Drunk Elephant: Tiffany Masterson

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I mean, you could have been wrong at every turn. And this could have collapsed, and it could have really potentially damaged your relationship with your brother-in-law, and maybe even your sister. It could have. Like, that was risky. Right. It was. But that's all I had. I only had one shot. And I was tired of worrying about the future, and tired of worrying about, I just didn't want to worry anymore. How did you deal with the stress of the possibility of being wrong and all that collapsing? I didn't consider it.

I didn't let that get in my head. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

I'm Guy Raz, and on the show today, how Tiffany Masterson started a second act as a 40-year-old stay-at-home mother of four by creating Drunk Elephant, a skincare brand she sold for over $800 million.

Okay, let me get right to the headline here. Grunk Elephant is a skid and care brand that was launched in 2013 by a stay-at-home mom and her brother-in-law. Just six years later, the brand was acquired by the Japanese beauty brand, Shiseido, for a whopping $845 million.

six years. Drunk elephant went from 0 to 845 million dollars in six years. Now, you all know that at the end of this interview, I'm going to ask a version of the question I always ask. I know you know it, so I'm not going to paraphrase it, but what I will say is that while this is a story of luck, it's also a story of incredible determination and strategic thinking and research and hard work.

Because Tiffany Masterson was a nobody in the beauty industry, she knew almost no one. She had no substantive connections and she had no money. But she did have an idea and a brother-in-law who was willing to give her the initial seed money. Tiffany found a drunk elephant in her mid-40s and professional branding people were convinced she was making every mistake in the book.

For starters, everyone hated the name, drunk elephant. What's that have to do with skincare? Most people she spoke to also hated the packaging and colors. And she was advised not to focus on higher end retailers like Sephora. But Tiffany followed her instincts and figured out how to build a brand that spoke to thousands of women.

even kids have gone crazy for drunk elephant. The brand recently saw an explosion of interest in its products among tween girls as young as eight and nine, much of it fueled by TikTok.

Anyway, Tiffany grew up in Texas in Houston to be exact. Her dad was actually the quarterback for the Houston Oilers back in the late 1960s. His name's Pete Bethard. But her parents split when she was a kid. And even as a kid, her main ambition was to become a mom and start a family.

I wasn't a good student. No, I didn't like school. I didn't even think of myself as very smart. I just kind of, I couldn't focus in school. And it was stressful and it was kind of a sad, a little bit of a sad time for me. It came later. I did well in college, but I was a cheerleader and I always wanted to be like my mom and get married and have babies.

And that's just super honest, like it doesn't sound very admirable. I just wanted to get married and have kids. That's what I knew. That's what my mom did. And so that's what I thought was right for me. Fair enough. I mean, no shame there. I mean, you knew what you wanted to do, which most 22-year-olds have no idea what they want to do. Right, right. How did you meet your husband?

I met my husband when I was 30 and I was set up on a blind date. Yeah. And I knew it right when I saw him. I literally saw him walking towards me and it was a blind date and I said to myself out loud that the party's over. That's it. Like I recognized him. It's weird. It was really weird. What's your husband's name? Charles. Charles. So this is the late 90s, right? You guys get married and pretty soon after you start a family.

That's right. We got married in October of 1999 and our first child was born in December of 2000. Yeah. And so you were going to focus on raising the kids. And what was Charles doing? What was his profession?

So when we got married, Charles was at Enron. The famous Enron. Right, right. And so that was, I thought, you know, this is good. We can have this little, we're comfortable and we could have, I didn't know how many kids I'd have. I thought I could handle two. And he already had two kids from a previous marriage. But right when Chloe turned one, my daughter, Chloe turned one. I found out that day that Charles had lost his job. Enron was going under. The famous accounting scandal that

Basically collapse that massive energy business overnight. Yes. Yes. It was incredible. Yeah. And he went on to work at a place called Texas commercial energy and worked there for two, three years and the same thing happened at Texas commercial energy. It just collapsed. It did. He ended up having to sue them and

And he was a sales rep. He was. And maybe not even following his passion. So that was an issue, but he was doing it. Yeah. He was making money to support the family.

Right. And you were happy being at home looking after and raising the kids and handling that world. Did you feel fulfilled? I was so happy. Yeah. Oh, I was so happy. I was so in heaven with my kids. And I remember waking up and doing all the laundry and doing all the cleaning. And at one point I had four babies under four. Wow. Like four, one and one and zero. Because you had Chloe and then you had twins and then you had another one.

Right away, my fourth baby, I was told I couldn't get pregnant and I turned up pregnant nine months later. So right away. Four kids under four. Yeah. That's a daycare. It was. It was a daycare and I was in heaven. I really was in heaven and I didn't want help. Yeah, it's the best. I wish I could go back. Sometimes I wish I could just for a week though. I wish I could go back and come back when I wanted. Yeah.

Alright, so you are in the thick of it, and from what I gather from what you're telling me, you were never sort of sitting around dreaming up ideas or just imagining a future where you would do something else, right? I mean, you were focused on being a mom.

I was focused on being a mom and then something happened around 2008. That's around the time. So 2009, um, that I really was like, I'm, I wanted to be creative. I remember being on the computer all day, like doing stuff that was mundane, like reading gossip websites. I was like, this is ridiculous, you know, but I also wanted to make extra money for the family and I just wanted to pitch in.

I've got some time. What can I do? I also remember creating invitations for their birthday parties. They were super, I would spend like hours creating these great invitations. Like physical invitations that you would send out? Yeah. And I remember recognizing that part in myself like, I love this creative stuff. Yeah. And then so I, it started with, I wanted to do a catering company.

Are you a good cook? I'm a good cook, and I remember trying to do meatballs. Like I was going to package up these meatballs that I made. I thought, I can sell these things. Like you saw them frozen? Yeah, I was going to sell them frozen. My husband went out and bought this huge freezer from Costco and never even got used. Yeah. I don't know. He figured out he was like Tiffany, the ingredients you want to buy are so expensive.

Right. You have to go to scale. You have to sell each meatball for like five bucks. Exactly. Five dollar meatball. Yeah. Yeah. Then I went on to this whole pantry cleaning out business where I tell me about what's that business? So I was one of the things I read about all the time were supplements and healthy food and how to be healthy and all that. And I thought I can go to people's pantries and get rid of all the bad stuff and replace it with great stuff. And this would be a great job to have.

Oh, that's cool. Like a consultant, like a home pantry consultant. You go in here. The pantry consultant. This out, out, out, out. And then you could like, no, you want flax seeds, no, you don't want, you know, you want white pasta, you want brown, rice pasta, less stuff like that. Yes. That's it. Yes. I called it named it Holy Pantry. My mom said, you can't use the Y. You have to change it to an I. Holy pantry, like how, like H-O-L-I. Yeah. Why not H-O-L-Y?

My mom thought it was disrespectful. Sacrilegious. Yes, that's what she thought. So she said, you've got to call it holy with an eye. So you could have like left a Bible in the pantry too, but that could have been part of the deal. Yeah. And then clean out your pantry and leave your Bible. Yes. Yes. I'm going to, and you need to pray while you're at it. Yes. I got fired from my first job by my husband. My best friend's husband who came in and said, what the hell did you do to my pantry? Now you've cost me a bunch of money and I've got to go replace everything you threw out.

Oh, you threw away all the way through where the Cheetos and like the Ruffles and stuff. Yeah. The chips away. Yeah. You're like, no, no chips. Oh, you could have taken care of cookies. So that didn't go. It didn't go far. He goes, get out of my house. And also I feel sorry for your kids. What the hell have you done? So that didn't go anywhere. And then I started selling our bond, which is a skincare line.

Yeah, tell me about this. So just to put this in context, I mean, you have some time and money's a little bit tight at home. Right. Money was very tight. What was your husband after he left the energy business? What was he doing mainly to earn a living?

He wanted to be a financial advisor for a while, and he did go work at Smith Barney, and he didn't love it, and then he's 40 at this point. He's older than that at this point. He's seven years older than me, so he was frustrated, and then we had a serious talk about what his passions were, and he's a very, very talented artist, and he comes from a long line of artists in his family. His mom is a jewelry designer here in Houston.

In his heart of heart, the guy is an artist. Yes. In his heart of heart, he's an artist. And so he started doing prototypes of metal lights. And he ended up partnering with this guy who did all the gates around town, all these gorgeous metal gates and fixtures and everything from lights that chandeliers. And he was really the only guy in town doing this custom. But it also wasn't a great business model, not an easy way to support a family of six.

Yeah. Okay. So that's a context and you're exploring all these different opportunities. And then you find out about this company called Arbonne, which is a, I think it's a multi-level skincare, a beauty company like Mary Kay or any of these other brands.

Exactly. Yeah, and it's like a way to make some money and it is. Maybe get a pink Cadillac, that's a different company, but it's. Oh, this one. Yeah, with Arbonne, you get like a Mercedes, I think. Oh, nice. If you hit the insane metrics, right? Completely impossible numbers, unattainable. But I did that for, I don't know, three, four months. And what kind of things were you selling?

skincare, so like a line of skincare. Yeah. I didn't know a lot about skincare. I remember always being interested in skincare because I had kind of some skin issues. So I just kind of learned a little bit about the products and that didn't go very far either though. I just, I didn't really have the ownership there. I just wasn't interested. You know, when it's not yours, it's very different and that wasn't mine. So I don't think I was really, I didn't hadn't bought into it. The conviction wasn't there.

So you only, you did it for a couple months and you realized this wasn't, wasn't for you. Right. And I also got a call from my brother during that time. Yep. And he said, uh, his wife and he had been at a wedding in California. And when they were there, somebody walked up to them who knew them because they owned a little store in Austin. Your brother store.

Yes. My brother and his wife, yes. And it was in Austin and it was a little store that sold baby blankets and sold candles and stuff like that. And so he called and he said, you know, his wife thought that this bar that they'd been given at this wedding, like this woman walked up and said, this bar is from Malaysia and I think it's the greatest next best thing.

Try it and maybe y'all can sell it in your store. Maybe you can sell this bar in your store and you could do really well with it. And so they agreed to sell the bar. And so they were buying it from her and she was buying it from a guy in San Francisco and he was buying it from a guy in Malaysia and the guy in Malaysia was buying it from the manufacturer. And so it was also a multi-level kind of thing. What was so special about this bar of soap?

It was called the Wonder Bar. Okay, good name. And the claims around the bar were that it did everything. It resets your skin, like detoxified your skin and cleared up any issue you could possibly have. And they did it with this magic, Chlorianare, like this algae from France and this Austrian clay that was, you know...

They basically said it could do everything, right? I mean, there's nothing this bar couldn't do. And the instructions were to use it with a very plain moisturizer. But I kind of jumped at the opportunity because the setup was going to be that I buy it from my brother and his wife, and then I sell it for a profit. The profit wasn't huge. By the way, how much was each bar? How much did it cost?

Anyway, the big bar was $105. $105. To sell, that's retail. You could sell them for $100? Yeah, I sold a lot of bars. That's like popcorn in the movie theater, wow. And so selling that was not not easy, but you had to really be a good salesperson, I guess. I had this bar like in carpool line and at events at school and stuff selling it to my friends. Yeah. I mean, I don't know how much I was making, maybe $2,500 a month profit.

For me, that was a lot. But I was really committed. I remember staying up late every night. I was emailing everyone I could. I had... But, I mean, what made this more something you believed in more than the Arbonne products?

I think the Arbonne products were just a bunch of fragrance products and I guess looking back, using the Arbonne products that didn't help me with my skin. I had really red inflamed skin. I had unpredictable skin. I broke out on occasion. I had large pores. I thought I had rosacea. The Arbonne products didn't do one thing for my skin. Maybe they made them feel soft.

But with the bar, I took the instructions very seriously, I used the bar. And I also used a really mild moisturizer that had no fragrance in it. And my skin, it just cleared up. It just cleared up. So I thought, oh, well, it's clearing up because of the algae in the clay and the this and the that and the bar.

And so I sold it that way. And that's why I was convicted of the bar because I thought, wow, these ingredients are amazing. So I was selling it and I was very engaged with people. Like I was like, call me anytime, text me anytime, email me with your issues. And so they started doing that. Like, and they'd be like, I like the bar, but I'm breaking out like crazy. Like what is going on?

And I would say, what are you using? What are you using? Oh, I'm using these three things. Well, send them to me. I'll look at the ingredients and maybe I can figure this out. So crazy. There's no reason for me to think I could figure it out. But I'm the type that if you call me, what's the best movie? What's the latest Netflix show? What's the best restaurant in Chicago? I'm going to try to figure it out. Even though I don't know, I'm going to be on Google. And I love to help people so much that that's what I was trying to do with people's skin.

By the way, what's the best taco in Houston? Now that you're on, now that I got you. Oh, I think it's, I think it's a little papa cito. It's not everyone agrees with me, but I think they're fake. I'm there. Next time I'm Houston. Thank you. I'm calling you. I'm going to get your top 10 list. Yes. So you're in Houston and you're selling this bar, but was the idea to just sell it to friends in Houston or was it to like turn this into a national product? Well, I didn't get the memo on this. So this is

I really thought, so there was this woman in California who my brother and his wife were buying the bar from. Yeah. There was a Wonder Bar USA. And so my brother and his wife and this girl in California, they were managing the website. I had my own website in Houston that was just Wonder Bar Houston dot com. Right.

And also, they told me upfront, like, this is just for you in Houston. This is not for you to go. Oh, you see. I got overexcited and I was really loving like the marketing of the bar and talking about it and sharing it. So I thought, well, I'm going to, I'm going to start reaching out to national editors and I want to get it on every website and every blog. And I want to, I just didn't fully understand they didn't want me involved in that part of it. And they called me and basically said, back down, back off, like, this is not for you. This is what we're doing.

You're just selling it to ladies in Houston. That's your job. That's my job. Just be quiet and sell it to ladies in Houston. And that was it. So my brother-in-law in Denver, who's married to my sister, they called him, they called several family members who had money and asked people to invest. And they wanted someone else in the family to buy the bulk of the bar so that we could own the distributorship. And I say we, but it wasn't we. It was they could own the distributorship.

in North America. And so they called my brother-in-law and they said, do you want to buy $300,000 worth of bars? So he ended up with $300,000 worth of bars to sell. He said, I see that you're selling these like crazy on Wonder Bar Houston.

Would she be willing to come to Wonderbar USA? I'll make you a partner. And then all your hard work that you're doing can benefit Wonderbar USA. I want my money back is basically what he was saying. But cost of goods to buy the bar, they were buying the large bars for $18 a bar. Wow. By the way, my brother and my brother-in-law knew nothing about the beauty industry. Yeah. And so they didn't know that buying a cost of goods at $18 a bar was

outrageously stupid. They didn't know that. I want to unravel this a little bit because it's going to get confusing because there's, in this story, will be your brother, your brother-in-law, and then your brother-in-law's brother. Yeah, that comes later. The brother-in-law's brother comes with drunk alcohol. So there's going to be some brothers, brothers-in-law's brother-in-law's brother, and we're going to do that up.

Right now, it's your brother and your brother-in-law. And your brother-in-law's got the cash. He's the guy who's like, yeah, I'll invest $300,000 to own the distribution of this clearly very profitable like fancy cleanser bar. You are selling them in Houston like hotcakes. And he says, look, I own the national distribution. Just kind of fold your platform into ours.

and you'll be a partner here. And you had no cash equity in there. It was your sweat equity. That's right. All right, so now that you become a partner in this venture, what does that mean? Were you still focused on Houston or did you start to travel and help build this brand up, this Wonder Bar brand up?

There wasn't a lot of travel and they were pretty tight with the money. So it wasn't like I made a small salary to replace what I was making on my own when I was selling the bars. So they agreed to give me $2,500 a month. And I did get the bar. Once I was made a partner, I was allowed to get it in national publications. How did you do that?

I would go on and try to contact blogs and emails and, I mean, magazine editors. I subscribe to this membership where I had access to the names of all the editors. And so I would email all day long. I would, yeah, they said, I think I counted 3000 emails I sent out over a period of time.

And you would say, I've got this amazing cleansing bar, and you would say it's got Austrian clay and French, you know, algae and chlorine. Yes. And can I send you one? And you would basically, that was it. That's how you started. Yes, and around the same time.

So I had reached out to get the ranker. They feature products on their television station. Okay. The direct marketing company. Yeah. They actually helped launch proactive, which is that right. Acne treatment and a bunch of other products. So, so they're behind a lot of infomercials. They started with Tony Robbins in the early days, but yeah. So they, they agreed in principle to sell wonder bars.

Right, so they called and they said, we're interested and we want to buy X number of Wonder bars. We will pay $5 a bar. I went, what? $5 a bar? I think they paid $19 for the bar.

Oh, you, you, they were just saying, well pay you five bucks a bar. You were like, we're already paying $19 a bar. Yes. They were saying you guys are nuts. You could make this for a dollar. They did. Okay. They said you are nuts. And I think we both laughed at the same time. The consultant was like, that's the craziest thing I've ever heard. Who agreed to that? You know, you can make a bar for a dollar or less. Like, sorry to tell you, you just got completely screwed. Yeah. So they, by the way, got the rankers like there's no way we can work together. Your price is too high.

No, I said, I said, I don't have to pay you to do this. We can't do this. Yeah. And I've read that there are also some, some like quality issues with the bar, right? Yes. And there was this horrible thing they called the healing crisis that people in Malaysia that made that people would turn bright red and break out and cystic. It was awful. And they called it the healing crisis like it was normal. Sorry, I'm confused, but oh, sorry. I'm, what is the, the people in Malaysia would break out after using this bar.

What we have initially, so the whole directions of use were use the bar, leave it on your face for three to five minutes and then rinse it off and then put a plane moisturizer on. That was the whole thing. And if you get a terrible breakout and a horrible reaction, that's normal. That's all the toxins coming out of your skin, which is not true, but I believed it. And that happened to you too? No, it never happened to me strangely, but it happened to a lot of people I sold the bar to.

they would break out, and basically the argument was, hey, this is totally normal. It's detox, your skin's pushing out all the bad stuff, you're gonna break out, but it'll get better in a couple days. That seems plausible to me.

Well, I remember people having to go to the doctor, my sister-in-law, my other brother's wife had to go to the doctor with huge welts on her face. I somehow managed to get in with the beauty director from Harper's Bazaar, Alexandra. I put her on it. I remember her emailing me from the Ralph Lauren fashion show saying, what the hell?

My face is like someone beat me up. What is this? I got on the phone with her. I talked her through it. She put it in the magazine. She put it in the magazine. I went into her office, flew to New York and met her in person, and it's crazy. You believe this argument, which again, it might be true that it basically is extracting the toxins. It's like that was basically what you were saying to people.

That's what I believed until I got a scathing review from a website called Beautypedia. Okay, what'd they say? They said this is a bunch of BS and this is a scam and these ingredients are a joke and there's no chance that any of the ingredients in this bar can be responsible for anything good that happens to skin. So all the claims are bogus. It gets a one out of five. Wow. I was shocked. I was just like, wait, what?

This happens over a year, maybe a year and a half after you're selling the bar, I think, right? Right. This is like in 2011, 10, 11, 10, 11. But a year and a half of you really pushing the selling it, believing in it, using it when you saw that review in Beautypedia, I mean, my instinct would have been like, well, screw them. They're wrong. And I don't care about this review, but you actually were really... That wasn't my instinct. I had two instincts immediately. One was, if it's not true, then why did my skin clear up? Yeah.

And two, I respected this website a lot. I believed them. And so what my second instinct was, I don't believe the guys in Malaysia now. They must not be telling us the truth about this bar. What's in it? I wanted to know what was in it. So what did you do? I mean, this review clearly freaks you out.

A lot of things are happening right here and now. One is I've reached out to Sephora. They've told me that we would never carry a single skew. In other words, if you don't have a group of products, we're not interested. I remember picking up the phone and calling my brother in Austin. He was kind of checked out at this point. Patrick and his wife still sold it in their store. Yeah. Patrick's your brother? What's your brother-in-law's name?

Charles, same as my husband. Okay, this is confusing. So, okay, we got Patrick's brother, Charles, your husband, Charles, also your brother-in-law. Exactly, exactly. So I'm questioning, I remember getting on the phone with like a, some sort of a chemist who could do a reverse engineering on the bar and trying to figure out what was exactly in the bar. And that kind of didn't go anywhere either. We talked to the actual creator of the bar in Malaysia.

in Malaysia who wouldn't give us very much information. So I was getting more skittish by the day. We're not going to be able to get into a retailer. We're not going to be able to make this what we thought we could. But you still have a lot of product to sell. A ton. So I'm talking to Charles on a daily basis. And I also think of Charles as my boss, by the way, because somewhere along the way it was stated, like, look, if you have this small salary, you will never make a penny until the investor is paid back in full. Just know that.

All right, let me ask you a sort of a slightly uncomfortable question. You still had to sell the Wonderbars, right? That's right. So how were you personally feeling about selling something that you felt was not good?

Well, I was conflicted because there were people who had bad reactions. There were a lot of people who called in tears saying, this is guard my face. And now I'm like, what am I telling people to put on their face? That really upset me. So that was worrisome. But that being said, it was Charles's investment. Yeah. And he wanted to sell the bars. And so that was my job. If I'm your brother, I'm thinking, well, we got to sell what do we have, you know, offload this somehow. And then let's talk about next phase. Is that what he said?

So Charles, my brother-in-law, said, listen, I think you're super passionate about this, and I feel like you really love what you're doing. I said, well, I have, I'm kind of coming up with an idea that maybe I should do a line. Maybe Sephora has a point. They want a bunch of different products, and I'm just going to sell bar soap. And that kind of got me thinking along these lines of solution, skin solution, like a total skin solution.

when we come back in just a moment, how Tiffany did exactly that, using her own skin and willing friends to develop her own skincare line. Stay with us, I'm Guy Rise, and you're listening to How I Built This.

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Hey, welcome back to How I Built This. I'm Guy Ros. So it's around 2010 and Tiffany is still a full-time mom and a one-woman sales team for Wonderbar. But she also starts to research what goes into skincare products. And the deeper she goes, the more she starts to see connections between certain ingredients and why her customers might be having bad skin reactions.

And I'm telling these customers that I have that maybe don't use this ingredient. Maybe take that out of your routine. Maybe essential oils and fragrance aren't good for your skin. After all, maybe they're irritating you. It was all instinct but instinctively it's the weird thing and I'm almost embarrassed to say it. Like I would put stuff on my skin and it would tingle a little bit like in a bad way. Like I would feel like, oh my gosh.

This just isn't good for my skin, like this is causing me to react. It started out like that, just all kind of guesswork, but then I started really reading about the ingredients and I started kind of guiding people and kind of getting this idea in my head about ingredients that were in products that maybe weren't so good for skin after all. Alright, so you, I guess you were your own guinea pig, you were just testing on your own skin. I was and my friends and everyone around me, you know, anyone I could talk to that would try.

So what would you do? You would just buy a bunch of skincare products or you'd buy individual ingredients, oils. Never ingredients. I never was the one, I'm not the one who made products in my kitchen. I wanted to read and understand like toxicity levels of ingredients. And yeah, I remember buying like this avocado oil and I got it, I used it, I broke out exactly like 10 days later.

And I looked at the ingredient deck, and sure enough, there's essential oils in there. But I didn't recognize that to be essential, it's because they came under different names. So that would force me to then learn all the names of essential oils. They can things go by different names. And I couldn't understand why everybody was using them. So this is like a research phase, right, basically. Were you thinking, I'm going to come up with a new bar, or I'm eventually going to come up with a cream cleanser, or did you not quite know yet at that point?

I wanted a line that was formulated with ingredients that I chose and that I could be in control of and that I would know what was in the product. Then I also wanted a solution like I could say, look, you don't have to go out and buy a serum or a sunscreen or this or that. This is the whole thing right here.

And you don't have to worry about ingredients affecting your skin from another product because I'm not going to use the ingredients that could potentially trigger a breakout in your skin. But then Charles, my brother-in-law, wanted me to make a bar because he happened to love the bar. So that'll be the cleanser portion of the line. And then I'll make a vitamin C and I'll make a sunscreen and I'll make it quite an acid. So I would go read dermatologist articles and

I just read so much and try to teach myself about what this line would need. Yeah. And then a lot of what I would want as a consumer. How would you keep track of all these things? Did you have a journal that you would write things by hand or did you have a spreadsheet? I had a spreadsheet on a computer. Were you intuitively naturally, like a spreadsheet, P&L, kind of numbers organizational person or

I'm not, I hate it. I'll tell you, I don't, I don't think I have those skills so much even today when you show it me a spreadsheet. My brain kind of goes numb. Yeah. But I'll tell you, when you're passionate about something and when it's all you thinking care about at the time, in the moment, yeah, I mean, I opened up a Excel spreadsheet. I may not have really known totally how to use it completely, but I knew how to fill in four squares and I was excited to see this kind of come to life.

You know, you'd mentioned me on the phone that you wouldn't have been able to do this in your 20s, that you actually had to do this in your 40s. And that makes a lot of sense to me because

as a mother or father, you know, to raise children requires a lot of organizational skills. Right. It requires a lot of like making sure the calendar, like the school events and the sports and getting this kid there and that kid there. And so I was thinking about your sort of methodical approach to ingredients, spreadsheets and writing things down and like, but I have to imagine that just raising four kids

also gave you skills that enabled you to kind of think very methodically like spreadsheets, calendars, like lists. Is that right? You don't have a choice. You don't have a choice. And I'm not like that. I was never like that. In fact, I didn't think of myself as anybody that would be able to raise or handle kids. I remember thinking I could probably could handle two, but I ended up just you do it. You just do it. You do what you got to do. Yeah.

What would you put on the spreadsheet, like the name of the ingredient? I would take a product just to look at the ingredient deck and then I would list out all the ingredients. Then I had three categories. It's like the way I understood it as a consumer. Here's three categories. These ingredients are there for skin. This is a humectant or an oil or a cell communicating ingredient.

The second category were ingredients that were there for the formulation itself, that you have to have a preservative, a stabilizer, things that help the product do what it's supposed to do and it keeps it safe. And then the third bucket that I use the word suspicious, I'm a suspicious person, like why are these in there?

Well there's only one answer there in there that either make the product smell pretty look pretty feel pretty there's dyes there's fragrance there's essential oils there's silicones that create the silky feel yeah but a lot of ingredients can't get through silicone so why are they there and drying alcohol.

Why is that there? It damages your skin, straight up damages your skin. Chemical screens. Every time I used a chemical sunscreen, I broke out. So it's physical, better, like mineral. So that's what I was thinking at the time. These are ingredients that don't need to be there. These are ingredients that do, I'd love to do something with ingredients, only ingredients that need to be there and let the formulation come out like it will.

And so you would basically buy, but basically buying brands, cleansers off the shelf and testing them. Is that how you were coming up with the spreadsheet, this list?

No, I was a lot of times it was somebody who called me and said, I'm breaking out or I do it in my skin is like freaking out right now. And I would say, what are you using? They would screenshot, you know, take a picture of the ingredient deck, whatever, and send it to me or read it to me. Then I would go from there. I remember going online and reading like what a product had in it, taking that list and then analyzing it. But what I'm wondering is, how did you know that certain ingredients cause certain reactions?

First of all, every ingredient on the list, I would look up. There were two or three websites that were helpful in the sense that they would rate the ingredient. EWG, for example, rates ingredients, one to 10 for toxicity. And so I can't say there was like one thing that I did that was like, oh, this light bulb, these six categories of ingredients are bad for your skin. It wasn't that. It was over probably two or three years of me reading about ingredients and kind of learning like, do they need to be there and what could they do?

I wonder, though, how can you really say, hey, these are safe and these cause breakouts? Because, for example, I found the thing that has affected my skin more than anything is cutting sugar out of my diet entirely, all sugar.

And some people are like, you're a freak. That has nothing to do. But in my case, I believe that to be the case. And please, anyone listening, I'm not a doctor. So please don't trust my advice. I'm an idiot, but I'm just saying that this. And I'm the same. Yeah. I was a state home mom of four. That's why I called the ingredients suspicious six because I at the time didn't know it for a fact. I am like, look, I've tried this. I don't know really why it works, but it's working for a lot of people, this philosophy.

And so you came up with six ingredients that you felt caused reactions in people. What were those ingredients?

One is SLS, which is a harsh, surfactant. Sodium sulfate, right? Laurel sulfates. Yes. So it can strip your barrier, your skin barrier. One is essential oils. One is fragrance dyes, and I lumped them in the same category because they're just so, they're pointless. Fragrances and dyes, okay. Yep. One is drying alcohol. Okay. So essential oils, fragrance, alcohol, sodium, laurels, sulfate, what else?

Silicones, okay, and then the last one is chemical sunscreen. Yeah, and also just to clarify it sounds so crazy, right? I mean, yeah, but it does it's like if your cables broke out calling you crazy, but yeah, I mean you wouldn't be the first I Kind of think that about myself too If you're if your cable breaks and they give you a list the first thing you do is go down the list of things you can try and

This is like that. This is just sort of a troubleshooter for people with troubled skin. So if you have something going on with your skin, try removing these six ingredients and see what happens. Okay, so it's like when you call tech support and you're like, okay, first turn off your computer and you're like, yes, I've done that. All right, now turn it on. Yeah, is it plugged in? Yes, it's plugged in. But here's the thing, right?

I imagine that virtually every single cleanser had one or more of these ingredients in them.

Every single product on the market I could find had one or more of these ingredients in them, except for like a pure oil that you might buy like a whole foods or something. Yeah. People really rolled their eyes and thought I was just flat out stupid. Yeah. And I was getting at the same time, people try the philosophy. And when they took this break from these six ingredients, it changed everything for them.

It can be really transformational. And I believe that this was something that no one else had thought of. I remember walking around Rice University one day and it hit me like a lightning bolt. It hit me for the first time, like it wasn't what was in the bar that was helping people skin. It was what wasn't in the bar. You know, part of me makes it makes me think that like maybe we should just use water on our skin.

Yeah, well, that's yes. The answer is that our skin has an acid mantle or a barrier that protects it. So if you're not stripping the barrier and you're not disrupting it and you're not sensitizing and inflaming your skin, your skin will do what it's supposed to do. It's because you're not doing anything to it.

Skin knows what to do if you let it. And there are obviously issues with people's skin that you can't just fix like that. I'm not a doctor and I'm not saying we can fix eczema and rosacea. It's not that. There are a lot of issues with skin that we actually create by using certain ingredients.

And so a lot of people walk around like, I just have acne prone skin, but maybe they don't. And maybe it's one of the ingredients they're using on a daily basis and they don't even realize it. And then once removed, their skin can reset and kind of do its thing. Okay, so you are in Houston trying to experiment with a bunch of different things. And you keep mentioning essential oils and I'm like, God, I thought essential oils were good. Or is all of it a problem or suspicious?

Well, they do have some good things about them, but the cons outweigh the pros and the good things about essential oils, you could say those same good things about non fragrant plant oils, like marula oil or apricot oil. Okay, so let's talk about one of those oils, marula oil.

Yes, made from the seed or the pip of the marula fruit. Is that an edible fruit? Yes, it is. And there's a liqueur called Amarula. It's from South Africa. Okay. And at the time, kind of the it oil was argan oil. Oh yeah. And I remember thinking like this could be a good moment to introduce a new oil out there. Not a lot of people had heard of marula. It was out there but it wasn't like

very well known and very popular. I remember the people around me had never heard of it. I love the way it felt. It absorbed really easily in my hand. One of the things that it was important to me for whatever reason was absorbability and not sitting on top of the skin. So a lot of the products I used in the past sort of sat on top of my skin.

So Marula oil, you sort of land on this ingredient because you're looking for something that could kind of be the anchor for at least one, maybe all the products in the line. And this to you felt like it could be the one. Marula oil. Right. So once you were ready to make like a test line of products,

Where did you go? I mean, at this point, you'd been selling Wonder Bar for a couple of years, and you had some contacts in the media because you had promoted that bar. Did you have any contacts in the cosmetics industry? Because a lot of these brands are made in the same places. Did you have contacts at some of these manufacturing facilities?

I didn't. I had the only contact I had that I reached out to and who actually was sort of her idea was this consultant from Get the Rinker. Yeah. Who said, you know, with your, the way you market and the way you talk about with the passion that you talk about, you ought to consider doing your own thing. Yeah. So we were kind of going to do it together. But ultimately I called somebody who said, why don't you try to call this place called Benchmark Labs in Orange County?

There's a chemist there who's great. So I called and I asked her to make my vitamin C, my sunscreen, and this glycolic acid, which a nighttime exfoliating serum. And you sent the list of ingredients that you wanted her to work with. Right. Was this expensive to do? I mean, how did you pay for it?

It was expensive. So I had to make sure because I was, I was only allowed to use Charles's proceeds from selling the bars. Right. Do you remember how much it costs to get samples made like 10,000, 20,000? No, I think each product was like around 30.

That's really expensive. It was expensive. It made it, it could have been less, it could have been 15, but so a lot of times skincare brands will go ask for something to be made and they don't own it. They just can use it. We owned these formulations, which I don't know how I knew to do that, but I thought it was a good idea for us to own them. And when you pay that amount, you're not getting like a bunch of product, you're just getting the formulation, maybe they'll go back, then maybe they'll do five or six different iterations, right, until you're happy.

Yeah, you get a certain number of retries before you have to pay them again. And then you own the formulation. That money gets you that. Then you go find a manufacturer. Yeah. All right, let's talk about the name because obviously Marula oil is a key ingredient. It was going to be a key ingredient that comes from a tree that with fruits, I think they're a little bit like low quats, maybe. They grow in Africa. Right. And the name trunk elephant, where does that come from?

So I'd been searching for a name, and I'm pretty shy. I didn't really see myself calling it Tiffany Masterson. And at the time, I looked around at brands. It's like doctors and French names. And I just felt like, what am I going to call this?

Marula oil was what I wanted to use as the moisturizer. And so this oil felt great. I went home. I Googled it and a video came up of animals in South Africa eating Marula fruit off the ground fermented and they were like stumbling around. So the implication was they get they eat them fermented fruit. They get tipsy. Probably not true. Probably impossible, but still it was getting drunk off fermented Marula fruit, basically. Exactly. Drunk elephants.

Yes. And so, I remember thinking, well, this is kind of my personality. Yeah. Should I call it drunk elephant? When you went to friends, you know, like drunk elephant, where most of them are like, yeah, that's cute. Or they're like, mmm, it's a little weird. My best friend said no way. She took me out to get pizza and she was like, I gotta tell you, I hate it. Yeah.

I don't like it. She changed her mind quickly, though. My mom didn't like it. My grandmother said it was the most asinine thing she'd ever heard. Yeah. But a lot of people said that sounds like a bar, a pub. Yeah, I mean, were there any, I don't know, people who were like, the result is you're not going to sell this product. Like any, any professionals or people in the industry that you consulted with.

Yes, I hired a, so in 2013 when I launched the line on my own website in Houston, actually August 15th, 2013, I hired this big fancy publicist in New York and I was super excited to work with them and she actually asked me to put together a focus group. It was going to cost me $30,000 to talk about the name.

Oh, they would convene a focus group. It would cost $30,000 and you would pay them to find out what people thought, okay? Right, right. And? I knew what they would tell me. So I got a new publicist.

Oh, you decided not to spend the money because you knew people were going to say, I hate the name. I knew, I knew what they would say. Oh, and by the way, the consultant with Gutty Ranker, I told her, I've chosen the name now and she said, what is that? I said, drunk elephant and she said, I'm out. Wow. She's like, I'm not into it. I'm not good. She's out. Never heard from her again. Wow.

I mean, it is a very unusual name. Now, you've been proved right in the end. The name worked and people noticed it, but I would have told you then, I'd have been like, listen, Tiffany, this is an awesome product. There's a lot of potential here, but let's just come up with a name that is going to say,

This is non-toxic, all natural, that conveys what it is. Drunk elephant is a drunk elephant. It's nothing to do with what you're selling. I would have said that to you. That's what people said to me, but I didn't listen. I'm trying to figure out how you decided to stick with it despite all these people saying, this is not a good name. Why?

Why didn't you see? Because it was in my gut. That was my personality. It was my taste, my style. And I knew that everything that touched this line, this brand was going to be me. And so it had to be me fully. I couldn't listen to other people because then where do you go with that? Where do you go after someone tells you? Change the name.

then you're like, wait a minute, now I'm completely lost because I wasn't, then I wouldn't trust any choices I made. Yeah. I remember kind of thinking, if I fail at this, I should fail all the way, just being me. Like I should fail spectacularly right away. Yeah. If I follow my guide on all these little things. So, so I just went with it.

Fair enough. But even if someone's like, just make a slight alteration, like call it elephant or... No. Even you saying that right now, I can remember my view. I'm triggering you. I'm sorry. No. No. I want to call it drink elephant. I'm going to.

Are you just stubborn about things, certain things? No, I mean, I am stubborn. I know what I like. I made decisions very quickly. So no, I knew. I did. Who's going to forget it? Yeah. Who's going to forget that name? Nobody. Nobody's going to forget that name. Right. Yeah. And by the way, the logo, which is just a sort of a pencil drawing of an elephant, like a silhouette, you drew that, right? That was the logo you drew.

That marks a lot. I don't know how. I'm not an artist. I sat down with a stack of paper with my daughter. I remember Chloe was sitting with me and I said, okay, you're going to sit here with me until I get this logo out. It came out the first thing. First thing I drew and it came out and I was like, that's her. That's it. That's our logo. You picked this name and now you've got to make

the product. I have to imagine you've got to put in a few hundred grand for a company to commit to making the products.

Right. So Charles, I mean, he ended up having to start putting his own money in at some point. And we did not take on another investor until 2014, like before you brought in any March, April, 2004, before we brought in a second investor. And at that time, it was a second and a third, not large investments, but something to kind of help. Yeah. The idea was to launch with how many different, how many different SKUs.

Six and 5,000 of each. So six, six, excuse, five thousand of each. And it was going to be what? Vitamin C serum, sunscreen, what else? Exfoliating serum for night. Okay. Yep. Two bars, one plane, one exfoliating. Okay. And then the Marula oil. Okay. Do you remember how much money that cost to get all that together?

It must have cost $150,000, something like that. That's actually a guess. I just know we were over $400,000 in late 2013, 2014. You set up a website. You get the domain name. I'm assuming drunkelephant.com was available.

It was in the summer of 2012, I got that done. Too many people registering drunk elephant. But you still have to spend money on the website and the packaging. Your brother-in-law is pouring now significant cash into this thing to be able to make the product line.

How was that relationship going? I mean, he's got the money on the line. You're in charge of this thing. Neither of you have any consumer product experience. You'd never worked for corporate consumer brands like you were at P&G. Again, not necessary, but still stressful, I imagine, for him, because he had a lot of money on the line. How was your relationship?

It was not good. So he had brought in his little brother to help with accounting. Your brother-in-law's brother to be the accounting, okay? Yep. Right. So what happened was his little brother started getting really nervous for him and basically held the belief that you're going to lose all your money on it. Again, Charles is in over $400,000 at this point. Yeah. And not happy about it. So he's kind of saying things like, you know, he was deluding me.

He was diluting your ownership. He felt like he had to. I mean, he felt like he had no control and he was scared. And I don't blame them. There's no reason to think this would work. We had it online at that point. It was doing fine, but not great. It got a lot of coverage. Yeah. And I think my sister probably was behind the scenes prodding him along to because she really wanted this to work for me. Yeah. But David, the little brother,

He had his ear, so if he, like, I could tell when Charles had been on the phone with David because he would call and he would sound stressed and worried and he was turning sour on the whole thing and it was very upsetting because it was the relationship on the line with my brother-in-law more than anything else for me. Yeah. How stressed were you?

I was so stressed. I had, you know, we were struggling financially. I had a seventh grader who was, you know, Chloe at the time was, um, I don't know, she was going through one of her, you know, just a typical 14 year old phase. So it was a hard age. Yeah. And I worked, I did everything from home. And so I, I would sit at the table and, um, just trying to juggle all of this different stuff that was going on. And it was a scary time.

This is a super personal question and I almost hesitate to ask it, but I think it's relevant in the context of this because there's a lot of stress that goes into starting a business. How about with your partner, your husband? I mean, did it create also stress intention?

It was both. I think that he believed in me and he was, you know, of course I could not have done it without him. Yeah. No way. For kids, he had to give up a lot himself for me to go do this. And also, if I put myself in his shoes and I'm being honest,

I don't know that I would have been like, yeah, let's go for it. I mean, I had to not be there with the kids a lot, you know? Yeah. And also at some point I had to ask him to stop working. Yeah. And say like, I can't focus when I'm traveling because I want the kids to be taken care of the way that I would take care of them. So would you be willing to stay at home with them until we can get through this period and I can get this off the ground? Yeah. Okay, when you launched,

in 2013, when you went live with a website. I know that your goal was to get this into Sephora, and your brother-in-law felt, I think, understandably, that that was an unrealistic goal. I think he was like, let's just try to get it into any shops we can, but you resisted that. Why?

I did because again, it was part of my vision. And I really felt strongly that you don't want to spread yourself too thin. You want to get into one place and really get your feet on the ground. Now that's he had David in his ear, his brother, you're a accountant. Right. Saying I've dealt with this kind of thing before and this is what you need to do. You're going to lose your money. If you're waiting for the golden egg to hatch, it's not going to hatch. I'm going to sit back and watch you lose your money again. And I don't want to do that.

But I'm wondering why you didn't think it would be a good strategy to try to get into small boutiques or smaller stores at the very least. Your whole plan was we've got to get into Sephora and in the meantime, we'll just sell it to our website. Just because they're not here to defend themselves, I'm going to have to defend them. Charles and David, I do understand their perspective. I do understand. David's saying, we've got to sell this stuff, let's go, let's move product. I don't think that was

unreasonable. Your strategy proved to be right, but it proved to be right in part because you've good instincts. Also, there's some luck there, too. Agree. I agree with you. I see why they did that and why they were scared. I was just in my head at that point, really, really focused, and I just couldn't see another way.

I think I read an article of a brand that got into Sephora, and this whole article was about the day she knew she made it. And I got that in my head, and I also shopped at Sephora myself. And so that was my dream. And I felt like putting in a lot of, you know, strip centers around the country would be incredibly time consuming and difficult to manage. So I got probably defensive, and I got my feelings hurt, all of that. And then it made me dig my heels and even harder.

I mean, you could have been wrong at every turn about the name, about the Sephora thing. And this could have collapsed and it could have really potentially damaged your relationship with your brother-in-law and maybe even your sister. It could have. Like, that was risky. Right. It was. But that's all I had. I only had one shot. And I was tired of worrying about the future, and tired of worrying about if, you know, I just didn't want to worry anymore.

How did you deal with the stress of the possibility of being wrong and all that collapsing? I didn't consider it. See, but you were... I didn't let that get in my head. You had to have been stressed out. I was stressed about Charles' change of heart. Yeah. I asked him at some point, do you want out? He said yes.

When we come back in just a moment, Tiffany gives Charles an ultimatum and starts working to get drunk elephant into her dream national retailer. Stay with us, I'm Guy Raz and you're listening to How I Built This.

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Hey, welcome back to How I Built This. I'm Guy Ros. So it's around 2013, and Tiffany's relationship with Charles, her business partner and brother-in-law, is on the rocks. They've just launched Drunk Elephant online, but Charles wants to leave. And Tiffany doesn't have the money to buy him out.

I couldn't buy him out, no. I didn't know a lot of people who would potentially invest, but the two or three people I did know I called and told my story to, not asking them to invest, asking for their advice, but hoping they'd say, oh, maybe I can invest, none of them did, but I called an investor friend and asked him to help guide me, like, what do you do? I'm being deluded and I've got no money in it, and how do I protect myself, and how do I

What should this be looking like? And he was like, well, you've got a $7 million accountant on your hands. Literally, David had 7% of the company at that point. And I did call Charles and say, listen, David's not working out. He doesn't believe in the vision. He's actually

Causing tension so much between you and me that it's hard to you know, this is not going well Yeah, and eventually I came back to Charles. I said look let's kind of start over Let's kind of say like look we're equal partners and we'll bring in investors or else I'll leave and go hmm

It was just high emotions, you know? He's a great guy and we still are very close. It wasn't like it broke up the relationship, but it was just this stressful time, right? So I called my brother and I said, do you know anybody that would want to invest in also Charles is not being very fair?

Patrick's your brother. Yes. But my brother was so close to Charles that he kind of ended up being the mediator between the two of us. Right. You know, he did, he did introduce me to the two people who came in. Oh, the two investors who eventually came in. Which was great. And that, that really did help. And Charles was happy with that. Yeah. And it took some strain off Charles. This makes, yeah, this makes me just, it just reiterates the old saying, never do business with friends or family. But I'm glad I did.

All right, so you have, you launch it very fortuitous time unbeknownst to you because this is the golden age of direct to consumer, right? This is like really when you could put up a website 2013 and you could actually buy ads and social media was really starting to blow up and you could attract attention to your website. So how did you, when you had drunk elephant.com before you were in a single store, how did you get attention for it?

So I decided not to advertise early on, never advertised until last year actually. So I reached out to every beauty director of every major publication and sent them this gorgeous acrylic box with confetti in the whole line. The line was so photographable. It was so bright, the colors, which got a lot of pushback on by the way too.

Yeah, you had purples and yellows and every product had its own color. It was a confetti-colored product line, which, again, counterintuitive, because I'm thinking of Clinique and these very simple

There was no color in skincare at the time. There was no color and there was no fun. They kind of look like tops of markers like highlighters. Right. And that was just my personal taste. That was just me. I wanted to decorate my house in all white with pops of color and I couldn't afford to do that. So I think I took that out on my line. Yeah. It was the packaging people who pushed back and it was the, you know, it was just all along the way. Everything I did was like skincare brands don't do that. Yeah. That's not going to work, you know, kind of thing. And so I was just like, well, this is,

I wasn't trying to appeal to anybody. I was just trying to do what I thought looked great on the counter and thought was sophisticated. When you sent these out to beauty editors, just cold sent them out. Did it work? Did any of them follow? It worked. I sent this box out to 30 beauty directors. It's hard to get people's emails, right? I had this system where I would

create, like, put their name, dot their last name at, or their first initial last name, or their first name last, and I try every way that an email could be. And until I got through to these editors, and I got through to all of them. The packaging wasn't even final yet, by the way. In 2013, when I launched on my line, and they published it. I mean, it didn't get into magazines, but it got into, it got online everywhere. On websites. Yes, got attention.

But I read that a lot of people around you, especially even in Houston and your hometown, didn't take it seriously. Like, you actually had a hard time getting attention from local media in Houston or... It was harder to get local attention than it was national. I got the attention of the New York editors really quickly. Houston, not so much. Because why? Because you were sort of brushed aside as a housewife who, forgive the derogatory term, but I'm just wondering, is that how they would sort of look at it?

Yes, I think so. It's a long shot to think that somebody in their 40s with four kids that just launches a skincare brand is going to make it. It's super hard. And I think even like two years in, people would say, are you still repping that little brand that you were repping? Because I didn't talk about it much in Houston. I didn't try to sell it to my friends. I really just focused on the big picture. And that came later on.

So interesting how oftentimes you're not taken seriously in your immediate environment by the people who know you, but actually you have to go be outside. It's happened to me in my life again and again. I think a lot of people can relate to that idea. Oh, it's just, that's exactly what happened. And so I didn't talk a lot about it. And I kept all the good news sort of under wraps. And I didn't, I just thought to myself, you know, one day they'll realize it's, it's for real. And I don't need to try to tell them about it. They'll have to read about it if they, if it works out. Yeah.

How did the, I mean, you launched in August of 2013, drunkelvin.com. I mean, I can't imagine all of a sudden the cash register was just, was opening a closing nonstop. I mean, was it- No, as I remember, I had a ding on my phone that sounded like a cash register. Right. Yeah, it would go off on my phone every time we got a sale. And it was so exciting. I remember calling my mom saying we sold, you know, $1,400 today.

Yeah. But slow going, I have to imagine at the beginning. Yeah. So in that time, how are sales generally? I mean, do you remember what you guys did in year one? I think less than 100,000. Yeah. And I remember, so August 2013, we launch online. Yep. And then 2014, July, I've got the final packaging and I've got the final formulations. And I've tweaked things a little bit based on the feedback I've gotten during that first year. Yep.

And so I remember getting into this place called was cosmopolitan which is a huge convention in Las Vegas and you have a chance to sit with the retailers and pitch your brand and it was the first time I was going to show the big retailers my brand and you get your list like the week before of the retailers that have chosen to meet you. I see they have to choose to meet you okay.

They have to choose to meet you. And Sephora wasn't on it. So I'm thinking I'm not going to meet them at this conference. So I go by yourself or with somebody else or a couple of my sister with my sister. Nice. And the day before the last day, this group of women came by and they had their badges turned around. I couldn't see who they were from.

And they were intrigued, and I had actually left this part of the story out, but I had actually six months prior to this, done the same thing with the head of Sephora merchandising where I jumbled up her name into every combination could possibly get an email. I did and I reached her. Yep. You found the name of this person emailed her at Sephora, and did she respond? She did. And were they interested?

She said, I'm going to forward you to a girl, a merchandiser, and she responded, send me the products. And I said, well, I don't have final packaging yet. This was six months prior to Cosmo Prof. And she said, well, you just keep in touch. So she starts seeing in magazines or online, not in magazines, but online. She starts seeing it. She reaches back out to me. I remember that I was downstairs cooking dinner one day, and

She I got my god, this is Cindy from Sephora. Yeah, I ran upstairs. Got on my computer and responded. I still don't have packaging, but I'm going to in July. She said, okay, well, keep us posted and send when you have it. So I go to a Metcosma prof. She comes by with five other women. I don't know who it is. I'm talking, talking, talking.

And you didn't know it was her? Didn't know it was her. My sister, on the other hand, my sister's like, that was Sephora. I saw one of their badges. Oh, because they were hiding their badges. They were hiding their badges. And then she comes by again the next day. And she just sticks her hand out and says, I'm Cindy from Sephora. Love the line. Please keep in touch. We're unfortunately not going to pick anybody up for 2015. This was July of 2014. She says, we're not going to pick anybody up for 2015, so I'm really sorry.

They're not going to pick up anything new for the year. Okay, so you discover Sephora's not going to put you in the store next year. But keep in touch. Yeah. In my heart, sort of sunk, but I still didn't believe her. It was really weird. I just didn't believe her. I just gave her her bag and I said, it's great to meet you. Hopefully I'll talk to you soon. Huh.

So I go home and a week later, I get an email from Cindy and it actually chokes me up. I'm surprised right now. Cindy from Sephora. Yes. And I've told this story so many times. It makes me cry. She said how God, I can't say it. It's so strange. I think I'm really back in that time right now. Yeah. And she said, I want to talk about being partners. I want to talk about partnering with you and launching your brand. Wow.

Next year, after they already told you they're not going to put anything in their store. January of 2015. So in six months? Six months away. What was your response? You got that email. She said, can we talk next week? And I was actually going to Jackson Hole with a friend and bringing my kids with me. And I remember being on the phone that trip a lot because I was so nervous about this call. Yeah. And so it was there in Jackson Hole that she told me that, yes, we want to pick you up, all six products.

She goes, if you don't sell a million in the first year, we won't kick you out. And, you know, I emailed my whole family. I told everybody that I'd gotten in. And at this point, my brother, who had just, he was excited for me. And so I called him and I said, I got in Sephora. And I don't know what I'm doing. I'm really, really nervous. Yeah. Charles was a silent partner. He's a silent investor at this point. But you needed operational help.

I did, and I really respected my brother, and my brother had just gone through this bad divorce, and so I thought it would be really fun for him to get involved in something, and he was so excited. You asked him to join the company. I did. I asked him to bring some money and join the company and help me manage what was about to happen. He had experience running a retail store.

He did. He had done that with his wife, but he also had lots of experience with investments. To me, he was my big brother who I trusted and he could probably help operate things and keep this thing organized because I certainly couldn't. You don't want to get a checkbook near me. I can screw up a checkbook in a second. I knew what I didn't know. Charles was

very happy for Patrick to come in and help run things. And so he came in in late July, early August of 2014 and helped me like with my first conference call with Sephora in September. So we had lots to do, lots to get organized and to get kind of ramped up for this big launch. How did you guys finance that because now you're going to be in Sephora in six months, right? Did you have the capital to make enough product to fulfill that first order?

We did. Patrick brought money in at that point, and we had money from those two other investors. Everything sort of felt like magical timing, really. When you finally launch in Sephora in January 2015, this is really the first major brick and mortar

that you're in, because up until that point, you're direct to consumer. And do you have any recollection at all of what kind of sales you were doing before you hit Sephora? Like, had you hit half a million a year? No. No, no, because we're only a year in. I mean, this is still 2014. Yeah. So what I did have at that time was not as much sales numbers. We had two things. One, we had repeat customers. Right.

And I also had feedback from, I did a whole focus group myself, and I had like 50 people in that focus group. And I had incredible feedback on the philosophy and what it had done for people's skin. And so I just kept waiting for someone to tap me on the shoulder and say, you don't know what you're doing. You're wrong. Go back to being.

I said, her mom, and every time I had an opportunity to learn more about if my philosophy worked and if this was like, you know, if there's proof of concept, I would get like major proof of concept. It would be like a confirmation would come and that would, yeah, you're on the right track.

And the philosophy was there are these six suspicious ingredients and we have eliminated them from our product line. Yes. And there was nothing else on the market at all, even in like Whole Foods or organic brands that eliminated these ingredients? No. In fact, they doubled down on the, I mean, whole natural brands doubled down on essential oils. Yeah. And presumably the margins on cosmetics are pretty good because it's not that expensive to make even with high quality products, but you can sell it at a premium.

Right. I mean, I think Charles would say that if you could make it expensive, like a high cost of goods, it would be me. I could do it myself because he's like, why is everything so expensive? I just was choosing the top of every... I wanted everything to be the highest quality I could get. The very best formulations. I was choosing ingredients that were expensive. So cost of goods for us was probably more expensive. How did you guys choose to price it? How did you land on the pricing strategy?

I looked at dermatologist brands and how expensive they were, and then I looked at drugstore brands, and I thought, you know, what would I want to pay for this as a 43-year-old woman? What would I be willing to pay for this? But if you priced it too low, you might be sending the signal that it was like a cheap product. Not serious, right? So you kind of had to price it, but at the same time, you yourself

You know, your financial situation was a little precarious. So, would you have been willing to spend $80 on cleansers and stuff like that at the time? So, I know if I could have, but I would have probably done it anyway. And, you know, Sephora never said anything about it. It's not like they said, these are priced very strangely. They seem to be in line with the competitors at the time. Yeah. So, all right. You come in to Sephora, January of 2015. Still, you're not a national product. You don't have

a national marketing engine behind you. You walk into Sephora, there are a thousand products available for sale. How would people even know what your product was? Why would they buy drunk elephant at that point?

I don't know. Well, first of all, I was only online in 2015. I wasn't to go in stores until April, and that was only 21 stores. So I had to prove myself online pretty quickly. Yeah. And thankfully, a publicist approached me who had seen the website in 2013.

She was like a one woman show and she had a little boutique agency and she really believed in the way the brand looked and the name. She loved everything about it. And so she did a lot to help me get some of these exclusives with in style magazine and the lore magazine and some of these big publications that had a wide reach. And so it was a combination. I mean, we were on social media and it's Instagrammable, the product line, everybody was taking pictures of it.

So it was just word of mouth and editorial, that's how we built it. This is 2015, so Instagram is really starting to take off. It is. How did you start to use Instagram?

I just started taking pictures and posting with cute captions. It was just, again, I didn't have a manager yet. That didn't come until later. I was doing it on my own and it started just gaining followers. I do think the CEO of Sephora came to Houston a year in and just said, what are you doing? We don't know what you're doing. The traffic coming from your Instagram into Sephora is like, we haven't really seen this before.

I can't explain it. I think it was word of mouth. Combined with the products worked, these formulations were surprising. They were super sophisticated. I wanted all of them to be as good and effective as clinically effective as anything on a dermatologist shelf, because I wanted that for myself. How did it do at Sephora when it launched?

It sold out of a couple of products right away. So the glycolic acid sold out really quickly. So we knew a month then that it was, it was being very well received. And so that happened quickly. And then the summer, like, so I launched in January, I go into some stores in March, April, 21 doors. I get a phone call. Gosh, it went so fast. I get a phone call probably in April, May of 2015.

2015 and I was driving down this street going to pick up my kids at school. And it was Cindy. And she said, Tiffany, there's a thing called the favorites wall at Sephora. And we want you on it. And it's every door. Well, by September of 2015.

Every Sephora. Every single Sephora. By September 2015. I only had a few months. It's so remarkable to me that Sephora and maybe Alta too, Alta, that they can really, I mean, I just think about Whole Foods, right? If you are only in Whole Foods as a food product,

Like, if you're just a brand, you're selling ketchup, like, you know, you could probably do 7 to 12 million a year in revenue, maybe 15 million just through Whole Foods. But really to go big, you have to be in Walmart and Target and Kroger and Walgreens. You have to be everywhere if you're going to sell potato chips. It seems to me that Sephora is different, that you can actually build a huge brand just in Sephora.

Right, Sephora is known for building baby brands. They take indie brands and they blow them up if they like you. If it doesn't work, then it's kind of hard to come back from that. What I did when they told me that we got in every store, I remember somebody telling me before that, to go in every Sephora door will cost you $500,000.

So when I got the call, we're going in for free because you don't pay for the favorites wall, which was unbelievable. That was a huge break, right? I called Patrick and Charles and I said, I think that we should put the money we just saved into sampling. And I think we should get every single employee at Sephora, the little skit, which was the whole line, but little version that they could use in themselves to take a drunk break. So smart. That's you call them drunk breaks.

I call them drunk breaks. I call them clean breaks at the time, but now I call them drunk breaks. I call my kids the littles. So I got little versions of the products and I said, I want to get the littles to every single person that works at Sephora so they can experience a philosophy and sell it knowing what they're talking about and really be personally invested in it. So we sampled the heck out of it. Yeah, that's smart. So you basically took the money, invest in samples, gave it to employees of Sephora.

Yeah, and also everyone who asked on social media, every person who DM'd me on social media, I sent product to. Wow. And so instead of advertising, all of the dollars we were saving, and I kept reminding everybody, like, we're saving a lot of money on advertising. So let's use that to give people a word of mouth, you know, and that's how you build Word. And it was painful a little bit because we were giving away a lot of products, but yeah.

That's what it takes. That wave of awareness that the brand actually worked and the formulations were super sophisticated, that came later. That kind of helped in the second year, because I started getting awards.

And so once I started getting awards, then you start getting credibility. Yeah. I didn't tell this story, but it's a good one. Nathan is my head of product development, SVP of product development at Drunk Elephant. He is the one that wrote the review for the Wonder Bar. Wow. He's the guy who wrote it on Beautypedia.

He's the writer on that review. Yeah, and after I launched Drunk Elephant, I got a Google alert that said Drunk Elephant was mentioned on Beautypedia, and I almost died. I was like, I cannot take this again. If this is the blow that they delivered to Wonderbar, I don't know what I'm going to do.

And he had reviewed four of the products, I think, maybe five. And they all got five stars. Wow. It was like the biggest, best confirmation. And I had just won my first Allure Beauty Award in 2015, which was also this big confirmation for me. So.

After he reviewed those, he emailed me and said, you know, I want to review the bars. I want to review this. I want to review that. Can you tell me more about how you formulated? So I responded and we kind of got this dialogue going. And eventually he emailed me and he said, listen, the website's changing a bit. I don't want you to be nervous when you go on because I know you're a freak and you go on and look every day for new reviews of your products. But it's going to change a little bit because Paula's choice is dividing from Beautypedia. So it's going to look a little different. And it made me think he may leave.

And so I said, if you ever are like leaving your job and you, I would love to talk to you. Yeah. Like I learned a lot from you and it would be an unbelievable honor to have you on my team. I don't have a spot. I'll just create one. And he wrote right back. He said, you know, yes, let's talk. You know, he's a scientist. So we brought him on to help me. And so I wasn't choosing all the ingredients myself anymore. I was still choosing them, but he was reviewing them.

And we were doing it more of a collaboration. And now to this day, he's right by my side. Wow. So the guy who totally rocked your world and made you kind of abandon that step bar now works for you. Yes, yes, works with me.

All right. Imagine once you start to gain some traction, you start to get outside investors coming to your door saying, hey, we want in. And in 2017, you did take on some private equity. I guess I have to imagine at that point in your mind, you're thinking, okay, let's go to phase two because eventually we want to sell this thing. Is that how you were thinking about it?

I was but here so something amazing happened before that which was that so in the summer of 2016 I went to a Sephora conference and by the time I got to the booth there were two ladies standing in my booth and I didn't have ever seen them before and one of them walked up and the other one stood on the other side and she said hi I'm Jane from Estee Lauder congratulations

And I said, hi, thank you for what? And she said, for becoming the fastest growing brand in the history of Sephora, the fastest growing skincare brand in the history of Sephora. Wow, Estee Lauder. Yes, I said, she said the president, I'm the president of Estee Lauder. And I said, how do you know that? And she said, well, they announced it this morning.

And I was so blown away, she said, here's my number, keep in touch. And then I turned around, the lady on the other side of my booth was the president of the L'Oreal. Wow.

It wasn't a month before the people from Estee Lauder came out to visit me in Houston. They wanted to get to know you because presumably they were interested in maybe talking deeper about an acquisition. They were. I think it's public knowledge that Estee Lauder was in the running. We talked to L'Oreal. We talked to all of the brands, of course, but going back to this point in time, we didn't have private equity yet.

And so there was some discussion at that point, do we entertain the idea of selling? So that was very early. This is when Patrick says, look, I'm going to start responding to all the inquiries on LinkedIn. We're getting LinkedIn inquiries every day, all day, from private equity. And we ended up going with a private equity company that was kind of focused on health and wellness. And I don't know, it was kind of bittersweet for me.

It was just the idea of selling the brand at that point was so scary. The brand was still so young. Yeah. I mean, I only launched it in 2013. I don't want to sell it right now because it's the middle schooler. I'm going to graduate from high school before I get rid of it.

Yeah, I mean, what I'm wondering about is if you were getting some potential interest in acquisition already, what was the point of bringing in private equity cash? Why did you do it? The idea was, listen, the next phase of this company is to get a C-suite and to start doing some due diligence. To get like a real seasoned professional from the industry into the industry. Which I had never done. Yeah. We didn't have, my brother was the president. And were you the CEO?

No, never. Yeah, never. No, I was never the CEO. Was there a CEO?

There was a CEO after we got private equity. We brought on a CEO. The private equity, they put some money in and that allowed us to hire the executive team. And this is when I knew I wanted to go really with industry veterans who had been, who had made an impact in the industry. So the number one skincare brand at the Sephora at the time was fresh beauty and the number one makeup brand at the time was Urban Decay.

So we got a CEO and a CMO from those companies to come over. And by the way, at this point, I'm assuming you had an office in Houston. We did. Okay. And roughly in 2017, how many people worked for drunk elephant? How many places did you have? Maybe 20. Maybe 20 by the time this is happening with private equity. I met with the private equity team trying to start to really discuss how we want things set up. And I decided I wanted to make everybody an owner of the company.

Everybody in the company was going to have a piece of the company. I don't think of myself as a really strong leader because I don't like confrontation, and I really wanted to be on the same level as everybody in the company. I really wanted it to feel like a team, and they were all in there doing the hard work together.

I also thought, because I had worked at a company where it was sold and I didn't get anything when it was sold. I want everybody on the day we sell this company to feel it, to get a check in the mail and really feel it. Also, I was building a really good team and I wanted everybody to feel like they were invested in it and they had a reason to want to be there.

So this is kind of nuts, which is, I shouldn't say nuts, but you had already had some interest from a company like L'Oreal, potentially maybe one day acquiring you, but they actually sued you in 2018 for patent infringement. Right in the middle of us being on the market.

when you were actually on the market open to potential choirs, they sued you that your sea firm, a serum, took their formulations for their vitamin C serum. Was that stressful? I mean, because that probably was a significant product for you.

No, it wasn't stressful. Wasn't. I'm not allowed to talk about the case at all. Oh. I'm not allowed. But I can tell you that CIFRA is still on the shelf. Yeah. Well, you guys both, I think the claims are all dismissed in the end. And I wasn't stressed out about it. Because I knew... You knew what would be the result. I know what was going on. But were they still, did that mean that they were out of the running and potentially making it a bid for you guys?

No. No. They weren't out of the running. It didn't create like weirdness like, wait a minute. You guys are talking to us about acquiring us, but then you're suing us. I felt like it was a misunderstanding and it wasn't resolved until after we were required. I see, okay. And here's the thing about that is that I wouldn't want to copy another brand. In fact, it's quite the opposite with me is that I didn't look around very much because I didn't want seeds of ideas to get in my head and I wanted to be very different.

All right, clearly, you guys were ramping up for an acquisition. In 2018, you were already having conversations with a bunch of potential suitors. And you were, it was announced in December 2019 that Shiseido, the Japanese, huge Japanese cosmetics brand, was gonna acquire Drunk Elephant for, it was reported at $845 million, which is a massive acquisition. I mean, this is,

Six and a half years after you launched the website in your mind. Did you want this acquisition to happen because you were like, okay, now I can take a breather. I want to just make some money off of this thing. I haven't made any money yet. You know, I feel like I want to be rewarded.

No, in my mind, it was like, it was no different than bringing in private equity and bringing in the C-suite. That was the next phase of building the team. Now it's time to build the brand around the world and spread awareness and help people. And I was so excited about the next phase. And that's how I looked at it. I wasn't planning to leave. I didn't leave. I'm still there, still doing the exact same thing that I was doing before. And I never thought of resting or anything like that.

tiffany, how, I mean, look, your investors, the private equity people, your brother-in-law, your brother, they made a lot of money off of their investments. Right. And then, and so did all the employees, all made a bunch of money. Yeah. Everybody made a lot of money. And you made a lot of money, probably not the most by far because that's just how it works. Investors always, unfortunately, make more than

the person whose idea was. But still, you did very well out of that. And you had gone from being kind of careful budgeting with your cash and your family to, let's just be honest, to getting rich. I mean, that must have been both satisfying, but was it also kind of jarring? All of a sudden, you're not just like a millionaire, you're like a multimillionaire.

Yeah. There's a little bit of a shock that happens and your mindset doesn't change those strangely. Like if you have, I'm a warrior and if I can't pay a bill or if I, you know, I still have that mindset. Yeah. I'm stuck in this broke mentality. Totally get it. I get it. Yeah. It doesn't mean I didn't buy a big house. I did. Good for you. You deserve about a house.

Fit my children, I got to decorate it, white with pops of color like I always dreamt I would. Nice. But I'm always worried about it. No matter what, I'm worried about it. It's a weird thing to be in. It's a weird place to be. It's just feeling like you could all go to Mars, like the world could end. I wonder because it's public, right? It's like it's a public number that's out there.

I don't know, do you kind of have to be a bit more cautious just because people know that you have money in, so there are philanthropies and there are charity events and there's, you know, and maybe even being careful about there are people who just kind of want to be around you because of this. I don't know, has it changed the way you interact with the world around you? Has it kind of forced you to be more cautious?

Yeah, I've had to learn a few pretty rough lessons, actually. Because you get sucked in sometimes with people who don't have the best intentions or maybe they're with you for the wrong reasons. But I have my core group of friends that were with me when times were tough and they're with me today. And so I know exactly who my friends are. And I actually made a list. This is so weird.

But I do have a list on my phone of my best friends and I've just kind of gotten closer to the people who have been with me and he's living there.

I mean, your kids are, I think you're close to being an empty nester, you and your husband. Yeah, that's coming. You're only in your mid 50s. You're still so young for having this amazing career. You've got an important job at Drunk Elephant. So, you know, you'll be busy. You'll be really busy. But at some point, is there something else you'd want to do with your time?

No, not that I can think of. Right now, I love what I do. I love my job. I love my brand. And I could do this for 20 more years if they'd have me. I may change my mind next year, but listen, I work there. I'm an employee. I get a paycheck and it's also going to help. I dread my last child leaving the house. I don't know what I'm going to do. I feel you.

I don't know what I'm going to do, but we actually did buy a house in Austin when my first daughter decided to move there. So I have three girls who are in college at the same place. And then a son who's headed to hopefully the same college. So I can just, if he ends up going to UT also, which I hope he does, then you can be there in what? Two hours. We can, if I can just follow him when he leaves, you know? So if that works out, I consider myself the luckiest person in the world.

When you think about the journey you've been on, the story you've told, I mean, how much of where you are now to attribute to the hard work you put in and your skills and how much do you think it has to do with getting lucky?

I worked really, really hard. And also, you have to have all of these stars aligned at the same time. You've got to hit it on so many different levels. You have to hit it on the name. You have to hit it on the packaging. You have to hit it on the formulations. You have to hit it on the timing. You have to hit it on the people. And I got really blessed and lucky on all of that, even the logo. But anybody who you ask will laugh and say, you didn't get lucky.

you worked your ass off. It's all I saw you do. I mean, I would travel with a girlfriend and at 5 a.m. she'd see me under the covers like secretly like we would get two double beds and approach and I'd be under my covers for emailing and working and she'd see the little light of the phone on. You know, I worked every waking moment I could that I wasn't with my kids.

I sat and worked until they needed dinner or they needed to be picked up or they needed the laundry done or they need, you know, I was there on the computer all the time. And so I think that that's what it takes. It just doesn't feel like hard work when you're on the right path. It doesn't feel, I look back and I think that was so fun. What a blast I had. I didn't even want to get up for lunch and I didn't want to fall asleep at night and it worked out. Thank God.

That's Tiffany Masterson, founder and chief creative officer of Drunk Elephant. By the way, remember how Tiffany's dad, Pete Bethard, was a quarterback in the NFL? Well, he's part of a mini NFL dynasty. Pete's brother, Bobby, is in the pro football hall of fame. He won four Super Bowls as an executive in Miami and Washington, D.C., and Bobby's grandson, C.J. Bethard, is currently a quarterback for the Jacksonville Jaguars.

Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show, and as always, it's free. This episode was produced by Alex Chung, with music composed by Ramtean Arab-Louis. It was edited by Andrea Bruce, with research help from Catherine Seifer. Our audio engineer was Josephine Neonai.

Our production staff also includes JC Howard, Casey Herman, Sam Paulson, Kerry Thompson, John Isabella, Neva Grant, Chris Messini, Carla Estvez, and Malia Agudello. I'm Guy Raas, and you've been listening to How I Built This.

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