47 - Ju Rhyu, Hero Cosmetics
Conor Begley: I had a fantastic time with you today. We talked about what it's like to take a brand from zero to$ 100 million in sales in less than four years, what it's like to start on Amazon and then grow rapidly as an initial distribution strategy, as well as what it's like to be a Twitter influencer herself. If you enjoyed today's show today, guys, make sure to be a friend, tell a friend, and subscribe. Thanks.
Speaker 2: Influencers, inspiration and Instagram, Instagram, Instagram. This is Earned by Tribe Dynamics. Here's Conor Begley.
Conor Begley: Hi, everyone. Welcome to Earned. We have a awesome guest today. We have the somewhat famous Ju Rhyu, founder of Hero Cosmetics on the show. Welcome to the show, Ju.
Ju Rhyu: Hey, Conor. Thanks for having me.
Conor Begley: Before we get into saying all the amazing things that are about Ju, I've got a confession to make, which is, we actually recorded this exact same episode two weeks ago. The problem is, it's a good, bad story. The good part is, the podcast is growing. It's at the top 5% in the world according to Listen Notes, it's over 100% year over year growth. It's doing really well. We're like, " We're going to make some investments." I've got DSLR camera, lights, this, that, the other thing, and then we got about an hour into the episode and realized that I had forgotten to hit the record button. Really appreciative of Ju for coming back for round two. I tried to drink as many Mai Tais, I was in Hawaii for the last two weeks, tried to drink as many as I could to forget as much as I could about you, Ju, but thanks. Thanks for taking out the time again.
Ju Rhyu: No problem. We actually finished, well, we thought we finished recording it and then we stopped and then you realized that the recording button wasn't on, but totally fine. I think second time's a charm, right?
Conor Begley: Yeah. That's the nature of business. It doesn't always go to plan. Well, for those that don't know Ju, she's got a fascinating background. You joined a tech accelerator out of school, then graduated from Columbia Business School. Then, you worked at Kraft, Samsung in Korea during the recession, and then you are running the brand now. It's been about four years, north of$ 100 million in sales. You're also killing it on the influencer side. EMV is up 144% year over year for 2021. It is a fascinating career to say the least. I'm excited to learn about it for the second time.
Ju Rhyu: Yeah, I can't wait to share with you again for the second time.
Conor Begley: Okay. Let's start out of the gates with, what is it about running a hundred million dollar brand today that is different than when you started it? What was different than what you actually expected?
Ju Rhyu: Oh, gosh. The biggest thing is, right now, I spend a lot of time saying no. Before, in the early beginnings of the company, I said yes to everything, every opportunity, if a retailer wanted us. In the beginning, it was all about, " Yes, let me figure out how to make it happen." Now, I have a much more comprehensive filter so I say no probably like 90%, 99% of the time and only really try to make room for the things that will really move the needle or make sense strategically. I think that's the biggest difference when you start getting to scale, is you start saying no more.
Conor Begley: Yeah. I've had the exact same experience on the Tribe side. It's at the beginning, you're really trying almost anything, which I don't know if that's necessarily the right way to do it, but certainly the way that I think most people start out. What are some of the things that you're saying no to right now? What's something that you're like, " Man, I was really close. We're really considering it but then, decided it wasn't the right fit."
Ju Rhyu: It's crazy but I say no to retailers, like big ones. We are an omnichannel brand, so we're online but also offline. We're at Target. We just expanded at Ulta, but I have a lot more really tempting retailers that come to us all the time, almost like begging us to let them sell our products. It takes a lot of discipline to say no, but we say, " No, it's not the right time because we need to focus on X, Y, and Z." Because actually, when you unlock those kinds of opportunities, you really need to resource up and at the right time, we will, so that's one. I say no a lot to things that take up my time now. I'll get a lot of messages from people saying, " Oh, I want 15 minutes of your time because I want to talk to you about this." Or, " I'm the student and I really want to survey you for this." Before, I used to say yes a lot more. It's really fun to do those things. I actually enjoy them. But now I'm in this period where I have to really protect my time so, yeah, those are some of the things I say no to.
Conor Begley: How do you decide which, what your retail footprint should look like? What is your decision- making process in terms of saying no to, okay, I'm in Target, but Walmart's come to me and I'm not going to go into Walmart or whatever happens to me.
Ju Rhyu: That's a really good question. Ultimately, the goal is to be everywhere because the key mission for the company is that anyone who needs our products, we make acne products, so anyone who needs them should be able to, A, afford them, but also B, buy them wherever they buy acne products. Eventually, we'll be everywhere but in the beginning you have to pick and choose because you just don't have the resources, again, to do everything at the same time. We took a strategy where we're online, we started out on Amazon. I tell people a lot of our success on Amazon was just focus, because it was one SKU, one channel. Then, we really focused on growing with a major partner en mass, and that partner, really the two big retailers are Walmart and Target. Of those, we really focused on Target. You just focus on the different channels, so there's mass, there's drug, there's specialty, and the best way really is to pick one partner, go deep with that partner. In specialty, our partner is... Sorry, it's Ulta. This year, we expanded with Ulta. Next year, we'll have a drug partner. Then, you just keep expanding out in terms of channel strategy and it's better to focus on one. Then, after you've dominated that one, then you spread your wings.
Conor Begley: You mentioned you focused on Target initially. What was it about Walmart that made you not decide to focus there? How did that work?
Ju Rhyu: Target, I think is such an amazing retailer. They really have done a lot to just improve the store experience. They're really great at curating indie brands. I loved some of the brands that really grew up at Target. If you think about the Harry's or the Natives, or Winky Lux have an amazing end cap there. I think they're really good about picking and choosing which indie brands would resonate with their guests and really getting behind them. Just from a brand fit, I thought it was really the perfect partner for us. Yeah, when the opportunity came and we jumped, we jumped at the opportunity to go to Target.
Conor Begley: Yeah. It really feels like just the branding, just the whole product, et cetera, feels like a Target brand to me. I don't know how else to describe it. In some ways, it's good on Target for having such a defined... They're so defined from a personality perspective and that's part of the reason they've done so well as a retailer, despite the fact that they're facing Amazon and Walmart and all these other retailers at the same time. I know it's one of my wife's favorite places.
Ju Rhyu: Yeah. It'll be interesting because Walmart is getting heavy into basically taking a page out of the Target playbook and doing a lot of things with up- and- coming brands. CVS, I believe, just poached the former beauty exec at Walmart. Some of these players, I'll be really interested to see what they do because I think they're seeing the success at Target and trying to do something similar on their own.
Conor Begley: Yeah. The better reputation you get as a brand builder versus somebody who's just distribution, I think, ends up getting you the types of brands that drive foot traffic, which for them, especially like a physical presence. If you're just about convenience, it's tough. It's going to get tougher and tougher to compete with Amazon over time and so you have to have some kind of element of curation, uniqueness, et cetera, to win. Actually, we're on the retailer game here so let's talk about that a little bit. The thing I think is most fascinating about your brand or one of the most fascinating things is the origin story when it comes to distribution, which is, initially, you guys launched on Amazon. You did it because it was the cheapest and easiest, and you could do it without having to build a website and do all that kind of stuff. Talk to me about how you approached that space and what were some of the benefits of being so focused in terms of your initial distribution strategy?
Ju Rhyu: Yeah. I always tell people we're a digitally native brand, but we did DTC all backwards because, for people who don't know, we did DTC last because we started on Amazon. Then, we went into retail and then we launched a DTC site, so we did it totally backwards, but it worked out really well for us. We embraced Amazon before Amazon really became cool. This was back in 2017 before COVID changed everything, but it was, we were bootstrapping the business. We needed a way to get the product in front of a lot of people really fast, but also very cheaply. We didn't have a ton of money. Amazon was perfect because where else will you be able to access hundreds of millions of potential customers in one platform where you don't have to acquire them necessarily. I already knew that people were buying this type of product on Amazon, so I knew that people were searching for acne patches on Amazon. It just made sense. It was the perfect place for us to start because it didn't require a lot of capital, people were already looking for this product, this type of product. We had the potential to really access so many people really quickly. We started with one SKU on Amazon back in 2017 and then the success on Amazon really opened the door to retail and now a lot of other opportunities.
Conor Begley: I honestly think that one of the biggest shifts in consumer behavior that I've seen when it comes to product discovery, is this shift from Google search to Amazon search, so from going from... Historically, people always did Google search, right? There's SEO around Google search and that was incredibly valuable, continues to be very, very valuable. But now, I know that I personally, and a lot of people go to Amazon first to just search for, hey, acne patches. For you guys, I know that getting, I would imagine you're number one in those results at this point. One, I would love to hear how you got there, and then, two, I would love to hear about what percent of your customers, you could do it both, overall and just for Amazon specifically, are coming in purely via, they're just searching for an acne patch and you're the first one and they buy you. Do you have any idea of what contribution, what percent of contribution that is to new customers?
Ju Rhyu: It's quite high and a lot of it comes from paid. For people who don't know how the Amazon engine works, Amazon, it works almost like a Google search engine, right? You type in the product or product name or product category that you're looking for and it populates a list of results. Organically, you can be placed at the top of the list or you can pay for an ad to be placed at the front of the pack. Either way, the benefit is that you're... I think they've done research where it shows very, very few people scroll after page two or something like that. Really being at the top of the list is crucial. I know we have the highest in terms of paid share of voice, we're up there in terms of organic but, yeah, I think most of the people come to us because we are literally positioned number one, number two, number three. That's why I think the Amazon strategy is so important and it takes time to get there. Back to your other point about how did we start and build this machine, really the biggest thing, it takes time. You're not going to build a successful Amazon business overnight because it takes time for their algorithms to pick up on the keywords that you have in your listing. It takes time to build up the reviews. It takes time to really get your ad strategy in place, but it's really kind of... it's like a Amazon flywheel that you build because once you have a certain number of reviews, the right keywords, you end up ranking higher. The higher you rank, the more you sell. The more you sell, the more reviews you get. It's just like a cycle that benefits you, the more that you can get all that stuff right. Yeah, it definitely doesn't happen overnight. I know people try to shortcut it, but definitely do not do that because they will find out and they'll shut you down for sure. Anyways, it's a mix of optimizing your images, optimizing your product page, having the right ad strategy in place, and then also supporting externally with social or email or media. We get a lot of affiliate links that lead to Amazon. People love linking to Amazon.
Conor Begley: It's been fascinating watching this kind of journey for Amazon through this time period because you have a lot of people that are gaming the reviews, but then for them, that's super critical to discovery that those reviews are trustworthy. They're doing all kinds of badges and moderation and all those kind of stuff, but obviously, just like SEO, there's such a big prize at the end of the rainbow that if you can get it right, it's worth a lot and so-
Ju Rhyu: Yup, totally.
Conor Begley: Then, similarly on the paid strategy, it's interesting to see. There's a massive growing business for them, the paid ads. I think, logically, it makes sense for them to have it. It feels a little much for me right now. There's a lot of ads. It's like I have to go through quite a bit to get to the organic result.
Ju Rhyu: Yes, hundred percent.
Conor Begley: But again, the nice part is it's all cased in reviews. It's like, okay, if they've got a lot of good reviews, I don't really care. Yeah, it's fascinating. I don't know if you've ever disclosed this, but what percent, give me a ballpark, you don't have to get the exact numbers, comes through Amazon specifically? Obviously, that's changed over time.
Ju Rhyu: Yeah, a little bit less than half, a little bit less... Our two biggest channels are Amazon and Target. Target's, it edges out Amazon in terms of dollar sales, but Amazon is still, it makes up a good chunk of the business for sure.
Conor Begley: Then, does Amazon actually distribute your products or is it done through-
Ju Rhyu: No.
Conor Begley: No. You guys have your own?
Ju Rhyu: We're 3P.
Conor Begley: Yeah, okay.
Ju Rhyu: Yeah, we're 3P. We were never 1P. It's funny. I just saw a Twitter thread on the benefits of 1P versus 3P. We love 3P just because it's all about price protection, because the difference between 1P and 3P is, 1P you're basically selling to Amazon as if they're a retailer, like the way that we would sell to Target. Then, 3P would be, you manage the platform on your own. You're a seller on their platform. The biggest benefit of 3P really is, you own your price and you can protect it. That's what actually, I think, allows us to be omnichannel because there are a lot of retailers that hate Amazon because they know that Amazon's algorithms, if you're, especially if you're 1P, will always undercut them. But if you are 3P, they don't mind as much because they know that you're going to hold the price. The key really is all about controlling the price and it's much easier to do that when you're a 3P.
Conor Begley: Fascinating. Okay, wait, we're going to dive on. How does, because this is such a new world for me, how does that work with Prime? How can they have Prime delivery if you're the one actually distributing the product?
Ju Rhyu: Prime, we use their fulfillment centers. It's fulfilled by Amazon. It's much easier to get the Prime badge as a seller if you leverage their fulfillment capabilities, otherwise, if you don't do FBA and you fulfill on your own, you have to get a certain amount of ratings and feedback from buyers to establish your credibility before you're allowed to get the Prime badge. You have to earn the Prime badge. They don't just give it to everybody. If you're a new seller, you have to earn a reputation as a reputable seller, and then you can access a Prime badge.
Conor Begley: Yeah, yeah, yeah. That's fascinating, 50%, that's a ton of money. That's super cool.
Ju Rhyu: Yeah. It's still growing though.
Conor Begley: What?
Ju Rhyu: Still growing.
Conor Begley: Yeah.
Ju Rhyu: 50% of our business is still growing.
Conor Begley: It's funny that you talk about the price protection, and this is a tangent, but I remember I was buying an iPad for my dad for the holidays and I went to Apple and looked at the iPad. Then, it was like, " Oh, I probably can get it faster through Amazon." I went to Amazon, it was like$ 75 less on Amazon, sold by Apple through Amazon. It's like the Apple Store on Amazon. It was like that for a long time. It wasn't just some blip. It was six months through, I haven't checked in on it in a while but it was just like, how... this doesn't-
Ju Rhyu: That's weird.
Conor Begley: It was like the cheap iPad, so it's like a significant price difference.
Ju Rhyu: Yeah.
Conor Begley: Anyways, I'm like, there's some weird contractual relationships going on here. I don't know what's going on.
Ju Rhyu: Yeah, probably.
Conor Begley: This didn't just slip through. This wasn't just like-
Ju Rhyu: Yeah.
Conor Begley: Well, let's take a step back. Let's talk a little bit about your journey. You graduated, went to Columbia, then did Kraft, then did Samsung in Korea. Tell me about that journey a little bit. Then, ultimately, what led you to want to be an entrepreneur? Because I know your dad was an entrepreneur, obviously, it's in the blood, it's in the family. But talk to me about that journey. Then, also what made you decide to make the leap and get into it?
Ju Rhyu: Yeah, you're right. I always wanted to be an entrepreneur. My dad is one, so I grew up with that influence, I guess. He always worked from home. I liked that he had flexibility around his schedule. He could travel when he wanted to, et cetera, except, yeah, I didn't take that route. Honestly, I had tried throughout my youth or career, I had tried a few times, but just nothing really ever stuck. Because nothing ever really stuck, I just took the safer road, which was to get a more corporate job. Yeah, I got my MBA at Columbia. I was really fascinated by marketing. I wanted to be in marketing because I thought it was a great fit between being creative, also being analytical and so, I went to Kraft Foods and brand management. Great training. I lean on my CPG experience all the time, even to this day. It's all about putting the consumer at the core. It's about really listening and understanding insights and teasing out those insights to make hypotheses and business decisions. That was, yeah, a super critical experience for me. Then, went to American Express, because the thing about CPG, and it's still true today, but especially back then, is that you don't have a direct relationship with your end- user because you always sell through a retailer. The user or the consumer ends up being, for example, it's like Target's guest. But when I was working at Kraft Foods, it was never our customer and so we never had any data. The data always came through our retailer, so there was never that direct link. I went to American Express because at a place like American Express, they own the relationship with the card member. I just realized it unlocks all this really interesting data and information that you never had because... at Kraft, for example, because you're always selling through someone. Similarly, going to Korea to work for Samsung was a similar experience, where I was building an e- commerce platform. But that's where I used my first ever hydrocolloid acne patch and that's where, it really inspires everything that we do at Hero, because the product was just so amazing. I was like, " What? This thing, this acne patch is amazing. Why am I learning about it now? More people need to know about it." Really, I leveraged a lot of what I learned at Kraft and at American Express just to really launch our first product, which was Mighty Patch, drawing the insights, watching consumer behavior, understanding that there was a market and a demand, and using those insights to create the name and the product and the branding. Experiences definitely don't go to waste. I think you leverage them and you build on them.
Conor Begley: Yeah. It's funny because I feel like you guys, as a company, straddle this beauty and CPG category, like you're halfway in between both worlds. I've heard actually, and observed generally that people who are going from pure CPG to beauty have actually had a hard time, because it's a little bit different, a little bit more emotional.
Ju Rhyu: Yeah, it is different, right.
Conor Begley: Yeah. But you guys have obviously navigated that super successfully, which is really impressive. Talk to me, this is taking a couple of steps back, but what made you decide to get an MBA? Why the MBA? Is that something you'd recommend to somebody else who's on a similar path to you?
Ju Rhyu: I didn't have a traditional business background and I did want to get into classic marketing. For me, the MBA was kind of, it was a great way to be a career switcher and get myself into CPG and brand management. Would I recommend it? It's such a personal question. It's very expensive, first and foremost, but the two years that I spent, I did learn a lot and I focused on a school, because I didn't have a finance background, so I wanted to go to a school that could help me plug that hole. Columbia is really, was known back then as stronger in finance. I learned a lot. I still have really great friends from school. I think the alumni network is also really powerful, but there are a lot of people, especially when you're an entrepreneur, running your business is your MBA. There are other places, I think, where you can learn a lot and learn, get a similar education, although you won't get the same experience. Yeah, I would say it's a personal decision. It depends on what you want to do, what you're trying to get out of it, where you think you might go. But I had a great experience. I thought it was exactly what I needed to get to the next step.
Conor Begley: For sure. I think the switching careers, switching focus is a big one. I actually got my, I did a double in marketing and finance minor in econ, so I tried to hit a few different things, but I still didn't know shit about finance by the time that I got... It's wild. I think that as an entrepreneur, it's one of the skillsets that is undervalued, that people tend to not have, but need.
Ju Rhyu: The finance piece?
Conor Begley: What? Say it again?
Ju Rhyu: The finance piece?
Conor Begley: Yeah, the finance piece.
Ju Rhyu: Yeah.
Conor Begley: It's actually just super critical.
Ju Rhyu: Oh, yeah, a hundred percent agree.
Conor Begley: Most people don't have it and they don't invest in it, and then it bites them in the ass in a big way later on. It's really, really important. I think it's part of the reason that ... Anyways, it's just, I think, it's a piece that people tend to under invest in, for sure. We did, for sure.
Ju Rhyu: Yeah. I know. We did, too. We outsourced everything but, man, finance, I totally agree. It's so critical, like learning to read a P& L as a founder is going to be really important because they're inputs that help you make decisions. There are a lot of founders who tend to be more creative. I know a lot of people who are like, "Oh no, I don't like the numbers. I just want to do the creative stuff, the photo shoots and the packaging and design." That's fine, but you need someone to be strong in this area because it's just the foundation of how you're going to build your business.
Conor Begley: Well, yeah. It's important from a credibility perspective if you ever want to go out and raise money, and then also, just forecasting, right? You get it wrong, it's a big problem. A really big problem and it's hard to get it right. We really didn't get good at forecasting for five years, six years. It was bad. If I could go back and change something, it's an area that I would change, for sure.
Ju Rhyu: Yeah.
Conor Begley: Okay.
Ju Rhyu: Agree.
Conor Begley: Let's go back to Hero. One of the things that you talked about is that you invested in earned media, really aggressively early on. Talk to me about what that approach was, because this is going to matter a lot to our audience, what that approach was, what worked, what didn't, and then what you learned from it.
Ju Rhyu: Yeah. We were bootstrapped for the first three years. We didn't have a ton of money because we didn't raise any. We had this product, we had our channel, which was Amazon, and then, obviously, the next question is, well, how are we going to get people to know that we exist and how are we going to get people to our page? We did focus a lot or really, exclusively on earned media for the first, at least, year and that was press and influencers. The press piece, I didn't hire a PR person. I actually launched, I used this website called Launch Grow Joy and I still recommend it today. It's great. It's like a DIY PR where they connect you with different editors in different industries and they give you a contact info. You log in, they'll say, " Hi, I'm an editor at Allure and I'm doing a story on acne, so if you have any cool products, email me and send them to me." We used that. The first piece that we got was an article in Into The Gloss, which is a content publication of Glossier. I remember, back then, the business was so simple. It was really easy to do the attribution. The day that the Into The Gloss article went up, our sales on Amazon went up by, I don't know, like 300% or something like that. I saw the spike. Then, it tailed off after a few days, but that's where I saw the power of a really good earned media piece. Then, I started doubling down on PR. I just started pitching more people. I eventually hired a PR consultant to help pitch, and then we started getting more pieces in Business Insider or Buzzfeed or New York Mag, et cetera, so really focused heavily on PR. Then, in terms of influencers, again, we did heavy gifting, really focused on micro influencers because we could never afford the people with a million followers or whatnot. Just really focused on heavy gifting, and every now and then... Also, because of the collective, I think, momentum that we were getting on Instagram, we started to see a lot of positive sales attributed to that channel as well.
Conor Begley: How does that tactic change over time on the gifting side? Because I know that that was something, that was huge, right? When we first started Tribe, just massive, massive mailers and really a focus on pure organic content. It feels like there's been a shift towards more paid relationships over the last couple of years, possibly in partnership with those people that are organic. How have your tactics changed in terms of those elements?
Ju Rhyu: We still do quite a bit of gifting. We focus actually a lot more on TikTok, too, TikTok creators. We started working on that platform around 2019, so before it became officially cool. We do a lot with influencers on Instagram, but we focus primarily on stories. Before they had to swipe up... some of these influencers, they would do 10 frames explaining the brand and the product, and at the end there would be the swipe up, which now is a link tap. But it was great because it has, it's almost like direct selling, except you're doing it on Instagram. That, as a channel, has worked really well for us when we found the right influencer. We do a lot more with that specific feature.
Conor Begley: Yeah, the direct contribution of revenue is a super important element that I think has come to light over the last couple of years. How do you think about investing in things that are more, call it top of funnel, where you can't actually measure direct ROI or it's more difficult to? You can't see it as clearly as you used to with Into The Gloss. How do you think about those numbers? How do you invest in those in a way where it's kind of blind?
Ju Rhyu: Yeah. We've experimented. We did a big sampling activation with Coffee'n Clothes last summer where we were launching a SPF. We had this wrapped truck that gave out samples of ice cream and also samples of our SPF so that... We had one in LA, we had one in New York, and then, and this year we want to do more top of the funnel investments, too. We've been talking a lot about OTT. There's always a time and place for every brand to do that. You probably don't want to do it in the beginning, but we've been around for five years and our awareness compared to our size is still relatively low. We do want to start making investments there because I think our distribution footprint is getting bigger and we have the dollars to be able to support it. Ideally, you'd be making investments more top of the funnel and then, ideally, you'd see the results at the bottom of the funnel, too, because again, we all know people need to see the same message five to 10 different times before they actually purchase. I think the whole idea is, you start investing top of the funnel, and it makes your bottom of the funnel dollars more efficient. We'll see if we can get there.
Conor Begley: For those that don't know, what is OTT?
Ju Rhyu: It's the ads on, for example, Hulu or... Amazon has it via their Fire, the Fire Stick so I think it stands for over- the- top TV or something like that. But yeah, it's those ads that you see when you're watching your favorite streaming... streaming your favorite series or movie.
Conor Begley: Have you tested any of the more traditional channels, like a TV or a radio, just down the fairway?
Ju Rhyu: No, we haven't done TV. We don't have a distribution yet because we're still fairly limited and then, we've tried podcasts. We experimented with podcasts. We've done direct mail and have some success with direct mail, but we haven't done radio.
Conor Begley: We talked about this last time and I've been observing your behavior on Twitter, and I've thought about Twitter a lot. I've thought about really going all in on Twitter, but at the same time, I think that it can be risky. We had John Demsey at ELC, recently crosstalk 31 years in-
Ju Rhyu: That's right.
Conor Begley: ...and he is out, from tweeting something that was insensitive or however we want to classify it. What's been your thought about investing in Twitter and what has been the motivation? Why do you keep doing it? What are you getting out of it? Because I know there's value there, for sure.
Ju Rhyu: Yeah. Yeah. I love Twitter.
Conor Begley: Is there a personal account crosstalk?
Ju Rhyu: I learn so much from it.
Conor Begley: Yeah. Sorry, go ahead.
Ju Rhyu: Yes, that's right. Yeah, it is my personal account. I love the community on Twitter. I think I learned so much... Actually, yeah, I tweeted once that it's better than MBA, because I learned so much on this channel from a lot of really smart people. But you're right, it comes with risks because as... I'm the face of this company, I'm also the co- founder and CEO, and so I... It's something that I've been thinking about as we get bigger and bigger is that, yeah, things that you say and your behavior, it gets really scrutinized because you become, you're like this, too, you become a public figure. It's interesting, because I've noticed some founders, as their businesses have gotten bigger, I feel like they've become more quiet on social. I imagine it's probably not a coincidence. I think, as you get more well- known, some people just prefer more privacy. I don't know, maybe that will happen to me. I'm not sure. But as a channel, I think it's fascinating. I've met people. I've made friends from Twitter. Some of them have written small checks to the company. I've just made really great contacts. It is truly a community. I learned so much, but I do read... Everything I think about posting, I read it two or three times to make sure.
Conor Begley: I sit on it for the night. I'm like, yeah, I'm going to take this out in the morning.
Ju Rhyu: Yeah, exactly. I don't want to become a John Demsey.
Conor Begley: Yeah. In a lot of ways, right? Some of the things that are most provocative from an intellectual perspective can be controversial. It's this fine balance between saying things that are going to get you attention but that also have risks. At the same time, I think to your point, the community, I've watched it, more than participated in this really strong, direct consumer, brand founder community. Like Moiz, if you know him, from Native is really on there.
Ju Rhyu: Oh, yeah. Yeah, of course.
Conor Begley: There's a ton of people out there.
Ju Rhyu: Yup, he is.
Conor Begley: Yeah, I've been thinking about getting into it myself a bit more. I am a avid crosstalk.
Ju Rhyu: You should.
Conor Begley: I've thought about it. I'm already on a lot of channels but it's... Yeah, because I am an avid Twitter consumer every day, multiple times a day, but I haven't become a contributor yet.
Ju Rhyu: Yeah. Well, I think you have a lot to contribute and I think people would learn a lot from you.
Conor Begley: Well, I appreciate that. I actually want to talk about one of your tweets specifically. You mentioned Into The Gloss earlier, obviously, Into The Gloss led to Glossier, which is a brand that was a media darling and a venture capitalist darling for the direct consumer world for a while, raised a ton of money. If my recollection is correct, you talked about like, " Hey, love this brand. Love Emily. Love the team." But I think that raising all of that capital made things harder, not easier, obviously.
Ju Rhyu: Yes. Yup.
Conor Begley: What is it about raising all that capital that made things more difficult for them as a brand, from your perspective?
Ju Rhyu: You have to know what industry you're in and what kind of business you're building and you have to raise the right kind of money. I think at the heart of what Glossier's mistake was is that they are actually a beauty brand and a beauty business, but they raised tech dollars. The expectations from those two categories is wildly different because tech investors will expect you to grow really, really fast. They want to 10X their initial investment, but people in the beauty industry, they won't expect you to grow that fast. They'll expect maybe a 3X to 5X on their money, which actually is much more reasonable for the category. They'll also put an emphasis on being profitable, whereas, I don't think... I think in tech it's much more like, it doesn't matter if you lose money, just grow, grow, grow, grow. It's come to a reckoning because I think they're realizing, okay, well, we're not a tech company actually. Okay, we are actually a beauty business. I think they just got rid of a lot of their tech team, which is really sad. That realization, I think, came too late because they should have known all along that that's who they were and that's what they were building. Because, unfortunately, I think with those big dollars come big expectations. I've been reading some press that, I think last year's sales were down in the US, which is definitely not good. Yeah. You just got to know what category you're in, what industry you're in, raise the right dollars with the right investors because it'll make your... Otherwise, your life would be hell, I think.
Conor Begley: Yeah. I don't know of any significant win on the retailer brand side through VC, that I know of. I think there's jet. com, got sold for a ton of money. Obviously, Dollar Shave Club got sold for a billion dollars, et cetera, but almost all of those were seen as failures post sale, right?
Ju Rhyu: Yeah, totally.
Conor Begley: But from an investor perspective, if I were to look at a company like Hero, I'd be like, " Wow, margins are great. Profitable. A hundred million dollars in four years. Let's go to the moon." But it hasn't seemed to work out yet. It doesn't seem, there's just something that doesn't match up there.
Ju Rhyu: Yeah. I'm not a VC and I'm not really in that industry, but I've heard those dollars have now moved on because everyone has realized DTC is not what everyone thought it was. You're right. A bunch of companies just went public, too. None of them are doing so hot. I don't know, maybe everyone's...
Conor Begley: Although, tech sector's cooled down, too. If you look at the numbers for any tech stock-
Ju Rhyu: Yeah, it's true.
Conor Begley: ...that IPO'd in the last two years, it's like, they're all down 25%, 35%.
Ju Rhyu: It's bad.
Conor Begley: It's like nuts. It is absolutely crazy. It hasn't filtered down to us from an investment perspective, but I think it will go down the chain, running a company crosstalk to an IPO. Awesome. Okay. Then, the last topic I want to hit is this idea of focus. You've mentioned in a couple other interviews, and I know Alicia from Prelude, she's the former president at Johnson& Johnson. You talked about how she really pushed you towards focusing on acne patches at the beginning versus saying going into a bunch of different product categories. Talk to me a little bit about focus. What are you focused on now and what have been some of the benefits that you've noticed from having, both the really focused product strategy, but just generally being intensely, to your point, saying no to a lot of things, intensely focused as a CEO.
Ju Rhyu: Yeah, that was game- changing advice. The background for that story is, we had launched Mighty Patch. It was doing really well. Then, I wanted to do a different type of product, like a wash off mask and some other things, like creams and things. Yeah, Alicia of Prelude, I had a coffee meeting with her, showed her the product, told her, " Oh, I want to work on other products like these, like wash off masks, et cetera." She said, " No, do not do that. You should stick with patches, to do them in every size, every shape, for every need. Just go deep down this patch category and own this category." When I thought about it, I thought, she's right. We scrapped the plans for this wash off mask and other formats and we just stuck to patches. It's such a good analogy because I talked to a lot of entrepreneurs and founders who... it's really easy you to get distracted in the beginning because, okay, your product's doing well. You got this retailer who wants you and that retailer, and you have five to 10 other opportunities in front of you to expand your product line. But I think, yeah, so back to your question, the focus is so critical because you don't have all the time in the world. You don't have the resources, you don't have the people and it's so much better... Actually, our investor, my investor, Trevor, he had made a really good quote, which is that, " Do something on a small scale." For us, it was Amazon. " Do something small on a small scale, but something that's repeatable and scalable." For example, we did the patch, one patch on Amazon, then we did more patches on Amazon. Then, we took that same model to Target. We started with one patch and then we did many other patches. Then, we started adding other SKUs and we just started, it was like a rinse and repeat across other channels. I think having that focus is critical because otherwise, it's just so easy to get distracted and to do a thousand things and do none of them well. Definitely, I think having the ability to prioritize is a superpower as a founder.
Conor Begley: It's one of the hardest things as an entrepreneur because part of the reason you get into it is you want to do something new and better, and you have an ideas, and all these things and to say, " No, no, no, I've got all these ideas, but this is all we're going to do." We cut out-
Ju Rhyu: It takes a lot of discipline. Yeah.
Conor Begley: It's really hard. It's really hard to know where that line is, because it's not a clear red line. We cut out about 50% of our revenue because we had taken on too much and we cut out about 50% of our revenue three years ago. We're like, " Hey, this revenue really, really good. This other revenue, not so good, if you looked at the characteristics of it." That was painful. We went through, we were doubling, doubling, doubling, doubling, and then we said, " Hey, we're going to do this." Then, we were flat for two years. Then, over the last, call it, 18 months to two years, we've been exploding. Our gross margins went from 66% to 80%, retention rates went from 90% to 115%.
Ju Rhyu: Oh my gosh.
Conor Begley: Our NPS went from mid- 20s to mid-60s, it was wild. Growth went through the roof.
Ju Rhyu: Yeah. It's amazing.
Conor Begley: It was all a matter of just saying, " Hey, we know that we can service these types of customers really, really well. Although that seems small... " For us, it's brands with over 50,000 followers on Instagram. We know that we can service those brands really, really well, and although that sounds like a small group of people, there are about 26,000 brands that fit that criteria just in our core categories. At the time, we had a few hundred brands as clients, we could get to 10X the size and have less than 5%, 10% of the market. Anyways, it is my number one piece of advice to other entrepreneurs, for sure.
Ju Rhyu: Yeah, and just on that note, sometimes more is not better, right? I was talking to this founder who has a lab and he works with lot of our beauty brands and he was telling me, he said, " I told my team to stop taking on new business. We're going to focus on the ones that we have and we're going to go, we're going to build vertically rather than across." He wanted to go deep and deeper with each client that he already had rather than bringing on, I don't know, 20, 30 new clients. Then, it was funny because I was talking to another lab and he told me, " We only have 10 clients at a time." It doesn't mean that they only have 10 brands because sometimes one client, one customer will have multiple brands, but really disciplined about, we only take on 10 clients, 10 customers. We try to just maximize the hell out of that relationship. Yeah, I think like what you guys did, sometimes more isn't always better. Sometimes it's better to go deeper.
Conor Begley: A hundred percent. Then, you also become known for something. For you guys, you are known for being the acne patch brand and for most people, they're trying to keep track of a lot of stuff all the time. For any single brand or concept, they usually have a sentence or maybe even just a word. You have to think about what that sentence is, what is that word associated with your company? How can you just become known for that? Become the first word they think of when they think of that. Anyways, okay. Let's get into fun end of show question, and I cannot tell you how lucky I feel that you did this with me round two. The first time, I asked you the question of, for really focused, really successful people, they are very judicious with their time, but they do have time where they slack all off, do whatever they want. For you, yours were like Netflix, cooking, a few other things. What I want to know is, on the cooking side, what are your three killer recipes that you make, that you're like, anybody comes in, I can make this, I can nail it and it's going to be really good.
Ju Rhyu: Oh, that's the good one. I make a really good puttanesca sauce.
Conor Begley: Okay. Okay.
Ju Rhyu: For a pasta. That would be one. I can make a really good steak, actually. I just made some this weekend.
Conor Begley: What kind of cut do you go for? What kind of cut of meat, is what I'm saying.
Ju Rhyu: I like a good ribeye.
Conor Begley: All right. I like it.
Ju Rhyu: I like a good ribeye.
Conor Begley: I can tell you like food, people that like food, like ribeyes.
Ju Rhyu: Yeah. Then, something that I really honed during the pandemic was sourdough bagels. That turned out really well. Yeah.
Conor Begley: Yeah, the-
Ju Rhyu: I'm pretty proud of that.
Conor Begley: I very unsuccessfully tried to make sourdough starter. How long have you had your sourdough now? Your yeast, your starter?
Ju Rhyu: Well, it died.
Conor Begley: Oh, it died?
Ju Rhyu: It died, but I had it for a good year and then it died. Yeah.
Conor Begley: Oh, no.
Ju Rhyu: I'll have to start all over again.
Conor Begley: There you go. Well, Ju, I really appreciate you taking out the time. Congrats again on all the success. Not surprising to see where you guys have gotten, but still super, super impressive nonetheless. I am fully expecting you guys to continue to grow really rapidly. Excited to see where you guys take it to.
Ju Rhyu: Well, it was awesome to chat for a second time and, yeah, thanks for having me.
Conor Begley: Well, hopefully, you'll be the first and last guest that ever gets to do that honor. Awesome. Well, thanks so much, Ju.
Ju Rhyu: Thanks.
Conor Begley: Bye.
Speaker 2: Hit subscribe now. Earned by Tribe Dynamics. Tribe Dynamics unlocks your social media influencer community. Our platform not only tracks and measures your best influencer relationships but discovers new influencers to grow your business through earned media. Get started with a demo today at tribedynamics. com. Tribedynamics. com.
In Ep. 47 of Earned, Conor sits down with Ju Rhyu, co-founder and CEO of Hero Cosmetics, an acne-focused skincare brand that achieved $100 million in revenue last year. We start the episode by learning how running Hero Cosmetics today differs from when Ju launched the brand four years ago, and Ju shares why she says no to a lot more opportunities that come her way. We then hear why Hero Cosmetics launched on Amazon with only one SKU, and how Ju went on to build a successful business on the platform. Next, we take a step back to explore Ju’s career journey: from earning her MBA at Columbia, to her time working at Kraft, Samsung, and American Express, to starting Hero Cosmetics. We discuss how Hero Cosmetics focuses heavily on earned media, including building relationships with publications and influencers to drive brand awareness. To close the show, Ju shares the “game-changing” advice she received that fueled her extremely intentional product development and distribution strategies.