“Glow Getter”: from Community College Student to $2.5B PublicCo CFO (Part II)
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This story is part of the Entrepreneurship of Life series, a collection of interviews with immigrant startup founders, venture capitalists, and tech business leaders.
THE BEAUTYHEALTH STORY (CONT’D)
Q: In December 2020, HydraFacial was acquired by a SPAC — Vesper Healthcare Acquisition Corp, for $1.1 billion. Vesper was founded by Brent Saunders, the ex-CEO of Botox-maker Allergan and a respected dealmaker in the medical aesthetics space, after he sold Allergan to AbbVie for $63 billion. Can you share the backstory of the HydraFacial / Vesper merger?
With his expert eyes, Brent saw tremendous value in our industry-leading brand affinity and unconventional go-to-market strategy.
When Brent was heading Allergan, Botox had for years held a Net Promoter Score that led the beauty industry. [Author’s note: Net Promoter Score®, or NPS®, is a widely used measure for consumer brand loyalty. It represents the percentage of total customers who are active promoters of the brand, less the percentage who are potential detractors. The higher the score, the better.] A few years ago, a newcomer overtook Botox on the NPS leaderboard with a score of 40, well ahead of household beauty brands such as Lancôme and Estée Lauder. Just like this, HydraFacial caught Brent’s attention.
Upon more investigation, Brent discovered another thing he liked: HydraFacial’s sales strategy was opposite to industry traditional wisdom, but perfectly aligned with his own vision. Most medical aesthetic product sales are “top-down” — i.e., focus on dermatologists and plastic surgeons, who are believed to be the most influential in their practices’ medical equipment procurement. Competition for this small group of professionals’ attention is ruthless. To make things harder, as competitors themselves, dermatologists and plastic surgeons often pressure suppliers to “pick a side”, effectively limiting the addressable market for anyone who obliges.
Contrary to popular beliefs, Brent sees estheticians and nurse practitioners as overlooked key influencers in the sales funnel. They hold consumer relationships and educate consumers about new products and services — which makes them fantastic external evangelizers. Internally, their voice matters as well, and often more than the doctors’ when it comes to buying equipment for their own use.
Sharing a similar view, HydraFacial works hard on making estheticians its allies and advocates. Their internal lobbying plus HydraFacial’s favorable spa and clinic economics often close the sale: HydraFacial delivery systems are easy to use, produce reliable and visible results, pay themselves off in 5 months on average, and generate good margins. As a result, facilities often order our products without involvement or even knowledge from their doctors.
Recognizing the value of our brand and business model, Brent made an offer for Allergan to acquire HydraFacial, but HydraFacial’s private equity owners at the time weren’t ready to sell. Fast-forwarding to fall 2020, Brent reached out again and proposed a deal with his new SPAC Vesper, when our owners were contemplating an exit. We’re fortunate to partner with an industry veteran and visionary like him for the journey ahead.
Q: Can you zoom in on the company’s partnership with estheticians?
We are symbiotic with our esthetician community through a “training-marketing-sales” triangle. To win over new providers, we initiate with radical generosity by offering them a broad selection of low-cost continuing education resources. We provide podcasts, virtual expert hours, business building webinars, in-person workshops, and even multi-day career programs. Topics range anywhere from treatment procedure safety and product ingredients to selling skills, social media marketing, and even tax planning. Providers love our training which helps them upskill, and we benefit from a growing pool of well-trained practitioners rallying around our brand.
This army of advocates play an integral part in our marketing. On the one hand, our brand awareness campaigns draw interested new customers to our spa partners; simultaneously, our providers promote us with passion by voluntarily publishing 4 out of every 5 social media posts about HydraFacial. In fact, they post 5x more about us than about our competitors, and 45% of our users heard about HydraFacial through estheticians. Another great example of our synergistic marketing is the HydraFacial “#GLOWvolution city takeovers”, where we send out retrofitted 16-wheeler trucks that serve as “pop-up” HydraFacial treatment rooms, and local practitioners volunteer to administer our free trials, building a new customer pipeline for us as well as for themselves.
After training builds a solid provider base and marketing generates growing demand, sales comes naturally after — our provider partners place more orders with us to meet their patrons’ needs. Together, we sow the seeds and reap the harvest.
Q: What are your top areas of investment over the next 12–24 months?
Our priorities are clear: relentless growth, R&D, and data.
While we’re in 90 countries, we’ve only covered one or two cities in many of them, leaving massive room for further penetration. Over time, we’d also like to replace the wholesale distribution model in the newer markets with our signature direct-to-provider model. Our years of history with tight marketing budgets has fostered a sophisticated knowledge of ROIs, and we’re now opening the floodgate where incremental dollars yield the greatest impact. We’re also building out our global operational support system to sustain profitable scaling.
Meanwhile, we’re doubling down on product R&D. We’ve just released Syndeo (Greek word for ‘connect’) — our latest generation of delivery system. As its name suggests, Syndeo is connected to the cloud, which enables more advanced features such as hand gesture interaction, making it more user-friendly for estheticians. We have also beta-launched “Glow ‘N Go” — a brand new at-home device to be made broadly available later this year: it could make HydraFacial part of consumers’ daily skincare ritual between professional treatments, building a direct and intimate relationship with the users. Glow ‘N Go will similarly be connected via our mobile app HydraFacial Nation; the app uses device data and the phone camera to run “face analyzers” for users, assess their skin health, provide care tips, and recommend HydraFacial services nearby.
This brings us to the third prong of our priorities — integrating and leveraging data across our offerings. With consumer consent, our app, at-home and professional delivery systems all collect relevant data and use it to better serve them. The consumer scans a QR code when checking in for her spa appointment, and in seconds, her new esthetician will learn everything about her skin condition and treatment regimen. This means a seamless, personalized experience for our consumer wherever she’s getting her HydraFacial.
Q: Beauty Health just brought onboard a new CEO, Andrew Stanleick, following the departure of ex-CEO Clint Carnell. Unlike Clint whose background was in healthcare, Andrew has spent most of his career in beauty, working for companies like Loreal and Coty (which manages the beauty line for brands ranging from Burberry to Adidas). What changes should we expect from this leadership transition?
Andrew has been great! He brings tremendous branding and digital expertise as well as global experience to BeautyHealth. At Coty, he not only turned around Cover Girl, but also oversaw the hypergrowth of Kylie Jenner’s and Kim Kardashian’s digital beauty brands. He is a true global citizen and lived in Asia for 8 years managing the APAC business for Coach and Loreal. He also spent many years managing EMEA and Americas operations throughout his career. His speed and builder orientation coupled with best practices from established global organizations are exactly what we need to scale BeautyHealth.
Q: On multiple past jobs, you were an operations-heavy CFO that essentially also acted as COO. Is that also the case at BeautyHealth?
Yes. At BeautyHealth, I oversee operations, supply chain, and enterprise IT in addition to finance. As we double down on international expansion, I spend a lot of time optimizing our global infrastructure. We need to source high quality inventory around the world, ideally having supply close to end markets; worldwide logistics need to be meticulously designed for efficiency; multi-jurisdiction tax planning plays an important part as well. These puzzle pieces must all fit together for our expansion to be sustainable and profitable.
THE MUSINGS
Q: How do you apply what you learnt in consulting to running a business?
Consulting takes being inquisitive and connecting dots; being a CFO is no different. You identify suboptimal parts in the business, probe them with curiosity, and piece together data and information to see the bigger picture. You’ll need both intuition and a fact-based, data-driven way of thinking.
Bringing together information requires bringing together people. In a large organization where functions don’t talk, tribal knowledge (and sometimes local agenda) become common and impede effective decision-making and execution. Good consultants and CFOs facilitate dialogues, build consensus, and foster collaboration. Afterall, everything in a business is correlated, and isolated efforts often don’t work.
One crucial trait for a CFO that consulting doesn’t teach is to test and learn. Thankfully it is part of who I am. 180-degree changes in a corporate setting often meet with tremendous resistance and crater; instead, a series of small experiments and incremental changes based on learnings go a long way.
Q: You’ve been through many tough business challenges, such as existential threats for traditional retail, a corporate bankruptcy, and COVID hitting an in-person service business. Looking back, what was the most trying time for you? What have you taken away from it?
To me, issues with a business, process, or system can be difficult but are ultimately all solvable; it is people dynamics that present the hardest tests. For a business leader, that can be misalignment and distrust from a key stakeholder.
When I was CFO on a prior job, the entire management team — myself included — fought hard to turn the struggling business around. Just as our efforts began to bear fruit, however, one of our decisions went awry. Rather than advising and giving us space to course-correct, the company’s founder and majority shareholder charged back in and inserted himself. In the name of a fix-up, he scorched our investments and hard-earned progress. It was deeply demoralizing, and many of us chose to leave. Till today, this experience reminds me that no business problem can be solved without trust as the bedrock, and that zero tolerance for even honest missteps drives away talent.
Q: Ben Horowitz at A16Z has a theory on how businesses during peace time vs. war time call for different leadership styles. You have steered businesses in both types of environments. Do you lead differently during peace time vs. war time?
In a way, being a war time leader is more straightforward. Pressure to survive tends to keep everyone focused on clear, near-term priorities and follow the lead.
Peace time leadership requires more finesse. When the goal is not to survive but to charge ahead, everyone might have a different idea of which way to go. A leader needs to leverage group wisdom in setting a direction and then rally everyone behind it. This starts with assembling a team of similar values and fostering a culture of trust and candor. People engage in constructive debates with egos set aside, arrive at thoughtful decisions, and hold each other accountable in their implementation. This is something we strive towards at BeautyHealth.
Q: Running a company and raising a 12-year-old boy, do you have any tips for fellow high-functioning career parents?
Divide and conquer! Work with your spouse to each find a role that fits your disposition. My husband is a straight-A, no-nonsense MIT graduate — he establishes discipline and structure for our son’s education. I, on the other hand, play the disruptor; I goof off with our son, making sure he gets plenty of playtime and opens up to us. I am not just his mom, but also a naughty sister and confidant. These different parenting roles come natural to me and my husband and complement each other. Don’t get me wrong, often times it’s a struggle to balance the dynamics, but love and over-communication help move things forward.
Q: You used to do Toastmasters and acting to overcome fear for public speaking. Can you share how those experiences affected you?
Early on in my career, I struggled with speaking in front of large groups. I had conviction in my ideas, but my accent and sometimes spotty grammar made me self-conscious and unconfident. When I tried to talk in a meeting, my shaky voice would give away my insecurities and handicap the message.
I was fortunate that a mentor of mine, Mike Richards, saw in me who I could be. He enjoyed Toastmasters himself and encouraged me to give it a try. [Author’s Note: Toastmasters is a global community with local chapters and clubs, where members make prepared and impromptu public speeches and give each other feedback.] I did try, and it was a gamechanger. In front of a supportive audience, I uncovered a new persona in myself: someone good at speaking off-the-cuff and even cracking jokes once the pressure was off, someone who people enjoyed listening to. She was unfamiliar, but wasn’t she exciting! It dawned on me that I could be her, I wanted to be her, and — I am her.
Later on, acting became another instrumental channel for my self-discovery and confidence building. Until I tried, I had had no idea that acting can be about being oneself, just placed in someone else’s situation. It forced me to get out of my head and into the present; to sense, express, and go with the flow. It shook me to the core. As I pushed against my old instincts, I couldn’t help but pondered: why did I behave the way I did? Do I like it? Can I choose to be different? To me, acting started as just a next step to Toastmasters in building my public presence, but over time, it turned into a “glowvolution” journey of my own, leading to self-awareness and growth. I am grateful for the profound way it has reshaped me.
(End)
Keyi (Author): If you enjoyed this story, check out my other interviews in the Entrepreneurship of Life series (catalog with links at the end) and follow me for new story alerts. You can also find me on Twitter and LinkedIn.
Some past stories that you might also like:
- Can Authenticity Drive Bottom-Line? This Startup Shows You How (Q&A with Alan Zhao, Co-Founder and CTO at YC Startup Warmly,)
- Silicon Valley Has a Century-Old “New” Player in Town (Q&A with Kevin Ye, Corporate Venture Advisor and Partner at Mach49)
- How She Creates an Affordable AI Coach — in Your Hand (Q&A with Dessy Levinson, VC-Turned-Founder and CEO of CRATE.COM)
