and Instagram, 501 00:40:38.679 --> 00:40:43.000 and it goes back to some of the things we've talked about around how 502 00:40:43.000 --> 00:40:47.679 do you engage and create community, how do you try to reach consumers both 503 00:40:47.760 --> 00:40:52.920 online and offline and tell consistent stories across those? How do you get into 504 00:40:52.960 --> 00:40:58.679 the right retail partners that are going to support you? There's a lot of 505 00:40:58.719 --> 00:41:04.280 different tactic and a lot of different strategies that needed that need to be executed 506 00:41:04.320 --> 00:41:12.039 today, because a lot of brands got away with spending efficiently Um in on 507 00:41:12.039 --> 00:41:15.880 online in during covid and that's no longer the case. So we've got to 508 00:41:15.880 --> 00:41:21.440 get way more creative in how we find customers where they are. That makes 509 00:41:21.440 --> 00:41:24.199 a lot of sense. What's one book that's inspired you personally in one book 510 00:41:24.239 --> 00:41:30.400 that's inspired you professionally? So one of my personal favorites, and by the 511 00:41:30.400 --> 00:41:35.280 way, I am notorious for not reading. I actually listen. I do 512 00:41:35.320 --> 00:41:38.360 a lot of audible and I do a lot of reading. Don't get me 513 00:41:38.360 --> 00:41:43.119 wrong, I read, you know, research and articles and work stuff, 514 00:41:43.119 --> 00:41:46.960 but in terms of you know, for personal reasons are benefit. I do 515 00:41:47.000 --> 00:41:52.760 a lot of audible Um listening when I'm running or walking the dog or running 516 00:41:52.880 --> 00:41:58.559 errands. And one of the books that I do think really changed my perspective. 517 00:41:58.960 --> 00:42:01.840 It was before launch true beauty and I was a little lost in terms 518 00:42:01.880 --> 00:42:06.760 of what I wanted to do and the time in my life was a bit 519 00:42:06.840 --> 00:42:10.880 challenging. And the book is called the Universe has your back by Gabrielle Bernstein. 520 00:42:12.000 --> 00:42:15.079 She has a few other ones. Super attractor is also a really good 521 00:42:15.119 --> 00:42:20.519 one, but the universe has your back is all about understanding how to relinquish 522 00:42:20.840 --> 00:42:25.039 control and to actually ask the universe for what you want and to put out 523 00:42:25.320 --> 00:42:30.440 the right energy to get what you want, because energy flows where your attention 524 00:42:30.480 --> 00:42:35.159 goes. And if you're focused on the negative, if you're putting out kind 525 00:42:35.159 --> 00:42:38.280 of low vibrations into the world, that's what you're going to get out of 526 00:42:38.280 --> 00:42:44.480 it. And so really trying to like focus on your perspective on things and 527 00:42:44.920 --> 00:42:47.519 stuff is going to happen to you and there's you have no control over what 528 00:42:47.679 --> 00:42:52.079 actually happens to you, but what you can control is how you react to 529 00:42:52.159 --> 00:42:59.480 it, how it actually makes you feel, and you can control that action 530 00:42:59.639 --> 00:43:04.000 after words. And it's an amazing book, Um and so I actually just 531 00:43:04.039 --> 00:43:07.239 plugged in Um not too long ago and kind of re heard some of the 532 00:43:07.280 --> 00:43:09.320 first few chapters. I was like, I need a little bit of a 533 00:43:09.360 --> 00:43:14.960 refresher Um, and so I I highly recommend it. I imagine that tells 534 00:43:15.039 --> 00:43:17.519 pretty helpful when you're, you know, analyzing teams and analyzing founders, you 535 00:43:17.519 --> 00:43:21.920 know, trying to understand, when there are hard times, which are always 536 00:43:22.039 --> 00:43:24.840 hard times, of how they responded to it right in those times. Yeah, 537 00:43:25.559 --> 00:43:30.880 especially if you're a super type a person who everything is worked out because 538 00:43:30.880 --> 00:43:34.440 you put a lot of hard work into it and hard work will deliver. 539 00:43:34.480 --> 00:43:37.639 But sometimes hard work doesn't deliver and sometimes you can do everything right and stuff 540 00:43:37.719 --> 00:43:43.079 happens and things derail, and so how do you react to that? How 541 00:43:43.119 --> 00:43:46.480 do you stay calm um? It's yeah, it's it's it's a good one. 542 00:43:46.920 --> 00:43:50.639 Awesome, awesome, excited to add that to the book list my found 543 00:43:50.639 --> 00:43:53.320 a question to Christina is, what's one piece of advice do you have for 544 00:43:53.400 --> 00:43:59.840 founders? Always share the bad news first, and I tell this to all 545 00:44:00.079 --> 00:44:05.800 my founders, is the only problem we can't try to help you solve is 546 00:44:05.800 --> 00:44:08.039 the one we don't know about. So if we have a good, strong 547 00:44:08.119 --> 00:44:15.719 relationship, or if you have one with your investor or a mentor somebody it's 548 00:44:15.760 --> 00:44:21.320 important in your life that is helping you navigate this crazy world of entrepreneurship, 549 00:44:21.840 --> 00:44:24.400 share the bad news first. It's always great to share the winds, but 550 00:44:24.480 --> 00:44:28.559 also share the bad news, and we actually at true beauty. We call 551 00:44:28.599 --> 00:44:34.239 it wins and learns versus wins and losses, because there's always a learning that 552 00:44:34.320 --> 00:44:38.519 comes from what is a perceived loss, and the quicker that you learn from 553 00:44:38.559 --> 00:44:42.880 it, the better off you'll be and the better you can handle the next 554 00:44:42.880 --> 00:44:45.719 situation that comes. So I would say sharing the bad news first is a 555 00:44:45.760 --> 00:44:49.320 good one. I love that, and we actually haven't had, I don't 556 00:44:49.360 --> 00:44:52.719 think, any, any previous guests I mentioned that piece of advice, so 557 00:44:52.039 --> 00:44:54.599 I love that. That's great, Christina, thank you so much for your 558 00:44:54.599 --> 00:44:58.239 time. This has been so much fun. Thank you. This is great. 559 00:44:58.280 --> 00:45:00.320 I'm glad you finally got to make it happy, and there you haven't. 560 00:45:00.360 --> 00:45:04.559 It was amazing having Christina on the show. I hope you all enjoyed 561 00:45:04.599 --> 00:45:07.199 it. If you enjoyed this episode, I love it if you'd write a 562 00:45:07.239 --> 00:45:09.679 review on the apple podcast. You're also welcome to follow me your host, 563 00:45:09.760 --> 00:45:14.719 Mike, on twitter at Mike Gelb, and also follow for episode announcements at 564 00:45:14.760 --> 00:45:29.719 Consumer VC. Thanks for listening, everyone. Oh, oh,