Her Customers Invested $4.5 Million and Co-Own Her Business: CurlMix Founder Kim Lewis

0:00Hey, business besties. Welcome back to the Female Founder World Podcast. I'm Jasmine. I'm the host of the show and the creator of the Female Founder World universe. Today, I'm chatting with Kim from CurlMix. Kim, tell us what you're building to people who don't know your business. You are now entering Female Founder World with your host, Jasmine Grinsworthy. So I have a hair care company that helps you master your curls in 21 days. So if you want your hairstyle to look like this and you have curly, kinky hair, then definitely come to us. We can help get you there in 21 days. I love the transformation, the timeframe that you have just pitch me there because you immediately get it.

0:35You're like, okay, this is not a long-term game. 21 days. I can commit to that. I imagine that that probably wasn't the, maybe the first thing that you came out with because it sounds like such a succinct story now. Take me to the early days of building a business. You guys started back in 2015. You've been doing this for a while. You've had a couple of iterations. Yes. What was the first version of the business and kind of like, where were you in your life that you wanted to start this business? Yes. So technically it started in 2013 when I was in college, I had to build an app and I was like, I want to build one for curly hair to educate you on how to do your hair.

1:09And I built a new social network. And if you know anything about social networks, building new social networks do not work. And so I did that for maybe a year or two after college. Yeah. And spent a bunch of money on building an app that people didn't really want to use, you know, and realize that they just want to use Instagram to showcase their story. But I had a lot of learnings and I picked up some content making skills and it just taught me a lot. So I did that from like 2013 to 2015 and probably sunk maybe$25 ,000 amount of money. But it was a good lesson for sure. Yeah. I mean, that's just like another little mini business degree, isn't it?

1:44Yes. Okay. So then why CurlMix? How did that come about? So in 2015, CurlMix started as a do-it-yourself box for curly hair. Think blue apron, but for hair. And I really got the idea because I was making my own haircare products at home. And I was like, man, if someone would send me all these materials to mix it together myself, That would make me so much easier. And I actually kind of saw the idea play out on Shark Tank, but for organic cookies. And so it was very funny because I'm like, oh, is anyone doing this like organic cookie Betty Crocker model for hair? I could totally do it for hair.

2:12And then we launched in June and I sold one box to my cousin. And I was like, OK, this is a dumb idea. I should have never done this. And then my husband co-founded Tim. He was like, no, you just launched wrong. You know, if Airbnb can launch, relaunch seven times, surely Chromex can relaunch twice. And so in September of that year, we relaunched the business. I went to like buzzsumo.com. I looked up the best articles and DIY, you know, DIY beauty period. And then I pitched all those writers from different magazines. And then most of them said no, but we're finding 29, picked it up. And this is before they had like a million followers on social.

2:45So now they're like massive, but they weren't massive yet. And they covered the launch and we ended up doing 100 boxes in that first day. But the problem with the DIY box is that the margins were only 30 percent. and our customers had started to either unsubscribe and their boxes were stacking up at home. But there was one box they were buying over and over and over again, and it was our flaxseed gel. So the flaxseeds that you eat, that you might use as an egg substitute or in a smoothie, when you boil them, you get a really gooey gel. And if you extract the gel, it becomes a really good hair gel to get a great wash and go like this.

3:17And a lot of my customers were using this to get wash and goes. And I was like, oh my gosh, maybe I just need to make this as a ready-made product. so um in 2017 in 2017 i was seven months pregnant and i spent i don't know all of september and october in my kitchen making 50 different batches of flaxseed gel seeing what was scale what would be stable because manufacturers would not make it for me i went to three of them and they were all like no this is too variable too difficult to work with we're not going to do it and we did pre-orders to our audience for the same price of the box because we had to make it for them yeah Right.

3:50And we sold hundreds in a matter of hours. Wow. And I was like, oh, my gosh, this is what we should be doing. So we had six months of boxes lined up, content, photo shoots already done. We tossed all of it because we're like, there's no sense in throwing good money after bad. Because that was all around the idea of the do it yourself, build it yourself kind of box. And once you realize that wasn't working, you're like, I'm going to cut my losses and pivot. One of the rules I now have for pivoting is that it needs to be necessity and not novelty. So the DIY box was novelty, but they were still going to buy ready-made products from stores because that's necessity.

4:23Yeah. And so being like a vitamin versus a painkiller. Yeah. The DIY box, a vitamin. Painkiller, the flaxseed gel because it's going to help you look beautiful and style your hair. Like I would have people flagging me down on Michigan Avenue in Chicago in the middle of traffic. What is in your hair? Please tell me what you're using. So I was like, okay, this is it. That January in 2018, we literally did maybe$3 ,000 in sales. So it was super low. And I was like, this is so dumb. I should have never done this. And my partner at the time was like, no, Kim, you knew it would be difficult. It's a pivot.

4:54Just keep going. I also love your partner. The next month we did about$8 ,000. And then that month after that, I was like, if we could just get back to$16 ,000, we'd be rocking. Yeah. And we ended up doing$30 ,000 without spending a dollar on Facebook ads. And I was like, oh, this is what people want. And so then he came and started to work in the business. And then we got to our first million in revenue. Wow. Okay. So this is 2017. then in 2018, you had a couple of really big milestones. You went on Shark Tank. How did that come about? So, you know, it's everyone's dreaming on Shark Tank, right?

5:24Like, and I remember they were doing a casting call in my neighborhood. And so we took our six month old with us to the casting call because we didn't have anybody to watch him. And there was my baby comes everywhere. Natalie's standing over there like, yeah, I see your baby everywhere. Oh my God. Would you believe he started crying during the pitch? No, of course he did. I was like, you're quiet this whole time. And now you're crying. But they loved our pitch. It was like, the one thing I tell people about Shark Tank is that they're in the business of making TV. Shark Tank wins Emmys. Okay. Yeah.

5:55You have to remember that. And so if you want to get on the show, you got to tell a good story. Yes. At the end of the day. It always comes back to story. It always comes back to story. So we ended up getting on Shark Tank. And I had gotten maybe like a 200K convertible note from the former CEO of LinkedIn and his partner because they knew Arlen from Backstage Capital. Arlen Hamilton of Vaccination Capital gave me my first$25 ,000 in 2017 when we were doing the DIY box. And you'd mostly brief draft up until this point. Yes. So I had tons of credit card debt leading up to this point. And I mean, I had to make a million dollars before anyone was willing to really invest.

6:26Yeah. And Arlen was the only one who gave me money at$25 ,000. Yeah. And then we used that to get to our first million in revenue. So the rest of it was all personal debt. So I don't recommend that to people. No. But we did it. I don't recommend it. I'm okay with betting on myself in that way. Yeah. and then we got that investment and I went out to go raise afterwards after we had gotten that million in revenue went on Shark Tank got the 1.2 million seat round hit 5 million that year in revenue and I went to VCs and they were just all like we want to see more we want to see more and I was like and this is before the George Floyd movement this is before all these funds for black and brown founders existed and I was like man like what can I do so I just kind of gave up fundraising for the rest of the year I was honestly it's so it is difficult and then you add all of these compounding elements as well.

7:10And it's just like, it's really tough out there. And I think a lot of people are trying to figure out, okay, if VC is not going to be the way that I fund this, consumer businesses are expensive to build. They are expensive, especially if you want to go into retail and people looking for alternatives. And you found one and nailed it. Oh my gosh. Okay, so I'm a big believer in crowdfunding. If you're a consumer package good, you already have customers online and I mean like a good amount, like at least 20 ,000, you know, I believe you can raise your own investment. I don't recommend it if you're like a tech founder or some people do it, you know, but I think your business is much higher risk and it's not built for crowdfunding because if your business fails, that's your reputation, you know, for consumer businesses, they make money, you know what I mean?

7:57Every day. So, or generally speaking. Yeah. And so crowdfunding, the regulation changed in 2021 to go from 1 million to 5 million as a regulation crowdfunding limitation. It used to be a million dollars and jump to five. I was like, oh, now this makes sense. Yeah. And we had to go through a long audit process, you know, um, gap financials file with the sec. It took a while to get ready. It's not just like you just cut on a switch and you it's raining money from your crowd. And when you say crowdfunding, it's equity crowdfunding, right? It's not like Kickstarter. These, the, your community is bought in and they're shareholders.

8:29Yes. So, and the difference is a lot of the investments or a lot of the donations for a Kickstarter or whatever, those values are typically a lot lower yeah people are doing like 50 to 100 bucks you know for investments via for equity via like a we funder or start engine or something like that you're looking at about 700 on average per person okay because they're actually getting shares in the business yeah so there's ever a liquidity event if you ever sell you have an ipo yeah they would either you know get their money back or return or i mean they could lose their money hopefully but you know that's obviously not the plan yeah and so your customers get to own an actual piece of the brand it's it's new and really revolutionary i think i think um in the past you know everyday investors if you weren't credited you couldn't participate in an uber investment early you know first stage investment in uber you couldn't participate in a google you couldn't participate in um a popular product company you know what i mean old spike whatever you couldn't participate in any of these deals and now you can if they come through a crowdfunding platform and so more companies are doing it and it's becoming more legitimate but i think initially people were scared and like if you're crowdfunding it's because you can't raise VC but the truth is crowdfunding is better if you want more control of your company and control of your timeline.

9:40Yeah and also you talk about like loyalty programs there is no loyalty program that is better than having your customers as actual bought-in shareholders in this company. They will recommend you to absolutely everyone and never use anything else. Oh my goodness our customers showed up in droves to our Ulta launch. So after Shark Tank, um, let's talk about the crowdfunding a little bit more. I don't want to, I don't want to leave that because I just think it's so interesting. Okay. So what platform do you use to, um, crowdfund? We funder.com. Okay. And what's the process? So you go through all of that, all of those steps to, there's like the accreditation, you need to do this properly, um, cross your T's, dot your I's, all of that.

10:21But what was the process in terms of like then communicating that to your, this community that you'd built, They all love your product. They're already recommending it to their friends. How do you say and explain to them, they might not be investors, what the opportunity is and how to kind of get involved? So one of the things that we did that is so simple but is so easily missed is a Facebook group of your customers. We literally have kept a Facebook group for our customers since 2015. Since we started as a do-it-yourself box. I was getting their feedback about what boxes we should create, right?

10:56So once someone purchases on our website, after they purchase, it says, while you wait for your order, join our free Facebook group with our customers. And we don't admit anyone who's not a customer. Yeah. So it's 20 ,000 people in that Facebook group. We will vote on product launches. We vote on flavors. We vote on, I will go live doing my hair in that group for two years in my shower every Wednesday, doing my hair start to finish to show them how to use the product. It's just crazy. It's crazy when I think about it. I was like, who was that girl? And it built crazy brand equity with our customers.

11:25So by the time it came to crowdfunding, like they already trusted me as a founder. Yeah. Because they had not, they had seen my face so many times before. It wasn't like she was just showing up to ask for money, you know? Yeah. And so then when I showed up with the opportunity of owning it, it was really impactful. Because typically in our community, and I mean, I mean, like the curly hair community, we see acquisitions all the time. It's one of the fastest spaces and fastest growing spaces in hair care, period. And so you've seen the billion dollar shame moisture acquisition. You've seen the multi hundred million dollar Myel acquisition.

11:53You've seen the Curl Smith acquisition. There's so many in the curly hair space. But the thing is, the customers never get to participate. And so they're always worried, are the products going to change? You know, the people who are buying us don't care about us. I was like, well, we can change that now. You guys can own a piece of the business. If there is ever in a liquidity event, you get to participate. And I felt like that was revolutionary. And I really wanted to do that for my customers. So I just explained that going live in the Facebook group, making content on social, traditional email marketing, like Obama's campaign.

12:20He had one of the largest campaigns that had single dollar donations. because it was done through plain text email. And he had a little donate button at the bottom of every email. And so I used that strategy as well. And then, of course, SMS. And plain text email basically means instead of these like beautifully designed like EDMs, you're sending out like the same way you email a friend. Exactly. Exactly. Amazing. Something that I listen to as I'm listening to your story that I like constantly hear is this, like you solidifying your story and showing up over and over and over as like a really forward facing founder in your business.

12:58Um, this is a superpower that founder led brands have, particularly, I think like women led founder led brands who are creating products that they use as well, uh, that the big conglomerates just can't do and they're trying to do, but they just can't. I want to understand how you think about that and like the role that leaning into that has played in the business. You know, I have learned that it's a plus and a minus, right? The minus is I'm kind of irreplaceable and I need maybe 10 people to really replace what I'm, what the value I add to the business. The plus to that is that's where a lot of our growth has come from.

13:41A lot of our success, our notoriety is because I can be the speaker. I can help run ads. I can help do email marketing. I can help go live and sell. I can also, like, you know what I mean? These are things that, you know, typically if you're not good at it, you'll just outsource it. Yeah. Or you just won't get done. But then maybe the business grows slower or then maybe you're not a success. Maybe you run out of money sooner. And so it's two sides of the same coin, I would say. But I don't wish it was the other way. I've learned a lot from this experience and it's just made me a better CEO and a better spokesperson for the business.

14:18Absolutely. Okay. So you, you've raised this crowdfunding round, which was four point, what was it? What did you raise in 2019? In 2021. It was 2021. We raised 4.5 million. Okay. So 4.5 million raised in 2021. You'd already been on Shark Tank. Take me to 2022 and some of the big milestones you hit that year. So that was the year we did$10 million. Amazing. And it was down to the last day. Just D to C, right? It was all D to C. It was no retail. And we stayed out of retail strategically. After Shark Tank, they were all calling. Walgreens, CVS, Walmart, Target, Ulta. Ulta had asked us to come in for a few years in a row.

14:59But I knew that our packaging wasn't ready. Our messaging wasn't ready. How do you say no to Ulta? That's like a dream for so many brands. Because I had an advisor who told me, one, I wasn't ready. Yeah. So she knew the ins and outs of my current business. Two, my packaging was not done well. The packaging that we were using on Shark Tank was the packaging I designed several years ago. Wow. Which, you know, it sounds cute, but like when the name Pure is bigger than the actual brand name on the packaging, it's like people would think that the brand name is Pure and it's not. The brand name was Chromex.

15:28Right. And so I didn't, the messaging is the most important when you go into retail because people have to make a three-second decision on whether or not to buy your product. And if your packaging is not ready, then you're ultimately going to suffer. And so going into retail, while it will be exciting, you'll eventually get delisted because you're not moving fast enough through the shelf. And so all of our$10 million in 2022 was all online. And yeah, that was the focus there. And what that really meant was, and mind you, we have a manufacturing facility. That's why I didn't tell you that. But we have a 30 ,000 square foot facility.

16:00And so in 2022 - And you do it yourself in-house or you're working with? Yes. So we have large kettles or we make 200-gallon, 300-gallon batches of conditioner and shampoo. And that's a whole other story of how we've been building multiple businesses. It is. It's literally like you've got the e-commerce business and then you have this manufacturing business as well. They're different things. And then you layer in retail. And it's like three different completely separate work streams that you have to build expertise in. But we can talk about that separately in a second because I do want to stay on what we were talking about, about the Ulta deal and how that came about and what you learned.

16:33Gotcha. So what I learned about the Ulta deal, so we launched an Ulta in 2023, so the following year. But in 2022, we rebranded. Yeah. So that was when we were like, okay, how are our customers using the hair products? Well, we told them to do their hair in the shower. He's like, yeah, but you have these pump tops that when you drop them, they break. So should they do this in the shower? I was like, well, it has to be done in the shower. Okay, the packaging needs to change. Yeah. Something that can slip and drop and it's not going to burst the cap or squeeze out of the bottle. So then we moved to tubes.

16:59Tubes are really easy. Our customers are more mature. She's over 50. How do you know, it's hard for her to work with those pumps and then twist the cap off when it's time to get the last of the product in the bottle and all these things. She has so many complaints. We're like, oh, tubes, tubes are much better. She'll be able to squeeze every last drop out of the tube. Let's do that. And then we, you know, master your curls in 21 days. You're right. That was not the original messaging. The original messaging was like handmade beauty or like simple beauty rituals. And it was just wasn't specific.

17:26And I remember reading Alex Hermosey's book, $100 Million Offer. And I realized that you have to give people an offer that sounds so good they feel stupid saying no. So if I told you I'm going to help you master your curls on 21 days for free, you're like, oh, sign me up. You know what I mean? And so that's what we transition our messaging to. And in doing that, that needs to be on the bottles. Yeah. Right? Which means when you change the label, it not only needs to have the brand name, It needs to read the exact way you want the influencer to read it off the package on YouTube when they do a review.

17:58And so we built the packaging with that in mind. Or when they lay it flat and take a picture of it, it needs to sit face up instead of being a bottle that rolls all around the floor. You know what I mean? Because if you're a digital first brand, it has to be digital first in how you do the packaging as well. And then we thought about, OK, well, there's a four steps. It goes in the box. How big should the box be? What about when we add different merch? So there was a lot of investment in the rebranding and the packaging and elevating the brand. I think it's so smart to think about how do you, okay, if you're planning on doing influences or building on social, like how do you make sure that the thing that that person receives is going to be something they can then clearly communicate and share in exactly the way you want them to and having that like that selling point right there on the bottle, being able to photograph it really easily, like all of this stuff really, really matters.

18:48So interesting. Okay, keep going, keep going. This is such a good story. No worries. And so the package you need to change, the message you need to change. And this really came from reading lots of books. I also read Positioning by Jack Trout. Yeah. Classic marketing book, but it just talks about how you need to own a word in your consumer's mind. And, you know, when you just say we're a natural hair company, well, there are thousands of those, you know, and that none of us stand out. What position do I want to have? And for us, it was a wash and go. Yeah. Because the flaxseed gel is what they were using to get the style.

19:16So let's dive all the way into the wash and go. So instead of a four-step system to help you do, I don't know, braids or locks or whatever, we focus on a four-step system to help you master your wash and go. So it's a wash and go four-step system instead of like a curly hair four-step system or a lock four-step system or, you know, just general hair care. And then we kept the – there is some transition though because we had lots of different holds and colors. So it was like how do we transition those over? and hindsight I probably would have just landed with one kit but we ended up doing all the holds so light medium heavy ultra so that's a lesson there it's like if I could have that was the opportunity to condense yeah and we didn't take it we just kind of like kept the same number of skews and everything uh that would be some feedback if you know if you're looking to hey rebrand your business try to get down to as few skews as possible especially if you're in CPG yeah and that is for um the clarity of the communication to the customer and your costs or what's the both yeah yeah because it's like well what hole should i use yeah versus just being like this is the one that everyone totally this is the product yeah yeah yeah and then one of the things that we recently learned too is that we probably should leave with a product that works that's easy for people to do on the first time the washing go takes like three times to master it which is why we say 21 days yeah um but deep conditioners they work regardless so i was like we probably should have led with that and then but you know we're learning different things as we go um we also got the buy-in from our community so our facebook group we're letting them vote on different colors and packaging and ideas and messaging and what resonated with them.

20:45So they'd be more, you know, we could bring them along the journey in the rebrand so we wouldn't lose everybody when we actually launched. And so once we did this rebrand, now I was ready to have conversations with Ulta. And they were like, okay, wonderful. You can come in in January, top of 2023 for the big meeting. And they had about 10 people in this meeting. It was really amazing. And they were so excited about the, or are, they are, I'm saying were because that's when we had the meeting. But they were so excited about the brand. They're like, we finally get to marry Curl Mix. You know, she's like, Kim, are you proposing?

21:13Like, I'm like, I'm proposing. Okay. And then Ulta has been an incredible partner for us, truly. They have ads running right now for Black History Month for Curl Mix. I didn't know. I just found out they're on someone else's podcast. Oh, wow. I was like, my friend just told me last night, I heard you on, I was like, you did? Oh, that's so cool. We're having wine. I was like, I haven't heard this ad. But, you know, we're on display tables and Ulta as well. And they've just been an incredible partner with terms and just so many different things. I'm super excited to be in Ulta. And I'm so glad that we waited to make them our first retail partner instead of trying to spray and pray.

21:44Yeah. Like a lot of early brands do. Yeah. It's very hard to go into retail when no one knows you. Yeah. And to grow up because it's your responsibility to sell through that product. Yeah. And if you don't have any brand recognition or name recognition, it's not going to move. Yeah. Yeah, absolutely. That's something that we hear again and again and again from people in the podcast and founders in the community as well about, you know, it's not, you can't just necessarily rely on the retailer to sell your brand. Like once you're in there, you're also responsible for bringing people to that retailer.

22:15It's not just their customers that are buying and it's this like relationship. And that if you go in too early and you don't sell through, like you miss your shot with them a lot of the time. Yeah. I want to talk a little bit about the retail stuff. Going into those big retailers seems like, I think it just seems so intimidating. Um, I know that sometimes it can be a very expensive exercise and, um, I want to know like if there were any costs that surprised you as you were going into this, um, about like, I w I was actually speaking with, um, a founder last night and she was telling me about how, um, she was in this massive, uh, grocery chain in Australia, um, for years.

22:58And she also worked as a, I'm like in distribution and stuff for a long time. And she was like, we ended up moving out of them because, um, we kept getting, you know, they're, they add on, um, marketing costs to you sometimes they can put that on you. And, um, it's not just the straight margin. Um, a lot of the time it's kind of like, they're going to have chargebacks and all of these things that you need to, to be aware of going into it so that you're like properly budgeting and that your margin is really strong so that when you launch into retail, it's still like a profitable thing. What are some of those things that you think people need to be aware of?

23:35The biggest thing that I think, like I knew about the chargebacks. Yes. I have a friend. And for people who don't know what are chargebacks. It's like if your product isn't selling through and within the time frame that they expect it, they can just charge you back for the inventory that didn't sell. So if you thought you had a$100 ,000 contract, well, if they refund you for$30 ,000 of it and say, hey, you now owe us$30 ,000, really it was$70 ,000. Yeah. But you've probably already paid your team. you've bought an inventory you probably don't have the 30 ,000 that you would owe so that's one thing and I knew about there are all these other charges damages things like if we have mooses that sell in the store but someone lose their top in transit and so that becomes a damage fee that we didn't have to pay for as the brand um and then there are the damages there are um returns sometimes return your product there are different promos that brands will have too like there's a double points program I think at Ulta you know what I mean uh there's also um different you know there was a gorgeous hair event all those like discounts you see in the store 30 % off or buy two get one free at Sally's like those are all promos that the brands are typically being charged for yeah I will say Ulta has an emerging beauty um division that offers a lot of this stuff for free to new brands oh amazing yeah so for the first year Ulta has not been charging me for these things and I'm so grateful for.