528: How Kosas is Redefining Beauty with Sheena Zadeh [VIDEO]

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0:39Just head to omnisend.com forward slash founder without the E to get started. All right, now let's jump back into the show. The early days of Kosis are the days I'll never forget. I was on a hike in Hawaii. I saw my first sale come in while I was on that the hike. I was expecting it to be like my mom or my cousin, but it was someone that I didn't know. It was an actual perfect stranger. And that was like a very exciting moment for me. There was an article that came out in the New York Times and the headline was a lipstick line for minimalists. That hit really hard because we'd been going through this long standing phase of heavy makeup.

1:20And I remember telling myself, yes, this is working. Keep going. You have to have some naivety to start a business. I only knew what I knew at the time that I knew it. That was very important because it made me really look in a myopic kind of way where I didn't know what the longer term story was going to be because maybe then I wouldn't have done it at all.

1:44Hear the stories, learn the proven methods and accelerate your growth and future through entrepreneurship. Welcome to the Founder Podcast with Nathan Chan. The first question I ask now is, what did the early days of Kosis look like? The early days of Kosis are the days I'll never forget. They're the most memorable days. They're the days that I wish I had cherished a little bit more in the moment. But I do think I actually had the wherewithal to do that. Here's what the early days look like. Everything funnels through one person and that person is me. and in a lot of ways that's awesome because actually it just means you can go really fast because you don't have to disseminate information you don't have a team there isn't like an ops person and a finance person and a marketing person and a anything it's all in one head and what that means is you just are like going and there is no job too big or too small It is just all about daily obsession and fixation on how I can solve a variety of problems.

2:56And that early stage, really, that early moment sets the stage for the rest of the business, which means that you adopt the mindset that nothing's necessarily going to go right all the time. Like, we're mostly just trying to solve a bunch of things going wrong so that sometimes we can have things go right. and that actually never changes throughout the lifetime of the business. Yeah. So they say that like you just get the problems don't get easier. You just get better. You just get more. Yeah. You just get more used to it. You accept it more as a reality. You don't think it's weird. There's nothing odd about there being a problem every single day.

3:34That's all a business really is. It's a lot of problems that you solve every day. You show up, you solve problems. Yeah. So how'd you start this incredible brand? People would look now and say, wow, this is amazing. How did you start? Where did the idea come from? How much did it start? What was the MOQ? Talk us through those early days. Oh, the real nuts and bolts in the details. That's such a funny and good question, actually. I mean, it started with just a love of makeup. Like I had a love of makeup. I had a very early vision on a point of view that I had on makeup that had to do with skincare efficacy, the feeling, the comfort level of makeup, the actual look of it, like it being natural, really wanting to help people find things that look super flattering, really transformative, are good for your skin and are like perfectly calibrated with regard to color.

4:27So my special skill is with regard to color itself. I think like that's just an innate thing that I am born with and that I have a lot of interest and passion and excitement around. So that's like the nugget. That was like the initial inspirational nugget. And that's what led actually starting and going down the path of wanting to create a beauty brand. From there, when it was like, how do I start? What am I going to start with? I had to pick a product. I was so product focused. So this is where I was coming from. I love makeup. And that means that I am like a very, I call myself a maker. I think you can either be like a strategist or a maker or a performer, or, you know, there's a lot of different types of people.

5:18It's really good to figure out which one you are. I'm a maker. I like to make tangible products. So I went in with the mentality of product first, and I didn't think about brand. I didn't think about my audience. I didn't think about that kind of strategy. I wasn't like going out and getting all these like agencies to make me all these decks. It was not about that. It was about, I want to make the most perfect lipstick in the world, like a lipstick that's never been done before. It still looks like a lipstick, performs like a lipstick because I didn't want to change that gesture that we're so used to.

5:48But like from the ground up, this is a completely new formula. And that's how I went in with, like, that's how I actually went into the business was just creating those first four lipsticks. Now you mentioned MOQ. I learned that phrase along the way in those days. And what like the weirdest thing in the beginning was when they were like, well, you have to have a minimum order that, you know, a minimum quantity by shade. And I was like, well, what is that minimum quantity? At that time it was a thousand pieces per shade. And so I was like, okay, so if I make four shades of lipstick, I'm going to have 4 ,000 pieces of lipstick.

6:27And I am everything, right? There's only one person in the company and it's me. My biggest question was, what does 4 ,000 lipsticks look like? Like, can I, can you tell me like what amount of space that takes up? Because these are going, going to be going to my house. And that's exactly what happened. So I've got like a sense of what 4 ,000 lipsticks is going to be like, there's this many boxes this is a size there I was like can they fit in the trunk of my car like is that gonna be okay so yes it was I drove to the manufacturer when they were ready I picked them up I put them in the trunk of my car I drove them home I unloaded them they lived in a room in my house and I put them up on my website and I started packing and shipping them literally from my house and that's how it's there you go and you know how'd you get your first sales I like I don't know I how I got my first I had a single page website so I was like I want to make this really easy I didn't have buttons I just had like it was there wasn't a menu where you could select anything you go to you would go to kosas.com and it was one page and it was one lipstick two lipsticks three lipsticks four lipsticks that was it add to cart checkout I um I was on a hike in Hawaii and I had the four lipsticks with me and I was like doing my social media like content it was actually everything it wasn't just social it was all the content capture was like me taking pictures of lipsticks on my iPhone I um had my own personal Instagram with like very like barely any followers it was mostly friends and family and at like I had a young baby then and she was grown up now and I would post pictures it was really like the mom community I was like hey guys I you know just launched this lipstick, this makeup brand.

8:14Yay. Congratulations. Welcome to the world. And like, I saw my first sale come in while I was on that hike. And it was just the greatest part of it was when I, cause I was expecting it to be like my mom or my cousin or something like that. But it was someone that I didn't know. It was an actual perfect stranger. And that was like a very exciting moment for me. I felt like I connected with a consumer. That's what happened in that moment. And that was just the first one. Yeah, there you go. So did you have like a press strategy, like a wait list or you just launched it to the world? And like, did you, was the site on Shopify or?

8:49Well, this was 10 years ago. The site was on Magento. I don't recommend that. We've made, we've made the migration since then. That was a painful moment to experience, but no, back then the site was on Magento. I didn't, what I think strategy is a word I wouldn't use in terms of what I had back then. I did a couple things though. This was 2015. So like setting the stage, this is before the algorithm in 2015. So Instagram was like in order. Remember those days? Yeah. Yeah. Chronological. And so I had thought about like, well, I need to send this to anyone that I know, everyone and anyone else, send them a lipstick and they can post it on Instagram, but like Instagram wasn't like that big of a, it was, I thought, I guess what I was doing was influencer marketing, but we didn't have that phrase really yet.

9:44Um, so that was one thing that I did. I would mail them out like individually and follow up with people and be like, please post about them. Um, that was one thing. The second thing that I did that I realized was a potential workaround. Cause I wanted to get the product on celebrities and have celebrity exposure, but I I couldn't access the celebrities directly. So I found a roster of all of the makeup artists who worked with all the celebrities. And they were all part of agencies. There was a handful of like really top tier agencies that represented the makeup artists themselves. I called the agencies and I got the list of all the artists and the agents.

10:26and I packed them all little like little bundles and drove them over there and dropped them off like on their desk and they distributed the product to the different makeup artists and I actually did get like quite a bit of coverage doing that because they would use it and they liked it I think that only works if your product is great but they would use it they would like it their client liked it it wore the entire night it was like very red carpet approved plus it was clean ingredients. So it was like, it was just the right thing at the right time. And then I did have the one final thing, which was the wherewithal to hire PR, which was still a relevant thing.

11:04I think it's quite a bit less relevant now. Like I wouldn't necessarily go in with that as my very first strategy. But at that time I did. And I got lucky enough to find somebody who had come I'm from like a huge public relations background in product PR from New York who was like totally burnt out and wanted to come and like work only, only, only with tiny brands. So it was the perfect match for me because I wouldn't have been able to pay those like huge retainers. And it was just sort of this like one-on-one relationship. And we would get on a plane with a container of lipsticks and go to all of the publications, Like all the magazines are just hit them like 30 minutes at a time, like sit there, give a spiel and leave them with product and leave.

11:51And that actually was another really important thing because I would, they did like the product too. And it really legitimized the brand very early on. It set us up as what I want it to be was, which was a prestige brand. Hey, founder fam. I want to take a quick break from the show to tell you about something we're really excited about our Black Friday offer because this Black Friday deal is different. If you're listening right now, chances are that you want to start a business of your own or you want to scale up your existing business. And if you've ever said, I'll start one day or maybe I need more help one day, Founder Plus was built to help you make it happen.

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14:06I was like known for being terrible. So I didn't want to put that on my product at all, even though I knew that it was, but it wasn't based on anything other than my love of plants and my love of things feeling really good. And like knowing that there's a lot of really incredible textures that you can accomplish when you're using a lot more like plant-based ingredients and a lot less plastic ingredients. It's the difference between like when you wear silk or 100 % cotton and it feels great versus like polyester and polyblends and polypropylenes, which feel cheap. And that was where I was coming from.

14:43I wasn't coming from like this needs to go into Whole Foods and basically not work. So I kept it under wraps for the longest time until the consumer caught up. And there were a couple of things that happened, which were there were a few retailers that started popping up that were trying to tell the story of what I just said, which is that the good ingredients are actually quality ingredients. And so there's a way for us to achieve maximum efficacy and still have a luxury experience while using these clean ingredients. So those early retailers contacted me because they read my ingredient. They were very diligent.

15:21They read the ingredient lists of all the Kosas lipsticks. And they said, hey, you're formulated this way. And I said, I know, but we don't talk about that because we don't want to be perceived as a brand that doesn't perform. And they were like, we're trying to solve the same problem. So we actually got together. And this is when I understood the power of retail for the first time, that they're telling that the retailer is telling a story. And how can I partner with the retailer to strengthen the brand story of Kosas? You talk about retailers. I want to talk about that more. I want to, like, who was your first retailer?

15:57can you talk me through the strategy there but before we do actually i'd love to go through the numbers right like what what did the initial investment look like how fast did you sell out how did you know you were on to something did you did you launch this business on the side like did you were you working in a day job um no i went full force into just doing this the initial investment was a sub a hundred thousand dollars so it was really small it was really like built on blood, sweat and tears, I would say. With like myself being the main marketing engine in that I would talk about the brand and talk about the brand story.

16:39And I was very comfortable doing that one person at a time. I still am at the like, ultimately, like I said, I'm a maker, like I like to touch things. I like to actually get my hands on people's faces. And that was how I started very much like being out there on the road. And I said yes to absolutely every opportunity that I had to be in front of human beings telling the story in whatever fashion possible. So that saved me a lot because I wasn't like spending money on media or do I mean, not that I could have I had no choice. It was a matter of not having any other options. I didn't work a day job.

17:17The cool thing about makeup and beauty in general is it's a very high gross margin business. That's what makes it really attractive. So in the early days when you're not spending and it's just like yourself going out hawking your product, you have profit on day one, which is great and amazing for that moment in time until it got to the point where if you're still continuing to be profitable with a business that small, like that just means you're not investing in brand marketing. And like that moment does need to come. And that came for me about three years after I launched the business. Retail wise, my early retailers were all very small boutiques because I was positioning the product.

18:01And I think like it's a loud and crazy space. And the competition at that time was all like huge mega, like longstanding brands with massive budgets. So how was I going to stand out was I was positioning the product, which was the lipsticks at that, you know, when I went from four to eight lipsticks, that's all I had for two years, I didn't keep like launching and adding new products, because that's what got expensive. But that initial lineup I positioned as an accessory. So I would put it in fashion boutiques as an accessory, be like, well, you have to get like a belt, a shoes, a hat, and a lipstick.

18:37Like that's what completes your look. And it was relevant to the DNA of the brand because I always felt that makeup needs to move with you and needs to be a part of who you are. It tells a story of your overall look. It's not about that like floating head and shoulders that we had seen for so many years, almost this like mannequin-like presence of makeup. Beauty is very personal and it should be. And so like being positioned as an accessory in that way was part of the brand's DNA. So it really went with the story. And so those were who the early retailers were. Then we moved into sort of those clean retail partners, like the Goop, the Credo, the Detox Market.

19:17That helped us really catapult by telling a new story, which was basically creating a category, clean makeup. I mean, that was a really important moment. And then from there, when it really began to mainstream is when our partnership with Sephora started and that was a whole different animal. Got you. And when it comes to early wins that you saw you were growing as you were growing, I know you had a, an article, a mini article in the New York Times. Can you tell me about that experience? Yeah, that was about six months in. So I was very much operating under the principle of minimum viable product.

19:56I was going to invest as little as possible with as few products as possible and see if this worked. And I was looking for a sign. And six months in, there was an article that came out in the New York Times. And remember, I was the head of e-commerce. I was the head of shipping. I was the head of marketing. I was the head of product development. So like nothing got by me. So I could in real time see like the sales would come through on my iPhone, like, you know, literally like emails. I would see them happening live, which is so fun. I'm so glad I went through that. This article came out in the New York Times and it just was like immediately.

20:35And to me, like I was blown away. I was like, oh my God. And the headline was a lipstick line for minimalists. And that I think was something that hit really hard because we'd been going through this like longstanding phase of makeup and heavy looks and like that whole Instagram, YouTube era that I think like was really entertaining, but not practical. And it didn't connect. I didn't connect to it. And I think a lot of other people didn't connect to it either. And now all of a sudden you were having this person saying, yes, I love makeup, but I also want to look like myself. Like, is that possible?

21:14And that was really the first time I was like, okay. And I remember telling myself, yes, this is working. Keep going. That's what that moment meant to me. and when did you have like a pinch me moment where you were just like we said yes this is where you keep going but when did you actually know that you're going to be okay right like a hundred thousand dollars that's a bit of money right like you know like it's it's a bit of money for like first part like first business like it's what if it didn't work you know like like when did you when did you know kind of like yeah i'm on to something well i was measuring so at that in those early days, like I, we were profitable, remember, which was exciting.

21:56I actually made the money back like relatively quickly, which was great. But I, I remember the first thousand dollars. That was like the hardest thousand dollars to get. I remember the first$10 ,000. And then I remember the first hundred thousand dollars and those things started to happen faster and faster. I started to achieve those milestones faster. The first thousand was the most special. That was the, that's the thing I'll never forget because I can't believe it like that even that even one dollar could have happened um was so special to me but pinch me moment I mean it only continues to get harder the stakes have gotten way higher the responsibility is significantly different 10 years later I mean there's an entire team behind us and um it is not I think the pinch me moment really like is the it's like the honor of being able to have people come and want to join my team that's the thing that feels like there's a movement being created that there is like something here to be a part of that's what I feel like is a really big deal because I think it's much deeper than the revenue and the sales and the retailers and any of that stuff it's that like there's a place that people want to come to it's interesting when you start a business right you start it from a place oftentimes of just wanting to create like you said you like you'd love to create right you love to make and it's fun but then as time goes on you want to build it you want to grow it you need people around you and you need a team and then you have to make this transition to actually like an actual ceo right yeah and you have to manage people and it's a totally different job as opposed to just the early days like you said it was it was some of the funnest times how have you managed that transition i have i mean i got really lucky with that and i think like one of my strengths i and i think this is an important strength if it's something that you don't have has to be developed if there's ever going to be a company is how do i manage a team How do I attract a team?

24:11How do I understand myself so deeply so that I really know what my strengths are and what my weaknesses are? And then how do I develop a trusting attitude? Because when we hire a team, when we bring people on to take over like entire chunks of our business, we have to be able to let that person run with it to an extent, right? I mean, of course, you're not going to be reckless or anything like that. But the point is always bringing in people that are like smarter than myself into the room, like, and which is, you know, in certain areas, that's not that hard to do. But once I've run everything, like once I went through that experience of running everything on my own, I, my, my radar for like what I was looking for and the caliber that I was looking for and understanding the difficulties of organizing in an entire ecosystem of a product business, which is so different from a service business because you're – I mean, you are everything, right?

25:10Like you're a manufacturer. You're a quality control. You're a media company. You're an entertainment business. Like how are you going to be able to oversee all of that with a very clear and distinct vision and then people kind of running each vertical in the right way? So that like instinct radar for it, knowing what that looks like when you see it and then being able to pass the baton. You'll lose the relay race if you hold the baton and you don't pass it. That's how you lose. To be able to pass it, to have that trusting skill as an entrepreneur when you have a type A personality and maybe have some controllingness and that's how you got into this business in the first place, that's a place where you have to check yourself deeply all the time on a continual basis.

25:59And then know how to have the flywheel go where you're like checking back in and you develop a collaborative relationship. That's what I have found to be the most successful is when I'm collaborating with my team. I'm not delegating down to them. I'm not micromanaging them. I'm not coming from a place where I'm questioning their intentions. I think having like healthy debate around a strategy is really important but we're now talking in a very high level way and that's where I I feel like I've been like both lucky and also like very intentional about and being able to find a CEO who for me what that meant was like okay like let me lay out the parameters of what's going on here this is a business that's really near and dear to my heart, I'm creating it because it's wrapped up in my emotions about makeup.

26:57It's wrapped up in my desire to tell stories around faces and beauty. It's wrapped up in my purpose, which is to make things beautiful and to completely shift the mindset of the whole entire beauty industry to a new way of thinking, which is makeup is for revealing the best parts of yourself. It's not for fixing and hiding yourself. That's where we used to be. And now we're in this new place. So that's like a mindset shift. And I, the founder, I'm still here doing that work. So how am I going to partner with a CEO who's going to love that about me? And that was like the question that I asked myself.

27:39And I go back to like people's experience. I met with, I don't know, a ton of people. It was the one that ultimately told me, I can't do my job if you don't do your job. It won't work if we don't work that way. Because I had others tell me, or at least I got the sense of, I'm going to need you to get out of my way so I can take over here. Like that was a work because that you would lose the sparkle. You lose the magic of the business if you do that. But the one that got it was the one who talked about it in that way. And it's been four years and it continues to be that way. I would say that if anything, my roles and responsibilities have increased, not decreased.

28:25It's not like I handed something off. It's just that they're two separate jobs. Being a founder and being a CEO are two separate jobs. They're totally two different job descriptions. Yep. I agree. And those responsibilities evolve and change as your company gets bigger? They do and they get more specified. We go from the jack of all trades and wearing all these hats, which I was doing because I had to, to the better way of operating, which is being very specific and sharp about what you do. I'd love to talk about Sephora. When did you launch into Sephora and what advice would you have to smaller brands looking to get into Sephora?

29:06I launched in Sephora in 2019. And it was when they were beginning to have this program or like they wanted to really lean into the consumer demand around clean makeup. I will tell you that by that point, I had started to do strategic work around my brand. I had really developed brand DNA, a voice, a look and feel, like a very specific approach to product. What is the look? What are our product franchises? How do we define the different categories in makeup? All of that became very, very well defined to me. Pricing strategy was part of that. The type of brand you are was part of that. so like if you think about those um the two axis of like where you know where you fall into like are you a mass consumer brand are you a prestige brand are you a high price point are you a low price point like that kind of double axis study that you should everyone should do on their brand I had already done that it was through doing that that I understood that we really wanted to like take a stance on being a prestige color brand.

30:20And once you know that, then it becomes pretty obvious that the right and best and only place to do that is Sephora. That's the partner that makes sense. I wouldn't suggest to a brand to try to get into Sephora or any retailer without first doing that work because that might not be the right answer for your brand. It needs to be the right fit and it needs to make sense based on how your positioning is working, what kind of category you're in and all of that. So Sephora was a result of that. Obviously, it's been and it was the right answer, right? I mean, it was also the most exciting moment in my life when I received the first email from them saying like, we want we're interested in your brand.

31:05I was like ugly crying in my car in front of the preschool dropped off my daughter. Like I couldn't believe it. But that was just the first conversation. It was still two years from that first email to entering the first Sephora store. And how did it go when you launched? Gangbusters? Yeah, I mean, kind of. Yeah, every moment feels like gangbusters in that moment until you're comping that same moment the following year. So it's a matter of like slow and steady growth. I don't, that's what I've really learned too, is that growth needs to be consistent. And like one explosive moment that isn't followed up with more growth behind it is exactly how yours are made.

31:54It's a flash in the pan. Like there's a lot of different ways to say it. You don't want to be that. What you want to be is somebody who's growing steadily over time. Yeah. And you guys have had incredible growth, especially over the last three to five years. You've also expanded. So you're much larger range of beauty categories now. What do you consider when you're looking to launch into a new category? we I mean I always go I'll go back to the brand DNA the brand the brand DNA and I'll define that for you too is it's a framework that we use to define the truth of the brand the heart of the brand DNA like it's like what we have in our bodies it's like it happens at conception so it's like unchangeable sort of you know for the most part and it's the truth of who you are it's a fingerprint.