It's a Matter Of... Determination
The Playbook to Launch, Scale, Exit and RepeatNovember 30, 2020 BeautyMatter
November 30, 2020
Launch, scale, exit, repeat. Divya Gugnani the CEO and Co-Founder of Wander Beauty has nailed that formula, but in today's hyper-competitive landscape resonating with consumers has never been more difficult. It requires both creative and analytical thinking and a lot of determination. Kelly Kovack talks with Divya about how building a brand that scales is one thing, but building a brand that consumers love is something entirely different.
Divya Gugnani [00:00:24]: Hi, I am Divya Gugnani, Co-Founder and CEO of Wander Beauty. We create fewer, better beauty essentials, and to me, it’s a matter of determination.
Kelly Kovack [00:00:38]: Building, scaling, and exiting. This is most entrepreneurs’ dream. I am Kelly Kovack, founder of Beauty Matter. For most entrepreneurs, it remains elusive, but there are others who have mastered this formula. It’s never been easier to bring beauty products to market, but building a brand in today’s hypercompetitive landscape, one that resonates with consumers, has never been more difficult. It requires creative and analytical thinking, but it also requires determination and passion to make an idea a business reality. Building a brand that scales is one thing, but building a brand that consumers love is something entirely different. Divya Gugnani, the CEO and Co-Founder of Wander Beauty has nailed the entrepreneurial formula of launch, scale, exit, and repeat.
So, Divya, I’m so excited to have you on. I feel like we – well, in the time when we used to actually go to events, we were always bumping into each other, we’d show up on the same panels, but this is the first time we’ve actually done something sort of with you and Beauty Matter, so I’m super excited, because you have built a fantastic brand, but beyond that, you have a really interesting background, and a really varied background, because this is sort of your first venture into beauty. So, I’d like to kind of back up to the beginning and talk a little bit about your background and how your path led you to co-found Wander Beauty.
Divya Gugnani [00:02:15]: Okay, great. Well, I’m so excited to be here, so thank you for having me. My career really started in finance, like the very dorky stuff: investment banking, Goldman-Sachs, worked in private equity and then venture capital, and I became really an accidental entrepreneur and started my first company in the auto parts space, second one in the culinary space, like you mentioned, very different things, and then my third company was basically a tech company, but it had a little bit of a beauty element. We created subscription service for privately-owned label fashion accessories and also beauty, and I raised venture money for that and sold that to QVC, and it was while I was actually at QVC that I really learned a lot about the beauty industry and really got deep into beauty. So, that was my learning ground, I would say, and while there, I worked with a lot of incredible brands that had passionate founder stories and really accelerated growth, and I met so many beauty founders, and I think it really inspired me on my own journey, because I was taking the subway one morning, and I was on the F-train from the upper east side to midtown Manhattan to my office, and I had two children within two years, I was exhausted to say the least, working full-time, and I just was putting under eye concealer on, and I just was like, “I need to put this on because I need to look 25% better than when I left my house, and that’s all I need.” I’m like, “I’m not going for glam, I’m looking for like not looking like I was awake all night,” and so when I was putting on my makeup on the train, I looked around and I saw people putting on their mascara and putting on their SPF and doing their hair, and I, you know, go to the gym, and now I’m biking outside more than going to the gym, but when I used to go to the gym, I used to always do my skincare routine at the gym, and I just realized I was living my life in motion, and there was no brand that was giving me beauty in motion and making my life easier, and so when I looked around at my friends, and I looked around at a lot of other people I knew, it was like we’re all time starved, busy, and active. You are, I am, you’re on the go, we were running into each other at events all the time, you’re speaking on panels, but there’s no brand that’s making us be gorgeous on the go, and that’s, to me, what was missing, and that’s what really inspired me to create Wander Beauty.
Kelly Kovack [00:04:33]: You know, you say that you were an accidental entrepreneur, but you’ve had sort of three other entrepreneurial ventures, and you know, you’re certainly not the first one who has gone from sort of finance to entrepreneurial ranks, but sometimes that experience doesn’t always translate, because a lot of brands are intrigued by the finance world because they need it or want it, but you know, there is sort of an analytical detachment in relationship to brands that it doesn’t always translate when sort of people from finance decide they want to become entrepreneurs, but it clearly did for you. But, what do you think that sort of experience on the finance side…how has it helped, I guess, in your ventures? Because I’m sure it did.
Divya Gugnani [00:05:25]: Yeah. I think what you said is actually 100% of what I agree with. So, I think so many people actually manufacture brands. I feel like they say, “Oh, I want to be an entrepreneur because I think that’s a cool and sexy thing to do. I want to raise money because I want the article in Beauty Matter and in Tech Crunch and everywhere else, and I want everyone talking about me in the industry. And, I want to have a brand and I’ll just hire people to do it and I’ll just do it.” So, I’m the exact opposite. This brand, this business, came out of a personal pain point, a personal problem, my own life. I met my co-founder, Lindsey, she was going through the same things for totally different reasons and validated what I was thinking because you know, here’s a super model who’s planes, trains, and automobiles, who is getting ready in every random airport, train, plane, Uber, all the time, and felt the pain points that I was feeling as a working mom, which is a totally different life. And so, I think that you know, my finance background, listen, I’m not discounting it, don’t get me wrong, I think it was great to learn finance skills, I think it was great for me to have those skills and have operational guidance, but ultimately, brands are created out of passion. Brands are created out of personal pain points. Brands are created so that you can create value for a community and customers. And so, my lens has always been that. My true north, my compass, is serve the customer, always serve the customer, obsess about the customer. Before we even created this brand, we surveyed 100 women and we did focus groups, and we surveyed women from 18 to 72 across the United States and we asked them what their pain points were in their beauty routine. I say always, my mom says, “You were born with two ears and one mouth, listen and speak in that proportion.” So, if you’re going to be a brand founder, I think you have to be a listener, you have to be a problem solver, and you have to have passion for what you’re doing; that’s the DNA of a founder to me. It’s not the, “Oh, I worked in finance and so I know how manage money, I know how to work numbers, and so I should create a brand. I’ll just hire a lot of people around there to figure all of the other stuff out.”
Kelly Kovack [00:07:26]: Yeah, I mean, you know, you can’t just…especially sort of, I think, at the inception of a brand, you can’t just throw money at problems. It never works, because the problems…it’s like a Band-Aid rather than a solution.
Divya Gugnani [00:07:43]: So, and I think it actually masks product market fit. So, what I think is really interesting is when we started our brand, there was product market fit immediately. We created one product: we created the On-the-Glow Blush and Illuminator, and we launched that and we sold six-figures of it within six weeks, and so we created one product that really allowed women to understand how to be gorgeous on the go, because it replaced four products in her bag. It was like your lipstick, it was your blush, it was your cream eye shadow, it was your highlighter, all in one. So, our brand was all about being gorgeous on the go and giving you fewer, better beauty essentials. This is fewer, better: it’s going to replace everything in your bag. So, for us, when we think about that lens of like, it has to do something for you, it has to create something for you, that organic fit and that messaging worked with the consumer and people bought the product. What I think happens in the finance world and people who come from finance and raise money is that they launch a brand and they spend millions of dollars in marketing, and that brand awareness that they create through out-of-home advertising, billboards, subways, Instagram ads, YouTube, paying influencers, it doesn’t create the product natural market fit, it creates, “I feel like I have to buy this because I’ve seen it 80 times everywhere I’m looking,” and so you buy it once, and you buy it for the marketing, but you don’t come back and buy it again and have an authentic love of the product because you bought it because of the hype. So, when you think about a brand and what I’m so excited about is like when I think about our brand, we have such a high retention rate and such a high repeat purchase rate because we’re authentically creating value in a consumer’s life, we’re not just pouring money into marketing to make her think that she needs it.
Kelly Kovack [00:09:24]: No, yeah, because you know, it is – I honestly think like you just have kind of entrepreneurship in your DNA because you also have sort of a very traditional educational background. You went to undergrad at Cornell and you received an MBA from Harvard, and you know, running a brand is very different than a Harvard case study as well.
Divya Gugnani [00:09:45]: That “H” word, we don’t use that “H” word in our house.
Kelly Kovack [00:09:50]: But, you know, I wanted to talk to you about something slightly different about your background, because you know, something is happening now during the pandemic that’s put sort of traditional, higher education and the system we have in our country, under a microscope. I mean, let’s face it, it costs a small fortune to put a child through college, let alone an Ivy League college, and many people are questioning the real value now, because everything is either hybrid or they’re going back for how long, we don’t know, is it worth the money if it is completely virtual? You know, I’d love to get your opinion kind of coming out of that system, your perspective on how your education helped you along your career path, and kind of beyond being just super impressive on a LinkedIn profile or a CV.
Divya Gugnani [00:10:40]: So, I believe, genuinely, that when I think about our society as a whole, when I think about my children and I think about my own person experience, I genuinely believe that education is super important, I really do. It’s something that I feel core, is like in my DNA. I believe you have to educate yourself. Do I believe that you have to go to a four-year college to do that? I think that is really being called into question right now. I believe education can come in many forms. It comes from work experience, it comes from reading books, it comes from attending lectures, it comes from networking with people. I’m getting educated every single day. Education is in my DNA. When we talk about the values at Wander Beauty and we give an offer letter to a new employee, it says, “We believe in team work, respect, integrity and learning,” and the learning piece is such a core piece of our DNA; everyone is learning every day in our organization. So, I believe in learning. I believe that the education system in the United States is broken and it is too expensive for people to go to college, hence they decide not to go to college. It is too expensive for people to go to private universities, so they don’t go to private universities for that reason, and the educational system here is broken. It is just…the cost of education is deterring people from getting that education. Further, the value they’re seeing in that education is deteriorating because we’re not keeping up with the technology advancements that so many other countries are, and that’s a tragedy that I feel upset about. And then, the third piece to that is really that 15+ companies, I’m sure you’ve seen this in the press, have now taken off this requirement to have a four-year degree, so Google, Apple, so many other companies have said, “You don’t need to go to college for four years to work here,” and so people are not going to college for four years to get those jobs that they aspire to get, and so I’m really in the camp of educate yourself and the way that you respond to education. So, I personally got three degrees. So, I went to undergrad, I went to culinary school, and I got a Master’s. If I were to do it all over again, would I do it? That’s a very big question for me. I was able to have parents who were very gracious in giving me that undergrad education, and then every bit of school thereafter, I worked. I worked, I paid for that education, it came out of my own pocket, and it was painful, and I know that experience firsthand because I went through it, and so I feel the pain of so many people who are making that hard decision right now, but I do believe, at the root of it, we must educate ourselves in any way, shape or form that we feel is best for our personal and financial situation.
Kelly Kovack [00:13:14]: And what about sort of I guess the network effect, right? Because there is sort of a very – especially sort of in ivy league schools, my brother went to the naval academy, it’s the same thing there, where sort of by virtue of the fact of having gone to that institution, there’s a connection that goes, and can be leveraged, in business. Do you think that can be created virtually?
Divya Gugnani [00:00:24]: I do think so. I will be honest with you, I do believe that we live in a new age where there are virtual organizations, there’s so many networking opportunities, there’s so many great angel groups, and there’s organizations like Chi for professional women and there’s Hey Mama for moms, there’s so many amazing networks out there across different interest groups and different sectors that I genuinely believe that you can build a very strong network if you just choose to. And, I will be upfront with you, you called something out in my background of like, “Hey, this is your first real beauty company,” and you’re right. How did I figure it out? I didn’t know anything, right? I went on LinkedIn and I reached out to people. I said, “Hey, I would love to talk to you. These are my questions.” And I’m not like, “Hey, I want to pick your brain,” because I think that’s a useless email to send anyone; no one wants their brain picked. So, I always say, “Hey, I have a really…these are my questions about this, you seem like you’re an expert in it. Do you have 15 minutes of your time to talk to me about it?” and I was very hungry to learn, and I think you need that hunger, and I really just LinkedIn people. So, was my Harvard network helpful in creating this beauty business? Quite frankly, not so much. I think I’ve met a lot of people going to school there and built long-lasting friendships, and I think in many facets of my life, that network and those relationships have been powerful, but in building Wander beauty, ultimately, I was learning an industry, and so I was starting from scratch and I really believed that my persistence and perseverance of being a student of the industry and reaching out to people and building those connections was what helped me the most, and anyone can do that.
Kelly Kovack [00:15:24]: Yeah, no, of course. I mean, I get LinkedIn – I’m sure you get the requests all the time, too, and I’m always happy to take time and answer questions if I can.
Divya Gugnani [00:15:36]: Me too, every Friday I do it. It’s like give back Friday. Every Friday, I put time on my calendar for young entrepreneurs, new entrepreneurs, people who are seasoned who have questions about people and hiring and recruiting, I’m there for them, because people were there for me.
Kelly Kovack [00:15:51]: Yeah, no, I agree. I also think this isn’t your first entrepreneurial venture, so you had one in auto parts, as you said, another that was sort of culinary in nature, and then sort of accessories and beauty that you had an exit to QVC. How did those other ventures kind of inform Wander? Because I’m sure not everything was a success, and I think especially in the past few years, there’s sort of like…I don’t know, it’s like an urban myth that it’s easy to launch a beauty brand.
Divya Gugnani [00:16:32]: It is not.
Kelly Kovack [00:16:33]: And there’s also this idea that every entrepreneurial venture is successful, and it’s not.
Divya Gugnani [00:16:39]: It’s like a restaurant. People are like…how many restaurants are successful? The failure rate of restaurants one year in is like over 50%, and then it accelerates I think to like the 90s within the five-year mark. So, the odds are actually stacked against you, not in your favor, and the reality is that you have to be different, better, and innovate to succeed. So, I could not agree with you more. I really believe that it’s very challenging, it’s very difficult, and those prior ventures actually taught me a lot. So, my first company was a huge success. It scaled dramatically; I believe our first month of sales we did like $3,000. You could not imagine the joy and elation on my face when I was like, “I made $3,000 doing this nights and weekends on the side as a side hustle? This is amazing!” I was so excited about the $3,000, it was like, I was thrilled, and I started doing $100,000 a month within three months, and it was like, our margins were amazing on auto parts because the parts actually don’t cost that much and the price that you sell them for is a lot higher, so that business was a real success, and I think that…I almost wish that it didn’t work that way. So, I had this great success and I thought everything was easy, and then when I built my second business, it was just impossible. It was like I felt like I was against a brick wall every day. We had an advertising model, one day the phone would ring, we’d get a six-figure check, and then the phone wouldn’t ring for six weeks. So, I suffered through not having the right business model, not having the right revenue model, having difficulties in hiring. I hired some – people were like, “You need senior people, you need leadership.” I hired some senior people who didn’t deliver because they didn’t have the kind of mindset to work in a start-up, which is really a mindset to hustle, to wear five hats, it’s a different mindset than working in corporate America. So, I made so many mistakes that I feel like I learned from the hiring mistakes I made, I wasted money, I invested in things I shouldn’t have, and so by the time I got to Wander, I feel like having three entrepreneurial experiences, two of them very successful and one of them profitable but didn’t scale, I had made a lot of mistakes, had learned a lot, and I was able to do this brand better, faster, cheaper, because I had the experience of going through it three times prior to this.
Kelly Kovack [00:18:58]: You know, when you launched Wander in 2014, the way you launched it was sort of unconventional. You mentioned the fact that you launched with one product. So, now hero products are like the way to launch, but back then it was not, because you would have been told, “Well, if you go to retail, you’re not going to sell enough, there’s nowhere to merchandise it,” yada, yada, yada.
Divya Gugnani [00:19:21]: So, you hit the nail on the head. That’s exactly what happened to me. I had the idea with Lindsey in 2014, we launched in 2015, we made one product, On-The-Go Blush Illuminator, which by the way has won an Allure Best of Beauty Award, is a hero product, and it was the first thing we ever launched. Every retailer told us they would not take us. They were like, “Where’s the collection? But X brand is launching with 60 skews, and Y brand is launching with 80 skews, and in order for us to put you in retail, you need 80 skews or 60 skews,” and I was like, “I have fewer, better beauty essentials. My whole point is that you don’t need a lot of stuff. Let me tell the story with one thing that makes sense. Let me actually see as an entrepreneur if I have a brand. Does this make sense? Do customers want to buy it? Why am I going to launch 60 things so I can fail at 60 things? I’d rather launch one thing and say, ‘Am I going to succeed or fail at one thing?’” So, nobody understood it, and I had to kind of pave that way.
Kelly Kovack [00:20:12]: And so you launched D-to-C and on QVC with the one product, and was that as a reaction to the fact that you couldn’t open a retail door, or did you decide to launch that way? In which order did it happen?
Divya Gugnani [00:20:29]: I decided to launch that way, but after that, I decided to launch that way because in my gut and in my DNA, I was trying this. I said, “This brand makes sense for me. I’ve done data and research; it seems like it makes sense for a community of women. Let me make…” I had never formulated a makeup product. I’d formulated some skincare when I was at QVC, but I had never formulated a makeup product. Lindsey and I worked on the lab – we wanted to get it right. We worked for over a year to get that product where we wanted to be, the packaging, the branding, everything. We invested the time. We wanted to tell the story with one multitasker, so we chose to do that. We chose the format of QVC, because the product needed explanation; you needed to say and talk and explain and demo and show how it worked, and so we made those decisions. Right after I launched on QVC, the two specialty retailers that everyone thinks reached out to us, and so one of them wanted to launch us right away, and I was like, “I have no product to give you, I have one thing,” and so that was the conversation and then we had a few other conversations, and we were lucky to have Net-A-Porter come back to us and say, “Okay, we’re going to launch you,” because they were very forward-thinking in building their new beauty category, and they said, “Okay, you’re a hero. This is your hero and this is the first product you launch with, we’ll get behind that on dot com, launch in the U.S., then in the U.K., then in Asia,” and it sold, and then we went into Sephora and kind of built the brand and were very curated about our assortment thereafter, but I never lost sight of what I believed our brand should be, and I didn’t want to give in to something everyone else was doing.
Kelly Kovack [00:22:02]: And how many skews is the brand today?
Divya Gugnani [00:22:04]: We have about 47 active skews, and that’s really across categories, so we say we’re fewer, better beauty essentials; fewer because they’re multitaskers, better because it’s all clean beauty, we have the clean seal from Sustain Net-A-Porter, from Birchbox, and we are clean by our standards, which everyone has their own standards, and then beauty essentials. We are servicing that modern woman who is time-starved and on the go, and so we’re giving her what she needs cross-category so she can buy it on her iPhone in a minute and 30 seconds on Apple Pay. So, we have color cosmetics which we first launched with, we have an amazing skincare business which is growing, especially post-COVID, up 38% and growing, and we have two select skews in hair and body, and we’ll be building that assortment. So, we really want you to come to one destination, just like you go to Amazon Prime to come get a lot of different things that you need in your personal life and your home, we want Wander.com to be that destination for you.
Kelly Kovack [00:23:01]: And, even though you have sort of expanded in sort of traditional brick-and-mortar retail and online, D-to-C sort of remained really important to you.
Divya Gugnani [00:23:11]: Always, and that was the core DNA of what I was telling you about the story of the brand. If you were going to create a brand for the people, you need to speak to the people and have a direct relationship with them. So, our whole brand is community driven. Every single multitasker that you see from us is socially co-created. So, we work with people in our community to create the formula, the packaging, the delivery system, the ingredients. 360 product development is done by focus groups, text message surveys, polls, Instagram feedback, every day we’re building that connection and the D-to-C business is the gateway to do that effectively.
Kelly Kovack [00:23:50]: Well, you know, another thing that I find really interesting is I get approached by a lot of tech platforms, and I know that you’re always testing out new platforms, always.
Divya Gugnani [00:24:03]: Always. I’m always on the test list. They’re like, “Oh, this new tech, Wander Beauty is doing a pilot with them,” because I love – listen, we have a philosophy at work: Test. Learn. Iterate. Build. That’s what everyone on every team does. Our product development team is testing, learning, iterating, and building; our e-commerce team is doing the same thing.
Kelly Kovack I don’t want to jump to COVID yet, because that’s sort of a whole other conversation, but I do think that brands that focused on – either had a focus on D-to-C or had very strong communities, or had very strong sort of tech infrastructure, definitely have weathered this storm a bit better. Can you talk about the technology? Because it’s one of those things where I think people kind of either are afraid to integrate it because it seems too complicated, or on the other side, they have a marketing stack of like a hundred different tech platforms.
Divya Gugnani [00:26:01]: So, we’ve actually streamlined ours, and we test – like I mentioned, we test everything, but then we only move forward with things that are core to our mission and make our business easier, or make the experience better. So, on a tech side, I would say we’re pretty savvy, we were one of the first beauty brands to launch Apple Pay very early on adopters, and it makes sense for us. Obviously, we have PayPal. Because you have to understand, our demo is this woman who’s a professional woman or is running around, or she’s a stay-at-home mom and she’s time-starved and shopping on her iPhone at 9pm with a glass of Chardonnay, for me, that would be Cabernet, but you know, the thing is that we really need to think about how she shops, and we need to create a better experience for her. So, we have been very thoughtful about what that looks like, so payment gateway is important, PDP page is the most important, we have a lot of technology interfaces that are happening right now on the product development page. If you are not going to a Sephora to buy our product because we have limited distribution in-store, that was a conservative choice, you are buying it on our dot com. So, I have to deliver the same experience of you feeling like you went into the store, you touched it, you felt it, you held the packaging, and you made the purchasing decision. So, that onus is on me. So, I’m creating tons of video content, I have an in-house studio, we’re leveraging tons of technology and tools to make that process efficient, then we’re delivering experiences with across ethnicities, across different skin tones, so people can understand what’s the coverage? What’s the payoff? What are the ingredients? What are they going to do for my skin? I have to educate, and I have to entertain, all at the same time, and I have to give you all of the touchpoints you need to convert to purchase, and so we do that very strongly. When I think about our web traffic, we are not looking at a lot of topple, funnel, drive-drive-drive marketing dollars to top funnel, we’re getting a lot of organic traffic, and a vast majority right now of what we’re achieving and built in our e-commerce business is not through paid media, it’s all email, word of mouth, all of this other, and it’s very high conversion rate. So, industry average, e-commerce conversion rates are about 1.5% to 2%, and we are about double that at this moment, which is big.
Kelly Kovack [00:28:23]: I mean, that’s fantastic. I mean, last year, you also did a pop-up on the Upper East Side, which the Upper East Side is not sort of the go-to space for pop-ups.
Divya Gugnani [00:28:32]: 100%, and that was a choice, by the way.
Kelly Kovack [00:28:36]: I’m sure it was. I think everything you do is sort of a very deliberate choice. I don’t know what plans you had for pop-ups, but you know, brick-and-mortar retail is, I guess, kind of on hold at the moment. But, what did you learn from the pop-up? Why did you decide to do it, and what was, I guess, the goal for the experiment?
Divya Gugnani [00:28:59]: So, the biggest thing for us is that we wanted to have a physical touchpoint to build that connection with our community. We had lots of digital touchpoints: text message, customer service phone calls, emails, so much digital communication with our customer. Instagram, DMs, all of this other stuff. We wanted an in-human space where we could meet the members of our community and create a safe space for them to engage with us, for them to brainstorm on product with us, for them to touch and feel, for them to get educated, and we offer tons of free classes, and that was the DNA of our strategy. We said, “This space is to build connection with our community in real life, and by the way, we are going to lead with education.” So, yes, we are going to entertain and have tons of events and parties and there was lots of wine and there was lots of cheese and lots of bagels, but beyond that, there was a lot of education. We had classes every single day of the week. So, that’s what I really wanted to achieve with that space.
Kelly Kovack [00:29:59]: You know, I feel like so much has happened in the beauty space in the last six years, from when you launched to now, COVID, and now post-COVID, it’s changing again, but just before we even get to COVID, what do you think was the biggest change in the beauty industry in the past six years?
Divya Gugnani [00:30:18]: The way people discover product. So, discovery and trial when I grew up, and I’m going to date myself, was I would remember my father taking me to Bendel’s to buy MAC concealer, because I had to have MAC concealer when I was in high school, and I don’t know about you, but I had to have the MAC concealer. I was gifted the beautiful dark eye circles genetically from my family, and I had to do something about it. My mom was like, “You can go to CVS,” and she didn’t want me to do that anyway, but I begged my father to take me, and the reason I begged him to take me to get that under eye concealer was because every magazine that I picked up had ads, every time I watched TV, I saw ads. I was inundated with this need to have the MAC concealer, because there was so much marketing behind it, and there were so many traditional forms of discovery through print media and traditional media, and the discovery process has been totally changed because department stores were that destination, just like I mentioned Bendel’s, you went to the department store, you had the consultation, that was a personal one-on-one service, they matched you the NC16 shade, and you were like, “This is me, I’m good. Now I’ve felt satisfied by this beauty process.” Now, that completely shifted with the rise of specialty retail, and the rise of Sephora and Ulta. They’ve changed the sell environment to be open sell, and open sell meant you could go and browse on your own and touch and feel and discover beauty that was uniquely suited for you, so that discovery process was like the next generation of what I could call beauty discovery versus department stores through traditional media. Then, there was kind of more traditional media, but still the discovery was happening in physical retail, but moved to special discovery retail from department stores, and then it just became digital, and so discovery is now happening – YouTube is the number one place for people discovering new beauty, Instagram, Facebook, TikTok, reels on Instagram now. Discovery has fundamentally shifted, people are discovering digitally, they are buying through subscription boxes, they’re discovering through subscription boxes. The world has changed, and there have been so many shifts in discovery, and by the way, discovery is deeply connected to trial: you went to a department store, you got a sample, and you tried it, and then you came back and bought it. You went to Sephora, and you bought samples, and you got samples because the cast would make you a sample, you went to Kiehl’s, they would make you a sample. Now, it’s like you join a subscription box, you get a sample at home. So, that is really changing, and now with D-to-C on our site itself, if you’re buying right now on www.WanderBeauty.com, you’re getting an incredible packet with a really good size fill for our Drift Away Cleanser and our Drive-In Moisturizer, and so every order is getting samples. So, discovery and trial are now happening online and digitally in a way that has never happened before.
Kelly Kovack [00:33:17]: So, let’s tackle the big question. So, can you give us a little business update, because you know, the past five to six months have fundamentally changed things on so many levels. I mean, in the U.S., we’re not only dealing with a health crisis, but a cultural and economic crisis, and as a New York-based business, you had to deal with the reality of COVID sort of early. Can you share a bit about how you and your team have navigated this time? What did you do on a very tactical level, and what were the surprises? What have been the challenges? And, what do you think the rest of the year is going to bring?
Divya Gugnani [00:34:03]: The only constant during this process has been change. It’s constantly changing. So, I think that I’ve been on my toes, my team has been on their toes in terms of thinking ahead. So, first and foremost, obviously health crisis turned into humanitarian crisis turned into economic crisis, and I think our core as a group and as a team was that we’re not going to sit on the sidelines and watch this happen. This is not a time for human being, this is a time for human doing. So, I think the first thing we did is we said, as a beauty brand, we have a platform, we have connections with the community, how do we give back? And, so when we launched our Good to Go Essentials and Hair and Body early in the year, we actually just worked with ten different hospitals to donate these and to get frontline workers our all-inclusive hair and body wash and our Scenic Route Hair treatment, and we really just said, what can we do as a brand? Because we’ve got to use our platform to do good, otherwise what’s the point of having a platform? That was my first reaction. My second reaction was like, “Oh my god, what’s going to happen to my business?” and it was just…it was hard. It was this panic that was kind of deep inside of me, and I’m going to be honest with you, I’ve never run a business through a pandemic, I have scaled companies, grown companies, sold companies, but I’ve never been through a pandemic, and when I get out on the other side, I’m going to be really thrilled. So, this was just leadership under fire is what I call it, I think we had to prioritize what is most important, which is our team, their health and safety, and our community, and we let everything else just not be a priority. We’re like, I want to make sure my team is healthy and safe, I want everyone to be remote, we moved to a rotational system even before there was a state mandate in place to be remote. We just really wanted to make sure our community was okay. We were not launching new products, we were not selling people things, I know a lot of brands were, and they felt like it was the right thing to do. To me, it didn’t feel right, and so I didn’t do it. I changed our whole launch calendar, I decided that we had to be relevant, and so when I thought about new launches, we were actually supposed to have a full coverage product in complexion, it was supposed to launch, and I thought, “This makes no sense.” I couldn’t even, in good conscience, tell people to buy it, because I myself am sitting home in my pajamas not wearing makeup. So, it’s like, put yourself in the shoes of your consumer and always think and listen and learn around you and let that be your guide, and so we launched double date, which is a really fun lip and cheek balm, and it’s actually been one of our most successful launches this year. The choices we made to be relevant to our consumer during this time and to support them in any way we could, I think those were good choices we made. I think on the operational side, we really cut expenses; we slashed expenses. We were, obviously, spending money on things we loved spending money on that we didn’t necessarily need and the pay and the livelihood of my team was the most important thing, to protect their salaries, and to be able to pay my people, was more important to me than being able to have great office amenities, given that we weren’t even in an office. So, it was a no-brainer to really cut expenses wherever we could, and really make sure we prioritized all of our funds to pay our people, and we’re lucky we’re profitable, and that makes a big difference; we were able to survive and weather the storm, we have a strong digital business, we’re not heavily in retail stores, we were not suffering the foot traffic declines that many other brands were. So, one of our retail partners told us that in the beauty space, on average, brands were about down 30% and 40%, and that was holistically, that was including store and online. So, whether you are a brand that was heavily in stores and down a lot in stores, which people were down 50%-plus, and you were making up for some of that with an increase in online traffic, net, you were still down a lot, and we’re up positive, double digits, and significant digits, and I don’t want to jinx that or curse it in any way, but I’m lucky that we made a lot of decisions early in our business, to invest in consumers directly and build that connection with the community digitally. Now, everyone who used to sell in stores heavily is trying to reverse engineer that, come back and say, “Oh, I need to have a dot com business now.” It should never be an afterthought; it should be a priority if you really want to be connected to your consumers.
Kelly Kovack [00:38:17]: Yeah, I mean, you know, now with – no one has been through a pandemic before, but there are people…I’ve run businesses through recessions, 9/11, hurricanes.
Divya Gugnani [00:38:32]: Yep, me too.
Kelly Kovack [00:38:33]: So, I think that does prepare for situations like this. There are a lot of sort of very young entrepreneurs who this is kind of their first big crisis, and it is a doozy, but I also think, because I’ve had lots of conversations with businesses, and I also get the press releases that it’s like, “Our business online is up 1000%!” and it’s like, okay, but where did it start?
Divya Gugnani [00:38:58]: You didn’t have one. You didn’t have one.
Kelly Kovack [00:39:01]: Because, so I think that there’s kind of these narratives going on. One is real, and the other is sort of this positioning, and I think it’s much more for the industry than anything else, to say, “Hey, we’re okay,” but, you know, I think when you kind of peel back the layers, I think the businesses that sort of had great leadership teams in place already, or had experience, and kind of had an operational backbone culture, and like you said, community, I think even if they didn’t have sort of a focus on D-to-C, that also kind of got them through, because they intuitively knew where to focus. And, I think it’s a real lesson for young brands on what it really takes to build a business, because I think it has been much easier, or it’s perceived to have been much easier in the past so many years, because yeah, you can throw up a website, you can put some stuff in a jar, and you’re in business, but whether you can kind of come out the other side of this, I think is the real testament.
Divya Gugnani [00:40:17]: I agree, and I think that it’s like a lot of people can do what you and I talked about very early on in this episode, which was raise money, pour money into marketing, and get anyone to buy anything. You can do it; I know tons of brands that have done it, but you won’t be profitable, you won’t scale, you won’t get people to come back, and so investing in that long-term relationship with the community, that’s where the investment should be.
Kelly Kovack [00:40:42]: Yeah, absolutely. You know, also, I think you are one of the hardest working people in beauty, because you’re always everywhere, at least that’s what your Instagram feed says.
Divya Gugnani [00:40:53]: Uh oh.
Kelly Kovack [00:40:54]: But, no, seriously, you never miss an industry event or an opportunity to promote your brand, and yet you have two kids and a husband.
Divya Gugnani [00:41:05]: Yes, I’d like to keep them.
Kelly Kovack [00:41:07]: Exactly, but I also know that you have – because I’ve heard your story before, but I also know that you have an interesting way of balancing it, because you are always yet, but yet you are a mother and a wife, but you also instilled, “I have a business and I work a lot.”
Divya Gugnani [00:41:28]: Yeah. It’s just who I am. You can’t change someone’s core beliefs, and I think you can learn a lot of things along the way, but I’m a hard worker. I’ve always been a hard worker. I worked very hard in high school to get the grades to get into college, I worked very hard in college to get the job at Goldman Sachs, I worked very hard at Goldman Sachs to be at the top of my class to get a job in private equity, and I worked hard for it; it didn’t come to me naturally. I would love to tell you that I have a photographic memory and I could take every test well. That’s absolutely not the story. I really believe that hard work has been the reason that a lot of good things have happened in my life; I’ve worked for them. And, I’m not afraid to say that, and I’m not…that is really just true about my experience, and others may not feel that way. I have a relative who just seems to do super well at everything with very little effort, and I think that’s fantastic, that’s not my story, but my story really is about being persistent, being determined, and really being an entrepreneur over and over again, the biggest thing that you remind yourself is the achievement really is just staying alive, and it’s just not quitting, because it’s so hard many steps of the way that you just feel like you want to quit, and I feel like the fact that I didn’t quit, I just figured it out. Every time there was a problem, every time I had a fallback, every time there was a misstep or an obstacle, I just put my head down and said, “I’m going to work through this,” and that determination to work is what got me on the other side.
Kelly Kovack [00:43:04]: But, you know, there’s so many people who – everyone’s always looking for that work-life balance. As a concept, I don’t even know what that is, because when you love what you do, you’re like, I don’t know, I don’t want to turn it off.
Divya Gugnani [00:43:19]: Listen, I do believe – I feel very strongly, and I feel like, listen, I will say that when I first started my career, we used to wear “no sleep” as a badge, “I work so hard” as a badge, and I don’t believe that. I don’t believe the generations today that are in the workforce believe it either, and I’m 100% clear on that. So, I just want to be clear about my personal choices. I choose to work hard because that’s a personal choice. I don’t have that expectation of the people around me. I believe that when they are present and when they are engaged in work, they should give it their all, but I think that they need to work while they’re working, and they need to be off while they’re being off. So, we have a policy at work, and you’re going to laugh at this, but we really keep to it, is that we only send emails during business hours. So, everyone at Wander gets emails at 9:15-ish to 5-ish o’clock, a little past that, and that’s when we, unless there’s something pressing and urgent and needs to be dealt with, or it’s like an overseas issue, we really just don’t veer from them. I don’t send people messages, if they want to send me messages, that’s fine, but I really try and engage with people when they’re present and they’re at work and they’re at their desk, or at their home office now, that is when they’re engaged in work, and when they are not at work, they should not be engaged at work, they should be engaged in self-care and being with their family, and I take that time for myself. So, I lead by example. I have many hours a day where I am just like, in the evening, with my kids, I put them to bed every day, so I am not on my phone, you cannot reach me, you cannot call me, and I’m not on email, and I choose to make those priorities. It’s like, that’s the only way my life works. Am I online at night working on stuff I need to catch up on during the day that I couldn’t do because my schedule had calls all day and I had 20 emails I needed to think about and respond to and schedule for the next day to deliver to people, that’s how I choose to live, but that’s a personal choice.
Kelly Kovack [00:45:06]: Yeah, no, I mean I think that we have kind of seen in this kind of venture-fueled start-up ecosystem how kind of toxic and unhealthy it is, because like you said, it’s sort of this idea of if you have a start-up, you have to work 24/7, and you have founders that are – being a founder can be very isolating and lonely.
Divya Gugnani [00:45:34]: Yeah, but I also think that you have to create the culture, so I’ll give an example. I worked as a start-up founder before and I worked – obviously, I’ve invested in a ton of companies and bunch in the beauty space as well, and this idea, you know, I read Glass Door News and I see that so many CEOs are at the office at eight, not giving their team dinner, people can’t leave because they’re waiting for the CEO to leave. I am the first person to leave our office every day when I’m in the office, because I go home to be there with my kids so they can eat dinner. That is a choice I make, and I’m very clear about it, and I don’t expect anyone to stick around, and you can literally come to our office at six o’clock, and it is empty. There is not a human being at Wander beauty, and I’m proud of that, because I know that if there’s anything that needs to get done, people know how to manage their own time. If they need to do a little work in the evening at night, and they need to catch up on stuff personally, they will make that choice and they will do it on their own time at home. There is no need for FaceTime, there is no need for people to be pulling late nights, there is no need to keep people there eating dinner. We just don’t create that culture. Entrepreneurship is a marathon not a sprint, and I don’t want to burn people out.
Kelly Kovack [00:46:41]: Yeah, I mean, burnout is real.
Divya Gugnani [00:46:44]: It’s very real, and I’ve experienced it, I’ve been with people who have experienced it, and I really believe that there are a lot of things that you do in the early years and it’s very intense and it’s very hard, and as you scale and have more of a structure and more people, you also have to take the time to really make sure that you have measured success and that you really take the steps to ensure the long-term viability of everyone’s mental health. It’s very important.
Kelly Kovack [00:47:08]: No, I 100% agree. I mean, you know, I think one of the…I guess I have kind of been an entrepreneur since I left Bliss in some way, shape, or form, with one pit stop with a real job. But, you know, the one thing that I loved was yes, I worked a lot, but I also worked on my own time. So, if I want to take the day off because my husband has the day off, and spend it with him, then I’ll work at night and not during the day. So, I also think – and not every business, obviously, has the ability to do that, but I think one thing that COVID has taught us is that people don’t have to work nine to five in a business to keep an office running.
Divya Gugnani [00:47:58]: Right. I think so, and I think that long-term mental health and satisfaction and whether you need to take a walk or you need to go outside, it’s just like everyone needs what’s going to keep them going long-term, you can’t think about the short-term. And, I really believe – I was just thinking and talking to some senior leaders on our team and kind of team leads, I have been so proud of how we’ve handled this transition to remote, because when you hire people you trust, that you believe in, that are there for the success and the investment in the brand, it doesn’t matter where you’re working from. So, it’s just like yes, it’s a little hard. I do miss the connectivity of seeing people and talking to them, and having the informal conversations that make so much of work enjoyable, but given that we can’t do that because of what’s going on in the world, I think we’re making the best of it by being remote and doing a lot of videos and staying connected that way.
Kelly Kovack [00:48:54]: Yeah, yeah. So, I’ve loved our conversation. You know, one of the reasons we decided to do the podcast was really to take the opportunity to bring those conversations that I have with people over cocktails or lunch or whatever, and really tell the story of really interesting people in the beauty industry, kind of in a different way and through a different lens. But, in closing, one last question for you. If you had one piece of advice, or one thing that you think could transform someone’s business, what would it be?
Divya Gugnani [00:49:36]: I genuinely believe that you have to listen a lot, and you really have to take in suggestions and input from everybody, and ultimately have to synthesize all of that input and really follow your deep intuition. So, just like I told you all of these retailers were telling me, “You need a collection. You need 60 skews. You need 80 skews.” I listened. Don’t get me wrong – I heard all of that feedback and considered it very deeply, and then my true intuition told me, “Build the brand slowly and steadily for the long-term, and don’t launch a ton of crap. Launch one thing that actually works and is really amazing and tells the story of your brand,” and so that really for me is listen, learn, evaluate, and then trust your intuition.
Kelly Kovack [00:50:21]: Well, Divya, thank you so much for taking the time and getting dressed to do this. I had to do the same thing.
Divya Gugnani [00:50:29]: I know, out of pajamas at noon? Who am I? Who am I?
Kelly Kovack [00:50:34]: I know, right? And, hopefully, we’ll bump into each other in real life at some point.
Divya Gugnani [00:50:40]: I would really love to.
Kelly Kovack [00:50:41]: I know, I know. But, anyway, thank you so much, and stay well. Thank you for all the insight that you’ve shared, and you know, we’ll get through whatever it is we’re going through.
Divya Gugnani [00:50:55]: We are. You know, it’s like you grow through what you go through, and that’s really it. I’ve grown through this experience of COVID, and I’m growing every single day.
Kelly Kovack [00:51:05]: Yeah, there’s a lot of cool stuff happening, too. There’s always opportunities, and people’s creativity is really sort of…and, humanity has been, I think, kind of keeps me energized and going, because every day is a roller coaster.
Divya Gugnani [00:51:21]: It is, it is.
Kelly Kovack [00:51:22]: Anyway, thank you Divya, and stay well.
Divya Gugnani [00:51:25]: Thank you, you too.
Kelly Kovack [00:51:31]: For Divya, it’s a matter of determination. No matter how many times you’ve successfully launched, scaled, and exited, start-ups are hard work. If you’re not passionate and willing to do whatever it takes to succeed, entrepreneurship might not be for you. Divya is an overachiever’s overachiever. She’s one of the hardest working founders I’ve ever met. Sure, she has an ivy league education with an MBA from Harvard, but she shows up every day and puts in the work, and then some. Even with a very busy schedule and a full-time schedule as mom, she finds time to give back, mentoring young entrepreneurs. Wander Beauty has built a brand that tapped into women’s desire for simplicity, delivering clean, hybrid, multi-tasking formulas, but the success has come from nurturing their community while crunching data and managing cash. And, by building a team that is equally committed to the mission. So, in the end, it’s a matter of determination. I’m Kelly Kovack, see you next time.
Divya Gugnani [00:52:39]: Hi, I’m Divya Gugnani, and what matters to me is determination. It’s all about setting your sights on what you want to get done, working very hard, taking care of yourself along the way, and achieving what you’ve set out to do.
Kelly Kovack [00:52:54]: It’s A Matter Of is a production of BeautyMatter LLC, copyright 2020. You can find more content and insights on www.BeautyMatter.com, and follow us on social media, @BeautyMatterOfficial.
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