672: From Broke College Student to $20M Brand in 10,000 Stores | ESW Beauty

0:01Hey founder fam, before we jump in, I want to take a quick moment to talk about our sponsor OmniSend, the email marketing and SMS platform built specifically for e-commerce founders. We've been recommending OmniSend to founder students and members of our platform for a while now because it just works. So whether you're launching your first store or you're scaling it to seven figures, it really helps you automate your marketing and get results. And did you know, on average, OmniSend customers make$79 for every$1 they spend, which is an insanely good return on investment. And if you're already on another platform, here's the thing.

0:35In just five days, you could actually be paying 35 % less without doing an absolute thing. OmniSend will move every flow across, list, and template. You just show up when it's done. And finally, because you're part of the founder community, you get 50 % off your first three months with the code FOUNDER50. Just head to OmniSend.com forward slash founder and that's founder without the E to get started. All right, now let's jump in the show. While every brand was raising prices, she cut hers and nearly tripled revenue. Today's guest is Alina Wang, co-founder of ESW Beauty, the brand that turned a juice bar epiphany and a$25 ,000 loan into a$20 million business across 10 ,000 retail doors, fully bootstrapped and profitable from day one.

1:21In this conversation, you're going to learn why Alina made the contrarian bet on retail over DTC when every founder was going in the opposite direction, how she survived COVID wiping out every purchase order overnight while going through a co-founder breakup at the same time, and what it actually costs to get your product into every major retailer, and why most founders find this out too late. hear the stories learn the proven methods and accelerate your growth and future through entrepreneurship welcome to the founder podcast with nathan chan welcome to the show alina wang so you co-founded esw beauty almost seven years ago now uh talk us through what was the aha moment at the juice bar that led to launching this brand?

2:20Yeah, that's a great question. For everyone that doesn't know, our brand is wellness-inspired skincare. So we take a lot of the tropes in healthy beverage and foods and combine it with skincare to create our brand. And actually, this was at home. So I've always known I wanted to start my own skincare brand because of my background in K-beauty, working for my family business from a young age. And I needed to figure out what it was. So I ordered a shipment of pressed juicery or pressed juices. And I was drinking one of their like kale, spinach, broccoli, apple juices. And then I was thinking, wait, this is healthy, made with nourishing ingredients, and skincare is largely made from water, it would be such a cool idea to make this into a face mask because I was using a face mask at the time while I was drinking the juice.

3:14And so that's how the idea happened. Okay. And how did you bring that product to life? So like you took a$25 ,000 loan from the bank. Did you have to put in any more of your own money? You started it with your partner at the time. like how much did you guys put in talk me through that manufacturing process of bringing it to life yeah I was a broke college student so I not only had this I was paying off student loans I didn't have money to put in um and I think he was like he just graduated and you know he has a whole story that we can also get into and why he became my co-founder but um maybe like a thousand or two thousand dollars and we were like well we have this idea what do we need capital so we got a twenty five thousand dollar sba loan um and then we made samples and we signed up for cosmoprop a trade show we made the booth we bought flights and accommodation and we went and then we were able to flip that into a couple different pos in total was a sum of 250 grand over the span of the year.

4:23Yeah. And one of those POs was from Coles, right? Yes, it was from Coles. And I want to unpack that. But before I do, talk me through how much it cost, even from a sampling side. How did you find the manufacturer? How long did that take? All of that good stuff. Yeah. So I have to thank my background because I was able to cut to the chase right away. So I was working at a K-beauty, everyone must know what K-beauty, Korean beauty is, distribution business. So the business model was you source products and then you distributed them to retailers. And that's what I did when I was in high school and college working for my mom.

5:09And so we've always done trips to Korea to visit these manufacturing businesses. And so I've always had a list of them and I knew who I wanted to work with right away. So I talked to them and they've seen me before and they were like, who's this college, like 21 year old girl. And I said, this is my idea. You know, I don't have the funds to do a full production. Can you make samples for me? And we were able to make a few hundred samples and we went and I said, I would guarantee you a PO coming back from this trade show, which I did. And so it was pretty much just a couple thousand dollars that we had to put in from the 25K.

5:56And that's how our product story started. Yeah, got you. And getting a 25 ,000 bank loan, how did you get that because you're a college student yeah so we signed up we created a business um and i think we created like an s core at the time i mean we could have done llc but you know we you know we thought it would be we a big thing one day and um we registered got like a tax id and all that and then just applied to a couple different banks it was like a regional bank that we worked with local to us in new jersey um and then you know we we got approved because 25k isn't isn't a whole lot okay um so then talk to me about Cosmoprof because that's like a you know pretty awesome first start foray into your first business you know 250 ,000 in po uh purchase orders um like what like the booth like anything that you can share with people there yeah so it was definitely the it show at the time it is the largest b2b uh beauty trade show um and i know they have one in bologna and then one in you know hong kong as well so it's a very global show and i knew that if i wanted to get my product um in the hands of buyers and have eyes on it i needed to go so i remember it was five grand for booth and you know I thought to myself well I need to translate the creativity that I have on the packaging into the booth so we made it a little juice bar themed and it was the most scrappy approach ever we bought shelves from Ikea and then we would assemble it first we were working at my mom's office at the time she gave us a little room and then we just kept assembling it and putting and got like fruits and things like that to make it a juice bar theme and I thought okay this is cute so we went and man I was just very aggressive like I you're not supposed to leave the the the edge of your booth but I would go in the hallway just keep pitching and pitching and pitching to buyers and literally drag them into the booth most times they were like no I'm not interested a couple were Kohl's we had like I think it was like Saks Off Fifth at the time and then maybe free people.

8:21There were just a few retailers. And you know what? I was like, let me just get it in everyone's hand and face. And then, yeah, the ones that stuck wrote the POs and we launched a couple months later. And then you said something interesting around the booth and how you made it stand out. You call yourself a packaging girl and believe that the product visual identity stop shoppers in their tracks how many rounds of edits or how much initial capital did you dedicate to really creating the the distinct juice bottle shape packaging to ensure it matched your clean wellness ethos like talk us through that because i think people can get so caught up on the perfectionism of a product you lose so much time and the packaging and all of that good stuff So talk us through your process and what advice you would give to founders in that space.

9:20Packaging is everything, I think. I think that it's a very saturated market in beauty. And if you don't have capital to deploy for large marketing activations and influencer partnerships, you need to get people, especially if you're a retail brand, interested right away. And so I had the vision of this juice bottle packaging this concept. I knew the ingredients I wanted to do. I mean, it took maybe depends on when you count as a revision. But I sat next to my mom's graphic designer at the time and she, you know, and I would just go through it over and over again. She was like the scalpel. And then I was basically telling her, move this to the left, move that to the right, do this font, make it larger, make it smaller, try this green, try that pink, try different colors.

10:09and I mean I think it was like 50 revisions over and over and over again until I was pretty until I was happy with it and that's what we decided to do and launch and print. I would say for a beauty brand or even if you're a food web brand you have to invest your time into it and if you have the ability you can work with a branding agency if that's not your specialty if it's your specialty you can go on Canva and literally I Canva wasn't a thing at that time now I would use Canva and just do it myself yeah and now the thing with branding and design agencies you can get incredible design in a at a cost affordable rate working with agencies or freelancers in like eastern Europe and all sorts of other countries and and regions where the work is exceptional like that's how i've built founder like it's kind of crazy it's kind of crazy like not anymore but early days like it's kind of crazy how if you look at some of these branding and design agencies which are incredible right like but like you know $50 ,000,$30 ,000, like if you do it right, you can find incredible design work at a much lower fraction of the cost, like$30 ,000,$50 ,000,$100 ,000,$200 ,000 branding agency deals.

11:36Yeah, that's good advice. I think it depends on what your budget is. But, you know, I've known people that can do it themselves. But if you can afford an agency, work with one for sure. And then And you also have, like you mentioned, offshore that you can work with. Okay. So you launched in 2019. We talked about where the brand's going. Eight-figure brand on track to do 20 plus mil this year. Top line, profitable, bootstrapped. You did something interesting. Despite inflation driving up cogs for many brands, you strategically chose to decrease the price of your sheet mask from around$6 per unit to$4.99.

12:26Why did you do that and talk us through the thinking and how it all played out? Yeah, I think it was thinking about where I wanted to be long term and brand positioning and also looking at the masks, face mask market. That decision was able to bring me from$4 to$11 million. And of course, not all attributed to the mask dollar change. I mean, there were other products we launched, like our lip treatments. But, you know, I thought that, one, our margins can support it. We've always had pretty good product margins for our masks. and two I wanted to be more of an accessible brand to a younger consumer and there was a lot more that I could build and I felt like there were so many brands saturated in Sephora that were$50 -$60 creams when a$20 -$25 cream can do the same thing.

13:25Now being in the beauty industry if I worked my way down to masks it made sense to decrease it by a dollar. And you made more money doing that? Yeah. So, I mean, for us, 95 % of our business is B2B. And so, you know, it would be, it was like 50 % margin on average that we give our retailers. So when you break it down to a dollar, it's really only 50 cents. And we did the math too. I mean, there were certain retailers that were approaching us at the time, like drugstores. And they never said you had to be$4.99, but I new looking at their assortment sometimes you have to think three steps ahead from what a buyer thinks i was the most expensive by far there and i won't be selling there and sitting there for a long time if i am an outlier from their assortment and so if i wanted to be successful in these accounts and you know make sure i have strong velocity then the vault then i need to rethink pricing.

14:33So that's why I ultimately decided to make the change. And then also to looking at, you know, what was happening at the time in 2024, everyone was increasing price point. You know, I felt like consumers would appreciate that I was doing this and that was I was really caring about them and their wallets. And, you know, I think that would help really nurture and it did grow a community. So it was a strategic, you know, financial and then also like gut feeling. Now, you talked about like you guys are 95 % wholesale retail that B2B is your big channel. Talk us through kind of, I guess, why you decided to focus there and not D2C first.

15:19I like what you said before we started about being contrarian. And I think that's honestly who I am growing up up until now today, still all my life decisions. And when I started the company, I at that time, it was the D2C boom. Everyone was doing D2C. I'm either, you know, you can be an influencer and then you, you know, have the platform. So you start a D2C channel. Or maybe at that time, I remembered meta ads were just very affordable. So I would just start a D2C channel. But for me, I was seeing that and I knew that one, I had no marketing budget at all. Like after, you know, all of the spend from the trade show, I would have like$5 ,000 left.

16:01So I needed to be smart and make sure that I got into retailers and because it was a guaranteed payout versus D2C. I put it online and I wait to see if people like it or not and then purchase. And my plan was to always grow B2B, stabilize it, and then start really investing and growing our community online. Because ultimately you want a pretty blended and even omni-channel presence. And the fact that you guys have not raised any money bootstrapped retail from a cash flow perspective with large POs and also kind of not always the most desirable payment terms. How have you been able to manage that from a cash flow perspective bootstrapping?

16:50Oh my God. The bigger they are, the worse it is. In the beginning, with retailers that weren't multi-state, huge national retailers, you didn't really have these deductions or trade spend. But if you work with a retailer that has thousands of doors, you will have to pay for everything. Everything from slotting fee, which means you're paying for a fee to be able to let your product sit on the shelf to different trade promos. If they do 25 % off your product, you have to not only pay for that discount, but you have to pay for the opportunity to be discounted. You have to pay for markdown. So oftentimes they set you for a period of time, like one year, and whatever doesn't sell that's left in their distribution centers, you must pay for it.

17:46And so, you know, I would recommend, one, making sure that you forecast out a year at least of what all of the different trade spend that you'll need. retailers will send you a contract so you will be able to see black and white but also speak with other founders as well to get a gauge and then two we use a factor and you mentioned payment terms this helps like remove the you know number of days that you need to wait to get paid so took us a bit to figure it out but once we did it was a lifesaver some retailers are net 30 net 60 net 90 we would get paid in two to five days, but of course you would give the factor a cut as well.

18:30That's gold. Okay. And just switching gears just around retailers, I'm curious, you started the business with your co-founder who was your partner at the time. He brought critical biochemistry and operations expertise, but your working relationship transition from a, I guess, romantic one to a professional one. How did you navigate that? And what would you say to founders that are running their business with their partner and going through that? Because I was saying offline to you, I went through something similar where I started a DTC brand with my now ex. And then unfortunately, we broke up.

19:21And it was very difficult. And it was one of the main reasons we sold the business. Yeah, no, definitely. It was quite an interesting time. First off, I want to talk about my co-founder and say he's amazing. like he is a great great smart smart guy and I don't think at the time I could have done this without him because I want to give him the accolades he went to Columbia for biochemistry his plan was to go and become a doctor and he took his MCAS he got in 98 % I forgot how they score it but that's unheard of most people don't pass not only did he pass but he did well so he is that technical wizard.

20:05And then I was like, listen, I have this idea. You know, I know that you're on your way to med school, but I think we can make more money and you can do be more fulfilled. And he was like, it took a while to convince him, but he was he agreed. And so his biochemistry background really helped with the initial R &D. And over time, he figured out the upside. We broke up not because of ESW, because of our own personal issues that we had in the time. was pretty amicable. But, you know, one, we love this company a lot and we wanted to succeed. And two, we have very different skill sets and never step on each other's toes.

20:48So I'm very focused on the creative side, the branding, the sales, external facing work, and he does all of the internal side. And we just know that we enjoy working together because we have such complimentary skill sets and very intellectual conversations and that we love the company. So we wouldn't have to make it work. And honestly, at that time, it was the only gig that we had because it was COVID and, you know, I was doing this full time and he dropped out of going to med school. So it was like, all right, we just have to make it work. Yeah. And when it comes to, I guess, during that time with the breakup, did it affect the business?

21:32Um, yes and no. I would say that we, at the time, were our first year in. And what was it? Let me look at timelines. So we had the idea of this company, January 2019. And then we launched to market or to retailers, July of 2019. And then launched publicly November 2019. COVID happened March 2020. And then we broke up May 2020. And so at that time, it was very slow. And, you know, like, we kind of took a step back at the company, but it was already so slow that it didn't really matter anyways. And I felt like that was the best time to be able to sort through the personal relationship. But, you know, once we sorted through it, a couple months, it went back up again.

22:24And that's when, you know, stores started opening. so honestly I'm pretty grateful for um you know everything being very slow at that time yeah and you talked about stores reopening so you guys basically um launched just before COVID um and retailers like Coles and Free People were suddenly cancelled and closed what was what did you guys do to survive all the while going for a breakup as well Yeah. We had, oh, my God, all the POs got canceled. We're so excited. Like, oh, my God, we're in stores now. And then we saw some of our products in January and February. And then you literally see these emails like, sorry, yeah, we have to resend these POs because our stores are not opening.

23:11Like the worst thing. And then a breakup. up um I mean the main thing was he had no expenses and I lived at home so it wasn't really like we were paying for anything to be honest um it was more of just we didn't have additional income but we had um at that time we started working with fair which really saved us fair is a wholesale marketplace that connects brands with like indie or mom and pops. And so the first wave of stores that opened in May, June, July were these mom and pop stores. Plus, gifting was a big thing at the time. So we would work with these companies that did gift boxes. And so that helped us stabilize and grow a little bit and then our trade first trade show out was July 2021 that was also when we launched in Whole Foods which was our anchor retailer and we met them in a trade show before COVID happened and we took a year to you know negotiate and apply to get in and after that it just kept going yeah got you so talk to me around kind of growing from a retail standpoint because it's not easy.

24:31It took you three years of persistence to get into Target as an example. So what strategy and growth metrics did you present to get them convinced to place their first order with you in 2024? Like talk me through your retail strategy and what you would say to founders. Yes, I would say be patient with retailers because no isn't no, it's not yet. Um, and we kept pitching, we work with a broker and for target, you most likely need to work with a broker. Um, and you have to show them velocities and other, and other doors, other stores, how you're performing on the market overall, how's your brand awareness.

25:17And, um, usually that would be enough. That's the, those are the key levers that you need to show and pull for retailer, for buyers at retailers. When it comes to retailers, do you recommend working with a distributor? Do you recommend working with a buyer or an agency to help you? Or do you recommend pitching yourself? How do you suggest founders best approach tackling retail and wholesale? If you have no experience, work with a broker, for sure, because there's a lot to learn. First, it's you have to get to the buyer. And that alone, there's all different strategies. Trade shows, cold pitching on LinkedIn, finding their email from some AI website that gives you people's emails.

26:08That's okay. First step, you do that. Then from there, you get an email or an initial meeting and then you onboard. Onboarding is not just three pages of paperwork. It's a lot and lot and lot to figure out. Your products go through testing and then there's all different, you know, backup that you need for them. Then you have to figure out shipping. So I would recommend working with a broker. But if you know what you're doing and you have the background experience, no. because you can save on this additional commission. And usually what do they charge? What kind of percentage do you have to give up?

26:46Around 5 % of net sales. Okay. So that would mean you need to make sure if you do want to hit and build a big retail arm of the business that your product has very high gross margins, like at least 70 % plus, right? to make it work. Yes. So once you achieve sell-in, you quickly realize the importance of sell-through. So what specific in-store promotional levers proved most effective in driving consumer sales and ensuring strong product velocity metrics in stores? Yeah. So in-store, we participated in their different discounts, that's important. You must do that because that will then pull you out and that will help give you more attention to the brand.

27:41But for us, what really grew business is more in and out programs. So you get side caps, end caps, displays, off shelf, clip strips, like all these things that bring your brand outside of the inline positioning because you get a second chance for people to see you. They purchase you, it brings retention, they go back into stores again. Those are things I think you should really try to pitch, but all these in and out programs require fees. So for example, just a clip strip, meaning like a clip, like those plastic clip strips you put in an aisle, 25 grand just to have that. A PDQ display, 50 to 75 grand.

28:23Side cap, I don't know, 50 to 75 grand too. But if you want to grow your business, then you have to do these things. Yeah. Wow. That seems like a lot though. Yes, it is. Hence why more than ever, you need really strong margins. Correct. So ESW Beauty pioneered the first ever compostable plant-based milkshake mask line, which required investing in a fabric called cupra how high were the development costs for that sustainability innovation and how crucial is this feature as a defensible competitive mode in the crowded clean beauty market yes um we well first we weren't number one to do it but we were one of the first ones to do it in the u.s um i always love to take credibility but i don't want to um take it if i didn't earn it and we actually didn't have to pay for R &D.

29:21So that's one of the benefits of working my relationships with our Korean manufacturers. You don't need to pay for a development fee. And I actually thought that was the norm until I started talking with other founders who work with manufacturers in Europe and the U.S. But you must pay for like the mold fee. You have to pay for your cogs obviously and I think that's because Korea encourages brands to think outside of the box because they want themselves to be known as the hub of beauty and innovation so they don't charge you because they want to get your thinking as well but yes it definitely helped a lot and made us stand out in the beginning because sheet masks often have this stigma where it's not eco-friendly because it's a one-time use product and I really wanted to fight that and want people to know that it can be sustainable and so we worked with our manufacturers and we you know found this fabric it's actually from Japan and we tested it and we actually did our own.

30:31We did, they did like commercial testing and we did our own, like got an at-home composter and put it in and it truly composted into soil. Yeah. Okay. Cool. So that's, that's crazy. So you quickly scaled the team from just yourself and your co-founder to over 15 people today. What was the most challenging hire to make and what early leadership systems did you need to adopt to manage different functional teams like your sales team for retail design and operations? Yeah, I think good leadership roles are the hardest to make. I think that, you know, you bringing in people who have a certain skill set, giving them the ability to action that, trust them and making sure they fit well with the culture what is probably the hardest I wouldn't say this is difficult at all but you know we had really great hires that were examples our head of sales and our head of finance who are amazing and love them so much um and you know it's something that a lot of founders think about because you think that actually the hardest part is this idea of self-learning everything but the harder part is now you have that knowledge and that's that's how you do things you self-learn and you run everything yourself how do you let go how do you trust people that is actually the harder part um and you know I think that's something that I struggled with for a bit but now I'm fully like thank goodness I don't have to think about it don't ask me figure it out like don't ask me where to put at an event what colors to put next to each other figure it out please because I have too much to think about this strategy to scale the business I think it was just a lot of um you know communication at first back and forth and I think it's also building trust too with people like you want to trust them but they need to prove themselves.

32:45And so I've seen them, you know, all the hires, they've really showed that they could do it. And as soon as they could, then I let go and then just do regular check-ins. But right now in our team, we're still around, we're still at the point where there's not one set formula for everything. You have to be very flexible in how you think about people and what's the right way to approach them. You know, but over the years, you kind of have an idea of this is like a certain type of person, their work style. So once you understand, you know, how to work with someone, then you apply that with the same type of person.

33:21And you've spoke frankly about facing imposter syndrome and the constant pressure of putting out fires as a founder. Do you have any specific practices that you do to help with the high highs and lows lows um i think i i just adopt a mindset now where i can there's a solution for everything like i always have that mindset because i have faced difficulties getting through covid going through a breakup very bad cash flow situations um you know all different things that you can think of. And I was always able to resolve it. So even though in the very back of my head, of course, there are unresolvable things, I remove that and I just think to myself, I can solve this.

34:18And so if you have that in the back of your mind, I can always solve it. That is peace. So that peace will remove the noise of stress and you can just focus your time on solving the problem. And that's a mindset that I've adopted over the years, but it took a while. Yeah. So when it comes to, I guess, your launch at Whole Foods in July, 2021, you described that as a big break. Why was that a big break? And what was the metrics for the raw juice mass to hit the initial 250 stores that led to Whole Foods to grant you all in chain, reset with double number of SKUs the following year? Yeah. It was our first major anchor retailer.

35:08We were launching in different retailers, but this was the first one where it had this national strong presence and it was a retailer that a lot of people wanted to get in. Also, I knew that I would have trust if I was in this retailer. And we launched in July 2021 with five of our masks and 250 doors. And then in 2022, we launched in full chain 500 plus stores with nine SKUs. And it were velocities were meeting criteria. I think they were like three units per store per week. And we were doing that. and they also were very big on innovation and we would always provide them with new ideas and we had something different at the time and so they brought us in.

35:58But they're one of our best partners. Today they now carry all of our, basically all of our lip treatments, our masks, eye patches, facial masks and we do a lot of seasonal in and out programs with them. So I would say one thing that would be incredible for a business like yours because you are not a strong D2C but are retail. Forecasting, is it easy to forecast when it comes to cash flow management and also managing inventory and stock? If anyone told you yes, I think that's a lie. it's not easy um and you know we've had um you know mistakes that we've made over the years but you have to be very very diligent with it um so we you know in terms of cash we have a cash model obviously every week you know in and out in and out and you also have to prepare for a buffer um and then for inventory i think very similar to that um thank goodness i have my co-founder john to do that.

37:08But, you know, making sure that everything is well forecasted, demand plan, between sales and ops, they have a whole system that they use. Okay. So looking forward, this is my last question. We have to work towards wrapping. You mentioned an immediate focus on deepening relationships across your existing 10 ,000 points of distribution. So with international expansion being a goal, what geographic market will be your first major target and what metric must the brand hit before pulling the trigger on global growth? Yeah. So our first one is Canada. We have been making efforts since 2025. So we started by working with a very great broker, went to trade shows, and then now we're finally launching in stores this year.