Working in finance, John Cafarelli frequently traveled bi-coastally and committed to a lifestyle of exercise, healthy food, and a good night’s sleep to maintain the rapid pace of his life. A skincare fan, he realized that the ingredients in the products he used weren’t aligned with his idea of wellness. On a whim he made his own moisturizer together with a chemist, which set the stage for Ernest Supplies, a skincare brand made of premium, plant-based ingredients. Now sold worldwide at stores like Barney’s Harvey Nichols, and most recently through a diffusion line at Target, the brand is famous for its eye-catching packaging and unisex skincare appeal. I spoke to Cafarelli about his unique product pouches and how he operates an exceptionally effective supply chain for his brand.
You started in investment banking before launching your brand. What were some of the things you expected? And what were some things you didn’t expect?
I worked for a private equity company and we invested in retail companies. Before I launched my company, I felt like I understood how to run a business, but then I realized the skill set needed to start a brand from scratch is totally different. I expected things to move a lot faster, but brand building takes a long time and a lot of money. I was prepared for higher-level things like cash-flow management, contract negotiations, or trademarks, but was unprepared to be an entrepreneur. I didn’t have a comfort level with uncertainty, for example. Entrepreneurship is really humbling—on the same day you could have a magazine write a great article about you, get a grooming award, but also one of your vendors could be late delivering your product or you’ll get an email from a customer who’s mad. It’s really easy to work nonstop and blur the line of your personal and professional life. I immediately got a space at WeWork to create some distance between the two.
Before launching, what did you feel was missing from the skincare market?
I was a skincare customer that would spend $100-125 on products every month. I knew a woman at Bloomingdale’s who would sent me products to my home and I loved investing in my skin. I was spending time in LA and New York, so I started going to Barry’s Bootcamp, hiking, eating better, and getting eight hours of sleep. I was just making smarter choices and then looked at my skincare and realized the ingredients weren’t working with my lifestyle. Things are so different in 2019 but back in the day, you could only get natural ingredients at the health food store and these products weren’t great in terms of user experience. I wanted something that could be at the department store with great efficacy but also something that could be cleaner and better for you. I met a cosmetic chemist at Expo West and called him saying “I want to make a moisturizer.” We created this moisturizer which was initially just for me to use, but I let people try it and everyone said it was awesome. That’s how we made our matte moisturizer. I was at a point in my life where I was like, “Wow, I really like making things.” This was right after the financial crisis, so I wasn’t making millions of dollars and it seemed like a good time to try something new. I said I would give myself six months or I would go back to private equity. Then I kept giving myself six months over the next three years [laughs].
Your Tech Packs™ were a complete innovation. Can you tell me more about that?
It’s food packaging—I love looking to other industries to innovate. I love seeing products reimagined, for example when Karl Lagerfeld made a Chanel supermarket. I wanted to rethink skincare packaging because I traveled a lot and every time I got off the plane my product was leaking out. Food has a lot of problems like skincare, you need to protect it from oxygen and light, and keep it fresh. I loved the standup spouted pouch concept, which is mostly used for baby food. It all started because we had a product development failure when we wanted to create a paint tube-style product. There aren’t many fillers that can make this, which made it hard to fill. At the time we couldn’t manufacture 10,000 of something, which is what you usually do with a unique product concept. I was chatting with my friend who is this great creative and we decided to make something that looked like ration packs, so you wouldn’t have the leaking problem. It was differentiated in appearance—the colors, the pouch—it made customers stop and investigate. When we made this, I said either this is going to bankrupt us or make us successful—ultimately it made us get the attention we needed as a brand.
What made you decide to launch a diffusion line for Target?
It goes back to the concept accessibility which is something we always talk about. Our customer is younger than us and they aren’t in department stores anymore. We felt going mass would help us connect with a bunch of people at a different price point and that people would find us walking down the aisles. The scale and access of Target is just intriguing. I don’t think that things that have great design need to be expensive. I think our formulas are top-notch and now we have a whole new audience of people. That’s what I love about our diffusion line.
How have you funded your business? If you’re self-funded, why have you decided thus far not to raise capital?
We’re dipping our toe in growth and, as a former investor, I would never take money unless I felt there was an outsized opportunity for growth. Now that we have a bigger audience I think this time would be beneficial for an investor as we now have a really compelling growth strategy.
You have an interesting supply-chain solution that provides flexibility. How do you manage an almost vertical operation?
That came about because of the pouch—this was not a common format. When you’re the first there’s no supply chain. At first, we found someone to fill our products but we were always out of stock and not able to grow. I thought to myself, we need to fix this and bought filling equipment and custom fitments which allowed us to fill products ourselves. Now we can work at our own pace, and can hyper-manage cash flow. I work with our labs and buy bulk which is cheaper than when they make it for you and sell you a finished product. It helps us manage inventory, and because of this I can turn inventory up to five times in one year. Normally you have $10,000 of inventory just sitting there. This is a slightly more vertical business model which helps us manage cash, as we have a warehouse and filling facility in Long Island City. I love that we’re more flexible than the average company.
How has the industry changed since the launch of your brand and how has Ernest Supplies evolved?
In so many ways. One of the key tenets of Ernest is that we want skincare to be part of a wellness routine. When I started, I loved how it felt to be making good choices for myself. Now in 2019 wellness is bigger than ever—people spend $12 on juice, take Barry’s or Rumble classes, eat free-range chicken, and drink sustainably sourced coffee. That is the direction that we wanted to go into with Ernest—we’re a brand that helps their customers make smart choices that align with their values.
