Sponsored By Happy Farm Botanicals
Sustainability can't be another fleeting beauty trend. It must become the new normal and we all have a role to play. If you peel back the label of most products there’s a lot of marketing and a lack of transparency. Kelly sits down with Tina Hedges, founder and CEO of LOLI the world's first zero waste beauty brand. They dig into shifting the business paradigm from growth and profit at all costs to creating conscious businesses built on profit and purpose.
Tina Hedges [00:00:23]: Hi, I’m Tina Hedges. I’m the founder of LOLI Beauty, and for me, it’s a matter of trash.
Kelly Kovack [00:00:36]: Sustainability. I know, I know, everyone’s talking about it, everyone says they’re doing it, and you may be tired of hearing it. I’m Kelly Kovack, the founder of BeautyMatter, and sustainability can’t just be another fleeting beauty trend, it must become a mandate, it has to become the new normal, and we all have a role to play. The beauty industry has been part of the pollution problem that got us into this world on fire moment we’re living in now. We also need to be part of the solution. It’s a matter of changing the business paradigm from growth and profit above all else to building conscious businesses that are built on profit and purpose. Beauty disrupter Tina Hedges – and I don’t use the word disrupter lightly – is the founder and CEO of LOLI, the world’s first zero-waste beauty brand. She’s building what I believe the future of beauty will look like: sustainable, transparent, and accountable.
Tina, so you have an interesting background. You sort of have this, early on in your career, sort of a very big business, kind of big beauty business traditional background, but you’ve also married that with some really big entrepreneurial successes, so you’re one of those rare breeds that kind of can live in both worlds. What is it that you think your experience from big beauty brought to your entrepreneurial pursuits?
Tina Hedges [00:02:15]: So, I actually think, Kelly, that the combination of having worked in big beauty and dipping my toe and then getting quite involved in the start-up world, that combination is a perfect synergy, because in my early days, when it counted most, I learned the discipline, the rigor, the responsibility, and the best practices from the world’s leaders. I mean, let’s face it, going through L’Oréal and Estee Lauder is like getting your PhD in beauty. Forget Harvard Business School, who needs that? And so there was a rigor and a discipline in how to look at the business opportunity, how to frame it, how to analyze the financials, how to have rigor in the innovation cycle, and all of that sort of gave me a framework, but that could also be incredibly limiting, right? It can put people into boxes, there can be so much process and so much rigor that it undoes the opportunity. So, on the other side, jumping into the start-up world, I learned that be ready to fail, fail fast, don’t be afraid of failing, which is the antithesis in big beauty, right?
Kelly Kovack [00:03:26]: Right, you don’t fail.
Tina Hedges [00:03:28]: You don’t fail, and you don’t go into a meeting with the chairman of the board or the executive committee and say, “Hey guys, relax, we just failed but we learned a lot,” right? So, I think sort of finding that perfect balance between those two frameworks, discipline and opportunistic endeavors, and just sort of finding that balance, I think that helped me a lot.
Kelly Kovack [00:03:54]: Is there one particular thing that you think most sort of entrepreneurs or sort of beauty start-ups lack that big beauty business employees? You know, because there’s a lot of – indie beauty is kind of considered a huge trend right now, although I would say it’s always been part of the business cycle, and a lot of people say, you know, “Big beauty doesn’t move fast enough. Big beauty, there’s too much process-driven,” but they’re still the beauty industry. So, is there like one thing that you could pull from your experience, kind of from big beauty, that you think entrepreneurs in the beauty industry should employ in their businesses that they kind of don’t right now?
Tina Hedges [00:04:40]: I think what I find really shocking when I look at the explosion of indie beauty brands is the lack of responsibility in really understanding formulation. It’s like, you know, someone wakes up one day and gets enamored with the idea of reinventing a category and goes to a very fancy creative agency who does a millennial pink tube with gold foil printing on it, and then they go to a third-party manufacturer and get a formula off the shelf, and then they’re like, “We have a beauty brand,” and then they get lots of venture capital funding, and there’s a lack of rigor and understanding of the formula and what really works and what’s really in it, and sometimes they don’t mean to be misrepresenting what’s in the product, they just don’t have the knowledge and the understanding, and I think that big beauty does this very well, it really trains its marketing and product innovators to work along with the scientists and the PhDs and really understand how products are developed, what goes into them. So, I think that knowledge and that expertise is really missing in indie beauty, and I think it’s a disservice to customer, and now, we’re seeing it also, by the way, in packaging, and the greenwashing of packaging, because these brands don’t know. They’re sitting there talking about bioplastics as being compostable; well, yeah, it degrades into the ground, but it’s leeching micro-plastics into the food supply.
Kelly Kovack [00:06:20]: So, you think it’s really that when you’re in big beauty, there is no wiggle room, you have to validate everything, where indie beauty kind of flows a little by the seat of their pants, either intentionally or otherwise?
Tina Hedges [00:06:38]: My mother used to say to me when I was growing up, “the paper holds everything, and just because you write it, doesn’t mean it’s true.”
Kelly Kovack [00:06:43]: Right.
Tina Hedges [00:06:44]: So, I think we’re seeing that, right? You can scan all these websites and the claims they’re making or their social media platforms, and I mean, I’m shocked to see brands that are saying they’re zero waste, or they’re organic, or they’re “clean,” when you just peruse the ingredient list or you look at their packaging, and you know that’s not correct, but there is a lack of governing body. I mean, I’m very, very grateful to partner with Made Safe, because at least on the formula side and the ingredient – granular ingredient side, because they look at such depth, they are, I think, the leading authority on a formula being made safe, but there’s not an equivalent in the sustainable packaging area.
Kelly Kovack [00:07:30]: I mean, I would agree with you. I think that the FTC has recently gotten involved in slapping a few hands, both on claims and fake reviews, but do you feel that retailers need to play a role? Because, I think when you sign on with a retailer, you sort of sign a disclaimer saying they’re not responsible, but yet, they’re sort of perpetuating what the claims are, and not all of them actually require substantiation, and even though the FTC did sort of slap some hands, I mean, it really – they didn’t have to advise consumers that the activity had happened, and the financial sum was really nominal in the scheme of things. So, I don’t know, is it a cost of doing business, or is it really trying to hold brands accountable?
Tina Hedges [00:08:22]: So, it’s a fascinating area to look at where do retailers play in the area of responsibility and claim validation and transparency. On the one hand – and, we’re just beginning to dabble our toe into wholesale, and I’ve been asked to sign a few affidavits on vouching that we’re a clean beauty brand, and when I look at what they’re asking me to sign, it’s so meaningless. It’s like the frosting on the cake, and you know, basically any brand could sign these affidavits, there’s no weight to them, there’s no really granular looking at what does it mean to be a zero waste or a clean beauty brand. So then, the difficult for us is we’re doing all the hard work, but brands with way more marketing dollars and ability to advertise or sample are making the same claims, and the retailers are allowing them, because either they don’t know, they don’t have an expert on the retail side to really help them dig down into what brands really have the authorities to make the claims they’re making. So, it’s an interesting conundrum, and I’ve had the have the conversation with myself of, do I secretly write to Estee Laundry and have them to do an expose and try to pull down my competitors, and you know, I have a theory, don’t build your happiness on someone else’s unhappiness, and cream rises to the top, and hopefully an educated consumer will be able to suss out what’s real and what’s not until we find a governing body.
Kelly Kovack [00:10:08]: But, you have sort of in the process of creating LOLI, you have found third-parties to sort of substantiate and validate your entire supply chain.
Tina Hedges [00:10:19]: Yes.
Kelly Kovack [00:10:19]: So, they do exist, but they’re not always sort of in the beauty realm, right?
Tina Hedges [00:10:24]: Yeah. We’ve done so much work, and some of it we haven’t even advertised yet, but we have a third party that looks at all our formulations on the ingredient level and tests them for everything from pesticides to contaminants to potency prior to us putting our stamp on the final product. We have Made Safe that then also looks at the ingredient level, from the nanoparticle size to where it was sourced from, to how it was formulated, to put their stamp. Then, we also have a platform that looks at our entire supply chain to assess the risk of people trafficking, because even if you think you’re getting fair trade ingredients, that co-op may be getting some parts of their supply chain from areas that have people trafficking. So, it’s a very, very complex ecosystem, and we’ve tried to seek out the experts in different fields to help us, and then, on the sustainable packaging side, the same thing.
Kelly Kovack [00:11:30]: So, let’s go back to sort of your reason for being and how you came to launch LOLI. There is the saying, “when one door closes, another door opens,” and I know in your case, you’ve talked about the fact that the universe kept slamming doors in your face and htat the last thing you wanted to do was launch a beauty brand, but I know you’re also a very spiritual person, and I would say, if this is such a thing, a beauty shaman. But, can you share a little bit about why you launched LOLI? And, there is sort of a really beautiful, mystical side, that is really intertwined, and I know you don’t really talk about it very often, but have found a really niche audience, which is interesting.
Tina Hedges [00:12:14]: Yes. So, the whole – there’s a bit of a commercialization happening right now with spirituality and skincare, and you can walk into some of the retailers now, or online, and see everyone has – which really gets to me, the two-dollar crystal facial roller that you can get in Chinatown and charging $60 for them, and, “Wow, isn’t this cool, like now I’m getting crystals with my skincare.” For me, I have a tremendous sense of respect and a feeling of responsibility to the spiritual side. My story begins where I grew up in Jamaica, West Indies, I was born there, so I grew up in the Blue Mountains where natural ingredients were being plucked in my house and made into all sorts of topical and ingestible remedies, so I have an early memory of my mom taking like a tin bucket that you would wash clothes in, pulling mangoes, stripping me naked and sticking me in the bucket with mangoes and letting me eat, but actually letting the juice of the mangoes go all the way down my body – that’s an enzyme cleanser, plus it really stains clothes, so it’s good to eat them naked. But, I actually – the deeper part of the story is that I actually died when I was four years old. I drowned in a swimming pool, and it’s a story I don’t tell that often, and I left my body and went up to whatever you want to think it is, God, creator, whatever word you have for it, and came back and have complete recall of that, and since then, I’ve been a natural intuitive, I channel and I actually see the energy of things. I know how to make the invisible visible. I think that’s why I went into product development, because I really see the future, and I can see the future really well with products, but I also understand the energy of things, and so for me, when I create product, I look at the vibrancy, the spiritual meaning, the emotional meaning, the color impact, everything that goes into that alchemy. So, it’s interesting, our customers who are very loyal definitely feel when they use a product that there’s something different, and they can’t put their finger on it, and I think it’s because of that sort of spiritual aspect, and I believe we need to bring more consciousness back into beauty. When I was in big beauty, at some of the companies I mentioned previously, we would spend hundreds of thousands of dollars, if not millions, on consumer research, one of the things that was always a given is you could take the same product and if you put a fragrance in it that the consumer liked, and you put a fragrance in it that the consumer didn’t like, the one with the more pleasurable scent would always test better for product efficiency.
Kelly Kovack [00:15:39]: Oh, interesting.
Tina Hedges [00:15:40]: There’s no difference in the formula except the scent, but they would say “it does better for my lines and wrinkles and my skin is smoother; I look more radiant.” One could argue, well, maybe they’re using it more because they like the fragrance, but they were being paid to use it twice a day, every day. So, I think that you cannot extract the emotional connection and the feeling that when something makes you happy, the impact it’s going to have on you, and I think we have to bring that consciousness back into beauty.
Kelly Kovack [00:16:11]: So, can you talk about sort of the closing of doors that led you to ultimately just surrendering to the universe and launching LOLI? I know it was a hard time.
Tina Hedges [00:16:23]: Yeah, it was a really hard time, although, you know, every month feels like another rollercoaster moment, just different dynamics. But, it was about – I want to say about five years ago when this all started, and I had just been in…at the time, I was actually in the beverage industry, and I launched a whole category in beverage called “hangover prevention.” Don’t ask me how I ended up in that, it’s not like I get hangovers every night or something, but I really love innovative ideas, and I met the founder of this business at the time, and maybe I was seduced because it had an angel on the can, called “The Angel of Mercy,” so anything with an angel, I love. But, I had gotten incredibly disenfranchised with beauty. I had a spiritual awakening where I felt that I had spent a decade and a half launching into the world millions of bottles and jars or plastic filled with 80-95% water and toxins and chemicals, and then telling the customer there was some natural ingredient in it, and when I felt about that, it just felt like I wasn’t living my dharma, that that wasn’t what I was supposed to be doing.
Kelly Kovack [00:17:41]: What year was this?
Tina Hedges [00:17:42]: Really, actually, about 2014, 2015, about four or five years.
Kelly Kovack [00:17:48]: Just before people were really talking about…
Tina Hedges [00:17:51]: Yeah, absolutely, and that consciousness just came from a personal sort of quest. I was getting more into my energy healing work, and so looking more at the totality of my impact, and how could I try and do a healing session on someone but on the other side make $20,000 by creating another double-walled PET cream or lotion or jar and selling it at $125 with crap in it – sorry, but that’s what it is. So, I had this moment of sort of a complete download of like, “What are you doing?” and you are really meant to be stirring up something way more magical and meaningful, and really, it was one day that I was just walking, I bought a juice, I walked into a retailer, I looked at the row of face oils, I said, why would we be buying those products? They’re all the same ingredient, it’s all diluted, polluted, and over-packaged, and then I had this sort of vision moment of, “Wow, we need to deconstruct beauty, unbottle beauty, go back to the pure, powerful, and potent living, organic, loving ingredients,” and all of the sudden, I was like, “Oh, that’s the name, LOLI: living, organic, and loving ingredients,” and then I got – I’m getting a chill telling you, actually, this is so funny. And then, so I had the name, and I had this vision of deconstructing beauty, but then I was like, “Okay, universe, what do I do with that? I have no money. I live in a studio apartment on the Upper East Side. I pay from paycheck-to-paycheck to pay my rent and color my hair. What do you expect me to do with this?” So, it was like that nagging thought behind in your mind, but I kept sort of forging my way forward and trying to get consulting jobs, and all of the sudden, I couldn’t get a consulting job. It was just the weirdest thing, I was like, “How is that possible?” So, my income started drying up, which was really scary, and I got to a moment where I was just like, “Wow, I don’t have anything to do. I don’t have a project. I don’t know where I’m going in my future,” and the idea of LOLI kept hovering, and hovering, and hovering, and all of the sudden, I was like, “Well, what happens if I just try and launch it?” and then I started going through the very rational, how am I going to pay for a website? How am I going to pay for inventory?
Kelly Kovack [00:20:32]: This wasn’t the first time that you’ve done an entrepreneurial venture, so you knew exactly what you were getting yourself into.
Tina Hedges [00:20:39]: Correct, correct. I mean I love those stories when people say, “Oh, I had $500 and now I have a hundred-million-dollar business and I didn’t take a cent.” There’s always an underlying story to those stories, that it isn’t quite how they’re portraying it, because I’m sorry, you have to pay for ingredients, and you have to pay for – and it’s always more than you anticipate, and even if you have better sales than you anticipate, you’re still going to have cash flow issues, so, I could rationalize how difficult this was going to be, but I just was like, “Let me try. What’s the worst thing that can happen? I fail? Well, I’m already failing right now, so I might as well fail larger.” So, I started in my Upper East Side apartment and I did a test, and the rest is history.
Kelly Kovack [00:21:27]: I mean, I remember those early boxes, and I can remember the conversations we had, and I was like, “Oh my god, she’s really onto something,” and I don’t think I even kind of realized at the time sort of how big the mission was that you were undertaking, but you literally deconstructed not only the concept of beauty, but the entire supply chain. Like, how difficult was that?
Tina Hedges [00:21:51]: Yes. That was super difficult.
Kelly Kovack [00:21:54]: Like, where do you even start?
Tina Hedges [00:21:55]: You know what, Kelly? I actually remember those meetings, and I remember being embarrassed bringing that box to you, and feeling like Mother’s Loving Hands at home.
Kelly Kovack [00:22:06]: Well, it was hardly that, but…I mean, anyway who can pull off sort of a collaboration in Mother’s Helping Hands at work with Alexander Yang is not exactly like crafty Betty.
Tina Hedges [00:22:19]: Well, I think we did that through the back door. That story is so funny, it’s worth another conversation. But, anyway, deconstructing the beauty industry and starting from how ingredients are sourced, and looking at how can we be more sustainable, from sourcing to product formulating to packaging to the experience of beauty, both in the consumer’s home and at retail, and really looking at every single piece of that, and how can we be as zero waste as possible, as sustainable as possible, and as powerful as possible, and I think the supply chain was absolutely the hardest, and it’s something I’m most proud of. We sourced every single ingredient. We have relationships with fair trade co-ops where we upcycle ingredients, like our date nut seed oil, from seven villages in Senegal, which now because we’re upcycling an ingredient, the nut, the kernel of the date, that used to be thrown away, it’s giving the women in the villages income during months that they usually wouldn’t have had the income. After they harvested the date, for months, they had no income coming in; now all of the sudden they have a whole new opportunity, so looking at how by upcycling we’re not only improving the sustainability of beauty from an ingredient supply chain, but we’re giving women income or opportunity that they didn’t have, right, to change their life. So, that’s on the sourcing side, and then the formulating, we’re moving the water. Wow. Trying to find a third-party manufacturer that’s willing to make our products that are as chemical and preservative free as the most organic of your food, food-grade, waterless, I mean, most third-party manufacturers didn’t want to work with us. They’d hear my vision, and they’d be like, “She’s crazy. You need to dump all of these shitty chemicals in there.” But, you know why? Their manufacturing supply lines are so infested with bugs, that unless you drop a ton of preservatives in there, your product is coming off that line contaminated, and you know how we know that? Because half of our inventory on our first run, we had to throw away. Things that never get micro-issues, like really hard, like you have to try, an oil or a salve or a balm, that’s anhydrogenous product, to get contamination in there is really difficult, and we literally had to throw away half of our inventory; so what does that tell you? The standards are just not there; they don’t look at it the way we look at it. We look at it as: we’re a food company reinventing beauty.
Kelly Kovack [00:25:14]: I think another interesting thing that you have kind of turned, or changed the paradigm on, is the beauty industry is historically really secretive; secretive about proprietary this, no one wants to talk about their vendors, although it’s a really small, incestuous pool on the supply side, but you know, what has been normally considered proprietary information, you’ve actually collaborated with people who might be perceived to be competitors, you also have open-sourced your formulations, so to speak, or recipes, to consumers, and you’re also incredibly generous with information, and I know this sort of goes to a larger cause that you believe in, and also is sort of fundamental, I think, to the person you are, but to the DNA of LOLI. Why do you think that’s important?
Tina Hedges [00:26:10]: I think to be a change maker, you need to be able to communicate on all levels how change is made, and I think being secretive or competitive is really just a selfish attempt to money-grab, and listen, LOLI, it is a B-Corps, but we are a for-profit business; I have shareholders and investors that are looking for their return on their investment, but one of the reasons we became a B-Corp is that part of our mission and our obligation to our shareholders is this altruistic approach and commitment to impact on many levels, and I think that the only way we’re going to be able to deliver on that, is if we actually share notes and learn from others, because I may have part of the solution, someone else may have another part of the solution, and together, the two sides of the orange come together to make one orange, right? If I just hold onto my piece, I’m insular, and things are changing so rapidly, so I think it’s hard to have that dialogue. And, second of all, I come from sort of an old school approach that when you educate the consumer on the industry, everyone rises, everyone wins.
Kelly Kovack [00:27:39]: And, I also think that the issues in the industry that you’re tackling are really big issues, you know, the beauty industry is one of the largest polluters of plastic in the world. So, you, Tina Hedges at LOLI, can’t singlehandedly change that, it’s going to take the entire industry.
Tina Hedges [00:27:59]: And, truthfully, I think that there’s some very well-meaning leaders in some of these big beauty companies that think they’re doing well, but again, they’re so busy, they’re running from meeting to meeting, they trust their advisors who are supposed to be experts, whether they’re suppliers or internal development people, to tell them the facts, and they don’t have the time – I literally spend my “fun” time reading Harvard research papers on compostable materials and things like that. I really dig into the details. I personally love it, but most beauty execs don’t have that time, right, so if their supplier says, “Oh, this is a PLA tube and it’s made from sugar cane or corn, and it’s completely compostable,” they’ll be like, “That’s amazing, let’s launch that. Let’s do it,” and they don’t realize that that is actually worse for the environment than some of the more traditional plastics, because people think it’s compostable, and it’s not – I mean, it will break down, but it breaks down into micro-plastic.
Kelly Kovack [00:29:08]: So, you know, if you’re so generous about information, how do you marry that with kind of keeping your competitive edge? Because that, I guess, ties into why people are so secretive.
Tina Hedges [00:29:24]: So, sharing with, whether they’re competitive brands or other industry leaders, where I source my garden compostable labels, or where I source my food-grade refillable glass jars, that isn’t going to make the difference of LOLI being successful, because they could get to that supplier.
Kelly Kovack [00:29:45]: They just need to look hard enough.
Tina Hedges [00:29:47]: They just – they need to look hard enough, but they could get to that supplier whether I give it to them or they find it on their own, but they can’t duplicate the heart and soul of our brand, and I think that’s where brand and the emotional connection to brand is so important. You could create product, you can commoditize. I mean, nowadays when you look, it’s hard to tell this razor company from that razor company, whether it’s a pink razor or it’s a blue razor, everyone is trying to get - all the language is the same, all the websites look the same, brands are losing – it’s again become this commoditized factory of producing direct consumer brands that there’s a template, and that template is just getting used over and over and over again. I think that I’ve spent so much time and effort and maybe at the expense of accelerating revenue quicker, but really developing the emotional component, the heart and soul of the brand, and I’m most proud of that, and I think that that is someone no one can steal from us. They can take our language; they can take our suppliers; they can duplicate our formulas, which are very difficult to duplicate, so good luck to you; but they won’t be able to duplicate LOLI.
Kelly Kovack [00:31:15]: You know, I think that’s one of the things that I sort of – not struggle with, but it’s very interesting to see these brands that…I don’t know if they’re brands or products, to be quite honest with you, because we both come from…we have a historical legacy of building brands, we’ll put it that way, that’s a bit more traditional, where you really sort of build brands that last, and I kind of think that we’re in a time now where, I don’t know, maybe we’re in the time of supernova brands where there is not this longevity and investors kind of play a game of hot potato and you hope you don’t get stuck with it in the end. But, I think the way you’ve built it makes so much more sense to me, because you really have a solid foundation that gets you through ups and downs of trends and economies.
Tina Hedges [00:32:06]: And, whenever I have a moment of fear or doubt, which that happens pretty much a hundred times a day, I go and read customer testimonials, and I received one the other day which was just so incredible, I’ve never seen anything like this. A customer had dropped our plum elixir on the floor, and it’s a glass bottle, and it’s a fairly heavily walled glass bottle, but if you drop it from five feet above, it probably will crack, and they sent a picture and said that the top of the bottle had cracked, and they sent a picture and said, “I don’t know if I should be mildly proud or slightly embarrassed, but I have continued to use my plum elixir and take the risk of glass shards on my skin because I’m so obsessed with this product,” and I wrote back and said, “I love your loyalty to the brand, but please don’t use that any longer and we’ll send you a replacement,” and then that became viral, and people started reposting and talking about it, because they were like, “This brand has the best customer service,” and I’m like, it’s not really customer service, that’s just who we are; we really care about our customers. I care about every single customer, and I think that goes back to one of your earlier questions, Kelly, where we talked about, “What did I learn from big beauty?” You know, my earliest training ground was at Estee Lauder, and I joined when she was still alive, although quite removed from leadership, Leonard was running the ship, but her philosophies and her outlooks were really engrained in the management team, and she would be the first to be out on the floor touching a customer, and she said, “Telephone, telegraph, tell a woman,” and so she understood the power of touching each customer and the virility of that, and I think that is in my heart and soul; no one can take that from me.
Kelly Kovack So, let’s move onto the money piece, because it’s definitely a hot topic. I kind of feel like we’re in the world of marketing sort of billion dollar valuations, which, you know, as far as I’m concerned, who cares what the brand is valued at, it’s sort of what’s the number on the check when you exit, but that’s me. So, I know that the initial fundraising for LOLI was a bit of a challenge. You had this white space opportunity that you saw, but there were no benchmarks in the market, which I know that makes it very difficult for traditional investors to really understand what you’re actually doing. You’re also a female founder, which we know female founders, especially when you’re fundraising, capital is not as easy to get. And then, there’s a third factor, which I found sort of shocking, but your age played a factor in some of these conversations. You know, I would think that for a founder like you, that has experience both in big business and on the entrepreneurial side, you know, to me, you’d be sort of an easy bet, but that wasn’t really the case. Could you share some of your experience in sort of those early days of fundraising?
Tina Hedges [00:37:48]: Yeah, so when I look back, Kelly, and I think that my first start-up, which was in 2005, I built a $30 million business in 18 months with four million EBDA, in 2005, and that should have put me in that cool club, right, where money should thrown at me from investors and said, “You clearly know what you’re doing. You’re a good start-up founder. Let’s support you. What other ideas do you have?” No, that wasn’t the case, and for one reason or another, whether I was a bit too early, because think about, 2005 was very early days in the start-up world here in New York City. I didn’t have a mentor. Someone from Venture, who was sort of like my guru who would open doors, and so I really was an outlier, and as time evolved, I became an outlier who was older than the prototype of what the venture world wants to invest in. They want to invest in people that are 30-35, straight out of Harvard or Stanford Business School, or Wharton, part of the cool club, and prefer if you have no experience and you come with an idea on the paper and you say, “I think the beauty industry needs to be reinvented, and I have the way to do it,” and they’re like, “Sure, he’s two million dollars at seven million pre-money valuation.” And then here I come, a female founder with experience, with LOLI, with serious traction, you know.
Kelly Kovack [00:39:34]: Because you did an MVP before you did the…it wasn’t sort of pure concept that you were raising money…
Tina Hedges [00:39:39]: And I would be literally, sort of my hand would be patted, “This is so nice.” I had one investor that said, “You know what I love about you Tina? You’re so relentless. You just won’t give up. Isn’t that cute?” Cute. And, another investor, “You know, Tina, it’s really too bad you have so much traction with LOLI and that you have so much experience, because if you were one of these prototype founders that we like to invest in, with no experience and straight out of grad school, we would have given you a two-million-dollar check, but you’re really just too old.” Literally. I was told to get off of pitching competitions because I was too old or not pitching tech. I mean, it was just really enlightening.
Kelly Kovack [00:40:27]: Also, you know, I mean, it may have been enlightening, but it’s also incredibly personal.
Tina Hedges [00:40:32]: Oh, it’s very personal, and I’ve even had situations very not “me too” where some of my investors have said to me, “Oh, do you really think you should be on air or on media because you’re not as pretty and young,” let’s just put it nicely – they said it a little bit more harshly “as I think someone representing the brand should be.” And, let’s face it, I think whether it’s from investors or consumers, there is this adoration and this putting on a pedestal of a very young start-up founder that seems to be living the life, and we could think of a few, right? And everything looks perfect and they’re pretty and they’re young and they’re vibrant, and there’s not as much reverence and respect for an older, experienced founder, male or female. I think it’s easier for males.
Kelly Kovack [00:41:31]: But, I do think that’s changing a little bit, because I think, you know, we kind of have gone through this phase of this proliferation of brands that were created by millennials for millennials, and I feel like there’s almost a glut of them, and millennials are also sort of aging and now they’re becoming parents and what they care about changes, and I think from – what I see, I think, the opportunities really lie on the edges of this, both sort of to older demographics, sort of, “Ignore Gen Z and boomers at your own risk,” and also Gen Z. I mean, do you see it changing? Because you never really stop fundraising, you’re always thinking about the next round.
Tina Hedges [00:42:18]: No, I never stop fundraising, and I think we should go – it’d be interesting to go back to how I did it, because I think I didn’t answer that question.
Kelly Kovack [00:42:24]: Yeah, sorry, let’s go back.
Tina Hedges [00:42:26]: But, you know, just to say, I think there’s some fatigue out there of sameness, and I think that the consumer wants to be spoken to and reached where they are, but they are also evolving. So, you’re right. Now that template of “this is what a millennial-focused brand should look like,” well, millennials are evolving, you’re right. They’re becoming parents, or they’re recognizing that they need to redeploy where they’re investing their disposable income, right, a $300 luggage that they maybe use once a year isn’t necessarily the best use of their funds, even if it makes them feel like they’re a traveler. I think that we’re seeing that fatigue, and I think that you’re seeing that definitely also in marketing spend, it’s becoming more costly to reach the customer.
Kelly Kovack [00:43:22]: I mean, how long did it take you to raise that sort of seed round, and what connected with the investors ultimately?
Tina Hedges [00:43:30]: So, my seed round took me, I started trying to raise that in about September of 2016, and didn’t successfully raise it until March of 2017, and I think I must have spoken to about 300 investors. I mean, it was everywhere I would go, I would ask anyone I knew, “Do you have three people that I could talk to about raising money?” And I would get passed from one person to the next. It just didn’t feel sexy the right way. It just wasn’t…and I think also I was super early to be talking about zero-waste beauty, no one really cared in 2016-2017. So, I finally raised that round by finding a lead investor, a family office, who I’ve been very successful with family offices, and part of that, I think, is they tend to have a longer-term view on return on capital, and they also tend to be very focused on sort of an ethos around their investment portfolios, so a certain percentage of the money needs to be toward sustainable brands or making a difference in the world, so there’s sort of a moral compass that comes in, which is really great, and then I wrapped around that a few angel strategic investors. And then, my second round – seed round – again, it took me about four to five months, and a few of my current investors came back into that round, but I found a media company who had a family office, and a global multi-national media company, and they were focusing really on beauty brands, and loved the sustainability mission. And then, my last round that I just completed last week, actually…
Kelly Kovack [00:45:31]: Congratulations.
Tina Hedges [00:45:32]: Thank you. Which was very, very, very difficult, because now we’re in that gray zone of, “We have traction, we have metrics, but we’re not yet at that two-to-five million AR,” right?
Kelly Kovack [00:45:48]: But, there’s also been significant changes kind of in the marketplace, so when you launched, you launched as a D-to-C brand, and it seemed like capital was just being thrown at D-to-C concepts, and then all of the sudden, you have D-to-C brands that are now sort of going from D-to-C to more traditional third party or branded stores, and then, you had kind of this focus on growth at all costs that seemed to switch overnight with the implosion of WeWork, and it went from growth-growth-growth to what are your unit economics, full stop.
Tina Hedges [00:46:24]: One hundred percent, and I’ve seen that even with our investors, is there’s not a lot of muscle memory in this, right, so they don’t remember what they were sort of holding my feet to the fire about previously, but in the beginning, they were very much like, “Why would you even consider going into wholesale? That isn’t where the money is, direct-to-consumer,” and they really pushed back on me, and all of the sudden it was like, “Wait, how come you didn’t open a wholesale yet?” and then the same thing about marketing spend, “Just get growth. Just get revenue,” and then all of the sudden it was like, “But why are you doing a sampling campaign,” which, by the way, got us 28,000 emails and skincare profiles, and a really nice return customer, but yeah, the unit economics of that sampling campaign weren’t profitable.
Kelly Kovack [00:47:19]: But, you’re also an individual founder, so you have no one to sort of gut check these things or, when you have those conversations, you’re like, “Am I crazy? They did say that.” You’re kind of…as a single founder, sort of how does that impact the dynamic?
Tina Hedges [00:47:39]: I’ve debated this whole situation of, do you need to have cofounders or be a single founder? On the one hand, it can be incredibly – the journey of founder is very lonely to begin with, but to be a single founder, it’s really isolating, because in those dark moments of the moon, right, you know, you’re like, “I think I’m moonwalking and I’m about to spin into the galaxy, is anyone there on the other side of the radio?” and you just feel so bereft, even if you surround – and I have a really robust group of advisors, but they parachute in and out for the most part, and they don’t have the full context and they’re not in the trenches for me, so that’s really scary. On the other side, if I had a cofounder, there’s eventually always a divorce. I mean, look at what just happened with Away, you know. Someone always gets pushed out, and at least I don’t have to worry about that. If someone gets pushed out, it’s me.
Kelly Kovack [00:48:49]: So, there’s one last thing that I want to talk about, because it is probably one of the first decisions that you needed to make, but you had alluded before that LOLI was founded as a B-Corps, and there’s some interesting statistics. So, in 2012, there were 300 companies, globally, that were B-Corps. As of last year, that’s gone up to 2500, which when you think about it, is still a relatively small number, but there was a study done by Extensor that said 64% of consumers find brands that actively communicate their purpose more attractive than those that don’t, and another study that said certified B-Corps grow 28 times faster. So, a couple of questions. One: what does it take to become a B-Corps? Because I think it’s beginning to become a little bit more common, but I’m not sure people understand the nuances of what it really takes. And you know, the other is, one of the largest certified B-Corps is the Brazilian beauty company Natura. Do you think that purpose is going to be a larger factor? Forget about sort of marketing and the consumer, but just sort of in a business sense in the future.
Tina Hedges [00:50:04]: I think purpose is everything. I think that the consumer needs less stuff in their life and as we evolve, I think as products, whether they’re tech products or they’re consumables, as they become more efficient and multi-functional, we will pair-down our regimen. I mean, just look at our wardrobes. Nowadays with an amazing pair of black leggings and a couple shirts or sweaters, you have ten different outfits, whereas we used to have a closet of singular items that we would wear. I just think that we’re pairing-down as an ecosystem, and so as a consumer is sifting through choices, to align themselves with a purchase that has purpose is so much more meaningful and important, and also, we are collectively in a mindset of we all have shared responsibility to this planet, and if I look at people who I admire, Anita Roddick was really one of the first in the beauty industry to bring purpose into the conversation, and she did such a – and think about that, that was the early 80s.
Kelly Kovack [00:51:26]: Early, early early. And, Lush as well.
Tina Hedges [00:51:28]: And Lush. Lush has done a great job too, I really admire them. But, I think that, you know, again, that’s where I get so – do we really need another double-sided mascara that is in a flashy pink container and has an influencer as the celebrity spokesperson and then we sell through a billion units of that? What does that do? And then, two months later, no one cares about that brand anyway.
Kelly Kovack [00:52:00]: I also think, just from kind of a more macro level, I think we’re also in a time where I think a lot of people feel that government is failing us, and I think there was also a time where businesses were more connected to their communities and were more involved in making an impact, and at some point, probably in the 70s, 80s, that shifted to a focus on profits and shareholders, and I sort of feel like this movement or growth to B-Corps is really a little bit of companies needing to be more accountable and being part of the solution, because government isn’t getting us there anymore. Do you think that’s part of the equation?
Tina Hedges [00:52:48]: I think that’s a very interesting insight, I had never framed it that way, but I think you’re right. I look at our journey in becoming a B-Corps. When I set up LOLI, it was just a Delware Corps, and then I raised money, and then I went back to my investors and said, “We’re going to shift into a PBC,” a Public Benefits Corporation, and so I had to get the board approval and all my shareholder approval, because what that meant is, I literally have a responsibility to meet our mission of sustainability, and that can precede my obligation on a fiduciary duty. So, it shifts the conversation, and not every investor wants that sort of dynamic. They’d rather make sure you’re meeting their profit and revenue metrics, right? So, for example, for me, in a very literal way, that could mean that I say, “Yes, I know that package is going to cost us more money, and our gross margin may go down, but it’s better at meeting our mission of sustainability, and I’m making that decision,” and I have the authority to do that.
Kelly Kovack [00:54:08]: Interesting.
Tina Hedges [00:54:09]: Right. It changes the conversation.
Kelly Kovack [00:54:13]: And the dynamic. You know, this has been such an interesting conversation. You know, I think just in wrapping up, is there one piece of information that you would sort of pass forward, if you will, that was either given to you or that you’ve learned that you think could make kind of a fundamental, positive change in another entrepreneur’s journey?
Tina Hedges [00:54:40]: There’s so many pieces of advice or insights that I could share, it’s hard to boil it down to one, maybe that’s another discussion.
Kelly Kovack [00:54:50]: That’s a whole other episode.
Tina Hedges [00:54:52]: Right. I think what I would say is, well, first of all, I recently was told that there are three R’s to being a start-up founder: you need to be resilient, resourceful, and relentless, and I think you have to ask yourself if you have all three of those R’s, and be really honest, because one is not enough. It’s great if you’re resourceful, but if you’re not relentless, you’re not going to get the outcome you want. And, you definitely need resilience. I mean, I’ve been pushed down, like literally, like gob smacked and I’ve had to pick myself up, and not let it affect me and brush it off and keep going, and I just think it’s the combination of those three R’s. It really impacted me when I heard that, and I was like, “Yes, I definitely have those three R’s. There’s no doubt about it.” That doesn’t mean I’m going to be successful, but I know that at least I’m starting from a good place. So, that’s the first thing: I would ask yourself to rate whether you really have those three R’s, and that’s part of your core DNA. And, the second thing I would say is that, is this coming from a pure place? Is it really your dharma? And, a very long time ago, someone said to me, “The two most important days in your life are the day you are born and the day you realize your soul mission,” and I, throughout my life, added a third to that. So, it’s the day you were born, the day you realize your soul mission, and they day you decide to do something about it. And, those are the three most important days of your life, and if this idea to start a company or be a founder is more of a vanity play or more about a money grab, walk away.
Kelly Kovack [00:56:55]: So Tina, we started our conversation with sort of a one-word synopsis, and you said for you that it’s a matter of Trash. Why? What does that mean?
Tina Hedges [00:57:06]: So, for me, Kelly, when I look at the beauty industry, the $592 billion global beauty industry and realize that they are contributing to 192 billion package units in landfills a year – think about that. Most of that packaging is plastic, and by 2050, there will be more plastic in the ocean than fish. And then, add to that that they’re formulating products that are 80-95% water, but by 2025, 1.8 billion people in the universe will be affected by water scarcity, and then let’s add all the chemicals they’re dumping into products, and women are exposed to hundreds of toxic chemicals a day through their beauty regimen. So, when you look at the totality of that, to me, that’s just plain old beauty trash.
Kelly Kovack [00:58:01]: Thanks, Tina.
Tina Hedges [00:58:02]: Thanks, Kelly.
Kelly Kovack [00:58:05]: For Tina and LOLI Beauty, it’s a matter of trash. She’s holding herself, the industry, and other brands to a higher standard of doing business that isn’t only about profitability; she’s stirring up conscious change in the process. Tina’s created a self-imposed accountability structure for her business practices and her supply chain because government oversight is just not moving fast enough. Regardless of where your views lie on the political spectrum, consensus can usually be reached around the belief that the government is broken in many respects. I think the path forward is going to be up to big thinkers and businesses big and small to force change. Business culture needs to move past the myopic focus of shareholders and returns to a focus on stakeholders: the employees, community, and yes, investors. The private sector has the ability, and one might argue, the responsibility, to drive change, believe in impact, and nurture their communities. The world needs more purpose-led leaders like Tina Hedges and brands like LOLI to show purpose and profit are not mutually exclusive. Doing good can be good for business. So, in the end, it’s a matter of sustainability. I’m Kelly Kovack, see you next time.
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.