Hero Cosmetics: Ju Rhyu and Dwight Lee

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So yeah, I went down the rabbit hole of, of launching this. This was probably 2013, 2014. And then in the end, a lot of money is, it's a lot of work. Do I know that it's going to work out? I don't know. So yeah, I chickened out, got cold feet.

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 Ju Ru was inspired to create the acne treatment mighty patches and grew them into a $630 million business in just five years.

There's a concept in psychology called functional fixedness. Basically, it describes a fixed or limited way of thinking about how to use something. So, for example, if I gave you a shoe, you might try to put it on. But you might not think about using the shoe to hammer a nail into a board.

The most famous example of this concept was an experiment where researchers gave people a candle, a matchbox, and thumbtacks, and the participants were then asked to attach the candle to the wall. Now, understandably, many people tried to push the thumbtacks directly into the candle wax to attach it that way.

But they soon discovered that wouldn't work, but they tried it anyway because that's what they were asked to do. Anyway, the point of the study was to see if people would think differently, you know, outside the box. So, for example, maybe they would melt the candles onto the cardboard matchboxes first and then attach the matchboxes to the wall with thumbtacks.

The idea here was to figure out if people can overcome functional fixedness with training. And by and large, the answer is yes, because this is a path to creative thinking. So, what does this have to do with today's story? Actually, a lot, because the product we're talking about mighty patches by a brand called Hero Cosmetics were designed for a different purpose. It just took another way of looking at them to figure out that there was a whole other opportunity.

Now, if you don't know what I'm talking about, mighty patches are small, round bandages that cover up zits. You can find them on the faces of thousands of adolescents on TikTok. And how do they work? Well, they basically trap, seal, and absorb moisture from the pimple to help heal up the acne spot faster.

And the thing about them? The technology has been around for decades. In fact, you could have gone to the drug store in the 1980s and picked up a box of something called hydrocholoid bandages. These are bandages used to heal regular wounds. And it turns out that there was a secret tribe of people who, for many years, would buy those bandages and cut them up into squares and use them to get rid of zits.

But it would take a very observant entrepreneur named Ju Ru to realize that there was a business opportunity here. See, these hydrocolloid patches had been popular in Korea as acne fighters for years. And because Ju is Korean American and spent a lot of time going back and forth as a kid, she had a hunch that these patches could be popular in the US as well.

And so, after years of working and marketing and dreaming of starting a business, Jew linked up with two brothers, Dwight and Andy Lee, to try and launch hero cosmetics. This was in 2017, and they did it with just $50,000 all in.

And just five years later, Jew, Dwight, and Andy sold the business for $630 million. It's an incredible story, and we'll hear from Dwight a little bit later, but first to Jew. She was born in Korea in the late 70s, and her family moved to Seattle when she was just three years old. Her dad worked as a broker in the logging industry, sending American wood back to Asia for construction projects.

My dad is a log broker. So he was working in the log industry and he was with this Korean conglomerate. But they sent him over to grow the business in the US. And a few years after doing that, I think he realized it was better for him to start his own business. So he actually left and then started his own log broker business.

And Log Broker is literally the guy, like the middle man between the people who chop down the logs and then the people who buy it and then, I guess, sell it on to people who build houses.

Right, so a lot of my dad's customers were based in Korea, and they needed logs for construction, furniture. I mean, Korea itself doesn't have a lot of natural resources, so they had to source from other parts of the world. So my dad was actually a buyer's broker, and he would source the logs, he would negotiate, arrange a transportation, book the containers and all that.

Tell me a little bit about you as a kid. I mean, did your parents speak to you in Korean? Was their culture their birth country something that they really was important for them to transmit to you growing up?

Yes, so I still speak to them in Korean, even though my Korean has progressively gotten worse. But culturally, yeah, I mean, we were very much a Korean household, eight Korean food. A lot of their friends, therefore our childhood friends were Korean. And there was still a lot of sort of community, you know, amongst other Koreans who had immigrated around the same time in the Seattle area.

When I was young, we went back every summer and we spent a good month to two months in Korea. I remember staying at my grandparents' house and it just being so hot and me hanging out with all my cousins. So Korean culture was still a big part of my upbringing.

Yeah. I guess from what I read, you were kind of thinking maybe in high school or as you were getting away from college of like becoming a doctor one day. And I was surprised to learn that your parents actually discouraged that. And this is interesting because I come from an immigrant family and so many people who've been on the show from immigrant families. Like that's what your parents tell you to do. Be a doctor, be a lawyer, be an engineer,

Yeah, I thought I wanted to be a doctor and my parents, they said, don't do it. It's way too hard. It's going to be years and years of study. Also, they're probably biased because my dad's a businessman. So he doesn't come from like a science or medical background. But for him, there were better ways to make a living that didn't involve, you know, eight years of grad school and hours and hours of training.

But I do remember they told me, well, if you do want to be a doctor, you should be an ophthalmologist because there's no blood. And it's going to be a lot. Like the hours will be a lot more bearable. So for them, I think it was sort of more lifestyle. Yeah.

where you, I know that you went to Brown University and from what I read you studied history and international relations and that those are usually majors like to set you up for like, because that's what I did, you know, like a career in like law or I went into journalism originally or

like publishing or that kind of, but even marketing and other things. I have to imagine, maybe I'm wrong, like when you went into college, you didn't really have a plan, right? You didn't know necessarily what you would do after it was over.

No, I had no idea. My dad was not happy with my concentrations. He was like, history and international relations. What is this? You should be studying economics, you know? But I don't know. I just remember in college always

being drawn to creative things, but then also liking analytical and business-oriented things. And so for me, it was always sort of, how can I do both? So I remember, I think it was like my sophomore year in college. I was like, you know, marketing might be the thing that helps me merge those two elements.

All right, so you finished college, and this is, I think, around 2000, 2001. And this was sort of the dot com, kind of mini recession. I remember that time. I had just recently graduated, too. I got lucky in internship, but it was a tough time.

But I guess you got this opportunity to go work for a private school for low-income students called Tiffany, which was, and tell me what you did there. It was in development, which is a fundraising role. So if we go back a little bit, right after college, I actually spent that summer in Kenya. And so I did some volunteer work there. And there was always kind of that part of me where I wanted to do

something sort of giving back to the community and one of the reasons why I took this job at Epiphany schools because I thought, okay, well, maybe this is a way that, again, I can impact community is by actually working for a local nonprofit and sort of leveraging my interest in marketing and sales to help out fundraising for the school. So you were there for a few years, but I think that that

I think it actually introduced you to the idea of your next step, right? Because you would, from there you went to business school, but you didn't, that idea didn't come to you until you were doing this job for the nonprofit. How did that happen?

Well, actually the woman who preceded me at Epiphany School, she actually went to business school. And so she left, she left to go to business school, right? Right. And so I took her job, I basically took her job. And so that was sort of the first seed, like, okay, well, that could be a path for myself as well. And then having worked there,

I mean, I enjoyed it, but there was an aspect of, well, I feel like I could do so much more. And also, there are other ways to, I think, positively impact the community or society. It doesn't have to be directly working for a charity or a nonprofit.

Um, and I started realizing you could do things in business and really make more of a, I think positive impact that way as well. So, so, so I got, I started thinking about it, uh, kind of earlier on and then, you know, I started applying to business schools and then, uh, and then I ended up going to Columbia.

So all right, you go to, you get your MBA. And I guess while you're there, you got an internship with Kraft, which you would go, and that after you graduate, you go and work for Kraft, working on food brands.

Right, so I did my internship at Craft Foods, which actually is now Mondalee, so I worked at the snacks division on the planters brand. So Mr. Peanut and, you know, on the nets that they have. It's amazing that's a planters penis is like a billion dollar brand. It is. And it's been around forever. Yes. It's unbelievable.

Yeah, I mean they have in-house commodity people who because you know you're buying commodities really so I always thought those meetings were fascinating because you're tracking like the commodity prices and like you know the weather patterns and how it's going to impact the farmers and whether that's going to increase the prices of peanuts and cashews and things like that.

It's amazing because even a sort of marginally fractionally lower price could be millions and millions of dollars for them. Right. If they're buying penances at that scale. Right. Exactly. Yeah. But I mean, that experience is, I mean, it really was very foundational for me. You know, I had a very traditional brand management experience. They train you in a very specific way.

So it was, you know, it was really great training grounds for me, just learning about retail. And back then, like D2C didn't exist. So the only sales channel was selling into retail and learning about thinking about the consumer and forecasting and marketing and brand and all that was, you know, really critical to our success.

Did you think that maybe, you know, this could be the path that I want to take, like in management and then corporate leadership eventually? Or already at that point, 2008, 2009, where you're thinking, I want to start my own thing one day.

I was always very frustrated because at that time, this was like 2009, 2010, I saw the world changing very quickly around me. So, you know, Facebook had just started and social media was really becoming a thing and, you know, in big companies, they just moved slower. I think that's just a fact. And so I didn't really feel like, you know, Mondalees or Kraft at that time was really moving as quickly as I personally wanted to.

But also, I think even in college, I kind of always had this entrepreneurial bug. Actually, in college, I remember with two other girlfriends, we tried to start a design studio. It was called Three Peas. And so I think that entrepreneurial energy was sort of always there, even in college.

All right, so you're a craft for a few years, and then I know that you went to work for American Express for a short period of time, but then I guess around 2012, in what would be a pivotal moment, you get a job offer and then you move to Korea. Tell me a little bit about why and what happened and what the offer was, what you ended up doing there.

I joined Samsung in their card division. Like credit cards? Credit cards, okay. Yeah. So Samsung and Korea, yeah, it's a huge conglomerate. Every vertical you can imagine, they probably have a presence there. So one of their verticals, in addition to electronics, which we all know, is financial services. And part of financial services is their credit card division, kind of like Amex.

So they had an overall initiative to diversify the talent pool. And one of the things that they wanted to do was bring Korean Americans to their offices in Korea to bring a little bit more diversity and experience and thought.

So they had recruiters who were based in New York who would actively scout the right profile in all of America to do expat stints in Korea. So I got contacted by one and I remember just taking the meeting just

you know, why not just have a conversation and became more and more serious. And then they had me meet certain executives who were in town, et cetera. And then one day I got the job offer. So then, I mean, then it became real, like I had to make a decision and then ended up deciding, you know, why not? If anything, it'll be an interesting experience and it was a two year assignment. So at the end of two years, I can always come back.

So tell me a little bit about life at Samsung. I mean, obviously you are Korean American, but I mean, you didn't grow up in Korean corporate culture. Right. Very different than American corporate culture. Very. Just a different level of commitment and tell me what a normal day was like.

It was definitely for a foreigner. It's a very foreign place. So for example, sometimes you wouldn't leave the office until eight or nine, just because your boss was still there and so you had to stay because you can't leave before the boss. So they were worried about people staying at the office too long and they instituted something called Family Day. And Family Day was every Wednesday and you're supposed to leave the office at six.

And it wasn't enough just to have the policy, the literally reconfigured everyone's computers to shut down at 6pm, like 6.00. I just remember at 559, you know, I would be writing this email and then you get a message that would pop up on your computer.

your computer is going to shut down in 10, 9, 8. And you just try to get that last email out. But I think the intent was really good. And then the way that they would enforce some of these things were very kind of micromanaging.

So it wasn't like it was, I mean, there were like enforcers, like you were expected to be at your desk on time and focused. And I mean, it wasn't like, we just trust you're going to do your work. Like people really were literally like looking out to make sure you were doing that.

Another anecdote related to that is, you know, they had another rule where everyone had to be in their seat at 8 a.m. Watching what they call Samsung news because they would have sort of like corporate communications at 8. And they'd have people with clipboards walking the aisle at 8.01. And if you were not in your seat with your eyes on TV, they would like, you'd get a little like demerit, you know? Like in your performance review? Yeah. Yeah. And if you racked them up, what would happen?

You would lose vacation days. Wow. See, part of me is like, I really admire that. Like, there's a reason why Samsung is such an effective company. I mean, it became one of the biggest electronics companies in the world in a very rapid period of time. I mean, American companies just couldn't do that, you know, kind of put that kind of discipline on their workforce. There'd be uproar, there'd be articles, there'd be lawsuits, there'd be all kinds of things.

Totally. I know. So on one hand, it's, you know, you kind of admire it in some ways or like, okay, well, this is why they've made so much progress. But then on the other hand, I don't know. I mean, culture is changing. You know, where culture is changing. Yeah, I wonder if it's still the same at Samsung. Yeah, I don't know. I'd be curious. Yeah. So all right. So you're

doing this job and in Seoul, which is an amazing city. I mean, even more so now than it was in 2012, it's just such a cool place I've been there. But one of the things that you, you know, as sort of visitors or expats or foreigners notice when they come to new countries is you just notice things that people living there just don't notice, right? You just are like, wow, that's interesting. And people living there wouldn't even see it because it's just part of the wallpaper. And one of the things you notice was

these stickers that people put on their faces. Yeah, I mean, I just noticed a lot of people walking around with these patches on their faces. And these were like just like like flesh colored. They're pretty transparent. They were round. They're like round circle patches that people like bandaids on their face. Yeah. People would have them sort of like they would have several of them on their faces and they'd go to the office like that. Like no, no questions. It was just very normal.

And you quickly inquired or assumed, I guess put two, two together and realized this is for pimples for acne. Yes. And I at the time was breaking out, unfortunately. I've always had a history of sensitive skin that at the tiniest thing I would just break out. And so I tried it for myself. I went to a pharmacy. I bought some of these acne patches and

I mean, literally I was so amazed at how effective it was because, you know, even just with the first use, it got all the gunk out of the pimple that I put it on and that pimple have flattened overnight.

And these patches, okay, so just to kind of explain, and help me kind of, to if I'm right here, they have an ingredient called hydrocholoid in them. It's basically a polymer, and I guess it extracts like liquid from inside a pimple. So it's basically a way of popping a zit without popping it, because that can create a scar, right? That's right.

This material, hydrocolyte, it's been around in like band-aids and in like hospitals for a long time. But I guess in Korea, they realized, hey, this actually works really well on skin blemishes.

Yes, so hydrocholoid, the concept, you know, originally started as kind of a new type of bandage or wound dressing. And what they realized was that if you keep the kind of damaged skin area moist,

It actually helps with the healing of the skin. Like dryness is not good. So you want to keep it like well moisturized in a moist environment. And so that's how it started. And then, you know, Koreans being very ingenious also realized, well, acne, you know, has inflammatory fluid and pus inside. And, you know, perhaps if you cut it up and make it round and make it a little bit smaller, it could work on pimples and

I mean, I think it started getting popularized in Korea, probably in the early 2000s. All right, so you see this, and you're using this, and you're like, wow, these are cool, these really work. They get rid of zits fast. But you're working at Samsung. Help me understand at what point does a light bulb kind of go off and say, wait a minute, maybe I can do something with these in the US.

Well, I mean, after that first use, I was like, why is this not more available or well-known? Like, it works so well, so much better than anything I've used before. And I started doing research, and I just saw all these Reddit threads that remember of people talking about these hydrocholine patches. Oh, you know, I can't get them here. I just asked my sister who's going to Hong Kong or to Korea. Can she pick them up?

And so for me like reading that showed me that there was actually demand for this type of product and people you know people were already talking about it on the web. But you know there was no brand really focused on the US market. There was I think a Korean brand even at that time I think they're probably starting to slowly sell in the US.

Yeah. There were some band-aid oriented brands that had the big ones, and people would comment, oh, I buy the big ones, and I cut them up into small squares, and I just put them on my face. But those band-aid companies were not marketing it towards skin blemishes. They were marketing it towards wound healing. Correct. So people would just DIY it and be like, oh, I just cut little patches from these hydrocolloid band-aids. Right. And put on my skin.

Yeah, and I mean, this is where, you know, I can connect sort of this insight with an experience I had when I was working at Crefous Mondalees. Do you know the 100 calorie packs? Of course, yeah. So the way that that got innovated or launched is because they were doing focus groups and they saw women, moms, buy a whole box of triscuits or rits or whatever and decamp them into their own small ziplock bags for portion control.

So people saw that they're like, oh, there is an opportunity here. So similarly, when I read that people were buying the big ones and cutting them up into smaller squares and using them for the pimples, I just, I thought, you know, this is it. This is more proof that people want this type of product.

Yeah, there's the Triscuits right there. Yeah, exactly. Yeah. All right, so you're, I mean, you get this idea in your head, but you're of course, you know, doing the corporate thing at Samsung. But, I mean, as you start to think, well, maybe there is something and you go on Reddit boards, chat rooms, you're seeing that there's, people are talking about this, but there's, you know, there's a lot more to do if you're gonna kind of even think about getting something going. What did you start to do?

You know what, in Korea, cosmetic manufacturers are required to list the name of the manufacturer.

Oh, like if they white label it, which most of you do, they have to tell you, wow, because in the US, they don't want to tell you that at all. They want to keep it secret. Yeah. So I went to pharmacy. I bought up like 10 to 15 different brands. I turned over the box and I listed the name of all the manufacturers that these brands were using. And I just, I started cold contacting them. I would call them or email them. And I mean, most of them didn't.

right back to me. But there were two or three maybe that did. And I remember there was one where I had to buy some samples, I asked for some samples. And so that was sort of the first step in identifying a potential supplier to kind of figure out how I would get this product created. Yeah. So tell me what you find. One of these companies is like, yeah, we're open to working with you. And

What did that mean? It was just a matter of, okay, just buying a bunch of these things and shipping them over. What did you start to do?

So first I got some samples and then actually one of them actually visited their factory. They invited me. They were like, come, come visit. We'll show you a little bit about how we make these products. And then it was just sort of conversations around like, well, can this be changed? Can that be changed? Can I increase this? Can I change that?

to see, you know, if the capabilities were there to make something more unique for the American audience. Okay, so sounds like a plan. And how much, I mean, how much money was it going to take to do, like, because some of these places have minimum per buys, like you got, well, you know, we're not going to talk to you unless you spent 100 grand, or what were they saying? I think it was 10,000 units. And so that would probably would have been

Probably, I don't know, 15, 20 grand or something like that. And did you have the cash to do that? You know, I did, and I went down the rabbit hole, like I had a name, I hired a designer, I had like a sleeve design that was like ready to go, and then I remember I submitted it to the manufacturer and they were like, oh, they could do everything. They would package it up, they would put your label on the subject. They finished good.

Yeah, and I remember him saying, oh, it's not going to work because it has to be in a box to protect the patches because the patches, if there's too much weight on them, the gel could squeeze out. I remember I had some other colleagues who were in my social circle who were also wanting to do something entrepreneurial and kept pitching the idea to them, oh, what about this? I think it could do well.

So yeah, I went down the rabbit hole of watching this. This was probably 2013, 2014. And then in the end, did not do it. Well, why not? You know, when it came time to submit that PO, I just, I don't know, I chickened out. There's a lot of money.

It's a lot of money, it's a lot of work. Like, do I know that it's going to work out? I don't know. So, yeah, I chickened out, got cold feet. When we come back in just a moment, Jew finds the courage to launch her idea after joining forces with friend and future co-founder Dwight Lee, who joins us after the break. 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 Raz. So it's 2014 and Jews' contract with Samsung is over. So she heads to New York and lands a job in the Korean beauty industry, which is how she meets the guys who will be our future business partners, brothers Dwight and Andy Lee.

At that time, K-beauty, Korean beauty was really trending, and I was doing a little bit of consultancy. And then I ended up taking a marketing job at a K-beauty startup called Pichonle. And just to kind of give me the basic description of what is K-beauty, what makes something Korean beauty?

I mean, I think there's probably maybe a little bit of debate about the definition, but really it's Korean brands, Korean beauty brands that have a Korean approach to beauty and skincare. So that's usually like innovative textures, very interesting ingredients. Like, you know, one of the really popular products is a snail mucin moisturizer. Snail like from a snail. Wow. So interesting. Like from snail shells or

No, they like the snails will just crawl and they like a little trail of that gun like that's really good for your skin Wow, I did not know that I'm going to start collecting snail slime

So the American audience just suddenly became really interested in products that were, beauty products that were Korean, from Korean brands. And it spurred a whole industry in the US, where there were these e-commerce sites. So Pichanale is one, where they would bring these Korean brands into the US and create a marketplace for the American consumer to access them.

All right, so you're working for the startup. But meantime, I think you still have this idea in your head, right? Like this idea of these patches, because no one had really brought them to the US at this point. And now you're like a year or two years later since when you first started this.

Yeah, I mean, it was still nagging at me. It was still in the back of my head. And now I work at this K-beauty startup. And I am kind of watching the industry. And I see that some of these Korean brands that have these acne patches are doing quite well. And I'm seeing this kind of emerging category take off. And I just kept thinking to myself, like, oh my gosh, someone needs to do this.

In the meantime, I guess, you're working for this startup for some time, but you also end up starting your own beauty consulting company, doing some consulting work. This is where I want to bring in Dwight, who's been patiently waiting here in this interview, because around this time is when you meet a guy named Dwight Lee. What were you doing at the time, and how did you meet you?

So Andy, my brother, who is the third co-founder of Hero and I, we were running a digital agency called Division of. It was mostly a production studio. We were designing and building experiences for screens. So think like websites, apps, interactive kiosks, out-of-home displays, things like that. And so...

We had met Jew through Peach and Lily. They were one of our clients. We met and we started working on the projects for Peach and Lily. Jew, I guess at a certain point, you tell Dwight about this idea that you had or this pimple patching. What do you remember when you first heard? What do you remember Jew telling you about it when you first heard about it?

We'd meet up for dinner and sort of talk shop and spitball a lot of ideas.

I think there was a lot of interest on both sides to try to get something going. And I do remember talking about sort of different cosmetic products and hey, maybe we should try this. Should we try moisturizer or like a cleansing balm or something like that? And she mentioned the patches and it seemed really interesting to me. I remember, you know, sort of later on, Jew gave me the product and I tried it myself and I was sort of blown away. So that really helped the cause too.

So did you, I mean, at what point did you feel like maybe Dwight was the person that you might want to work with? Did you think that?

So this is where I feel like we were so lucky in many ways because it was not that I had this idea and it was looking for a co-founder. It really was a very organic discussion where like, oh gosh, like someone should do this. I think it's such a good idea. And I just remember Dwight saying like, hey, if you want to do it, I'll do it with you. And it turns out, so there's three of us, right? There's Andy, myself, and Dwight.

It actually turned out that we have very complimentary experiences and skills. I sort of had more of this corporate marketing experience, and then Dwight is a technical engineer, and then Andy is a creative person.

And now in retrospect, I'm like, oh, that's a really good kind of cross-section of skill sets because we covered big parts of the business just with the three of us. Luckily, I mean, it just happened very organically.

So, Dwight, what was it about this product that seemed interesting to you? I mean, were you selling stuff like were you? I know you'd worked with brands that launched products, but why did you think that this was particularly interesting?

So in the earlier years of the agency, we were always trying to launch our own products internally. And I mean, we have like a list of products. I have a list of products that just never took off. Like, what were you looking at launching? Oh, man. I mean, we were trying to do wedding management software at one point, LinkedIn for lawyers.

We launched a web hosting platform to some to some success. We started a wine subscription app at one point. I mean, you name it. We were just we were just always building things in the agency, but we wanted a product to sell particularly on Amazon and

And the acne patches seem like a really good product because of the size, the entry is sort of low barriers to entry in terms of cost. But there was no market in it for the US. And it just seemed like a really innovative product.

But I think more so than the product, I was really interested also in working with Ju. And I think when you're starting a business, finding a good partner is sort of like 90% of the battle. Yeah. And so I think when Ju suggested the idea, I was game. I mean, I think if she had suggested vacuum cleaners or something like that, I might be like, well, maybe. Yeah, OK, maybe. But I think that patches.

were a really good product, but also working with you as one of the draws as well. All right, so you, Dwight, your brother, Andy, and you two decide to join forces and to try and see if you could sell these products, which you were really excited about. First of all, let's talk about the name that you came up with. Tell me about how you came up with it.

We started with a product name, which is the Mighty Patch. So that's the Hydroquil egg acting patch that we were talking about. And I just, I remember for me, it was really important that the name be emotional because my insight was that acne, like it sucks to get acne.

No matter your age, you wake up, you have the pimple, you're like, oh, you know. And I mean, I personally know because it happens to me. And so I knew the power of this product. It was an amazing product with real results. And I wanted a name that was like,

positive and punchy and emotive. And it's actually Andy, they came up with a name. I remember we were like just brainstorming all sorts of different names. And I think when he was like, Oh, mighty, mighty patch.

And we're like, that's the one. And then with Hero, again, like one is something positive, emotional, and the product, you know, I mean, it's a little bit literal, but it literally can save the day. Because when you, again, have when you wake up with that breakout, you know, before an important moment, you

You panic and Yeah, and then it's always like a little bit of like is a trademark freeze URL for you know all that stuff and But really behind it was more of a emotional motivation and in terms of like

Just startup capital also. I mean, you guys were going to bootstrap this initially. How much money did it take initially to do the kinds of things you need to do, which is order the inventory, get the branding and the packaging put together.

basically import all this stuff and use third party logistics or however you're doing it. Like, did you need like 100,000, 200,000, 300,000 bucks to get this off the ground? We started with $50,000. Between three of you. Yes. And did you go back to that same company that you went to in 2014 to order the patches? Yes.

All right. And by the way, tell me about launching on Amazon because there are millions, millions of products on Amazon, right? Like type anything in and you'll just find tons of just obscure brands that you never heard of that make the same thing. So there's a strategy to getting noticed on Amazon too, right? Like, did you set up a store? Did you use other sellers who are influential? Like, how does it work?

Well, I think the first thing we did was, I mean, we looked at Amazon as the sort of store shelf. So we just thought about it that way. And we took a step back and said, how can our product stand out on this digital shelf? And so we designed the package very intentionally.

to stand out. I mean, the early thesis was that we wanted to feel like an OTC product, so feel very medical, but also sort of playful, right? So that's why the early package was it was white with a pop of color. So it felt playful, but still medical. He wanted to be like an over-the-counter medicine, but something that was fun too. Correct. And we also wanted it to be unisex. We didn't want it to be solely targeted for females, acne effects, everybody.

male and female and so we wanted to be conscious of that. Okay, so you have packaging. I think you launched it on Amazon in September of 2017. How did you get anybody to be aware of it? What did you do?

We ran ads. I mean, that's always kind of the Amazon playbook, but gifted influencers, press back then was a big one. I remember back then into the gloss, which is a beauty blog was really popular and we got a write up in into the gloss.

And we only had one channel. We were only selling on Amazon. So I remember that article went out and then our sales on Amazon spiked. And so that was a moment where I thought, like, we've got to double down a press. Did you hire a PR firm? I mean, you had 50 grand. So presumably, at least a third, maybe half of that went to that first order, maybe more.

So there's a website where it's almost like D-I-Y-P-R. So you pay for the service, and then you log on, because there are a lot of editors who are doing articles, and they'll submit their request. They'll say, I'm doing an article on this, so I'm sourcing brands in acne, or in baby care, and they share their email. So I took that, I took their emails, and I would pitch them.

How many, roughly how many emails do you think you wrote? Oh gosh, I mean, it was just constant. But every month, the good, I don't know, 20 emails or something.

And I think leaning into PR was that earned media was really helpful for us. It saved us from having to dump a bunch of money into Instagram or Facebook or even Amazon ads. I mean, you get a press release or an article and it was a big one, like New York Times really in the day. And that can really transform your business overnight.

You've got the middle of 2017, or I think September of 2017, you're on Amazon. How much did that into the gloss or those hits on those websites affect sales? Did you start to see traction right away?

Yeah, we did. I mean, I think within 90 days, we had run out of our initial inventory. And I remember before launch, we were talking about how long do you think it's going to take us to sell through 10,000 units? Would it take us a year? Is it going to take us six months and ended up taking us 90 days?

The traction was there from early on pretty quickly. I think we also benefited from the fact that the category wasn't as saturated as it is today. Today, if you go to Amazon and you search pimple patches, you have pages and pages of search results. But when we launched in 2017, it wasn't like that. We were one of a handful. I think that also helped us stand out a bit.

Yeah, I mean, it totally makes sense. Because you sold out your initial inventory so fast and you had experience in the Korean beauty industry, were you thinking that the next big push would be into the K-beauty market?

So I actually did not want it to be K-beauty. You didn't. Okay. Yeah. Just because I thought it should be an American brand for this American audience. And that was actually part of the value prop because sometimes when you buy, I mean, even today, it still happens.

I think there's a little bit of a trust issue because the supply chain of sometimes the products that come from one country that end up in another, it's not always clear. And I mean, sometimes there are a lot of dupes or a lot of fakes and things like that. So us being like this American based brand for the American audience and then adjusting our marketing.

You also have to think seven years ago. I mean, it's super popular now, but seven years ago, it wasn't as popular. It was just sort of coming into its own in terms of K-beauty and things like that. And so yeah, it was really important that we removed all sort of barriers for.

someone that's maybe not on the coast that's not familiar with K-beauty to try that product. And so, you know, if you go and see a product that has a different language on it, you're almost immediately turned off. And so we just wanted to steer clear of that as much as possible. Right. And so you really didn't want people to... I mean, some people would have been like, oh, I know these because I went to Korea. But really, you just wanted people to think, oh, that's interesting. What an interesting idea. Yep, absolutely.

Okay, so you sell 10,000 units by the end of 2017 entirely through Amazon. And that really proves out this that there's something there. And I guess at this point, you really want to figure out how to get this onto shelves in retail, how to get this into shops. So what do you do? How do you start that process?

Yeah, I also called emailed retailers. So I just shot off a bunch of emails to different buyers at different retailers. Some of them, I had had their contacts on them. I literally just, I went on to LinkedIn, found the name of the buyer, guessed their email, pitched the product and why thought they needed it. And the first retailer to say yes was anthropology.

Wow. And it's interesting because anthropology, it's a fashion retailer. I don't think they sell men's clothing, right? Since mainly women's clothing. Yeah, I think it's mostly women's in home. Yeah. And it's a national chain, but not that many stores, I think, but 200. So it's a great brand, right? But at the same time, it's not a shop that

everyone's going into every day all the time, but also influential. And were they the only ones initially that bit or were there others who were like, yeah, we want, we want to do this too.

They were the only ones at the time. So, I mean, we launched September, probably immediately I started pitching retailers and then, yeah, I can't remember exactly one, maybe like October or November. Anthropology said, okay, like we'll test you in 80 stores. And that started in January of 2018. So just a few months after launch. And anthropology is interesting because their demographic is

I mean, let's just be honest. I'm 50, so it's very rare when I get an acne. Just because your body changes and you just don't develop those things that cause that as much, right? But, you know, between the ages of, I don't know, 12 and, let's say, 35, you are more likely to develop skin blemishes of that type, right? And that's who's going to anthropology, particularly women. Yeah, exactly.

So it's a great place to be, even though it's not huge. It's a pretty good place to be.

Yeah. And I think retailers like that, they tend to be more trend forward to and they can take more risks versus like a massive chain that has, I don't know, 10,000 stores. And then I think for us too, like it was good for us to sort of dip our toe into retail because we weren't launching again, like with a massive retailer. It was 80 stores, you know, and then we expanded to 200. So it was very sort of thoughtfully approached.

Yeah, we got that call. I think it was a week or two weeks after the buyer called and said, we were selling so well that we're going to go full chain immediately. Wow. But I think the size of anthropology was just perfect for us to dip into retail, like you said. What we did in those early days with both anthropology and Amazon was do a lot of updates to the product.

So, you know, how you sell a product in retail is much different than how you sell it online. And so this, the box has to stand upright. The text has to be legible from say 10 feet away as opposed to, you know, three feet from your monitor. And so we did a lot of testing. You know, we updated the packaging. We created display packs. There was a lot of learning that we took. And we updated the packing quite a bit, which set us up for bigger retailers later.

So when you, you know, when you had that success with anthropology, presumably you could use that in your pitches to other retailers. I mean, this is like 2018 now. And you, from what I gather, like you, you were still up until this point, consulting, doing consulting work for other brands to just to bring in some income for yourself, right? Consulting full time job. So this, yeah, this was basically my side hustle.

But with the success, I guess, in anthropology, that maybe prompted you to kind of shut down your consulting business and leave that behind.

Well, I did that when I was able to pay myself a salary from hero, which I want to say, you know, we launched the September 2017. I want to say it was around March or April of 2018. I mean, it wasn't a big salary. It was a small salary, but still that was when I decided, okay, I'm all in on this.

All right, so once the anthropology thing worked out, where did you go next? Because you want to presumably go into other retailers. Who did you approach?

2018 was a year of special to retail. So after anthropology, it was free people, Neiman Marcus, Goop, Urban Outfitters, like those types of kind of lifestyle fashion retailers that had a beauty assortment. One of the things that's interesting to me about cosmetics brands, especially if they work, is

The margins can be really high compared to other products, right? Because to make them isn't that doesn't often cost that much, but you can sell them at a premium. People are willing to pay for good products at work. And so were you, I mean, I guess your sales were financing the business, right? There was cash flow.

Yeah, so Amazon for us was a very profitable channel. And the money we made from Amazon, we put towards launching our DDC site, launching slowly in retail. And I mean, we were, we bootstrapped for the first three years. And I think largely the economics of our product and the way we built the business, it, yeah, it lends itself to a lot of efficiency.

And how, I mean, marketing is a big part of a success of a brand, but it can take hundreds of thousands of millions of dollars. I mean, were you guys spending a lot on marketing at this point? Who knows? I mean, a lot of sampling, again, gifting, gifting to influencers. Anything free we would try.

I think sampling for us was really helpful. We got on all these sort of box programs. We had college ambassadors really early on. The key with this product is that once you get it in someone's hand and they try a patch and it works, I mean, that person is a customer for life. And so for us, we sort of realized that early on. And so we got samples made, little six packs, and we were just giving samples out to everybody and anybody we could.

So that was a big part of the strategy.

What are, tell me more about these college ambassadors. Yeah, I mean, we were trying to find people on college campuses that would be sort of an ambassador for a hero. And we'd send them a box with some collateral, a little postcards and things like that, as well as a box of samples. And it wasn't too complex of a program. It was kind of an honesty policy where we'd just give them a box of samples and trust that they would give it out to all their friends and people on campus and things like that. But we were really targeting, I mean, college,

That age group is a big demographic for us, and so we're targeting heavily. Yeah. And, you know, Jim, I'm curious, because when you were in Korea, right, in 2012, you noticed people wearing these patches on their faces, which was unusual to you because you hadn't seen it before. And so what's interesting to me is like, how was this adopted so quickly by young people in the United States? I mean, all of a sudden, people felt comfortable

just having like a patch on their face, like overnight.

Yeah, I mean, overnight, yeah, probably it took a few years to get there, but I mean, we did a lot of the education. I consider us a category creator in the US and, you know, sampling and talking about the benefits. And then also a big thing that we did with Hero was really kind of what we call like normalize acne because I think there's a lot of shame associated with having that breakout or having acne.

just being a brand that says, you break out, you have acne, it's okay, like we understand, we have it too. And I think that's communication that resonates with people. And so we're seeing, I think a whole generation that is okay now with that occasional breakout. And sometimes, you know, they kind of flump the fact that they have that breakout and they wear the patch on their face and they just, they don't care. And I think it's great.

When we come back in just a moment, Jew and Dwight deal with the challenges of a growing business, whether to expand into new products, take on investors, and ultimately sell their brand. 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 Raz. So it's 2018, and Hero Cosmetics is making more and more retail deals, and their online sales are growing. Jude, Dwight, and Andy want to capitalize on this, and they think that new product lines might be the answer.

We had one of those sort of pivotal moments that really, I think, in my opinion, changed the trajectory of the business. But we had this product, the Mighty Patch. It was doing really well. And so logically, you think, well, you're going to launch a new product off of something else in your

product portfolio, and we were talking about doing a wash-off mask. It was going to be like a clay mask that you mix with water, you apply it to your face, and you rinse off. And then I had a coffee chat with this investor in the space. Showed her Mighty Patch, I said, I want to do this new product. I think it's going to be a wash-off face mask.

She said, no, you should not do that. You should stick to patches. You should dominate this category. Do them in every shape, every size for every need. Just go all in. And I just remember thinking she's right. And so we shelved the face mask product. And then we came out with Mighty Patch Invisible Plus, Surface, Variety Pack. It was just go all in on focusing on kind of dominating this category of blemish patches.

Yeah, one for daytime, one for nighttime, a bigger one for larger surface areas. Any type of acne problem that we could solve with our patches, that's what we try to do for a good like two years. Okay, so you are focused on doing this mean time around this time when the business is really starting to

So take off to, um, you do something quite unusual, which is you moved to Paris with your husband. Um, because in the meantime you were married, you got married. I guess he's French and he wanted to go to France. Um, that's, I mean, how are you going to do? Uh, like, um, if I, I, my question to you at the time, I'd be like, well, how are you going to run the business from France? Like how are we going to do this?

A lot of travel. A lot of frequent flyer miles. Were you worried about that when she was like, oh, I'm moving to Paris. I wasn't worried because shortly after I moved to Seattle. Okay. Wow. And you know what? Let's have a nine hour time difference between us. Let's make it even more fun. Yeah, poor Andy, we left him with the office and all the employees. Good luck. So how did that work? Were you working at like two in the morning and I don't know, and

Jew, you were working until like 11, 12 at night? I was structured my days where my meetings started at 2 p.m. my time. Yeah, because it's a six-hour difference with New York. And New York was really the hub because that's where the team was, the office was. So my meetings didn't really start until two, but in the mornings, I would do all my catch-up work or my thinking work.

And then I stopped taking meetings at 8 p.m., which is 2 p.m. Eastern. So, I mean, there wasn't a lot of overlap with anyone Pacific time, but I mean, at the time, like really Dwight was the only one who was on the West Coast. Well, how often did you guys meet given that nine-hour time difference? Once a week. And then whenever we would overlap in New York, we would get together, but we were on Slack and Zoom, I mean, just all day long.

The good part of it was that it meant like when COVID happened, we were set up because we were already a remote office. And we already had people, you know, dispersed and on all the communication system. So I mean, of course, there are other difficulties, but I think we were pretty used to use to remote working situation. Yeah. Meantime, 2019, you guys get into target. And I think it did like,

700 targets, right? Now here's the thing about Target again, like you have a product and now there's awareness around this product and if Target just puts you on the shelves, people still have to discover it. Was that an issue for you or did you already have enough awareness where you could just send people to Target now to get it?

I mean, the dilemma that I think the buyer had was they were intrigued, but we didn't have a lot of skews at the time. And then also she didn't know where to put us. And so what we decided together was they had this new beauty mini section, which kind of acts like a discovery cash wrap type of thing.

And they were like, we had this new thing. It's doing really well. Can you do a mini SKU version of your Mighty Patch for it? And it'll be in around 700 to 800 doors. So that's what we did. We created a special SKU. I think we priced it at like $7 and it was kind of a sampler.

And I mean, yeah, the worry was, well, it's one thing to get in and then it's another thing to get people to buy it. So I remember we had queued up some, I mean, this was 2019. So we didn't, I mean, TikTok wasn't even a thing, but we had hired someone who had the foresight to tell us we should be on TikTok. So I remember we made a big TikTok push, Instagram push, just letting everyone know. I mean, every channel we had control over, we pushed them to target because we knew it had to be a success.

Yeah. I guess heading into 2020, this is still pre-COVID. You've made $6.5 million in revenue, which is pretty amazing. You've been entirely self-funded up until this point. Was that when you thought that you might need investor money to scale up?

Yeah, you have to remember, I mean, we were profitable early on. Yeah. The problem with the business was we're always chasing growth in terms of, we were growing so rapidly and the POs were getting bigger and bigger, that even though our top line was really high, I mean, at the end of the day, we had still little money in the bank because we're always just cutting bigger POs to have more inventory on hand to fulfill these orders for targets. So the money would come in and go out right away. Oh yeah, 100%.

All right, so you start having conversations and did you get any term sheets? We did. But the term sheets were due the week of lockdown. I remember the Dow dropped by a thousand points. And then there were a bunch of firms that were interested who suddenly dropped out because they had to do triage on their current portfolio companies. But we did get some term sheets.

Did you decide to take some of those offers? No, we didn't take any. We didn't take any. The term sheets we got were so bad. Possibly because...

They just didn't have faith in the company or because they smelled blood in the water with everything that was going on in the market. It's tough to say who knows, right? But they were just so bad and they seemed so onerous to us. To the point where, I mean, our attorneys at the time, we were on a call and the lead attorney, he said, Hey guys, I'm going to take off my attorney hat right now and I'm just going to put on my business hat and I have to say, frankly, this is a terrible, these are terrible term sheets. Like I would not recommend taking them.

What were they, I mean, what were some of the, the term, I mean, presumably they were looking for huge percentage ownership and things like that. Yeah. And there were just a lot of, a lot of little tricks, a lot of trap doors and, you know, owners, prep structures so that essentially we could sell the business later on and still walk away with barely anything. I mean, they were just very investor friendly, very founder, uh, unfriendly. So you turn them down. We did turn them down. Yes.

Um, okay. So now it's COVID time. And, and there was a, I mean, around this time there was a real risk that, you know, everything could go south, right? Of course it wouldn't happen for certainly for a lot of direct to consumer brands, but, you know, all of a sudden people are focusing on like buying energy bars and, uh, hand sanitizer and toilet paper, whatever there, hand sanitizer. Yeah. Uh, so did you see a brief dip in your business?

No, we didn't. I mean, luckily we were in the channels that were still deemed like essential retailers. So Amazon was still online. Target was deemed essential retailers. So we really didn't see much impact. What about the supply chain challenge? I mean, with just ships not being able to come in and you were bringing this stuff from Korea.

Yeah, it was a real nightmare. I mean, every day we were trying to just triage an issue, whether there was delays with ships on the water or the ports were shut down because of COVID outbreaks or our suppliers couldn't get the ingredients for something. I mean, it was just every day for probably three years was very stressful, for sure. So how did you keep your inventory stocked?

For us, the strategy was to just lean into the inventory, which is risky. So we went essentially from one month of inventory on hand with lots of orders to, at one point, we're up to six months of inventory on hand. Oh, you just bought as much as you could get.

Oh, yeah. Oh, yeah, which is a huge risk, right? I mean, if sales dropped at any point, we would have been stuck with just millions of units in a warehouse that we would have to gotten rid of. But luckily, sales kept up and we were able to sort of keep things moving. But for me, the main thing, the main strategy was just never going out of stock. Yeah.

Okay, so now you get through the first year of COVID 2020. You're in 2021, which is now the second year of COVID. And I guess you decide to try and re-engage with some of these investors that had originally gave you terms to see if maybe you could negotiate something a little bit better. Is that right?

Actually, there was one investor that we wanted to work with. So in the first process in early 2020, this guy, Trevor, he was just really smart, really engaged. Every meeting that he would come to, every discussion that we'd have with him, he'd leave us thinking about something. And so even in those early days, we felt like he helped contribute and shape the business.

The funny thing is he turned us down the first, the first time around, not because of COVID or anything. He just said, you guys aren't ready yet. You know, I see a lot of potential in this business, but you aren't ready yet. So maybe we can talk in a couple of years or something like that, which totally baffled me. Cause I was like, look at these numbers. I mean, this, this brand is exploding, but I mean, talk about discipline. This guy, he basically turned us down. We still wanted him. So we kept talking and we kept sort of the relationship warm.

And then when it came time later on, I think it was October of 2020, actually, we went back to him and said, hey, here's some updated information about our target sales. Here's how the business is doing. Do you want to do a deal? And he responded, he came back with a really good, clean, fair deal.

All right, so I guess one of the things that you, I mean, because at this point you must be, I think you start to think, hey, we're getting close to acquisition time, right? I mean, is that fair to say? And if so, what was the threshold you had to reach in order to become attractive to a buyer? 100 million dollars. 100 million sales, okay. Yeah. Tell me about

about the process of finding an acquire. Because, I mean, God, it's amazing. Just two and a half years in, barely three years in, you start to have serious conversations about an acquisition. Yeah. I mean, the first is sort of, are we at that scale where we would be attractive to people? And I remember 2021, it was clear we were going to hit that $100 million threshold.

So there was a board meeting and then it was a topic and the question was like, should we start a process? Should we think about this? And then everyone was like, yes, it is time. So we kicked that off in 2022.

You eventually did start to engage in a deeper discussion with Church and Dwight. And I think they own, man, a bunch of brands, Arm and Hammer and Water Pick and even on Trojan Condoms. I mean, they own a bunch of different brands. And so you engage in a conversation with them and they're, I mean, this is gonna take a bit of time. Tell me a little bit about that process because

You know, when you sign an engagement letter, it's not guaranteed that it's going to go through either. Yeah, you're right. I mean, signing it is just one step and then there's a whole due diligence process. Yeah.

But, you know, for us, when we were selling the company, partnership was really critical. Like, culture fit was a must. So we wanted someone who, you know, we could trust with the culture and the team and someone who also had the platform to continue to grow and scale this business. And, yeah, we got to know the management team at Tertion White and they ended up being the one.

The acquisition also meant for us that the brand would have a sort of forever home, a place that it could live and grow beyond us and after us. We were really focused on having a place where this brand could live on for 50 years, where I could bring my kids to Target later on and say, hey, this brand, it's still here, it's still flourishing. And so that more so than anything, first and foremost, it was really important that the brand had a home. And so Church and Dwight was good. We felt like the best place for it.

The acquisition was announced in August of 2022, $630 million. It was amazing for a brand that really launched in September of 2017 on Amazon. A little under five years after your official launch for just a really incredible exit.

Um, at that point, I mean, what did that mean for, for you guys? Did that, that also mean that you were committing yourselves to working for church and Dwight for, you know, for a period of time? Yeah, for three years. So tell me a little bit about what that means. I mean, now you have this brand that you started and you controlled really. And now you work for it. So you're not the decision makers anymore. What is, what is that like?

I mean, I think a founder's role is sort of ever-evolving. The three of us, the work that we were doing in 2017 is different than what it was what we were doing in 2019. And it's different today. It changes all the time. I mean, I don't really oversee supply chain and look at the list of ships coming in and stuff like that anymore. It wouldn't make sense for me to do it when Churchill Dwight has, you know, vast infrastructure to do that.

So the role is evolving, but for us, number one is to make sure that the brand is safe, the brand is going to continue to grow, and the culture does evolve in a way that we wanted to, and it'll be successful at Church in Dwight. When you guys think about where you got the journey, how much of this do you attribute to the work you put in, and how much do you think has to do with just luck? Dwight, first to you.

I think hard work is the baseline for any sort of success. I mean, you just have to work your tail off and make the sacrifices, but also I think we're all just floating or being carried really in a river of randomness that sometimes we call luck. I've been blessed with an immense amount of luck in my life. And for that, I'm so appreciative and grateful.

I agree. I mean, I think the hard work is, you know, that's what it takes. Really, if you're going to commit to an entrepreneurial journey, like, you got to work really hard. But I mean, I think we were so lucky in many, many instances.

Like, you know, I think the timing of when we launched, the timing of when we sold, you know, me meeting Dwight and Andy and us turning out to be a really great team, actually, like, there are a lot of, I think, happy accidents that I attribute to, to luck.

That's Juru and Dwight Lee, co-founders of Hero Cosmetics. By the way, did you mention it earlier in the interview? But a big way that Mighty Patch really took off was through social media platforms like TikTok. I have watched preparing for this interview so many TikTok videos of young people showing me their skin up close and there's it. I can tell you I should be paid extra just for doing that.

But I really understand it now. 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. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at gyroz.com or on Substack.

This episode was produced by Chris Messini with music composed by Ramtina Rului and Sam Paulson. It was edited by Andrea Bruce with research assistants from Olivia Rockman. Our engineers were Gilly Moon and Robert Rodriguez. Our production staff also includes Alex Chung, Carla Estavez, J.C. Howard, Devin Schwartz, Katherine Seifer, Kerry Thompson, Neva Grant, John Isabella and Elaine Coates. I'm Guy Raas and you've been listening to How I Built This.

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