How One Brand Made Sephora Create an Entirely New Product Category

0:00They took a chance on us. We were the first electrical tool in store at Sephora. Hey everyone, welcome to Shopify Masters. I'm your host, Shuang Esther Shan, and this is your companion for starting and scaling a business. Before T3 revolutionized the hair industry, consumers spent hundreds of dollars on makeup and beauty products, but cheaped out when it came to their hair tools, often settling for the limited drugstore options. That all changed when Dr. Julie Chung, alongside her husband and co-founder Kent Yu, launched the first premium hair tool back in 2004. Julie is here to share how T3 not only altered the hair aisle, but the beauty industry altogether.

0:44Welcome to the show, Julie. Thank you, Shuang. I'm happy to be here. I'm so happy to chat with you. I know the idea for T3 actually came to you when you were still a medical student, and you noticed that people spend a lot of money in beauty, makeup, skincare, but they didn't really invest in hair. So talk to us about the beginning of this idea. Yes. So to your point, I was that person who spent a lot of time in care on my clothes, on my skincare, being Korean. I sort of grew up trying and wanting to be an aesthetic person. My mom sort of ingrained that in my head and any Korean or Korean American woman will tell you.

1:29So I was obsessed with, you know, cosmetics, skincare, fashion. But when I was in med school, I met a guy, met my boyfriend who quickly pointed out to me that I seem to spend a lot of time and money on these things, but I had hair tools that really weren't serving me. I was always complaining about my hair, how it's frizzy, how I can't dry it or style it very well and doing it with you know, a$20,$30 dryer that I bought eons ago. And so that was the beginning of an idea. Amazing. And it's kind of crazy to think about that you're trying to also bring this idea to life because someone might've had that thought and they just kind of let it pass.

2:16So how did you then pursue to develop something from an idea to an actual viable product? Yes. So at the time, 20 years ago, the hair tools category was very much relegated to the home appliance section. So even though it's tools are clearly devices that women use every day, and as part of their styling routine, you would find hair tools really next to toaster ovens and blenders and vacuums. So I think no one really thought about tools as beauty per se, and about making tools specifically with the end consumer, the woman, the modern woman in mind. So it seems like such a simple idea, but at the time the whole category wasn't even in beauty.

3:05So I think it was hard to sort of, I guess you could have looked at the common hairdryer at the time and say, why can't we make this better? But I think it took a beauty perspective to see that this was not being used properly by women and that women were not viewing it as a beauty tool. So it was a really, we really had to look carefully into the category and realize there's a huge white space, not just in developing a better tool, but in bringing hair tools into the beauty category. And it's amazing to hear because your life and business partner, Kent, your boyfriend at the time, both of you actually decided to invest in the idea.

3:49So where were some of the first steps the two of you took to start developing? Yeah, so we developed this idea maybe a year into dating. I was a medical student at the time at UC San Francisco. Like I said, I met this guy. He grew up with hairdresser parents in the hair world, so had some understanding of what the salon world is like, meets this girl who's sort of really wanting to be more in fashion and beauty, but went into medicine because of her tiger mom. And although I do love medicine, he clearly saw an opportunity to do something for me. My husband, he's now my husband, thankfully, is the ultimate feminist.

4:29And he's like, how can I make her something better? So it really started off as just him trying to make me something. And it sounds so funny, but of course he had engineers and designers through access through that, through his parents. So he went ahead and developed this dryer and it became clear to me the first time I used it that it worked extremely well. It dried my hair in half the time, but more importantly, it left it really soft and frizz free. I didn't have to soak it in bio silk or any type of oil to sort of keep it calm. And so it became clear that this was an idea worth investing in.

5:11And so at the time, he had some money scraped up from his job in finance and in Silicon Valley, and I had no money. But we asked friends and family for loans and found a factory that was willing to make this very new product for us. I love that the beginning of product development was such a romantic gesture. And having that relationship with production partners also often intimidating because you now have to test and iterate and give feedback. So how was that process for yourself and Kent? You know, at the time, 20 years ago, there was so little technological advancements in hair tools or specifically I'm going to talk about the dryer because that's the first item that we came out with our hero item.

6:02And it continues to be the category within our hair tools assortment that I'm very passionate about, you know, making adjustments in terms of understanding airflow and heat and the way in which it comes out and how women expect their results to be. even working towards that goal made a huge difference in performance for the dryer. So let's just say the bar was very low in the hair tools category to begin with. So when we came out with our dryer, it was clear that it made a huge difference in styling. And that was evident when we would see stylists and editors alike who were reluctant to try us in the beginning, but it really became clear that the product was high performing.

6:49So, you know, looking for that factory who could make that product for us was difficult given the small amount of money that we had and that we couldn't make a, you know, have a big run in terms of the quantity that we could order. But that first product really blew people away. Pardon the pun. And, you know, we were able to do$3 million in sales in the first year out, which is really crazy because we were told, you know, at$200 a dryer at the time, your average dryer was$25. We were told there's no way anyone's going to buy a dryer like that. So in this case, product had to be king. If it didn't work, then it wasn't going to sell because it was already 8x what the average dryer went for.

7:38And of course, iterations on that dryer really came from feedback. I was customer number one, a person with a true need. And we would talk to stylists, talk to our consumers. At the time, there was really no concept of sort of community and community building. At least that wasn't said out loud. And for us, it was incredibly important to stay connected to everyday women like myself. And then of course, stylists to make sure what we were doing was meeting their expectations and how could we further improve on our product based on the feedback we were getting from our community. That's incredible.

8:17So where were some of the strategies you used to enlist stylists into that initial group to test and also give you the feedback that you were looking for? So back 20 years ago, stylists really weren't seeded at all. So for us now, when you're coming out with a makeup line or a hair care line, you automatically, it's clear that you would seed not just influencers, but stylists and professionals. But back then, stylists really weren't seated. So they were excited to receive free product, number one. And then the product was extremely beautiful. That was the other sort of differentiating factor between us and the other guys 20 years ago.

8:57I wanted a tool that sat beautifully next to the things on your vanity. You know, in beauty, you have these creams and perfumes and cosmetics that are extremely beautifully packaged and look beautiful in your vanity. But then you would have a large, clunky garage tool like black hairdryer, extremely heavy, sitting right next to it. So I needed it to look beautiful. I needed it to be lightweight. The packaging was different. 20 years ago, you usually had a woman on the box, hair flowing in the wind, a plastic inset so you can see what's inside. But we were inspired by the simplicity of Apple. just put a beautiful product image, not a lot of copy on an all white background.

9:40We got a lot of pushback from retailers initially, but stylists who themselves are very aesthetic and can appreciate when something is beautiful would receive these products and use them simply because they look so different. And then once they started using it, they of course recognized that the performance was by far superior than anything else on the market and super lightweight, which is important for a stylist who's blowing out drying hair all day long. I know stylists who have like shoulder issues and carpal tunnel. And so seating stylists and then editors who refused to talk to us in the beginning, they told us to go to Good Housekeeping.

10:21They said, why would we ever talk about a hair tool. It's not something that we write about, but what we would then do was just leave the dryer with the editor and say, okay, well, thank you for your time, but this is our gift to you. I'd love for you to try it. And people started writing about us just based on how the product was working. So there was very little marketing per se. We just needed to get the tools into the hands of at the time, these were the influencers, right? And they still are now too, but stylists and editors who had the ear of the consumer. I love the persistence and truly allowing the product to speak for itself.

11:02And I think there is also that important component of educating the customer, because to your point, this was something that was eight times the average hairdryer at the time. So how did you go about basically advocating for this product and for this price increase for people to pay attention to this new product? In this case, it was really PR and what stylists were saying about our product. You couldn't convince anyone to spend that amount of money at the time, but there was quickly a lot of buzz about the product. And then again, when you just look at the product, you realize there was something very different about it and it looked very, very luxurious.

11:48So it was a little bit easier to realize and understand that perhaps this product costs more. And then of course, a year later, Sephora came knocking and was willing to put it into their stores. And of course, that's a huge validation knowing how important Sephora is in the beauty world and really bringing brands that you need to know about to the consumer. That was a huge validation for us. and assurance for the consumer that this must be worth the money. I think that also shows how forward-thinking Sephora is, because to your point, yes, hair dryers are next to appliances, and they were willing to bring a product that is thought of that way into their stores.

12:33How was that experience like? Because I think, you know, getting their email or their message is one thing, getting that PO is great, but then you also have to figure out the logistics of fulfilling that order. First of all, when we were contacted by Sephora, I mean, we were thrilled. I mean, Sephora was and is our North Star in terms of really making sure we have a presence there in brick and mortar. You know, they took a chance on us. We were the first electrical tool in store at Sephora. So they didn't have anything that you could plug in, number one. And number two, these boxes are big. So when you're a retailer and you're looking at how much you're getting per square inch of shelf space, it's a big commitment.

13:18So they definitely took a chance on us. And thankfully, again, because of how amazing the product is, the T3 Featherweight, our very first dryer, flew off the shelves and they couldn't keep it in stock, which of course meant that we need to fulfill. And so in those first year or two, it was hard because it was just us. And fortunately, we were making money and we weren't taking investors. So it was a struggle. We'd be up all night trying to fulfill orders, not just to Sephora, but also to all the salon distributors who were also asking for more and more product as our company grew. Logistically, it was hard.

13:59I think nowadays, if you grow like that, immediate thought is to raise money and to grow your company quickly. But really, it was a slow burn, sort of old fashioned way of just, you know, figuring it out on our own and just trying to, in the beginning, fund it ourselves. I think it's so important, not just for 20 years ago, but also today because profitability and building your own runway has become so important in this economic climate. What's your advice for new founders who are in the beginning stages where, you know, they need to invest in inventory, they need to think about scaling, but they also need to have profitability in mind while they're doing so?

14:44I think one thing that I would advise that moving slowly is okay. I think a lot of brands, I mean, I love seeing the brands that come out with an amazing idea, raise tons of money, grow really big quickly, and then exit, you know, for hundreds of millions of dollars. And that is always wonderful. Who doesn't like that? But also building a brand and making a product that is needed, that works well, and that people will continue to come back and buy is in the long run, the most important thing. So I think that slow, sort of steady, thoughtful growing of your business is important and not to necessarily feel like you need to grow quickly.

15:32I would hang on to as much of your company for as long as you can. And maybe that's a little bit old fashioned in the way that we're thinking, but we still continue to be 100 % owned by my husband and I. It's a family run business with no investors, no outside money. And that gives us freedom too. It gives us freedom to make products that we think make a difference. It's meaningful innovation with intention and careful consideration for whether or not the products that we come out with are truly building our brand and maintaining the loyalty and trust that we have built over 20 years with our community.

16:16So for me, I would say it's the slow burn and careful brand building and making an outstanding product because at the end of the day, no matter how much money you have and how splashy your marketing is and all your activations are and all the influencers that you hire. If your product is not outstanding, people won't come back and it hurts the brand. Yeah. Product is truly at the core. And I love that you've stayed a family business and also self-funded. Can you share a little bit more about the philosophy and the decision to remain that way? Maybe because we're control freaks. It could be that.

16:55my husband and I and then you know we have lots of friends who are founders themselves and who have done the opposite and have done very well um and then some probably some cautionary tales about losing control and perhaps compromising on products or having to expand your range maybe beyond what makes sense for the brand these things we um weren't sure if that was something that we wanted to deal with. It's not to say that we wouldn't consider it in the future if we had the right investors, but for now, it's been working well for us for 20 years. And of course, a lot has changed within the last two decades in the hair industry.

17:40Recently, Dyson, a home appliance brand, has decided to make hair tools. How are you maintaining your competitive edge? Yeah, I, you know, when Dyson came out, It was interesting to us because we tried to take and did take the hair tools category out of the home appliance space. To have a home appliance giant come out with a hair tool was kind of ironic. We welcome the competition. And to be frank, we can thank them for expanding the consumer mindset and how much they're supposed to spend on their tools. You know, at the end of the day, we're David and, you know, Dyson feels like Goliath to us, but we had to stay true to ourselves.

18:20and continue to focus just on hair tools and continue to really listen to the everyday woman and the stylist about what they need. And it's sort of a feedback loop of meaningful innovation and not innovation for innovation's sake. And I think that still is very unique to us. And we're still the only ones who do that, who really are making tools for everyday women and really, really care about your hair health. I did go on to finish my medical degree and become a doctor. So when I say something is healthy for you, it's part of the Hippocratic Oath for me. It has to really be healthy for you. So for me, it's women's wellness, making them feel good on the outside, which of course affects them psychologically.

19:05We're a very human company, which I think is very different from my vacuum company colleagues who, like I said, did an excellent job creating awareness for spending more in the hair tools category. And there's room for everybody. I think Dyson does a great job with the way they design their tools and sort of creating a lot of buzz around innovation. And that part's important. Yes. And we also innovate meaningfully where we think it's important. But for us, it's about really connecting with the woman and really understanding what it is that she needs and providing results that she's asking for, not results that we think she wants.

19:50But it's in communication with women and stylists. And I think that still very much separates us. You know, at the end of the day, I like to say to myself, you know, who cares truly about women's hair and stylists? And I can say with certainty, it's T3. We've been around longer than our vacuum competitor counterparts. And we'll continue to be here another 20 plus years because we're very in tune with our customer because the mission is different. It's not technology to wow you with technology. It's meaningful innovation so that the everyday woman's life is easier. She can style effortlessly without feeling intimidated by all the different attachments and all the whizzing and, you know, sort of flashiness of the technology.

20:44We found when we speak to women that they find this intimidating, that most women throw away their user manual. Most women can't be bothered to figure out all the different ways to use all the million attachments. Because I will tell you, as a woman and speaking to many a consumer family and friend, we only have one or two hairstyles. We don't have 10 different looks. You know, we're not most of us are not influencers who can spend the time to really concentrate on all the myriad number of ways to do our hair. So it's one of the reasons when we came out with the Air 360, which is our air styler, I made it very, very simple.

21:23I said dry, airbrush, brush it out style, and then curl. And that's because I was finding out that women were very confused. Our air IQ is also very simple. You just plug in, it's a smart dryer, the first one on the market. You just plug in your hair type and it does the thinking for you. It will set the velocity and the heat at the level that your hair needs and will adjust according to attachment. Why? What woman wants to spend hours in the bathroom figuring stuff out? I don't know one woman who I've talked to who's ever said that they love just sitting there figuring things out and laboriously working on their hair.

22:05We have important things to do other than their hair. We want great hair quickly and we want that result, that styling result to last. We have other things to do. There's so many other things to figure out for sure. I think one of the amazing things is also that for T3, you also figured out what the consumer wanted, maybe. And it was also something they probably didn't think about or were ready for because it was revolutionary in a way to think about the health of your hair and offer something that was premium. So I guess like today, how are you thinking about offering something that might be things the consumer might not even know that they're ready for?

22:49That might be just a few steps ahead, but you're also kind of developing with that thinking in mind. Yeah, that's always the toughest thing, right? Is to try to predict. Well, first of all, we very much know what are sort of the latest concerns that women have. and develop products to try to address those concerns. We're a problem solution-based company. It's not us telling you that you need this without understanding the issues that you have. But yes, creating products in an area where women don't necessarily realize they need help in that area is difficult. And that's where the messaging is important.

23:31That's where understanding your consumer very deeply is important because the way in which you message it can affect whether or not she accepts it. But you won't know that unless you understand sort of the psychology of what she thinks about that. And hair is hard. I think women, I kind of see it as a psychological conundrum for most. Most people will tell you that it's a battlefield. Most people feel emotionally connected to their hair. So when you message new products or new ideas, you have to have that in mind. And I guess that's also the human side of T3 is really understanding what barrier can I get over in that woman's mindset and that one topic so that she can appreciate why a product is useful.

24:25To your point, which is a good one, I don't think anyone's ever mentioned this to me. You're right. Hair health wasn't really thought of as important. It was just hot, hot, hot, heat, heat, heat, get the style, but without thinking about how it compromises hair health. And you're right. It did take a lot of time to convince and tell women that they needed to spend more because they really need to think about their hair health and the long-term effects that it has in your hair. Yeah. And I think the other aspect of having a product that's premium and that is of quality is the fact that this is something someone will use for years to come.

25:07So from an outsider's perspective, someone might say, well, does that hurt the customer retention or the repeat purchase? So how do you think about customer loyalty and retention? Yeah, that's a really good question. One of my favorite and funny stories I like to tell is I have stylists come to me all the time who tell me how much they love my products. And then they'll describe the product that they have because I'll ask them what they have and they'll forget the name of the product. And they'll say something like, oh, it has these beautiful rhinestones on it. And I'm like, rhinestones? That takes this product back to 2005 or 2006.

25:47And so you're right. People do tend to hang on to their products. And it's a tool, right? So if you could buy a foundation and not be into it three months later, and you have no problems just sort of throwing it away or putting it aside. But when you have a tool that's this big, and it was an investment, then yes, you don't necessarily want to upgrade it too quickly. So it is hard to come out with products that will make you want to change it out, that will make you want to consider another style even. But I will say all of our products look beautiful side by side and are sort of like a set, if you will.

26:25They look beautiful together. So I think that really encourages customers to come back and then purchase the flat iron and the travel dryer and the curling iron. And we do see this amongst our very loyal T3 customers that just come back because they can rely on performance regardless of the category of tool that they're looking at. And of course, like I said, meaningful innovation and evolution of our products, we have to convey to customers effectively that the dryer that we made 20 years ago was fantastic at that time. But our AIQ 20 years later, you must and have to believe that the motor is, you know, 20x stronger and that'll last longer.

27:09It's smarter. The way in which we generate ions is different. You know, all of it just is an upgrade. So there is definitely education in terms of convincing the customer to let go of their perfectly fine, wonderful dryer that they bought 10 years ago. How can we then get them to consider, you know, upgrading? And that's always going to be the marketing conundrum, right? And also at 2x the price of what it was 20 years ago. I will say we're really good at design and making a beautiful product. And sometimes it's as simple as, wow, this product looks extremely beautiful. I thought my dryer was beautiful 20 years ago, but this is outstanding.

27:53That will also really push women to decide on the more technologically advanced dryer. And I also feel like there's a butterfly effect, especially with stylists or those who really love beauty. They definitely will bring their friends into the T3 family as well. So even if it's not the customer coming back really frequently for an upgrade, but they'll be advocates for the brand in their own way and bring friends into getting their own T3 products. Absolutely. And also, we make a huge investment into the stylist community. They're at the forefront. They're our ambassadors. When you ask your stylist, what's the best hairdryer I should be using?

28:37Most people will just buy whatever their stylist says. So it's incredibly important to us that stylists trust our products, use our products, and can very confidently say that this is the right thing for your hair. So it's also validation from stylists. And then of course, you're right, word of mouth. And most stylists will tell you they remember the first time they bought their first T3 product. We've been around for much longer than our primary competitors. And that goes a long way. So there's something we've been hinting and acknowledging even at the beginning of the show is the fact that you are a medical doctor, an eye surgeon.