Goop, Ritual and other brands that are cleaning up the beauty industry at FaB’s 2nd LA meetup
At FaB’s recent LA meetup, we heard directly from California-based clean and ethical startups about their business ventures, gaining insight on the market’s current status and the next step it’s heading in.
FaB (Fashion and Beauty Tech) is a community of investors and entrepreneurs creating new value through technology in the beauty and fashion industries, and their Los Angeles chapter held a meetup event on September 17 on a rooftop in Santa Monica overlooking the ocean.
Brand stories being the key to fundraising
The first-panel discussion of the event was themed “D2C Fund Raising”, and the four panelists consisted of investors and heads of startups based in LA and Santa Monica.
“What does a startup need to receive funding?” was the question asked to each panelist. One panelist was Deborah Benton, an investment partner of Kaktus Capital with a portfolio of 13 companies mainly in the beauty, fashion and wellness industries. She answered that when a startup is at the stage of having just been freshly founded and an investor is deciding whether to invest or not, what’s more important for the investor than financial data is looking at the potential of the brand. For example, elements such as the founder’s story, the brand’s positioning, and the new value that the brand brings to the market.
Erica Moore, CFO of lifestyle brand Goop, said that as a brand that believes in spreading the ideas of clean beauty and wellness they’ve made efforts to clearly explain to investors the specialized knowledge and merits that the company possesses and show how their products have science behind them, because investors are more likely to be convinced by authenticity and credibility. She emphasized how disclosing information, along with evidence, is a crucial element in the beauty industry.
Other panelists also mentioned how a founder’s vision of how to grow their company as well as their leadership and confidence in storytelling are all keys for getting investors interested in the early stages of a startup’s life.
From there, the next question asked was “Is the personal story of the founder an essential element in forming connections with investors?”
Katerina Schneider of Ritual, a subscription service of multivitamin supplements for women, told of a vexing experience wherein a meeting for raising funds for her business, when she mentioned to an investor, after much hesitation, that she was four-months pregnant they told her that she had to choose either family or business. On the other hand, she also told of a wonderful encounter with another investor who got in contact with her, having emphasized with her personal circumstances that had led to her starting the company.
Tracy DiNunzio, founder of Tradesy — a CtoC marketplace for women who handle luxury fashion goods and other women who are looking to buy them — also recounted how on one Christmas Eve, finding herself without any investment deals from anyone, she resolved to not throw in the towel and try to recover her business no matter what.
Brand stories are also an essential element for Goop, which was launched by Hollywood star Gwyneth Paltrow. While Paltrow’s fame and the narrative of her lifestyle attract consumers to the brand, it also helps to deepen connections with investors. However, because there have been some investors who’ve asked for a meeting with the brand just for the sake of getting a selfie with a celebrity, the company found it was necessary to first figure out if an investor actually wants to invest or is just curious about meeting a famous person.
The personal story of a founder can be thought of like a mirror that reflects the founder’s feelings toward their own brand and the passion they have for the business. Being able to find an investor who understands that and shares the same values is what will allow brands to find a business partner who will be in it for the long haul.
What makes a ‘clean’ brand?
The theme of the second panel was “Clean Beauty and Sustainable Fashion”. This session featured founders and managers from some of LA’s fastest-growing startups.
The session began by searching for a definition for the latest buzzword: ‘clean’. Cat Chen is the founder of the startup Skylar, which offers hypoallergenic original perfumes that avoid using harmful chemicals or allergens. Chen kicked off the discussion by saying that ‘clean’ tends to be confused with the ‘naturalist’ movement that has saturated the market in recent years, however ‘clean’ should really be coined ‘new naturalist’ as it’s an evolution of that movement.
Representatives from both Goop and The Detox Market — companies that are both retail pioneers in the clean beauty market and are famous for their strict product selection — emphasized the idea that using natural ingredients doesn’t necessarily make something good, and “natural” doesn’t simply mean clean. To them, ‘clean’ refers to things that eliminate all harmful components.
Both brands have an extremely rigorous “List of Harmful Items” which they refer to when screening products that will be handled in their stores. Goop also mentioned that they lay importance not just on ingredients but also on information disclosure, transparency, sustainability, fair trade and cruelty-free. The consensus was that it can’t be called ‘clean’ unless it’s also ethical.
Coming clean to savvy customers
Today, with the proliferation of the internet and social media, consumers have access to so much information and are rich in knowledge. So what do brands need to do in order to be trusted as a clean brand by these consumers?
Goop CCO Elise Loehnen said that consumers have started to carefully read the labels on beauty products, as they have always done with food products. However, because most people are unable to keep up with all the latest scientific information that evolves on a daily basis, there is a need for trusted sources that breakdown all this information and present it in a straightforward and easy-to-understand way.
Skylar’s Chen said that consumers seek out information and learning on products that will precisely suit their needs. For those making genuinely clean products, this consumer trend is in their favor. Product makers need to act honestly by not only conveying the truth about their products without patronizing consumers but also answering their detailed questions not through misrepresentation but through conducting due research.
How a marketing channel for clean beauty should be
Romain Gaillard, founder, and CEO of The Detox Market, was asked during the session why so many clean beauty startups come to sell their products through his company.
Gaillard put forward two reasons. One is because if they can get their products handled by The Detox Market, “consumers will see them as being legitimate. So, they come to us for the mark of approval — the so-called ‘clean certification’.” The other reason is that they see The Detox Market as effective marketing channels.
When The Detox Market was founded in 2010, they only had a few products that were approved as both ‘clean’ and functionally effective — about one product for every category. However, now each category is overflowing with these products. Gaillard expressed his view that in the clean beauty market, which now has an excess of products, everyone currently realizes the need for retailers that can select the best products and properly present them to consumers and online stores that can handle multiple brands.
After the discussion, there were a number of questions from the audience that further reflected how to clean beauty remains a hot topic that is of great interest to many, and after that the meetup came to a close.
FaB’s meetups are celebrated as gatherings of professionals who are sensitive to the latest business trends in the beauty and fashion industries. In LA you can truly feel investors’ devotion and passion toward the clean beauty and wellness fields, and this writer got the impression that these markets are starting to mature.
Text: Ching Li Tor
Original text (Japanese): Rika Higashi