[beginning of recorded audio]
Elsie Rutterford [00:00:09]: Hi, I’m Elsie Rutterford, Co-Founder of BYBI.
Dominika Minarovic [00:00:12]: Hi, I’m Dominika Minarovic, Co-Founder of BYBI.
Elsie Rutterford [00:00:15]: And to us, it’s a matter of positivity.
Kelly Kovack [00:00:19]: Clean beauty and sustainability, while noble pursuits, are inherently rife with misinformation and lacking definition. I’m Kelly Kovack, Founder of BeautyMatter. There may be no perfect answer or solution, but there’s plenty of progress and we all have room to grow. Every individual and every business is in a different stage that represents the reality that clean, sustainability, and activism exist on a spectrum and look different to all of us. Yet, an argument can be made that we all have a part to play as global citizens. The existing system needs a total reconstruction, which will take time, leadership, and a commitment to make the change happen. For British beauty brand BYBI, defining clean beauty has been table stakes for this start-up. But co-founders Elsie Rutterford and Dominika Minarovic say the road to sustainability has been a work-in-progress.
Elsie and Dominika, thank you so much for joining us today. I’ve been a huge brand of your fan, kind of lurking behind, watching what you’ve been doing. So super happy to have the opportunity to speak with both of you for the first time.
Elsie Rutterford [00:01:29]: Thank you for having us. It’s a real pleasure to be here.
Dominika Minarovic [00:01:33]: Yeah, thank you so much for those kind words as well.
Kelly Kovack [00:01:36]: Of course. So if you don’t mind, let’s start at the beginning and kind of set the stage, because this isn’t – kind of what you’re doing now is not sort of the genesis of the two of you coming together. I always like to get the backstory because it kind of informs a lot, I think, usually. So how did you meet and then ultimately come together to be business partners?
Elsie Rutterford [00:01:59]: Of course, wow. We have to cast our minds back now quite some years, which every time I tell this story, it never ceases to surprise me how long ago it was now. So we met in 2012, so that is almost ten years ago, which is just bonkers, because it has sped by. We were both working together at the same company. So we joined around the same time. We were in advertising sales, so we are both sales people through and through – that’s our background, that’s where we started our careers, and we were selling advertisements, essentially, here in London. We started at the same time, quite quickly hit it off, became office BFFs, just sort of sat next to each other gossiping and bonding over many, many things. But one of the real, I guess, points of bonding that we found we had was a shared love of kind of health, fitness, wellness. That sort of wellness scene was hitting the UK at the time; we’re a little bit behind you guys in the US. And yeah, we enjoyed going to the gym together and we would, like, trade recipes for sweet potato brownies and we’d follow all of the vegan influencers who were suddenly making veganism cool, when it used to just be about lentils and kind of crunchy granola. So that was kind of going on, and then alongside that, we’ve both always been interested in beauty for kind of many different reasons. But I guess the very, very early initial thoughts of the business was kind of around can we marry this love of beauty and wellness, essential. And our answer to that was what about if we started to look into making our own beauty products in the same way all of the kind of fitness and food influencers were doing with their own food. Could we start to understand beauty labels, start to kind of educate ourselves around beauty ingredients, and then make our own products? So we did.
We were doing it in our kitchens, really enjoyed it, very much as a hobby to begin with. Although I would say we’re both pretty entrepreneurial. We both always kind of had that streak in us, and I think kind of in the back of our minds, it was always sort of could this be something more? But we spent quite a long time kind of figuring out what our offering was and testing out different kind of, I guess, avenues of monetization before we landed on a product brand. And landing on a product brand actually came much later. We didn’t launch BYBI until 2017. So what we did in the meantime was launch a kind of blog called Clean Beauty Insiders, which was dedicated to sharing these recipes that we were coming up with in our kitchen. We also went on to write a book which was published by Penguin, which was a recipe book for your skin. We were running workshops in London. So at one point we were thinking kind of, could this be an events business? Could we bring people together to kind of share a love of beauty? So we were sort of testing things out, and I guess what we proved along the journey was there was an audience for natural beauty, there was an audience that we really resonated with in terms of being quite a mainstream millennial beauty business, and that there was probably a gap for a beauty brand that could really speak to them but also be upheld in great ethics around being kind of natural and vegan and sustainable. But it took us a while to figure out that actually, what we wanted to do was launch a product brand that really spoke to that. So yeah, we came into things from the content angle and then went on to launch BYBI in 2017.
Kelly Kovack [00:05:06]: You know, I think one of the most interesting dynamics, and challenging dynamics, and I speak from sort of personal experience, I feel like I’m the Elizabeth Taylor of the beauty industry when it comes to partners. I’m not sure what that says about me, but being founders together is challenging, especially when you’re friends. How have you navigated kind of the roles and responsibilities? And you clearly have a really good dynamic because when partnerships aren’t working, it’s palpable. So you’re clearly doing something right.
Elsie Rutterford [00:05:42]: Yeah, and you’re right, it is a really tricky dynamic to get right and it takes a lot of time and a lot of communication and a lot of patience. I think absolutely, we are friends. You can’t spend as much time as we have over the past kind of ten years with someone you don’t like. So fundamentally, of course, there is a really solid friendship behind our partnership, but I think what’s really always worked in our factor is that we were work colleagues, and I think that sets up our dynamic to be a touch more professional, maybe, than a set of friends just coming together with a great idea. I think we always respected each other’s work ethic and drive. And I think the danger sometimes of going into business with a friend is that you don’t always know how they’re going to behave from a work ethic perspective, and is one of you going to be harder working than the other? Is someone going to have more grit than the other? But we already knew that and kind of really appreciated that in the other person. So I think the fundamentals and foundations of our relationship were always going to set up us for success because it was set up in a professional environment. And I think we just genuinely enjoy each other’s company but have admiration for the other. I think we each have a distinct set of skills, even though we do crossover on quite a lot of things, including kind of sales and that kind of outward facing ability to communicate and sell our brand. And I think that’s what gives us strength as founders. But when you dig a bit deeper, we each have our own set of skills that are very complimentary and we have slightly different ways of thinking that are really complimentary and we challenge each other a lot, and we’re always open to those conversations as well. I think as a founder, it’s really important to have those open discussions about, you know, plans and decisions and thoughts and opinions and be really open to hearing, you know, others on their approaches as well. So I think that’s another skillset we have is just to be really open and good communication skills as well.
Kelly Kovack [00:07:34]: Yeah, I think the founder relationship is something that doesn’t get talked about a lot, but it is one of the biggest reasons that businesses fail. Because if you don’t have alignment among sort of founders, the team falls apart and the business falls apart. So I think the way you’ve gone about it is really thoughtful, and clearly with a business sense rather than we really like each other, let’s start a business together.
Elsie Rutterford [00:08:00]: Yeah, I would 100% agree with that.
Kelly Kovack [00:08:03]: I always love brands that kind of stem from either a content play or a community because I think it definitely gives the brand a leg up. The easiest part, in some respects, is building a brand, but then you have to find people to actually buy the brand. But when you have a built-in community, you kind of have a head start. So I’m curious what the vision for the brand was, kind of at the inception, and what the process looked like, going from concept to market. Because you did have this community. So I’m wondering, how did you leverage them? What did the development process look like? And then beyond that, sort of in going through the brand development process, what were your non-negotiables? You’re a brand that is grounded in purpose, so it wasn’t just about throwing stuff in a jar with some labels and capturing the monetary opportunity. It goes deeper for you guys.
Elsie Rutterford [00:08:54]: Wow, what a question.
Kelly Kovack [00:08:56]: Sorry, it was rather long-winded.
Elsie Rutterford [00:08:58]: No, no, it’s good, I’m like god, okay, I’ll try and answer it all. Okay, so the brand kind of inception then, so those five years that I kind of talked about between starting the kind of content platform and then spitting out a brand launch in 2017, I think a lot of that was dedicated to kind of cultivating and harnessing this community within the kind of like natural beauty world here in London, which really did end up kind of playing into how the brand was shaped. The community is small. We weren’t skincare influencers with millions of followers. We had a really, like, tight group of people who were really interested in the kind of natural beauty scene, who were really engaged and really receptive and who we could really kind of lean on when we were kind of starting to think about the initial stages of the brand. So they were very useful when it came to things like market research and understanding our audience and understanding if there was an appetite. But I think what was quite interesting with the way that we did things was because we had this in real life event that kind of spurred on the content we were producing, we would have groups of people saying the events that we were running were basically make your own skincare with us on a Sunday, and we would get people together. We were making like coffee body scrubs, so at that point, it wasn’t particularly sophisticated. I might add that we have gone on to study formulation since then and we’re much more sophisticated and we have a lab and we’ve got chemists that we work with now. But back then, it was just kind of exploring the world of making your own skincare. So we’d bring together people in a room, it was kind of a Saturday afternoon event, we’d supply a bit of Prosecco just to get people in the mood and flowing. And they acted as what then kind of became focus groups. We had these women, these groups of people in the room together, really kind of a captive audience of people that we would bounce ideas off of when we were starting to think about the brand and starting to think about what was important for people. And they were really, really crucial in understanding the gap that we felt existed, which was the fact that a natural, vegan, kind of sustainable brand didn’t exist to speak to us as a mass beauty consumer. So this is a few years ago, but it either existed in the way of being a lovely, beautiful, homegrown lavender brand that you could buy from a very niche outlet but it would set you back $200 for a facial serum, and quite frankly we weren’t in the market to spend that, or on the other end of the scale, it was like walk into Whole Foods, tag it onto your grocery shop and it feels very nuts and berries and not very exciting, not a luxury, fun beauty experience. So we really wanted to speak to the middle of that, which was great ethics, great values, great formulations, but done in a way that felt modern and fresh and could speak to a mainstream beauty audience. And doing those focus groups, or those workshops, and speaking to our community, really helped us cement that there was a gap. Whereas if we hadn’t been able to do that and we hadn’t had that kind of audience and community to lean on, we perhaps wouldn’t have felt as confident to go on and start the brand and chuck in our full-time jobs in advertising and really give it everything. So that was incredibly useful for us. And then what was the second part of your question?
Kelly Kovack [00:12:08]: Oh, so, sorry. I love the fact that it started with sort of conversations. I think there’s this new trend of brands being built on data. So it’s like this is trending, I’m going to build a product around it. I have my own opinions around all of that, that’s for another time. It’s become my soap box of late. But I think data and numbers are fantastic and I love them, but at the end of the day, there are people behind those numbers. And if you don’t have the conversations, it will be soulless and you will miss something. So I love the genesis of it. My other question was, what did you process look like? So it sort of started from this group, but what were your non-negotiables going into it? Price was obviously one, so you wanted it to be affordable. But from a formulation standpoint, were there – and a packaging standpoint, were there kind of guardrails you were playing with in terms of how you wanted to show up when you launched?
Dominika Minarovic [00:13:07]: Yeah, definitely. I mean, I think we had embodied this value of being natural and for us, natural is driven by performance. So touching back to where Elsie started with the journey is like, could we go into our fridges and start to use these ingredients that we know have great benefits for the skin – for your insides, and could we then apply them to the skin? So we’re using avocados in our smoothies, they’re rich in omega oils. Hey, what if we quite literally applied them to our face? Would we get amazing benefits? And yes, you absolutely do because you’re using high quantities of pure, unprocessed natural ingredients. So for us, when we decided to launch the brand, we were like well, we already know the value of these natural ingredients, they’re so three-dimensional, you don’t get the synthetic fillers and the preservatives and I guess the functional ingredients that you do in a mainstream formulation. Even the preservatives and the base formulation when you use natural ingredients have benefits for the skin because they’re all derived from nature. And they’ve got holistic benefits, they’re rich in minerals, vitamins, antioxidants, and then they’ve got a functional purpose for the formulation. So we were like, we’re going to bring such value for our consumer because the top of the incubus, right to the bottom, our ingredients have a benefit for the skin. We’ve never talked about toxins; we’ve never bashed synthetics because we don’t believe that beauty should be about negativity. We’re trying to talk about why we use naturals, why we use ingredients, not what’s not in our products. We talk about what is in our products. So natural was always a non-negotiable for us because we generally believe that delivered the best performance for us and therefore for our consumers. And then things like vegan, cruelty-free, for us, that’s super obvious. Why do we have animal byproducts in our products? Why are we not pushing to ban things like animal testing? These things just seemed super obvious to us well before they became mass consumer trends driven by data, as you said. You know, we used our intuition for a lot of these things.
But you know, I think the most interesting thing we started in those early days, which is now coming to prominence, is really our focus on sustainability. And I don’t tend to like to use the word sustainability or sustainable, because at the end of the day, we’re a consumer brand creating product and shipping it around the world. By that very concept, that means we’re unsustainable. We prefer to use terms like climate conscious or pro-planet because we acknowledge that by being in existence, we’re not technically sustainable, although we’re obviously trying to change that. But these kind of concepts around packaging, sustainable supply chains and raw materials sourcing, these are things we started from day one before they were driven by data and made really cool and you know, a marketing turn. It was actually driven by the horror of going into these supply chains and seeing how much waste there was. How little, I guess, understanding there was about where your ingredients were coming from, who was harvesting them, how many hands they were passing through. The sheer amount of waste there is in beauty packaging and why putting a box within a box within a box wrapped in plastic, you know, who is setting those standards and why are we allowing our consumers to expect those things? So those are all realizations we had when we were starting the brand, and we started to do a lot. We didn’t term ourselves as sustainable; the term didn’t exist back in 2017, and it certainly wasn’t really a demand from consumers. It was just something that we felt quite passionate around pursuing because we just thought if we’re starting a brand in 2017, we can’t go into it knowing we’re implementing all of these poor practices. So right from day one, we started using better quality packaging, recyclable packaging. We demanded to know where all of our raw materials were coming from. We started to understand what the impact on the environment was from our raw materials from a harvesting and renewability perspective. We were thinking about how often we were putting things on planes versus sending things by sea. These were decisions that were already coming to the front of our minds as we all as making commercial decisions. So I think it’s always been a value that’s been really authentic to the brand.
And even jumping back to Clean Beauty Insiders in 2014, 2015, the whole idea was that you were going into your fridge, you were taking ingredients that were about to go off or that were already opened and you might end up discarding, and you’re creating this really bespoke, one-time-use product. But there’s no waste, there’s no excess packaging. So it made a lot of sense for us to continue those themes into our product brand where we could. So there were a lot of non-negotiables at the start, it made us quite difficult to work with – I’ll be honest with you. We did all of our formulation in-house, including all of our sourcing. So we would go to a manufacturer, quite literally, and say, can you make this for us? But you have to buy everything from here, you have to source the packaging from here, and you have to make it like this. And they were like, this isn’t really the way that it works. I don’t know if you guys know that or not. Normally you just tell us you want a cream for $2 and we make that for you. But we were like, well, that just doesn’t sound very good, does it? And they were like, well, I guess not, so let’s try it your way. And now we’re a multi-million-dollar brand shifting some serious volume through those guys and I think they now appreciate our process.
Kelly Kovack [00:18:19]: It’s interesting to talk about kind of what you just mentioned. I think it’s infinitely easier to build a brand based on those values than it is for a legacy brand to kind of retrofit ethos. And I think a lot of big brands are obviously trying, but you certainly get grouped into that clean, sustainable sort of category, if you will. Which when you launched, even if you didn’t message to it, it was definitely kind of a differentiated positioning. But now, fast-forward, it’s simultaneously become kind of table stakes, ubiquitous, completely unregulated, which means that brands are sort of left to their own devices. So some brands, like you, are clearly doing the hard work to further the industry and educate consumers. And with transparency and kind of self-regulation. But on the other side, you have opportunistic players that are kind of in the market to capture the opportunity – that is huge – and they play a little free and easy with the claims and create a lot of confusion and misunderstanding. So as a brand who is kind of doing the hard work, how do you navigate all that noise and actually take credit for kind of doing the work?
Elsie Rutterford [00:19:37]: Yeah, it’s an interesting question. As you can imagine, the quantity of greenwashing that goes on in our industry becomes particularly frustrating for us, as we are first, as we are, as you say, putting in the hard graft, and it will be frustrating and disappointing, I guess, to see brands kind of sweep in and either make claims that you know aren’t substantiated and that they can’t back up, or put things out there and claim that they are sustainable when actually they should just be table stakes. So things like, our packaging is recyclable and therefore we are sustainable. That kind of messaging winds us up; however, I think it’s really important to one, to stay in our lane and focus on what we’re doing, and two, be open to celebrating when some of the bigger guys say come along and are trying to kind of make small movements, albeit in a very slow and clunky manner, but we have to stop and say isn’t it fantastic that one of the big guys are making steps towards a more sustainable future for everyone. So we do have to stop and kind of celebrate that people are at least kind of thinking about this and bringing it to the consumer – to the front of mind for the consumer. But I think the way that we cut through and what we did sort of over the past 18 months, I would say, when we first started and we knew that we wanted to be sustainable or climate conscious or whatever you want to term it, we knew that we wanted to do things better in terms of our impact on the planet. We kind of went with it at okay, let’s just do everything then. Okay, let’s choose a better material and let’s choose better ingredients where we can. Let’s do everything we can from a corporate standpoint to make sure our office is running completely green. And we were incredibly proud of everything we were doing, but when we came to communicate that to our customer and show them what we were doing, we found it quite difficult because we were basically doing a lot of things and not necessarily going deep on any of those, so not doing any of them particularly real and not really owning any of that. And I think for the planet what that also meant was we were not having the best impact we could do. So what we did back in 2019 we sat down and said we need to do a proper audit of our entire supply chain, we need to understand our true impact, and then we need to focus on something super tight and say this is our mission when it comes to being climate conscious or environmentally responsible, and this is where we can have the best positive impact. So, we did that and we looked at our entire supply chain, we say from sea to shelf, and we actually developed an in-house auditing system that helped facilitate that, as well as bring on an external partner to help us do a full kind of lifecycle analysis of our entire supply chain. And basically what that spat out was the biggest impact we have, negatively, is carbon, is our carbon footprint. But the biggest positive impact we can have for the planet would be to change that. Everything just kept coming back to carbon. Every bit of work we did, it was our carbon footprint. Carbon is the biggest contributor to climate change at the moment. So back in 2019, we kind of looked into 2020, we set our pro-planet goal is to be completely centered around carbon, we shifted the business to start to look at our entire supply chain and understand where we could make tweaks on carbon, we got ourselves to a position of carbon neutrality by the end of last year, so 2020, and we are now on a path to carbon negativity by 2025, which is an absolutely massive goal for us. But what that has meant is that we have a very, very clear goal when it comes to our sustainable efforts, and this is then very easy for us to communicate to our consumer. It’s very easy for a consumer to come and have a look at what we’re doing, understand where we’re doing it, understand the things – the packaging materials, why we decided to work with a sugarcane-based bioplastic for example, understand why we might pick to work with an upcycled ingredient, and to make an informed decision on whether they want to buy our space or not, eco-credentials. And that has really helped us cut through. I think it helped us cut through the greenwashing, it helps us cut through the kind of false claims and the fact that there is little regulation. Because there is regulation when it comes to carbon, and we are kind of well within understanding our carbon footprint and having that audited. So, yeah, I think that’s what we have to do now. You have to kind of pick your battle and just go forth with it, otherwise it does become incredibly confusing, it’s hard to have any positive change as a brand, and you will just confuse your consumer.
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I feel that so much of the conversation kind of in this category specifically has become kind of adversarial, where it’s like, I’m right, you’re wrong, glass is better than plastic. If only it were that easy. It’s not about one thing being better than another, it’s about, to your point, choices for a brand, and it’s a complicated conversation. So I applaud you for the work you’re doing, really. I mean, you do have to choose your battles, because – and I think also I would imagine it’s also challenging, you know, ten years ago you would make decisions on packaging or supply chain and you’re like great, check, done, moving forward, and now nothing is sort of a final decision because technology keeps moving from sort of a material standpoint. So maybe there will be something better than sugarcane, right? And then you guys are going to be like okay, got to look at the packaging again. So it’s kind of a different way of evolving a brand because decisions are only kind of for the here and now, but they could change.
Elsie Rutterford [00:25:56]: 100%, and it’s so interesting you say that because we had a conversation today with a packaging supplier who asked a leading question around the sugarcane and its credentials. The answer is, it’s the lesser of several evils, right? We’re not talking about any – there is no such thing as a perfect material, as you say, it quite literally doesn’t exist. So when we’re thinking about materials, all we’re doing is saying, we can’t use that, we can’t use that, we can’t use that, we can’t – what’s left? Okay, that’s probably slightly more in line than that. The decision making is so challenging. It’s not, as you say, what’s the best material, it’s what’s the least worst material.
Kelly Kovack [00:26:36]: Well, and also, what’s the least worst material for my business. It’s not the same decision for – it depends on the category you’re in, the formulation. There’s so many factors that need to be considered.
Elsie Rutterford [00:26:48]: Yeah, and I think consumers should always be wary of a brand that tries to purport perfection in this era in this space. As soon as someone is talking about the silver bullet and having solved the climate crisis through their recyclable pallet, I think it’s an obvious point to say that brand probably doesn’t value the consumer, but also the planet that seriously. We would never go out and say we’ve solved it, we know what we’re doing and we’ve cracked the nut. It’s still – there’s so many things at play when it comes to sustainability, and ultimately, as long as you are a product brand, you do have a carbon impact and you have an impact on the planet. So to then say you are truly sustainable is then an oxymoron, in my opinion anyway.
Kelly Kovack [00:27:36]: So you guys obviously are a UK-based brand, but you’ve also launched in the US in a big way, most recently with an 1,800 store rollout with target. Every market has cultural nuances, and while the US and the UK share a language, there are still nuances to the market. So I’m curious, what are the similarities and the differences when it comes to kind of this clean beauty category and conscious consumers? Are the UK consumers the same as the US? Are there sort of cultural differences?
Elsie Rutterford [00:28:09]: Yeah, there are definitely cultural differences, which we’re still kind of like grappling with and learning at the moment. We are three months into our launch into Target and every day we learn something new about the US consumer. I think with regards to the kind of clean space and being a clean brand playing in the US market, I think the US consumer is probably more advanced and has a slightly more sophisticated knowledge of the clean beauty space because I think it landed in the US sooner than it did in the UK. I think it picked up speed sooner than it did in the UK as well, and that was probably driven by the differences in formulation guidelines and regulations by territory. So perhaps it didn’t land as quickly as it did in the UK because we’ve got slightly tighter regulations when it comes to formulations and stuff, so it was probably a hotter topic over there in the US. But I think that means that it’s a blessing and it’s a curse because I think part of our job is already done. We don’t need to come into the market and educate on natural ingredients. You guys get that. You understand it. You’re won over by it. You’re interested in it. But we do have a hell of a lot more competition and I think we probably have a harder job to do really showing how our formulation is different to another clean brand on the market. And also proving that we’re not just another clean brand on the market, you know? We’re not jumping on the bandwagon; that we do have authenticity and depth to our brand and our products that really works. So I think that’s been a real learning curve for us, but super interesting, and it’s actually been actually really fun developing, marketing, messaging that can really speak to the US consumer. As you said, we have the same language, we thought that we’d just land there and say the same thing, but actually no. We do need to kind of tweak things. So that’s been super interesting. I think that you then kind of look at the US market in itself. Obviously, we’re finding that state by state, they’re markets within themselves, and we can’t approach the US as a whole, we really do have to look at it by state. So really understanding where the brand is resonating state-wise is super interesting and where we really have work to do. And then if you drill down even further into that, the Target customer is like a whole other being in themselves. And that’s been super interesting to really kind of start to understand and learn what she’s really driven and motivated by. Really understanding – we don’t have Target. That’s also another thing, we don’t have Target in the UK. We actually don’t really have a store that rivals it. We have, you know, the drug store side of thing, we have Boots and Superdrug, but you wouldn’t go in there and pick up a jumper and a duvet set as well as your beauty products; they’ve very pharmaceutical. We don’t really have anything that speaks to it. So the whole idea of Target has been really interesting for us as a business to really understand the consumer’s mindset when they step into a Target store and kind of like why I’m there versus the while I’m there and how that affects what they might pick up off the shelf and how then do our products speak to somebody who may have just popped in – so we hear you just popped in for a bottle of water and you come out $300 short an hour later. So really understanding the Target customer has been a real nuance for us, and one I think we didn’t appreciate going in how nuanced it would be, but super interesting. It’s been really interesting understanding what kind of forms of media the US market will kind of respond to and be receptive to versus the UK. I think we’ve been experimenting with more sort of traditional forms of media that’s been quite cool and has a great uptake, like TV is doing really well for us.
Kelly Kovack [00:31:43]: I think one of the things that I find interesting about your business is that you kind of have a really – I think – modern approach to distribution. So you’re in Credo and Sephora and you kind of have a deep relationship with Sephora because you kind of have an international distribution footprint with them. But then you decided to launch in a big way with Target. So, first of all, how did you navigate that? Because that kind of needs negotiating skills, I would imagine, so you keep everyone happy and engaged. I’m curious about what your strategy was and why that was the path you could have taken, because obviously I’m sure you could have had other choices.
Dominika Minarovic [00:32:24]: Yeah, I’m sure it was really interesting for us when we were looking at the US landscape. As you mentioned, we are partnered with Sephora, we are partnered with Boots in the UK, so imagining, perhaps, a similar route into the US, perhaps through a drugstore/pharmacy route or perhaps a Sephora, but when we started to really look at Target and the Target landscape, you know, they’re still very much building their beauty assortment. It’s a really exciting space for beauty in terms of the brands that they’re bringing in, but I think that mass positioning as well was really attractive to us. I guess we hadn’t necessarily crystalized ourselves as a mass brand until we really got deep in with Target. Our price point had always moved us out of the prestige realm. We never aimed or had ambitions to be in a luxury prestige space. I think for us, an accessible price point was really important in terms of perpetuating our values of being accessible and making sustainability like a mass concept. So we had always had a focus on price, but Target really challenged us to bring those prices even further down and make ourselves a truly mass proposition, and I think that was definitely the right thing for the brand, because there is still – for the moment – a little bit of white space for this pricing category, I would say. The prestige space for clean beauty is very crowded. So just from a pure opportunity perspective, I think we had a bit of white space both in Target and from a pricing perspective. But I think as a retailer, you know, the assortment that the buyer has put together I think has been really thoughtful at Target. He’s brought in some great brands that aren’t competing and aren’t cannibalizing but really uplift the whole category. There’s a real focus on clean, but not necessarily from a kind of toxin, kind of bashing perspective. It’s really a focus on kind of high performance, clinical ingredients that have an effect on your skin at that good price point, and I think that’s a really important message to the customer, that you don’t have to go out and spend $50, $60 on a cleanser to get great skin.
So there were a couple of things that really attracted us. Obviously, the scale, you know. We’re trying to do things better for the planet, but obviously we’re only going to have that impact if we’re doing things at scale. So without a doubt, the scale of Target was super attractive. In terms of the negotiations, there was obviously the courtship that always happens with a big retailer. We spent a lot of time in the US, we spent a lot of time with Target, but I think that there is just – you would be surprised at how many synergies there are between us and Target as a business. It sounds absolutely crazy because we are a tiny business compared to Target, but in terms of what our ambitions are and what I think and I believe our inherent values are, there are a lot of synergies, and it felt like we had kind of come home. When we’re speaking to the buyer, when we’re speaking to the wider Target team, it just really felt like we were all aligned in what we wanted to achieve from a beauty and from a product assortment perspective.
Kelly Kovack [00:35:19]: I was more talking about keeping your current distribution intact. But we don’t have to talk about that, you clearly did it. You’re clearly selling at the other retailers otherwise it would become an issue, And the interesting thing to me, I think that this was a long time coming and it’s just another trend that was accelerated by the pandemic. You know, for so long, brands were defined by their channel of distribution or the choices they made, and now it doesn’t matter anymore. Your channel is the consumer. It’s not, you know, do you live in Target or do you live in Niemen Marcus, which I think is really interesting. I want to kind of dive into the funding of the business, if you don’t mind, because you don’t just launch into 1,800 Target stores without some capital behind you. And a lot of brands, once they – if they’re self-funded and they get sort of that perception of growth, so there’s interest from the consumer, there’s interest from retailers, you can really sort of hit kind of a bottleneck if you can’t capitalize or you don’t have the money to make the inventory to fill the opportunity. So it’d be interesting to understand how you funded the brand kind of initially in the early days, but also in January, you launched a pretty significant Series A round led by Point King and Unilever Ventures, that’s an existing investor, to support that launch. So I’m curious how you sort of funded things in the early days, because I think that’s always of interest to founders, and also what the fundraising process looked like for you and kind of what you’re looking for in an investor.
Elsie Rutterford [00:37:01]: Yeah, absolutely. So our kind of fundraising journey, to date, we did a small pre-seed just as we were launching the brand as kind of a round of friends and family, and then our seed was in 2018 and that was led by Unilever Ventures. So we got kind of institutional money pretty quickly, but we were thrilled to bring them on as a partner. They’re just – they’re really fabulous. They have a great kind of portfolio of very similar brands but nothing that feels too kind of competing. So their breadth of experience is incredibly thorough. As a venture of Unilever, they’ve obviously got insight into some pretty interesting kind of industry knowledge, as well as just being a great team. So we were thrilled to kind of have them on board. They helped us in conversations around that distribution strategy that we’ve just talked about. Was it right to go into kind of a mass retailer? Should we take the Sephora relationship kind of global? So they were sort of very sold and very bought into the idea of speaking with the likes of a target and going kind of down that mass route. So they were supportive of that, which meant that as we went on to raise our Series A, which as you say, in the run-up to the launch in Target and to make sure that we were well-capitalized, because absolutely you need cash to work with a business like Target from an industry perspective, but also from a marketing perspective.
Kelly Kovack [00:38:29]: You’re playing with more zeros.
Elsie Rutterford [00:38:31]: I mean, god, yeah, the number of zeros that we were adding onto the door count based on what we’d been doing so far was huge. So I think from an inventory perspective, from a marketing perspective as well, we had the benefit of working with retailers ahead of working with Target, which meant that we had a good understanding of how much it takes to service an account like them. Obviously then we added the zeros because of the scale. But I think we kind of came into it knowing okay, it is going to cost us. We are probably going to have to place some big stock orders. There is going to be a bottleneck before we get paid for that. We had a decent couple of years with trading with the likes of Sephora to understand what that supply chain looks like and what it looks like in terms of dollar values servicing an account like target. So then we worked backwards and understood when we would need to start our Series A fundraise, essentially. So we had Unilever on board and really supportive to kind of follow into a Series A. And we had met Point King Capital, who are based out of Sydney through industry shared contacts, were introduced to them, and again we just hit it off. We met with Sam, who is our investment director and kind of heads up Point King, who is incredibly experienced within the beauty industry. And we’ve met a lot of investors, I would just like to add.
Kelly Kovack [00:39:51]: I’m sure.
Elsie Rutterford [00:39:52]: I’m making this process – I’m making it sound like it was a walk in the park and we just met with Unilever and just met with Point King and then we were done. We were not. This was a very long process. For every fundraise, every step of our fundraising journey has been thorough, long, painful at times, but we’ve met some amazing people. Both with the Unilever team as well as the Point King team, as soon as we met them and kind of explained what we were doing, we just felt like they were super aligned and they got what we were trying to do. So that made kind of selling in the opportunity at Target and selling in why we needed to raise the $7 million we were raising a much easier conversation because they were well behind the direction that we were taking the brand. I guess we just really felt like the team there would have the expertise and the kind of knowledge to help guide us in what was the landing of the biggest account in the brand’s history. And I think that’s important as well in the kind of investing landscape – we weren’t just looking for the dollars, we were looking for the experience as well. We were looking for the right partners. We were looking for people who would really be able to guide essentially two novices. We don’t know the US market and as I said earlier, we don’t even have a Target in the UK. So we’re super pleased with how it has turned out. We’ve got a cap table of some really interesting people based all over the world who are really well-placed to really guide and mentor the business, and I think that’s super important if you’re going into an account like Target.
Kelly Kovack [00:41:09]: Yeah, I would agree. So I have one last question for each of you. You know, the industry is moving so fast and then coming off of the pandemic, which has accelerated a lot of trends and made things that were kind of bubbling up mainstream very quickly. You know, I’m excited because I think we’re going to enter into this period of really profound innovation. I think the beauty industry is going to look totally different in a few years. And I guess my question to you is do you have any predictions of what might be? Especially innovations in the space that you’re in. And also, you know, do you have any hopes for the future of the beauty industry? I think we have a lot of work to do on many fronts. What are your hopes for the beauty industry looking forward?
Dominika Minarovic [00:41:57]: Yeah. It’s again, such a powerful question. I think in terms of innovation, you’re absolutely right. I think innovation is being driven by the consumer. I think that, you know, 15, 20 years ago, if you think about it, all these brands were producing products. The only way you would know if they were any good were those reviews in the back of Marie Clare or InStyle or Glamour with an editor telling you to buy it, but there was no validation, really, from your peers, there was no way to cross-reference those. So you kind of just went on the assumption that these paid experts would know what they were talking about. Whereas in this day and age, I would arguably say that your peer is now that expert and that journalist is probably last on the list that you’re looking for that validation from. And I think that has collectively raised the bar in terms of what you can expect from product performance, and actually, as a brand, you can’t get away with crap products anymore. You know, I see so many products coming to market and genuinely am impressed by a lot of them because I think brands have access to innovation, the newest ingredients, and we now have a clearer understanding of what really has an impact on the skin. And it’s not so much about those gross margins and it’s actually about delivering value to the customer. I think from our perspective, we’re seeing a big marrying up of skin and wellness, and this is where the brand is rooted, so obviously I’m going to say that is a big trend, but more and more I’m seeing the concepts from food and wellness supplement filtering down into beauty and it’s definitely where we see a lot of inspiration, but I think in a post-COVID era where people are quite concerned with their health, that is extending to their skin. Skin is the body’s largest organ, and when you’re so consumed with your health and your well-being, often your skin is one of the first places to show when that is in disarray, but two, is something that needs to be taken care of when you’re thinking about your wider holistic health. So I think clean brands and brands that err on the side of wellness are really well-placed. And I think, you know, price is a big point of innovation in that, how can we continue to deliver these excellent formulations at prices that people can afford? You know, we see a lot of consumers now moving downstream to retailers like Target from Sephora. How do we still inspire and excite those consumers at that price point when we don’t have as much flex on gross margin and we can’t invest as much, perhaps, into innovation as you can at a prestige price point. And how do we still deliver that beauty experience through packaging as well, because that is still super important. So I think there is going to be a continual shift towards clean. Whether you like it or you hate it, whether you believe it or you don’t, I think we would be fools to say that the clean beauty movement is going away. I think it’s becoming stronger and I think the messaging around clean, healthy skin is just resonating more and more with the consumer. So for us, obviously, that’s great news. But yeah, I do think that most brands will just start creating clean formulations as table stakes. And then, again, on the sustainability and particularly the packaging side of things, I do think that is now table stakes and you can’t get away with, you know, just reckless packaging that is completely unrecyclable. I think that consumers call you out. I think that if you’re shipping things in e-commerce packaging in bags with bubble wrap and wrapped in another plastic bag, you will get called out, and I think that is a great thing. So just to be really conscious about excessive materials I think is something that will become much more relevant for the consumer and therefore will filter down into brand innovation as well.
Kelly Kovack [00:45:37]: Elsie, do you have anything else to add?
Elsie Rutterford [00:45:39]: I think Dominika has covered a good part of it. I think, yeah, I agree with everything that she’s just said. I think from less of a product formulation and perspective and more just of a general kind of messaging perspective, we are really seeing a shift in the sort of perfect skin that has been sort of put out by the beauty industry for the past 50 years. We recently launched a kind of skin positivity campaign and the way that that resonated with the consumer was so exciting. It was so exciting to see people excited to see real skin, you know? People were just like, thank goodness, someone is finally here to show what real skin looks like and not afraid to show pores and texture and lines. I think that will only continue to grow. I think there’s a transparency that’s kind of hitting the beauty industry that perhaps hit fashion some time ago. We saw sort of ways that body positivity – I think we’ll see that with skin positivity. I think we will continue to see yeah, just a level of transparency that has been quite literally touched over by the beauty industry for so long, and that’s really exciting. I think that’s a really positive and exciting – I said exciting about a hundred times, you can see I’m really excited about it. So exciting. But I do think it is great to see things moving that way, and it is fabulous to see us put out a campaign like that that really resonates with people. And it just feels a little bit deeper than just selling people products. It’s actually like speaking to people and speaking to, you know, what they really care about and ultimately helping to kind of drive confidence. So I think that’s something we’re seeing in the beauty industry – a real shift in the beauty industry that we’re super enthusiastic about.
Kelly Kovack [00:47:28]: Well, thank you guys so much for spending some time with us. It has been an absolute pleasure to meet you both, and hopefully this isn’t sort of the first and last. So please stay in touch, and hopefully we’ll get to meet in person some day, which seems like such a novel idea these days, but it is coming. So thank you guys, looking forward to seeing how you grow in the US, and definitely stay in touch.
Dominika Minarovic [00:47:54]: Thank you so much, Kelly. It’s a pleasure.
Kelly Kovack [00:48:00]: For Elsie and Dominika, it’s a matter of positivity. But they are unapologetic in their plans to evolve their young, agile start-up into an industry-leading beauty brand by pushing back against category norms. They launched with the aim of filling a gap in the market for brands that stood for great ethics around natural, sustainability, vegan, and cruelty-free. But they’re also laser-focused on accessibility and building a brand that could speak to a mainstream audience. Change is a communal effort; if it’s really going to happen, space needs to be created for it to take place. For a brand to affect change requires managing and sustaining a team that are as passionate about the business that they’re building as they are about constantly challenging the supply chain and the operational status quo. So in the end, it’s a matter of positivity, and that’s what matters. I’m Kelly Kovac, see you next time.
Dominika Minarovic [00:49:02]: Hi, I’m Dominka.
Elsie Rutterford [00:49:03]: And I’m Elsie.
Dominika Minarovic [00:49:04]: And to us, what matters is positivity. Positivity around using natural ingredients, being pro-planet, and loving the skin that you’re in.
Kelly Kovack [00:49:15]: It’s A Matter Of is a production of BeautyMatter LLC. You can find more content and insights on
www.BeautyMatter.com and follow us on social media @BeautyMatterOfficial.
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