ADHD, Adversity, and Ambition: How Tracy Holland Built a $450M Beauty Empire | S2 Ep. 154

0:00Hi everyone, this is Kate Hancock and today I have Tracy Holland. Hi Tracy. Hi there. Good morning. Good morning. I'm so excited for you to be here Tracy. Everyone, Tracy is a founder, CEO, and entrepreneur who is an authority in beauty and wellness with a global track record of incubating and launching brands. Now, she's behind the Orlando PETA Hair Care, Nuance by Salma Hayek, Bliss, and a lot of big brands. Also, she was the Ernst & Young Entrepreneur of the Year in 2017. Oh, my God. Tracy, welcome. Thank you. So tell me, what was your journey like to get where you are, J.C.? Well, I mean, I think if if for entrepreneurs who are out there and called to be an entrepreneur, it's a blessing and a curse.

1:02Right. So. I think there are no accidents in life. And in my case, I was an entrepreneur from a young age. I'm the oldest of four girls. My parents are both PhD. My father's a nuclear physicist. My mother's a child psychologist. Both of them prided themselves on strong academic careers and hard work. And both of them prized really the accreditation of a great school, but also, you know, getting a job and a 401k and a pension and working for a company and going from kind of the ranks and going up to manager and then director. And that just was never in my DNA. So I did not fit in with my family from the very beginning.

2:00I was literally the kid who now, in hindsight, I think I probably had ADHD, but I didn't know that that was not something people talked about. Yeah, for sure. So I was always, they were having a difficult time getting me to focus and to do well in school. And at some point, my mom put me into a special ed class in sixth grade and said, you know, you have learning disabilities in math and you need a lot of support. and um weirdly math is one of my strongest areas i couldn't be successful in business without having great math acumen but i have a great math acumen around making money margin forecasting revit ash flow planning if you ask me algebra or if you ask me geometry it'd be a complete f but math is actually one of my strongest suits but in school they put me in special ed I was the only kid in the class not in a wheelchair actually at that time and you put rubber things on my pencil so I could hold my pencil appropriately and honestly I just thought maybe I'm not that smart and maybe I won't be successful in school my parents seem smart but maybe I just didn't get blessed with that and looked for ways to figure out how to make money I mean that was from 12 I remember starting my first pie business my father bought me a horse and so I would give horseback riding lessons for money I would host you know community I'd host things in my backyard and invite the neighbors and charge money to watch performances.

3:45I was just always very mindset oriented toward making money. And at 14, I went to my dad and asked him for$25 so I could take my GED. Because at the time, I really wanted to just get out of high school and start my own business. And my father was so mortified. He was like, no, you're not getting your GED. And no, you're not dropping out of school and no, you're not going to go start your own business. And then they whisked me away about a week later to reform school. And they put my hand to reform school for two years, um, where I couldn't leave. And I had to study and I had to do work crews and I had to, I, we went to school Monday through Saturday and we cut down trees and wired electricity and did wilderness survival trips and they kind of forced me to graduate from high school because I had no choice but to be there.

4:46And so when I got out of high school, I decided I wasn't very smart. And so I didn't think I was going to end up going to college. And I ended up waiting tables for a year and making money through tips. And my poor parents, because they thought, oh my gosh, here she is. Now waiting tables. I refuse to think about college. And it was through that experience of waiting tables. And actually, I got fired from my first job at Adele's because I wouldn't hike my skirt up high enough. The manager at the restaurant said, you know, we have a dress code and your skirt's not your skirts to your knees and you need to hike it up.

5:37It needs to be mid thigh. And if it's not mid thigh, if I don't see your skirt high enough next time you come in, we're going to have to terminate you and let you go. And I thought, you know, I was like, this isn't hooters. This isn't how I want to be treated. I know I'm smart enough to not have to hike my skirt up for tips, but I just didn't feel like maybe academically I was going to be super successful. and I applied to the Fashion Institute of Design at 18 or 19 and got into the Fashion Institute in San Francisco and started my academic career there and learned about retail and product and wholesale and production and distribution and margin and realized that that could be something I could probably figure out and be pretty good at and as I went through the Fashion Institute and was getting straight A's.

6:37And at the top of my class, I thought maybe I am pretty smart. Maybe I could, you know, be successful academically. And so I rolled into a four-year program at San Francisco State under a foreign policy, international relations, and a marketing undergrad and was super, super wildly successful academically. And I think these little building blocks as human beings, when we get validation from the outside world about the fact that we're capable or we're smart or we can be competitive and we have a gift to bring to the world, it gives us the confidence and the momentum to continue to be willing to build and really that's that's where i began my successful career in business was just these this these moments of feedback of finding from outsiders who i respected and institutions that I'd respected to say, look, you're not only successful, but you're at the top of your class and you can compete.

7:54And so it's shaking those, the beliefs. Our beliefs are such a powerful impact as to whether or not we are successful. Yeah. The beliefs that we have, what we, who we think we are and what we carry in terms of the things our parents told us, our teachers told us, our influencers growing up told us that we're this or we're that, or we're not good at this or we're good at that, or we have possibility here, but this isn't an area that we're ever going to be successful. Like unwinding that, pulling that apart, figuring out how to recalibrate those beliefs are the most important thing I think is people process we go through oh now take me back to that time if you remember when you're you were in a special um class my kids are both ADHD and I have ADD so while I was growing up my my mother I mean she would tease at me like I'm stupid or something because I could never remember, right?

9:05Do you think it has an impact on you of doing more in life? Tell me. I think people with ADHD are Ferrari engines with bicycle brakes. So I think it's our superpower in some ways because I think it gives us the ability to look at the horizon and survey what's happening on multiple inputs and calibrate quickly whether or not we're working things are working well or things are off calibration right so my ability to handle inbound in inbound inputs on business I can smell issues long before they actually become issues because I can kind of handle a lot of balls at once. The hypervigilance of ADHD also is a little bit of a drain on your humanness, right?

10:10Because there's a point in time in which your body needs to rest. Yeah, when I say a Ferrari engine with bicycle brakes, you know if you think about that you have to figure out how to slow your body down enough to enjoy the moment yeah without thinking about the next moment and the next moment and the next moment and so there's this place of finding peace in the moment that allows you to just settle in and enjoy rather than be go, go, go, go, go, go. Right. Yeah. Um, so I think of my, all three of my kids have been diagnosed with ADHD. All three, all three. I thought, okay, this is like life coming full circle for me and having to deal with this, um, challenge, which is teaching three little people how to figure out their own calibration.

11:12Right. So my daughter interprets her own ADHD issues with always feeling that word enoughness. You know, am I enough? Are my grades enough? Am I doing enough? Is my homework enough? Am I being successful enough? Do I have enough friends? her enoughness that's how it shows up for her whereas my boys in their adhd they have to finally kind of find their social balance with their friends because they're always the kids that are bouncing around and really in their physical physical body um and getting them to settle so that they can have a relationship and be settled in the moment physically. I feel like with boys, it shows up with their just like body moving all the time.

12:07Whereas girls, it shows up more internally.

12:14But they're figuring it out. But boys are actually both on medication and my daughter is not. So that's an interesting, that's an interesting consideration, how it's interpreted differently for boys versus girls so yeah one of my youngest one he tends to bounce instrument from one to another and he would go bored and like i don't want to do homework because i know all these things already i'm bored right he's not motivated enough but he bounds into different sports or instrument like he gets bored fast right yes they get they just want to be and stimulated all the time. All the time. You know what's really interesting that helps that I would highly consider if you get a second, go to Amazon and buy some kinetic sand.

13:06Kinetic sand has a magnetic aspect to it. So imagine the feeling of sand, the texture, but it doesn't go all over the floor. It sticks together. And so when you roll it around, the sand stays either in a bowl or it can stay in a ball and not drop pieces of sand all over. And for my boys, they both enjoy playing with kinetic sand while they watch television. And one thing I learned about ADHD, especially in boys, is that their learning happens when their movement takes place. So that's why they need to move their leg or they need to pull a rubber band or use a squeezy toy that their brain actually absorbs and learns much more quickly and retains information if they have a chance to move while they're learning.

13:58So I got kinetic sand for them and it's made such a difference. I can get them to sit and watch a movie and really enjoy the movie if they can play with their sand or have one of those squishy balls. Well that's a great tip. now before we started our live we talked about the netflix social dilemma you tell me what that conversation like to your boys your kids oh you know i'm so challenged because as an entrepreneur i love inventions right so this idea of learning and social media and what the world comes through your phone and you can learn so much i i was listening to a podcast this morning with tim Ferris and Richard Koch, who wrote the 80-20 rule, which is one of the best-selling books of all time, you know, 80-20 rule rules my world.

14:52Actually, as an entrepreneur, the best thing I think you can think of is getting, you know, doing your best and making the best decisions you can and never getting to completion. You have to make decisions and continue to move forward. So I think of social media is being such a gift to all of us but this this movie actually eliminated the issue that we don't talk about that faces us which is the addiction of these tools and how the developers of these tools have actually designed the tool to prey on or to support the weakness as humans that we have, which actually goes back to Pavlov, right? When you think of the Pavlov principle of ringing the bell and every time you ring the bell, you get a treat or a hit of cocaine or whatever they would do to stimulate animals, upon the bell ringing a stimulus, in essence, it's really fundamentally the same principle.

16:06so every inbound ding every inbound bing bong gong notification is intended to continue to give you these hits yeah of dopamine which trigger a response in you of connection and and excitement right and so the addiction of taking that away causes stress depression loneliness and to think about the fact that a device is what brings joy or connection rather than a human being and connection through contact is a radical shift in who we are as human beings and not even really yet determined what the impact of that's going to be for us in 10 years 15 years 20 years right so we're seeing we're seeing through our devices what we think of as news and we're reacting to it we're getting feedback or input on social issues and disparity in income and and political perspectives and really there's no one vetting whether it's true or not so we're reacting and it's and it's controlling how we think and how we act and how we purchase and what we look at and what we do and i it's kind of my blow i'm going yeah it's Yeah.

17:54Yeah. Yeah. Yeah. And I shared to my kids, I was like, you know, I'm kind of guilty of that. The algorithm, the vanity metrics for if you launch a brand that we look for it. Right. But at the same time, so I communicated to them like you have to watch it because me, I'm OK. I'm strong enough person that my emotions are not tied to how many likes or comments I get. Right. The younger with low coping mechanism, that's scary. Right. And my 12-year-old, Kate, this actually happened a week ago, which was my biggest, I think, fundamentally my biggest shift in how I'm seeing this movie today. It's a week and a half ago, my daughter came to me.

18:37She's 12. She's in sixth grade. And said, for Christmas, I wanted to know if I could get a nose job.

18:49and i at first i scoffed because i hadn't watched this movie yet and i thought you know what a nose job first of all she has this gorgeous roman nose her nose is perfect even if she were 18 or 20 past the age of parental consent do i think there's a surgeon who would really in good faith do a nose job on her. I don't. To do what? Right. I mean, her nose is perfect and it's perfect for her face. So it's not even me as a mom saying your nose is perfect. I think it would be weird to change her nose for any reason. But she turned and said, look, I have this like slight, you know, bump here. And I looked at her and she was kind of smiling.

19:41And I said, are you serious right now? are you just saying that to get me? And she said, no, I'm serious, mom. This is really, this thing really bothers me. And I, I would like to get it done. And I recognize that you may not give me the money to do it, but at some point I'm going to have it done. And I said, what would give you even the indication that there's something here on your nose that you would need to remove? And she goes, well, my nose just isn't perfectly straight. And so I've really noticed it bothers me. I thought, God, that's so weird. I mean, it's just like, it's so kind of left field.

20:13I mean, if it's just the strangest, like little micro nuance and the fact that she's even noticing it is odd. And then I watched that movie and I thought, oh my God, you know, there are these suicide rates and just deformity, like the complex and the perspective that they have watching these TikTok videos and how they're seeing themselves, the whole thing just gave me pause. So I don't find it a coincidence that that conversation took place a week and a half ago, and then I watched this movie. So now I'm on a mission. Got to fix this to the extent that we can. And by fixing it, I mean having the conversation, removing the shame, putting the conversation on the table and talking about it every single day openly as much as we can with our kids absolutely right absolutely yeah because it's shocking to me that this little girl at age 12 in sixth grade would even have an understanding of what a nose job is right yeah i remember my eldest when he was I think he was 15 I have a skincare business and he asked me mom how can a light in this spot or something it's like wow does it bother you because he's more tan he gets really dark like this is a better you would bother you with your color but I think that's over but that's kind of like questioning myself like what are these kids watching and who is really their their ideal person to look like yeah right yeah it is scary it's crazy so i feel like it sounds like there are some really smart folks out there who are working on this issue and i think in the next decade this is going to become one of the biggest topics that we're facing because i don't think yet we quite understand the implications of what all this means yeah you know what can we do like what is the conversation like like more deeper into what we know now right well and think about this right so how many people have you talked to in the last year who have said i made a statement And then the next day I looked on my Instagram and a feed came up for me of Bali or Red Roses or whatever it may be that we discussed that I've never thought of or considered in my life.

23:06And now all of a sudden I see it in my Instagram. Social listening. It's the listening. So that's going to become, I think, the next phase of conversation. because as as an everyday consumer i have alexa i have you know my phone i don't think you and i walk around considering that there's someone listening to what i'm saying or you're saying as somewhat like as in a big brother sort of way and considering how to retarget that back to me and you i don't think but maybe more more other people are more conscious of it i don't it doesn't even phase me right yeah for sure i know for sure elixa is listening so i tried not to like order through it it's like it yeah it's scary especially with a smart home where your wall is listening to you right yeah see i always i was under the guidance that alexa's not listening unless you call her name like alexa's latent and sitting there like a piece of equipment until you say alexa and then all of a sudden she's like yes but actually that's i don't think that's how it works yeah or like you can i mean i i know brands could manipulate alexa you can do what is the top a pillowcase and you keep on mentioning that brand so you recognize it and the same as the google voice right yeah so it is scary i mean what i just you know i feel really bad for the kids in the younger generation so i mean like what is their future is going to be it's going to be really interesting to see what happens in the next 10 years and today we have a president who uses twitter as a as a conversation platform and has been for the last four years.

25:09And so, you know, can you imagine, can you imagine five or six or seven years ago where we would have in a million years thought Obama would have some sort of one-way conversation with us through Twitter? Yeah. Like it would come through his press secretary. He would have his formal agenda. It would be discussed, you know, know with the media the media would then disseminate the information that's how it all worked right yeah so in the last four years we have as constituents had conversations with our president which is not then hasn't been vetted right he's not going through his press secretary no one's reading his tweets before he sends them obviously so that's a whole new form of communication right yeah are you kids on tech tiktok all three of them yes okay scrolling all the time all the time although i did get this recent uh software program i'll tell you what it's called it's called deco d-e-c-o have you heard of it no and it comes into your home and it um it controls your children's access to all electronics so in essence it's acting as a gatekeeper to all electronic communication.

26:46And I can set settings child, preteen, teen, or adult. And so if that's in essence by child, what those children are allowed to see through that device. I think the only downside to this is it can't control obviously their cell phone because their cell phone has its own Wi-Fi connection. But I do think in that movie it did say that you really shouldn't allow your kids to have a phone until age 16. So I give my child a phone when they are going to a friend's house or they're going somewhere and I need to access them. But I know now that I need to take the device away when they get home. and then allow them to have it as I would hand it to them and say, okay, you can use this and then hand it back an hour later and scroll through what they've been looking at.

27:47Yeah. It's a conversation that everyone, it's scary. It does scare me watching that movie. It's a huge, it's a huge aha. Because nobody has yet documented the actual with all of these tech thought leaders that there's this plan and discussion about how to re-engage people every hour of every day back on their device in the same addictive pattern as you would have the Papillonian theory, right? as to how to continue to engage, engage users. Yeah. The profit. So that's. And have you been off your phone? Have you literally gotten your phone and put it in to a box or taken it away for a day to five, seven days at a time?

28:51When was the last time you did that? I did that. I was doing road trip I turned off my phone for since this quarantine because I get like carpal tunnel syndrome from working through my phone so I tried to turn it off and or I put like the heaviest case so I know my my my hands can't handle it so I ended up not using it like yeah I was able to during april for like five days wow yeah how do you feel it feels so good my stress level drop yeah because i don't have to watch and i don't have to you know i stop watching the news a lot i kind of limit to watching political stuff because it's stressful and what's going on so yeah i i'm i tried to camp in joshua tree and have my peace i love it it's like i have better clarity not relying on watching my phone all the time right yeah it's a big deal to be a big deal did you feel stressed and overwhelmed when you got back and you had 100 texts and 500 phone calls i i even try not to return calls and a lot of junk like i would just like i was fine i think i was doing a lot of road trip you have to do it constantly to get used to it yeah yeah so i'm fine not relying my phone and do you let people leave voicemails for you and do you return them yeah yeah yeah i have a girlfriend who her voicemail is i don't do voicemail so if you leave me a voicemail i'll never return your call did it work for her it works you know for sure she's a beauty at big beauty entrepreneur tony co do you know her from nyx no what was the brand nyx cosmetics oh oh yeah yeah nyx right like they get acquired by l 'oreal yeah yeah yes she has a message on her phone and it says um so thank you for calling uh i don't do voicemail so if you leave me a voicemail i will not call you back if you want to reach me text me but otherwise i'm out i love it i love it now tracy let's talk about hatch beauty what was the what was tell me how did it how did you come up with the name when it all started tell me the story so my business partner creative um gentleman who's super creative came up with the name Hatch Beauty.

31:34We had Scout and Hatch Beauty, which in essence, the idea being hatching an egg or coming up with a new idea. So he had come up with the name back in 2009. And the idea actually came in the early 2000s, frankly early to mid when I would see long before Hatchby formed as a company I saw the need that retailers had to have incubated concepts that felt like third-party brands so it felt like a L 'Oreal brand or it felt like a Unilever brand but they wanted to have exclusivity so they really at that time Walgreens and CVS were very concerned about each other in market share Target and Walmart very concerned about market share at that time Sephora was kind of more concerned frankly about department store than they were about Ulta now I would say it's a Sephora Ulta thing but that was really the genesis which was retailers were really looking for a unique point of difference.

32:45They wanted a unique proposition, something that felt exclusive, but they wanted it to have all the bells and whistles of a third party brand. So they wanted, they're not interested in control brand. They weren't interested in private label. They wanted a brand that had social media. At that time, social media was Facebook and website. Like, you know, in the beginning of this idea of incubating brands, it was really, how do you have a website presence and then how do you drive allure and cosmo and vanity fair and at that time magazines how do you drive awareness of the brand through traditional print media and the big business idea that i had to form hatch beauty which we were truly the first beauty incubator in the United States at that time next to Mesa, which was one of our competitor who was a French-based company.

33:47And their primary business was, frankly, in Europe. They had very little business in the U.S. when we started. They're primarily a fragrance business. So they would do a lot of private label fragrances for Zara and companies like that. but the the idea was really born from the needs of the retailer and then when i was in europe in 2004 2005 i saw what what boots was doing at the time with number seven and with botanics and then in 2005 i saw boots bring number seven and botanics to the u.s market and put it inside it right is it target yeah and they had 18 linear feet inside a target and 18 linear feet of boots based brands including soap and glory which was marcia kilgore's brand um after she left bliss She went to go develop soap and glory with the Boots team.

34:50And then as I dug into it more, I realized that Boots had a fully vertical organization. So they had an incubation arm internally. They had an R &D arm. They had a marketing arm. They had a manufacturing arm. So they own contract manufacturing facilities. And I was so impressed as an organization as to how they thought. So as a retailer, their solve for how to find a point of difference from other competitors in their market was to create brands that they would own and they would drive the distribution and the strategy around marketing and promotion within their own stores. But then what I found fascinating is that they successfully took that brand and put it into another potential competitor retail set, even though Target wasn't necessarily a competitor at the time because it was in the U.S.

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37:19So I was fascinated at the idea that someone like Target would find a retailer-owned brand compelling. And I thought, you know, there is an opportunity to incubate brands with exclusive retailers as a launch pad to get the brand into distribution and then look for complementary retail partners to co-launch with after a certain exclusive period. And I wonder if we could do that and it would work. And it was really that simple. Like, this seems pretty interesting and nobody else is doing this in the U.S. market. I wonder, you know, at that time, Target was probably the closest retailer to Boots.

38:09They had Sonia Kushek. And so they were developing Sonia Kushek product through their procurement and development teams. and they were working with her as the influencer in the creative arm and then they would go seek suppliers to to fill those those items for them but really there was no other retailer in the U.S. market that was capable of doing that and so I thought there's a really big business here and I wonder what it would take for us to launch this concept and year one Trader Joe's and Overweighty were our first two retail clients and your two CDS was our first big retailer client and then Target and then Walgreens and then Walmart and Sam's Club and Costco and we just kind of continued to build our business momentum and so from 2010 Jan 1 or Jan 2 when we opened our doors By the end of 2016, we had generated over$450 million in revenue.

39:20Wow. Wow. What was the first brand you launched in those retailers? Our first brand in year one, which has actually full circle come around this year in COVID, our first brand in year one in 2010 was a trader joe's uh hand sanitizing product because we had h1n1 wow so we did over a million units of plant-based hand sand that year so we had an aloe vera and just kind of plant um related product but we did quite a bit of hand sanitizer in 2010. And then we developed a Bath & Body range for Overweighty, which is a Western Canadian-based grocer, much like Kroger up in Western Canada. And we developed a line of Bath & Body-related products, all fruit and fragrance and scent-based.

40:20My business partner had been formerly with Baffin Body Works. So he kind of took the heritage of what we had done, what he had done at Baffin Body Works and brought it into our year one product with Overweighty. Wow. It was fun. And that year, that year we did 2 million. Year one of our business opening, we did 2 million in revenue. A million of it was consulting income. And then about a million of it was product sales. Love it. And then year two, we did almost 10 million in revenue. About 8 million was in product sales, or maybe almost 9 million in product sales and almost a million in consulting.

41:06And then year three, 13 and a half million. And then year four, 50 million. Wow. I love how you remember your figures. Um, no, yeah, yeah. Now how do you deal with that? Like, cause I know for sure CVS, they have it a different look and then the packaging, a different one. Like they have this different, how do you handle with that as a brand? Like, cause they, cause they like different things, right? Consumer does. Um, yes and no. I mean, at that time we were working with Selma Hayek and she had a real vision for what she wanted for her brand. So we, we developed skincare, hair care, body care, color, cosmetics, and nail for Selma and CVS was the customer.

41:58What I think we realized as we, you know, each of our brand incubation projects requires the retailer to come with consumer data and consumer shopping habits and kind of what's happening on their extra care card because in CVS's case there are more extra care card holders than visa holders in the United States. So you have to imagine they're coming with incredible data on what their consumer is buying when she buys x when she buys y where is she purchasing is her price sensitivity around certain price thresholds and what are her considerations in terms of purchase and what does what incentives and sends her to purchase so that's hugely helpful but one of the things we realized and i think the aha for hatch beauty which we stumbled upon it wasn't actually thoughtfully a strategic decision but we had an aesthetic for prestige so imagine the type of product that we would buy or shop for was something that we would purchase at a Sephora Ulta.

43:10But we figured out the value chain of how to bring that aesthetic to a mainstream mass retailer and make it feel prestige. So I think we were truly the first company who interpreted the trends of what was happening in prestige and the trends of what was happening in terms of package, in terms of product efficacy, performance and then successfully brought that to a mainstream customer for a reasonable price. So we certainly were not the cheapest brand in the store ever, nor was that ever our intention. Our intention was to deliver great value to a customer on trend with a product that they would be excited and love to use at a price that was maybe a third of what you'd find at a Sephora.