I had the opportunity to catch up with Deva Finger, one of the co-founders and Chief Investment Officer of Luxury Brand Partners, to learn more about what they do and how they are differentiated.
Tell us what Luxury Brand Partners is and why you started it.
Luxury Brand Partners is not like any other company that exists in the consumer space. We are a hybrid of hybrids in that we create new brands, we invest in existing brands, and we operate, grow, and sell our brands directly. In a nutshell, we build high-end, artist-driven brands.
Why the focus on artist-driven? Because creativity is the truest differentiator in the world of branding and beyond that world. The consumer space is an incredibly saturated space, and consumers want an experience as much as they want great products. We believe that the experience, brand innovation, and disruption is inherent within the artist. We at LBP are there to support, distil down the essence of the artist’s vision, and provide all the resources to bring that vision to the market in the most authentic way.
I am one of the founders at LBP, but we have quite a large set of partners that came onboard at onset and even before LBP existed. I’ll explain—while I was working as a banker at Goldman, my brother, Tev, was working as one of the early partners and founders behind Bumble & Bumble’s product line. He built the brand with a team that developed deep direct relationships with a core set of the “A-level” salons in the industry. Much of that same team carried forward to create Oribe Haircare after Bumble sold to Estée Lauder. The concept behind LBP was to leverage that same formula for building authentic brands like Bumble and Oribe into a diversified mix of brands that support each other and live well together in niche retail environments, such as apothecaries, salons, spas, focused specialty retail, etc. We started by acquiring a controlling interest in Oribe Haircare, then Becca Cosmetics, and then focused on building brands that our core clients were asking us for like R&Co, Smith & Cult etc.
As Chief Investment Officer, what do you look for when evaluating a new brand?
Easy, I look for everything that private equity firms and conglomerates are not looking for. I don’t look for positive EBITDA or cash flow, I don’t look for ways that I can put leverage on an opportunity. I look for truly engaged artistic founders. I look for entrepreneurs that are pushing the envelope and breaking the rules … things that your typical HR team would have a heart attack over. Ha! That is a good start. I then look to see what mistakes the founders have made and if they are fixable. What choices did they make around their target sales channel, who do they as a brand sit next to on a shelf, their point of purchase, etc.
Saying “no” to opportunities is often more important in the early phases of a brand than the opportunities they do pursue. We are lucky to have built an incredible infrastructure, full of marketing, product development, sales and operations talents that can fix most problems, redo packaging, reformulate etc., but you can’t undo bad core decisions or endemic issues (like bad partners, etc).
In addition to acquisition work and formation of new brands, l also run all of the new brands that we incubate at LBP. We do it this way because we rely on sharing of resources across departments to get our brands off the ground. We have over 300 specialists (employees) at LBP who are best in class at what they do, from operations and inventory management, through product development, sales, education, investments …. When you zoom out on our company it begins to look like somewhat of a matrix. Having written the business plan for LBP I know well where all the bones are buried across this matrix so I can navigate this matrix well. Moreover, running these early-stage brands gives me a lot of insight into what our retail partners are doing, looking for, and where the next demand zones are percolating. I use all of this information that I pick up in running our new brands as part of our evaluation of new brands.
You have built such a strong portfolio of amazing brands that have a huge cult following. What makes a successful beauty brand?
There is some irony here because I am not a beauty junkie at all or even a large product user. But I am a brand junkie. I love it when people’s unique ideas are put into practicality and the tangibility of a brand. I love when those brands break the mold, don’t follow the crowd, are counter-culture and even somewhat anti-establishment. This is what the world needs. Unique thinkers, building products that change the markets they are in, rather than following suit with “me-too” attitude. Brands that aren’t encumbered by bureaucracy and politics. These are just some of the elements that I focus on that helps drive the cult and indie allure behind our brands. Not to mention that our team is laser-focused on innovation and efficacy. The performance of a brand has to be there, the efficacy must be paramount. Don’t continue building a brand if you can’t meet this initial standard.
Where do you see the industry going ?
Love this question. We started building our brands in top salons. This gave us an opportunity to work very closely with our customers in a tight-knit way. Salons are a fragmented destination in our industry, meaning there are lots of direct voices available to give us feedback and a lot of destinations available for us to partner with and develop deep relationships. These salons also gave us an opportunity to capture the “early adopters” in our market. We evolved from these salons to apothecaries, high-end department stores, and specialty retail destinations. Places that are curated and create great retail experiences.
I have no doubt that the market is moving towards brands with the most distinct vision and creativity. In a world where everything is available at the tap of your phone screen and there are no impediments to discovery or limitations on access to information, consumers want scarcity, rarity and authenticity … and these things can’t be faked or copied.
I don’t believe that the Internet will be the only dominant channel for retail in the future. I see the boundaries of the Internet and bricks and mortar blurring and disappearing. Bricks-and-mortar destinations will become even more pivotal to brands as they will provide the experience that allows consumers to discover brands. They will become the showrooms that anchor brands and online will become the place for consumers to replenish, dig deeper into a brand and save time.
What advice would you give to a young entrepreneur just starting out?
Ensure you are very passionate about what you are building. This sounds canned and obvious but it is the only way you will be able to stay committed to the long, hard slog on your way to success.
Establish your core values and stay true to them. You can’t go wrong if you stay true to your values. This will be your compass.
Don’t take on partners that don’t share your values. Bad partners will bring down the best vision. This is the most unfortunate mistake anyone can make. Think of all the work that goes into building a new company and then imagine that being erased several years down the line when the partnership melts down. This issue is unfortunately so prevalent. Make sure to think hard about whether your prospective partners truly share your vision and values. Be honest with yourself as you ask yourself these questions.
Don’t take the leap until you have built a business model. Not a business plan—I mean break out Excel and figure out how to create a set of sales projections. Once you have these top-line projections then build out the expense structure necessary to achieve your sales projections. Be conservative and assume it will cost you more than you expect to reach your goals. Once you make your original set of assumptions then go out and get as much information possible about them. Talk to industry experts, ask questions, and test these assumptions. Then go back and revise your assumptions in accordance with what you have discovered.
Lastly, don’t let anything stop you from taking the leap. Yup, that totally goes against advice number 1 ,2, 3, and 4 above; therein lies the challenge and magic of being an entrepreneur! Good luck.
What’s next for you guys?
We currently have some of the most exciting and innovative concepts coming down the pike. Ironically when we were building Oribe, everyone was asking us about the Bumble & Bumble story, when we were building R+Co and Smith & Cult, everyone was asking us about Oribe. Now our excitement and enthusiasm is all about our new concepts and brands in development, but people just want to hear about R+Co, V76, and Smith & Cult. That depicts the uptake lag in innovation and shows how brands need time to incubate in the market.
For now, I can’t tell you exactly what we are doing but imagine this—beauty brands built by the world’s fashion leaders that cross categories. Partnerships with retail destinations that are thinking differently about the market. Imagine artists from nontraditional backgrounds that are creating brands in sales channels that don’t really even exist yet. This is our direction. We are very excited about the future.