617: How A Failing Skincare Brand Became An 8-Figure Makeup Empire | Aliett Buttelman

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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. Imagine if your brand had a single viral moment to change the course of the entire business, turning years of grinding at$20 ,000 per month into seven figures in sales in just 48 hours. Well, today's guest, Elliot Buttleman, is the co-founder of Fazit Beauty, the makeup patch brand that broke every CPG rule in the book on its way to becoming an eight-figure business. And after years of grinding on problem-solving skincare patches that barely moved the needle at$20 ,000 per month, Elliot and her co-founder Nina made a bold pivot to aspirational glitter makeup patches.

1:20Then came October 7th, 2024. Taylor Swift wore Fazit's gold glitter freckles to a Chiefs game and in 48 hours, everything changed. So in this conversation, you're going to learn why aspirational products can outperform problem-solving products in saturated markets, the exact organic social strategy that generates over half a million views daily, and how bootstrapping gives you the freedom to break every industry rule, like going all in on Amazon when experts say it'll kill your brand. This is a masterclass in pivoting, in patience, and being prepared when your overnight success moment finally arrives after years of building in the dark.

2:01Hear 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 that I wanted to ask you is it's the Kansas City Chiefs game in October 2024 I don't know the exact date it would be here in Australia but what was going through your head when you turned on the tv what happened I had been an entrepreneur for eight years and I will never forget October 7th, 2024. I don't even want to say it was my lucky break, but it was compounded years of the grind and the grit and everything came to fruition.

2:56I came home from a workout class. It was about 7 p.m. and my husband had the Monday night football game on. I ignored it as usual, but this Monday was a little bit different because the Kansas City Chiefs were playing. And I now started to tune in a little bit more because Taylor Swift would make an entrance and I was always interested to see what she was wearing. And I get a message from a content creator on our FaZeit Beauty Instagram account saying I think Taylor Swift is at the game right now wearing FaZeit's glitter freckles. And I just blacked out. I was a little confused. although I did plant the seed months in advance and I look on my Instagram explore page and the whole explore page is a zoomed in photo of Taylor Swift wearing my brand phase of beauties gold glitter freckles and the internet broke I looked at the tv screen I see her doing her stadium tunnel strut and I just bawled my eyes out and somehow my husband captured this whole moment on video and that was really the moment that my business phase it beauty changed yeah so I want to unpack that because you know that video that your husband captured that got over 10 million views not on purpose but then what happened next is over a 48 hour period phase it sales was you know over seven figures but you guys were prepared right like you like you you didn't run out of stock so so talk me through what led you to that moment i want to go back because you guys have had pivots through the brand it hasn't always been easy like you said you've been doing this for eight years your co-founder started another brand like talk me through like what led to this it really is when i reflect back all timing and i think as an entrepreneur especially in the early days, you really want to strike gold.

5:01You want that retailer investor to say yes to you. And if I look back, those are the times that we weren't ready. And I think the Taylor Swift moment happened to my co-founder and I in our business when we were finally ready for that next phase of the business. But my co-founder and I met when we were about like 21, 22. She had started her first skincare company. Iwix is a consultant for her and we had years of experience working together and going through trials and errors of what it was like to build a business and took those learnings to create something together 50-50 which was phase it beauty and the early days we started as a skincare acne care brand.

5:45We were selling pimple patches, ingrown hair patches, silicone and scar patches. And we were really learning the different lessons of building a brand, everything from figuring out how to raise money for the first time, how to manufacture a new product that has never existed on the market. And we failed over and over and over again. And we're trying to figure out how to make product market fit. And we're close to not having any more money left to run the business. And finally, we found product market fit with the first ever makeup patches that we developed. But really, to have a Taylor Swift moment and to capitalize on such a viral moment, you have to lay the foundation for your company to be able to succeed in that moment.

6:39I actually just called another company who just had their own Taylor Swift moment. and they were like, well, we don't, it happened, but we don't know what to do. She wore the product, pictures are all over the internet, but like what next? So this moment can happen to anybody, but if you don't have the right people behind the brand and know how to capitalize on this moment, then the moment didn't matter to begin with. So there's a lot to unpack here. So you met your co-founder Nina as you were consulting for her you started phase it together with just$13 ,000 of your own savings for founders listening with limited capital what were the absolute must-dos to stretch that$13 ,000 can you give us some detail and specificity because that's really helpful for people listening and watching yeah I mean I would have definitely spent my money much differently than we did.

7:37Again, you're going through a lot of that trial and error. I believe people should run their business at any phase with the mindset of I only have$13 ,000 in my bank account and really running a company lean and thinking through, do you need to, you know, take this marketing opportunity or spend that amount of money? Will that actually move the needle for my business. But in those early days, it went to designing the product, the packaging, our first samples, having a little bit of inventory, hiring a graphic designer to do that. And that was really mostly where the money went. We couldn't afford, you know, some fancy website developer, you know, to come in and make a custom website.

8:21I remember looking at competitors like Hero Cosmetics and Starface, and they had these sick websites. And mine looked like from the early 2000s like dial up internet, which was so embarrassing. I wouldn't show anybody in my community what I was working on. And what we realized is the only thing that was technically free that we could control and that we were good at was social media. It wasn't designing graphics on Instagram. I remember being on Canva and trying to make something pretty and it looked like a disaster. So we went on this new platform called TikTok and we were trying to figure out what was resignating with, you know, people on this new platform of, you know, how do we build a digital community there?

9:05And we leaned in and, you know, through trial and error and testing different content strategies, we found something that worked that we didn't have to pay for. And then I would say, you know, we we've invested quite a bit in the early days of seeding to influencers that that's where we really thought we would move the needle with the business. And all that cost was shipping and the cost of the product for us. And that's really all the money we had to work with. We didn't have someone for email marketing or SMS, like all of the traditional levers that I would pull today. We had no resources, capital or skill set to be doing any of that.

9:49Yeah. And how did you come up with the original idea? it's interesting to me what you mentioned before you said two words product market fit well three words product you said three words product market fit you didn't have that with the launch of this product tell me tell me though because it sounds like you thought you did so tell me what what research did you guys do how did you come up with the original concept of your first line of products with the acne patches but then you pivoted what caused you to pivot because this is this is really critical because a lot of founders they would just see the end story of where you guys are at i want to know how you came to the decision of pivoting but before that how did you come up with the first idea and what were the leading indicators that told you the first version of the product products was where to go yeah uh so my co-founder nina labruna her background is in product development and I was consulting for her on our first company, Labruna Skincare.

10:53She came to me during COVID and said, I have this idea for this dermal patch technology and it's with this ingredient that it's existed for a long time but nobody's made it cool called hydrocolloid. There is a few companies out in South Korea working with this product. Only one company called Hero in the US who's making these tiny little pimple dots. Shout out to our friends at Hero. She's like, but I'm really noticing these micro trends on TikTok that the pimple dots, people are using so many of them to put on their face. Maybe we should launch larger size of this product for people dealing with maybe more cystic acne or have larger scale breakouts.

11:37What do you think about this idea? And I'm certainly no product developer. I was like, I don't know anything. I mean, this sounds like another passion project on the side. I'm happy to help you work through this. And she ended up convincing me during that time to start a company with her 50-50. So we launched the first ever multi-shape extra large acne patches. And this was for this acne community. And we were really driving this messaging of acne positivity. And beyond there, we really wanted to push the boundaries of, okay, what else can we do with this patch technology? What else could this be used for?

12:13Can we infuse ingredients into it? So we launched the first ever ingrown hair patch for men's beard area and women's bikini line. We launched the first silicone acne scar patch for people who had cystic acne, maybe cleared it, but now have these raised scars. So we were really, you know, figuring out what we can do with this new dermal patch space. We had seen patches being used with vitamins for a hangover or, you know, melatonin for sleep. And then there was the pimple patch market. And we were really doing something new in a space that hadn't existed before. We had traction on social media.

12:50We had interest from retailers. We had interest from investors. And I really think it was the matter of it wasn't the right time for us. There was traction. There was something there. We had innovated something that had never existed before. We had cracked the code on TikTok, but we still couldn't get industry people to give us like that stamp of credibility. And we were hitting goals, but our lives weren't changing overnight. You know, nobody was really taking a chance on us other than us. And I think we knew something had to change or else we didn't know how much longer this business could last.

13:31And I remember my co-founder coming to me saying, so I printed these manufacturing samples of this. It's like it's a patch, but the patch has these like little glitter stars and it goes across the face. And I was like, what? What does this have to do with our progress over perfection skincare blemish line? And this this I don't know how like as a branding marketing person, how do I weave this story to, you know, glitter makeup across the face? And I don't know if it was necessarily my aesthetic at the time. And she was like, you know what? I'm going to send you some products. Let me know what you think.

14:14She calls me and says, I'm wearing these in Los Angeles. People are stopping me on the street saying what in the world is across your face and how long did it take you to make that design? and she said no no it's it's this patch they're you know kind of these like glittery looking freckles and uh she sent them to me i try them on i go out to a really nice restaurant with friends in new york city and at the end of a dinner the maitre d hostess comes up to me and says ma 'am i just want to let you know i upgraded your table because we're so obsessed with your makeup and immediately started seeing this community and connection over this maximalist makeup we were wearing and I called Nina and said okay I'll figure out a way to weave this into our progress over perfection skincare patch line let's launch this product and at that moment we had raised a little bit under$200 ,000 really to get to the next level we had urban outfitters take a chance on us in the U.S.

15:17they're a specialty boutique if you're not familiar with them usually typically at malls for Gen Z clientele. They put our ingrown hair patch in 10 stores. So we had a little bit of money and traction. And I said, I hate our branding of phase one. I, as a founder, can't get behind our original designs. It's overtly Gen Z. Everyone was trying to push this gender neutral, multicolor tie dye look. And I said, if we're going to continue to work on this brand and needed to feel like an extension of me as a founder. So we took our money, we rebranded completely, and we were going to align this rebrand with the launch of the first ever makeup patches.

16:01And this was April of 2024. And at that moment, we launched, the launch story is actually quite interesting. It was Coachella Weekend 2 in Los Angeles. I said, this is the perfect moment to launch this product except our manufacturer couldn't get the product to our warehouse in time so my launch plan was ruined and I remember crying on the phone to Nina like this was our chance we've missed the moment we sent a few manufacturing samples to friends going to the music festival they made it made a video getting ready before the festival wearing the product just not even like the finalized product they posted the video the video goes viral we sold out of a hundred thousand units of product before the product even hit our warehouse and at that moment we were like okay we found product market fit finally okay this is good all right so a few things unpack here you said you were hitting goals with your original line of you know the the the acne acne patches and you know the ingrown hair removal like like that excites me as a man like ingrown hairs and you get a pimple and like that that that like naturally i'm like oh okay like my eye my ears perked up but what did hitting goals mean and why was it like it wasn't working still like like like tell me what that looked like so a founder could potentially identify it because you know at founder you know obviously we have a show but we have a community of e-com founders in our founder plus membership and and this comes up a lot.

17:41It's like, how do you know whether to keep going with a product or not? How do you know if you've truly hit product market fit? It sounds like you guys hadn't, but you knew what that looked like or what it felt like. How did you define that? I think those early days, your goals are not necessarily tied to revenue. For us, I would say traction and goals were, Are retailers interested? Okay, are retailers taking a chance on us? You know, are larger retailers, you know, bringing us into stores beyond, you know, mom and pop boutiques? Okay, what does that PO look like? How much is that? I would say traction on social media.

18:23What are our metrics looking like? Is our account growing? Do we see engagement in the account? Are investors interested in us? Are they reaching out? What are their fears with the brand? And then, OK, is revenue growing month over month? And when I mean revenue, I mean, I can pull up my P &L now. I was doing$500 a month,$2 ,000 a month,$8 ,000 a month. I was probably doing about$10 ,000 a month until we launched makeup patches, or maybe a little bit more than that,$20 ,000 a month. Was my Amazon account growing? So I think you look at that indicators. But I do remember we brought on a meta team for paid media and they kind of said to us that something's not resonating here.

19:11Like your ads are not performing. It's not converting. We tried so many different things. It was a little bit harder with, I think, the ingrown hair patch, which I thought was going to be our hero product, but not the easiest product to promote with, you know, meta policies of, you know, showing women's bikini line. That wasn't really going to work for us. So I think we kind of felt in our gut that something dramatic really has to change because at this rate, we have really not a lot of money to pour into this business. We're not sure how we're going to explode this. On the other end, we were launching some very innovative products that had never existed before.

19:55And our competitors and, you know, beauty conglomerates started, you know, taking the idea and running with it. And it doing really well for them because they had the money behind them and we just couldn't compete. But if big conglomerates are copying you guys or getting inspiration, there could have been an argument that if you guys kept pursuing, you could carve out your own niche or market and you could keep growing. like if a business is doing let's say sub$20 ,000 a month most would assume that you've hit product market fit but you guys didn't feel that that's because because this is really important because a lot of founders listening to this if they're doing$20 ,000 a month with their product they're kind of like yeah I'm on to something but you didn't feel that you know we kept promoting the skincare patches when we launched our makeup patches and then I think it was a really clear indicator from us if maybe the makeup patches didn't go viral upon launch and there it wasn't an instant success I would have kept pushing the skincare patches a bit more but I think since it was so clear that we just had like tapped this untapped market like why keep you know burning money on something that wasn't doing super well and let's just go all in on what's going well right now.

21:19Yeah. And look, that would make sense. If you sold a hundred thousand units on launch versus these other products that you kind of feels like you're pushing uphill to get traction, it makes sense, right? Like you go with the wave. Yeah. And I think to be transparent, you know, I've been asked in interviews and I probably have lied of, oh, well, did you see like a spike in your skincare patch sales when the makeup patches went viral or like when Taylor swift wore your your glitter freckles honestly no so right if we're not seeing a spike in like overall product selection from phase it then i think it's time to abandon ship okay that makes sense so at what point because you took over 100 vc calls for phase it significant rejection talk us through like at what point were you trying to raise money because you said you've raised a couple hundred grand so you launched with 13 it's personal savings raised a bit from friends and family i think 50k from an accelerator um at what point did you try and raise vc funding talk us through your experience the lessons learned even the emotional toll there because i think and at what point was that was that during yeah in the beginning i mean day one of starting phase it Nina said I want to do this but I want to be VC backed we had run a bootstrapped company already we realized as a beauty brand you need a lot of money I think the statistic I mean you would know I think the statistic is like you need a million dollars to launch a successful you know beauty CPG brand so immediately as soon as we launched our first prototype product of the extra large multi-shaped acne patches we put together a pitch deck and we went out there and for context at this time, I was seeing a lot of founders doing this.

23:12They hadn't officially launched or they didn't have revenue yet. Companies like Ceremonia and Crown Affair in the US. And I looked up to those founders and said, okay, we can do that. I thought we had checked so many boxes for investors of, I've created a new category and I've innovated in this category. I've cracked a code on TikTok. I've created digital community. Isn't that what they all say on podcasts and interviews of what they're looking for from a new brand they're looking to invest into? So we went into these conversations. And I think at that point, these VCs had learned their lesson of, okay, maybe we need to see a little bit more revenue and traction before investing into a company.

23:53So we had our $13 ,000 of our personal savings, obviously, to create that first prototype and have inventory. and then we started you know talking to VC after VC and it was you know it was a blessing in disguise honestly that we didn't take money at that time because I think they would have forced us down a skincare patch road longer and maybe we would have never create you know had you know their faith in us to you know pivot and launch makeup patches and I think in the early days of starting a business, you don't know what direction necessarily you're always going into. And I think someone's saying that, I think someone's lying to you if there's always clarity and where they think the future is going for a business.

24:36And I think it is important to pivot and be adaptable as a founder. So a hundred no's. And I had one call that said, I know this guy who's working at an accelerator program. Let me connect you with them. This accelerator program only invested in tech companies. They were based in the Midwest. My co-founder and I are in Coastal City. She's in Los Angeles. I'm in New York. And we started doing these pitch competitions with them. And they kept calling us back. And I was so confused because honestly, before starting Phase It, I never considered myself a lucky person. And they kept saying, you're in the next round.

25:13You're in the next round. And never believed that we would be a finalist or we would, you know, enter into their accelerator program, but it was us and eight other companies. They were all male companies. We were the only two women of this cohort. I think we were one of two CPG brands. Everyone else was in tech or fintech. And they gave us$50 ,000 on a convertible note. It was technically a$100 ,000 note because they considered another$50 ,000 to be the fee of the program. I would tell founders to be very weary of these accelerator programs and very gracious they gave us money in a time that we were so desperate.

25:57But I think with that desperation, you say yes to things and sign contracts that you know nothing about and you can't afford lawyers and you can't really. You have no leg to stand on in terms of negotiating at this stage of your business. So founders beware. But we entered this program and, you know, I don't think anyone in this program really helped us to get, you know, anywhere in the beauty world. But I think, you know, they gave us that first$50 ,000 to reach our next point of traction. And they really helped us, you know, create some structure between my co-founder and I of, you know, some governance, putting together a first P &L, all these important things as an early founder, you really neglect in the building stages.

26:41And that point probably gave us six to eight months of runway. And then we decided to do, once we hit another piece of traction, we had four more products out into the world. Urban Outfitters said yes to us. Videos with hundreds of millions of views. I felt comfortable to go to friends and family and say, we know what we're doing here. We're also launching these makeup patches. I need you guys to, you know, have faith in us. We know exactly where we're going. And I think we raised about$175 from friends and family at that point. And that was the last time I raised money. Yep. Awesome. And would you recommend to founders to raise money now being on both sides of the table?

27:29It's so different. I think CPG and like tech are so different. And it depends how capital intensive your business is. I think for us, thank God we didn't raise money because it allowed us the freedom to figure out where we wanted to go with our business. And I own 98 % of my company, right? That's priceless. um you know i think there was a sexiness years ago of raise so much but you lose control and a lot of my friends say like you know my investors breathe down my neck and you know i they fall into a rhythm of once you raise you really it's hard to not stop raising you know you've only you've only run a company with money and i tell founders you need to learn how to raise the money with nothing sorry You need to know you need to learn how to build a company with nothing.

28:27And I think that has been our strength is we have been so disruptive with marketing, with products, because we've had no other choice. And if I look at my marketing strategies versus these large conglomerates, it's funny. they're like all coming to me now because we have this skill set of how do we break through the noise where they're just paying you know the most expensive hottest creator at that point and giving them a script and hoping something comes of it yeah yeah i look i i agree with you 110 percent um to build founder to the company healthish dtc brand always like i i prefer to bootstrap it's such a like the the blood sweat and tears you put into it is just unfathomable but at the same time you learn to actually build a business the right way yes once you have traction then you want to put fuel on the fire but at the same time you can control your own destiny if you do stay bootstrapped so talk me through I guess organic social you said you had hundreds of millions of views for the acne patches right so you're generating like you said sub 20 maybe 30 like you're a six-figure multiple six-figure year businesses your social strategy was still working but nothing took off like the makeup patches talk me through like what can founders learn from you around having a solid organic social strategy you mentioned that a big part of it was obviously product for posts not spending a lot you said meta ads didn't work nothing was landing I always find that really interesting because a lot of founders they are happy to just spend thousands or tens of thousands of dollars on ads where they could spend it in other areas like even on content creation like you see where i'm like it's oftentimes it's it's it's a unit economics thing with facebook ads around your aov a lot of the times like it's just math it's pure math so so what what can founders learn like how do you create short form video content that gets views there's so much psychology behind it i think of one like stop looking around seeing what everyone else is doing it's it's that's not standing out i think even for us if you look specifically at tiktok you know people jumping on trends like that's not how you're like breaking through noise is with trends for us we thought about it so methodically we with acne specifically one there's already community there it's a you know it's somewhat of you know not a tiny but it's a small community of people who are talking about the same subject and have the same feelings and attachments.

31:27So you're really striking a chord with a certain community. The second thing is graphic content is disruptive. And three is there is a psychology around watching someone peel something off their face and something coming out of their skin. So we utilize that. We looked at, you know, Dr. Pimple Popper, you know, has a TV show in the United States. You know, people love watching this stuff. So we use that to our benefit. You know, it was twofold. One, it was this positivity community, right? People, other brands were hiring, you know, professional models with perfect skin to talk about acne. We were gifting product to an acne community of people who really had these struggles and talked about it on the Internet.

32:19and they were striking a chord with their community. And then our short form content of watching a patch peeled off someone's face and seeing, you know, not to be gross, but like pus coming out, people watch that full video till the very end. And that's how something goes viral. We took that same approach to launching the makeup patches, right? We noticed that people love, you know, waiting till the end to see this transformation of skin. now we're going to take that same psychology and apply it to cosmetics right my skin is bare right now but in 30 seconds watch as I pat my face with water on this paper backing patch peel it off and now I have this maximalist beauty moment in the matter of 30 to 60 seconds that was our strategy we had tested jumping on trends talking to camera founder-led content on the brand profile none of that worked.

33:14I post 10 times a day on TikTok on the Face of Beauty account. I probably have a video, I don't know, with half a million views every single day with that same strategy that we've used from the acne patch content. Yeah. Wow. So you were getting views, but your conversion rate or click through to traffic was not that high, right? I think our story is always about timing. And I think at that time, TikTok was so new. When we had launched the acne patches there was no tiktok shop all i could do is put my website link in my bio and i think most brands at that time had a really hard time converting views into sales and that's something we struggled a lot with until tiktok shop beta program launched in the u.s yeah okay all right so with the whole taylor swift thing october 7th 2024 24 um you talked about you know you actually got off a call recently just maybe today with the founder that they had a viral moment um where Taylor Swift was wearing their product or using their product and they've got press all sorts of things but you guys um were prepared and you were very strategic talk us through strategically how what were the things that you did before and what were the things that you did after?

34:34I mean, back to timing, prior to Taylor wearing the product, we had several viral moments over that whole summer. So we had experienced, we had these case studies of, okay, if sales surge one day from a video, what is our reaction to that? Is our warehouse ready? Do we have enough product? So we started projecting out more product to have in the warehouse. And luckily we had a massive shipment of product coming in two days before Taylor wore the product. You know, a little bit of timing, a little bit of luck. The day she wore the product, what people don't realize is nobody knew the brand she was wearing.

35:13So I spent probably the first five hours that evening contacting every journalist who was already writing about Taylor wearing this new makeup glitter freckle across her face and saying, hi we're we're the brand please credit us and I had to do that for five for five hours and then the next morning I hired a publicist because there was so much inbound interest in us so honestly her on tv and then me looking at shopify I wasn't seeing the sales coming in immediately because consumers hadn't connected the dots yet once we had a control on press and we were getting on live Like TV segments and I honestly think every media outlet in the US and over the world, like across the world, were writing about this moment.

36:00I think largely to the fact that we immediately got on social media and we were talking about it. We weren't going to let this moment pass us. I was on my personal TikTok. So was my co-founder. My video got 10 million views. My video is actually the video that ended up converting the most amount of sales in that first day. and then we naturally saw like DTC and Amazon take off we had one retailer at the time and that was Urban Outfitters so they were you know the only brick and mortar who was getting the surge of sales and when you have a viral moment and I had I had been on panels before the Taylor Swift moment talking about our brand and virality is you can't stop talking about it right it doesn't have to be Taylor Swift, any type of viral moment that your brand faces, like you can't shut up about it.

36:47Like you like you're always hitting. I feel like email marketing always says this to me is, you know, you might be tired of it telling your own story, but you've only hit 1 % of the world. So we were talking about it on phase of beauty account on our founder accounts, you know, across all marketing channels. Um, we were doing all different types of press. It was, um, affiliate press. It was getting on TV. It was local news. And from that point, Taylor Swift was about to go on the Ares tour about two weeks later in North America. We went to every single city that she was performing in. We were doing pop-ups.