“Your Business Network Is Everything”- Aaron Chatterley Sold Feelunique To Sephora For Millions

0:00He finally got her. Oh my God, he got her. For years, a deranged man in Wichita known as the poet stalked Ruth Finley. He sent her letters, gifts, and poems. The Wichita police put everything they had into Ruth's case, but got nowhere. The poet was always two steps in front of us, and we just didn't know why. And the city was already living in fear under the watch of another monster who called himself BTK. And he also had a thing for poetry. Could we really have two different people? But no one could have guessed how this would end. That's one of those Hitchcock endings that we did not expect.

0:42From Sony Music Entertainment and Numetric Media, this is The Poet. I'm Rachel Brown. The Poet is available now on The Binge. Search for it wherever you get your podcasts to start listening today. Subscribers to The Binge can listen to all episodes all at once, ad-free. Most people miss this in business. The people that they're most likely to work with are the people that they enjoy spending time with. You know, no matter how great your terms are, that's the magic sauce that most people just miss. Welcome back to The Businessmen, the show where two blokes with more enthusiasm than sense attempt to build a skincare empire while talking to the most interesting minds in business.

1:25I'm Ben Shepard, flying solo because, as many of you will know, Joel Domont is currently knee deep in the trenches of new dad life. He's covered in muslin cloths. I'm covered in product samples. But together, we remain fully committed to our goal, bringing our men's skincare brand for skin into the world. If you're new here, you can catch up on the whole chaotic journey by subscribing wherever you love to get your podcasts. Or if you'd prefer to watch on the YouTube, you can head over there, see what we look like, see us sweating in this heat and subscribe too. Every week we sit down with people who have built, broken, rebuilt and reimagined businesses.

2:01Today's guest fits that mould perfectly. I'm joined by Aaron Chatterley, entrepreneur, beauty industry heavyweight and co-founder of Indoo, the teen makeup brand rewriting the rules of youth beauty. After he sold Phil Unique, one of Europe's leading online beauty retailers, Aaron could have, of course, taken a breather and enjoyed a well-earned pause. Instead, he found himself drawn straight back into the world of beauty this time noticing something everyone else seems to have overlooked. Young people relying on products that weren't created with their real needs in mind. Indoo is his answer, a brand built with teens for teens, rooted in empowerment, creativity and a proper sense of representation.

2:42It's a story of vision, timing and refusing to accept that's just how the industry works. Exactly the kind of entrepreneurial spark we love on this show. Enjoy.

2:55Aaron thank you so much for joining me on The Businessmen. It's a real thrill to have you here. I was talking to Joel about the fact you were coming in and he was so excited because of course everything that you've already achieved within the world of skincare and beauty is a mine of information that we'd love to extract in the nicest possible way. Let's start at the beginning. Yes. Before we get on to the extraordinary businesses that you've launched and created what was your first job? My first career choice was a drummer. I wanted to be a professional drummer. So I skipped out of school and moved to London to pursue a career in drumming.

3:30I kind of said to myself, if I get to 25 and I'm not going to actually make a proper career out of this, then I will quit. So when I got to 25, literally, I dropped my sticks pretty much. and the company that I was working part-time for gave me a full-time job. So I ended up going into marketing, into telecoms and marketing at that point. Worked my way up through the marketing team in comms. Went to work in the Caribbean for a year. So I spent a year there, really got my feet under the table in terms of like internet marketing, understanding about websites when businesses were kind of coming out of print brochures and deciding whether they needed a website or not.

4:14came back from a year in there and then I spent a year with cable and wireless in Europe advising companies about building building websites for their for their businesses some big companies in Europe and what I realized that during that period was that a lot of businesses that I was talking to trying to find somebody to actually build these websites for them was was really quite the challenge because there weren't that many companies building you know that you could go to that understood not just the technicalities of a website, but how to get customers, the branding and all these other bits.

4:49My girlfriend's dad at the time had a print business in the Midlands and we were living in Oxford and I was commuting backwards and forwards to London. And I said to him, I've got this idea. I think I'm just going to quit my job and start a business building websites because my clients can never find somewhere to get it done. And I was earning really good money. We just bought a house in Oxford. And I thought, he's going to go apeshit. He's like, what the hell are you doing? My daughter's got a life. He's a customer. You're going to quit your job for this stupid idea. So I was chatting to him and he said, oh, this is a great idea.

5:21He said, I can see all my clients are starting, you know, like he had a big printing firm in the Midlands. He said, a lot of my clients are starting to kind of like look at this new technology. He goes, how about if I put some money into it, how much do you need? And I was like, well, I don't know, 30 grand sounds about right. Pay my salary for a bit. I can find some people. He says, well, I'll give you the 30 grand and you give me 30 % of the business. And then you can access all of my clients that are looking for websites. And I was like, bloody hell, this is brilliant. So I thought, this is great.

5:53I'm in. Yes. And I then went online because I had no idea about how to design a website. I knew how to sell it and I knew the fundamentals of why the market was there. So I went online and I found this freelance designer. I phoned him up and I went, look, this is a bit left field, but you're designing freelance. You're doing a few websites. I said, look, I've got this opportunity. I said, look, this is a bit random, but my father-in-law's just offered me some money to start this business. I'm not a designer. And basically I persuaded him to join me. So we started this little company. Three years later, we had a lot of my father-in-law's clients.

6:30We had Sky Television. We had Antico Flooring. We had this whole Jaguar Land Rover. We did stuff for 12 employees. We were turning over a pittance, four or 500 grand, but we were making a bit of money. And then we sold the business. The software company came along in April of 2000, who all the kind of big software companies at that point wanted access to web technologies and e-commerce and stuff, and they bought us. so I sold that business like two months later and then moved back to Jersey a couple years later and then but when I when we sold that business I had a four-year exclusion I couldn't start another business in the internet for four years and we made a bit of money out of it not enough to retire on but enough that I could bum around at like 30 and do very Jersey yeah I was not that entrepreneurial kid at school you know for me it was like sometimes an idea comes along as an entrepreneur and you think it's the best thing ever um but then you realize cost of goods are too high or the you know the brand's not going to land or people don't actually want it but and and then you forget that the idea ever existed and i probably had dozens of those over the years but this was one of those moments where with that web design thing i was like the more i thought about it the more it's like some and then sometimes these ideas get to the point where you go we just got to do yeah yeah yeah and that was the case then it's probably happened twice since I'm sure it would have happened with you guys.

7:57So, yes, we sold that business and then I had this exclusion. And then, but in 2004, when it was coming out, I was like, well, I need to do something because the money's going to run out. I was like, well, the only thing I know is about building websites. A couple of my friends had a business called Play.com in Jersey. I don't know if you remember that. Yeah, what was Play.com? They sold DVDs, CDs, video games. Yes, yes, yes, yes. This is in sort of the late 90s, early 2000s. Absolutely. And in the middle of 2004-ish, these guys were the biggest employer in Jersey at one point. They had over 1 ,000 employees in Jersey, Heathrow, Cambridge.

8:34They were absolutely killing it. I mean, turning over hundreds of millions, making enormous amounts of money. And bear in mind, their business wouldn't exist now because it's all downloaded. Of course. But it did make me look at it and think, you know, these guys are, you know, they found a niche online. They found a vertical market. And then I looked at ASOS and they were starting to own high street fashion. Net-a-Porter were coming through with luxury fashion. Amazon at that point were really known for books. Yes. So I said to my mate Rich, like, I really want to do something. But if we start an agency, we can only scale it so far.

9:08But if we can find a vertical market like these guys have, the potential is endless because there must be these vertical markets out there. So long story short, we hit upon beauty. and at that point in time there were a couple of players but they were they were a bit more niche they were either very focused on hair care yeah they were very focused on premium beauty or mass or you know just fragrances but there was there was no real kind of beauty player that kind of really offered that full proposition in the way that at that point mostly women tended to shop beauty even you know my wife worked at clarence for nine years she loves the brand but she will still buy you know a dior lipstick and a clarence moisturizer and a maybelline you know lip gloss for five pounds and it's a multi-brand multi-category so we were like well actually if we if we could start something which kind of ticks that box and does what the department stores really were doing then on in store that could be an opportunity so long story short actually not that short now long story, slightly less long.

10:15We started a business called Feel Unique in 2004 as a multi-category, multi-brand retailer from Jersey. We built that up over the next sort of 15 years. It was self-funded. We never really raised any money. I was going to say. We put 35 grand in each. But that was at a time when digital marketing was easier. Building a brand was easier. And retail, as you will find out, Well, actually, building a brand is a lot more complex than building a retail business. Retail is quite straightforward. I buy something off of them. I mark it up. I put it on a shelf. I market it. And then I sell it to them and take a cut.

10:57It's fairly straightforward. As you are already finding out, brands, complications, formulations, testing, clinical trial. It's just like packaging, compliance, regulations, opinions, like textures. It's super complex. Waivers. Yeah. But retail was quite straightforward. If you want a glimpse into me and Joel running a business, we'll sit down, send a quick email, and 10 minutes later, we're still staring at it, trying to sound clever and polite. Luckily, though, Samsung Galaxy AI makes that a lot easier. Writing Assist works straight from your Samsung keyboard, helping you get your point across clearly without overthinking it.

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12:18Decencies apply. Find out more at samsung.com slash business. But people weren't really buying beauty online though, were they? No, they weren't. And that was our biggest challenge. They were starting to buy online. They weren't necessarily buying beauty online, but they were replenishing a lot online. It was starting to happen. and so we broke even in month 18 which is pretty much where we predicted and we took virtually no salaries obviously but we had this really really fortunate and clever cash flow kind of solution in that when we started the proposition when we started for Unique was everyone's going to love this we're going to build an amazing website and then I'm going to pick up the phone to all of the big brands because I know nothing about beauty I'm going to pick up the phone to all the big brands and with my powers of persuasion I'm going to persuade them to let us sell their products online.

13:06So we built this amazing website. We got an office. We put a bit of money into it. And then I spent two or three days phoning all the big brands. And you name them, Yves Saint Laurent, Chanel, Dior, L 'Oreal, everyone. Literally 99 % of them told me where to go. Are you insane? We only sell through department stores. We only sell through, they were like, we're not ready for this. There's all the kind of heritage brand situation. and then we were like, oh my God, no one want, Nivea let us sell their products and then a couple of other very small random products. We had no inventory. It was mental.

13:43And at that point, are you thinking maybe, I'm thinking, what the f*** about that? Yeah, yeah, yeah, yeah, yeah. Maybe we have bitten off more. Maybe we've bitten off more than we can chew. But then doing a bit of Googling, discovered what's called the grey market. Brands will often, you know, overproduce. They'll put pressure on their distributors to take more orders at the end of the year. The distributor's got too much stock left. They'll pass it off to these gray market wholesalers. So we discovered two or three of these gray market wholesalers that can basically sell us everything that we want.

14:13And it's all branded. It's all branded. It's the legitimate product. The high-end prestige. It was literally everything we wanted. All the fragrances. It was everything. So we spent like, we got both of their kind of inventory list. We uploaded everything onto our website and just said it's in stock. And we had nothing. We had a room this big with a couple of desks and some empty shelves. But both wholesalers did this deal where if we ordered something by 3 p.m., they would put it in a box and send it to us for overnight delivery, almost for very little difference. And we were able to buy it so cheap because these guys are so cheap.

14:49So we would get an order, say, at 2 o 'clock. And especially when you first start, you'll get one order every couple of days. That's kind of how it is. You get the odd sympathy order, and then it slowly starts to build. So we'd get an order for sale, like, I don't know, like an Elizabeth Arden eight-hour cream. Yeah. Three o 'clock, phone up the wholesaler and say, can we have two Elizabeth Arden eight-hour creams and two Yves Saint Laurent, two Chocolat, or whatever it was. The next morning, the box would arrive. And our thinking was, well, someone likes it. So if we get two, we put one on the shelf and send the other one out to the client.

15:23Amazing. And it just went mental. You know, we were really lucky at the time because paid search and all that stuff was really, really cheap. And basically we built the business and we became such a pain in the ass so quickly to the manufacturers that eventually after years of persuading and banging down the doors and just being nice people and being honest with them, we were like, look, we're not going to go away. We need to find a way to work together. And we had this conversation with all of the big brands. And slowly over the course of sort of four or five years, we managed to get direct supply with actually with all of them.

15:56And then we built the business up and sold it to LVMH Sephora in 21. So going back a little bit, did it go so incredibly crazy at that point because the price point was so desirable? Yeah, we were the cheapest. So people then found what they were looking for and they couldn't get in the shop. Yeah. for it was going to cost them 55 quid. Well, they could get it in the shop. But it was going to cost them 55 quid and you were selling it for something extraordinarily cheap. Not extraordinarily cheap, no. We were probably selling, on average, probably 10 % to 15 % cheaper. Okay, so significant enough.

16:31But there were one or two products where we realized very quickly, and there's a product called Yves Saint Laurent Touche Clat. Yeah, well... It's a concealer and it was the product. I can remember makeup artists everywhere whacking Touche Clat, like a bucket load on my face. So in the mid-2000s, that was the product. Yeah. and everyone was buying it, and people were looking for it online and searching for it. So we had this kind of clever bit of software that if you searched Tusha Clout on Google, you get the paid ads come up. We were always 50p less than anyone else. And was that an algorithm that you'd worked out?

17:07It was just the way that kind of the Google ad works. We were able to kind of make sure that we were constantly 50p. so what started as you know day one we bought two within months we were buying 500 and we were just leading with that so the price the retail price is probably at that point about 21 22 pounds and at one point we were getting down to like 13 pounds and just literally giving that particular product away and it was just dragging so many customers in and actually it was interesting because it was it was it was yves Saint Laurent who were owned by L 'Oreal Lux that was the the the first brand to where we sat down and, and, and they were like, all right, you know, we need to find a way out of this because there was nothing they could do because we, you know, we were selling their products that they had somewhere down the supply chain, let, let get onto the market.

17:57Yeah. So we built it up and then, you know, we, we, I think probably the last seven or eight years we were, you know, a hundred percent of our products were directly supplied by the manufacturers. And did that alter things then from the website's perspective? Did it make the products, you could still price them at what you wanted to price them No, actually, no. It was interesting because when we, we actually, it was a conversation with E. Saint Laurent probably about 2009-ish actually, where they said, look, we will, and with L 'Oreal generally, we will let you have our products legitimately. but you need to have a store because there's this thing called selective distribution in Europe.

18:37They don't have to supply you if you don't have a physical store. And you need to get rid of all the grey market product on your website. Not just ours, but all of it. Because they didn't want to be associated with a business that was selling grey market. If you guys want us to support you as a legitimate distributor of beauty products, we need you to be completely legitimate. So was there a concern at that point that you had built up this market and this business with all of this opportunity of products that were come about in a very sort of rigorous way, but actually they were going to force you to change in order to get the prestige of having them direct to you.

19:11They were going to force you to change your model. Yeah, and I think we knew that we could probably scale more efficiently with direct supply because buying from wholesalers was hell when we were doing so many numbers because we'd have to arbitrage between different suppliers. We wouldn't get the full range sometimes. We wouldn't get the latest drops. We wouldn't get the gifts for the purchase that the brands were getting. So we knew that we had to ultimately, if we really wanted to kind of accelerate growth properly, we needed to be legitimate. So we ended up having these conversations and it was literally you have to have stores.

19:44So we found a chain of, bizarrely, this guy in Jersey had three beauty stores that had all of those brands in. He wanted to retire. We bought those very quickly. And then I had to go back to my board and say, right, I want to get rid of all of our gray market product. so we are now going to have to buy those brands for more than we currently sell them for in some cases and we're going to probably mostly have to sell at retail price but i think longer term it's going to give us a much better position and it did you know and actually sales kind of went up at that point because suddenly we've got the full range we can then we can then be the good guys but we can be the only kind of beauty retailer that's not got any gray market products we're not like the competition.

20:27And, you know, but we spent like two or three years. The business was built on relationships because it was those conversations where, and the initial conversations were like, you know, I just emailed all of the general managers and the CEOs of these big businesses and said, look, I know we're a pain in the ass. I know you're not going to supply us, but I'd love to tell you what we're going to be doing over the next few years. And longer term, we'd love to find a way to work with you. I'm not asking you to do that overnight. And none of them are going to say, no, I don't want to hear about that.

20:54They all literally said, okay, come on, let's talk. So we went, we talked, you know, you build a connection, you build a relationship. And then when they're ready to make that decision, I think it's so important that most people miss this in business. The people that they're most likely to work with are the people that they enjoy spending time with. You know, no matter how great your terms are, that's the magic sauce that most people just miss. And we lent so heavily on that. We probably didn't get the best margins compared to our competitors, but we had all the brands that no one else had, like Chanel, Dior, Charlotte Tilbury, all the real premium brands before anybody else, because I'm not taking this myself, but the team of people that we employed were really good at relationships.

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22:50Always read the label.

22:54Before you got to selling to Sephora in 21, was there a point when you and your business partner sort of sat down and went, this is really going to work? Was there like a moment when all of a sudden it wasn't just an idea that you felt had legs, but it was tangibly, goodness me, I think we're correct. Yeah, if you asked him, you'd get a different view. If you asked me, it'd be like the moment I had the idea. Right, okay. I'm like, this is... You just knew? Yeah, I just knew. Whereas he's very cynical, which is great, because if we were both like me, the business would have gone bust in six months.

23:35And if we were both like him, it never would have got off the ground because it just would have felt overwhelming and crazy. I tend to focus on, we started the business with nothing. We put 35 grand into it. We never really raised any money and we sold it, you know, 16 years later to RVMH. Can I ask how much you sold it for? The headline value is 132 million. We didn't get that, obviously, because when you start bringing in private equity and all their crazy horrible debt structures and capital. And again, we did okay out of it. So we had this period about three or four months in between selling it in, I'm going to say around June 2021 and the completion in October.

24:18And during that period, I'd agreed with Sephora that I would stay on for a year. Okay. So I agreed that I would stay on for a year and just kind of in a transition. The CEO was staying on, Sarah. And I was with my kids in Mallorca with my wife. my wife was at the hotel I'm like a massive fan of like theme parks and water parks Me too Love it Oh my god I'm obsessed So me and the kids are in There's some good ones Western Water Park in Magaluf We weren't staying in Magaluf Some of my favourite holidays as a teenager in Magaluf I know I love Magaluf but my wife BCM's come on My wife in Magaluf Not a hope in hell So me and the kids gone to Magaluf We're literally lunchtime eating chicken nuggets in the middle of the water park And my kids at the time, they're 12, and they've got the most crazy fashion.

25:09Twin girls. Yeah. They've got T-shirts down to their knees. And I'm like, where do you learn about this kind of, where are you learning about these? Because I know, you know, they go to a school where they wear uniforms. I'm like, how do you know? And as you can imagine, it's TikTok, it's Snapchat. And the brands that they're buying into, teenagers, there are some really cool and obvious teenage fashion brands. Subdued, Brandy Melville, there's a whole kind of raft of them. So with my beauty hat on, because I'm still employed by Sephora at this point, I'm like, so how do we as a retailer, how do we reach that audience in the way that these very authentic brands are getting you to buy their fashion products?