Lara Schmoisman 0:05
This is Coffee Number Five. I’m your host, Lara Schmoisman. Hello. Welcome back to Coffee Number Five. Today I have my coffee that is getting cold because I was in my pre podcast chat a little too long, but because I can keep talking to him. So welcome John Caffarelli, COO of Beauty Matter and founder of Ernest Supplies. So thank you, thank you for being here having coffee with me.
John Cafarelli 0:33
Thank you for having me. I’m so excited to be here.
Lara Schmoisman 0:36
Well, I met you a while ago. And then we keep running into each other in different beauty events, because everyone thinks that there are so many beauty brands out there and it’s a huge market. But honestly, it’s not that big. And you keep running into the same people.
John Cafarelli 0:50
I know. Well, that is I mean, I just feel like that’s the that’s the beauty of our industry, so to speak. Is that, yeah, I just feel like there’s, there’s, there’s a core group of people that you just keep on running into. And I love that and I’ve enjoyed seeing you. I just last time I saw you we were in LA together. I always love running into a familiar face, especially on the road.
Lara Schmoisman 1:14
And who knows where we’re gonna run next?
John Cafarelli 1:18
Who knows? Right? Yes.
Lara Schmoisman 1:20
Yes. So okay, so let’s do a lot. I love to hear the story how you got here, because you have a very different background than coming into the beauty industry and then as a beauty brand owner. So bring us back to today. How did you get here.
John Cafarelli 1:40
So the story did not start with me dreaming as a little kid that I was going to start a skincare brands and end up running a beauty focused media company that was sort of not the plan. I started my career. I graduated Georgetown in 2001. With a degree in finance and econ. I was an investment banker for a few years, I worked in the media and telecommunications m&a group. And then I left and I, I joined an investment fund, one that was focused on industrials, which was very cool, because I got to travel a lot and be on factory floors. And that sort of got me very interested in how things are made. And then I helped to found a fund that was exclusively focused on consumer products. And at the time, we were very unique, in the sense that we were one of the few funds that was focused on sort of small and mid cap, consumer brands. And my focus was multi unit retail, and fashion. I also ended up sort of moving into looking at companies that sort of were playing into this very evolving trend at the time, of healthy living and wellness. And so that’s kind of how I got interested in beauty was through that. But at the time, you know, this wasn’t a place where a lot of investors were focusing, really any time and effort I used to go
Lara Schmoisman 3:11
What year are you talking about?
John Cafarelli 3:12
This is like 2007-2008 was when we first started.
Lara Schmoisman 3:18
The industry changed so much since that time until today, like not everyone can go and have a beauty line, it changed dramatically.
John Cafarelli 3:28
Well, so yeah, so it happened not only with beauty, but it happened with food and beverage as well and sort of was sort of this like sea change. And I think I think what ended up happening here, here’s, here’s my theory, I don’t know if this is if this is actually what happened. But here’s my theory. So in the early 2000s, late 90s, early 2000s, a lot of manufacturing moved outside of the United States. And it left these, you know, really great manufacturing facilities with a lot of excess capacity. Right. So there was a lot of opportunity to grow, you know, to grow their business, because there was there was too much equipment and not enough business. And so companies started working with brands on much smaller brands, right. So it used to be that if you wanted to, you know, manufacture a moisturizer, face moisturizer, you had to buy a million pieces right now, the minimums were going out.
Lara Schmoisman 4:25
Right. So I think they started something a trend of something really smart that many of the public doesn’t know, but it’s a white labeling.
John Cafarelli 4:33
Totally. Yeah, totally. And so. So you know, you had you had minimums going down, you had this like focus on working with smaller brands or white labeling brands, you had, you know, this sort of concept of a formulation libraries coming about which made made things a lot easier and a lot less expensive to go out and to put together a product line. And so, so more people had access to it, that combined with it. So that was sort of on the product side, right. But then on the marketing side, the whole world changed as well. And so you know, social media for, for better or for worse is sort of the great equalizer. It used to be that if you had a consumer brand and you wanted to tell people about it, the gatekeepers were people like Vogue, or GQ, or, you know, one of the one of the big magazines, or you had to have a budget, you know, to be able to advertise on billboards, or to advertise on television. But now, instead of a $75,000 page in vogue, you could seed your product to a bunch of influencers and get the word out. Or you could even better you could start posting really great content and build your own audience and have your own megaphone to tell people about your brand. And so, the barriers to marketing your product, and to telling the world about your product sort of came down as well. So it was sort of this like confluence of, of a bunch of different things that made the consumer space a lot more accessible to to smaller brands. And so, you know, people with great ideas, people who were in the market looking for something that they couldn’t find, or people who, you know, had a lifestyle that was, you know, maybe not unique, but not overly well satisfied by you know, the mass brands that were out there, now had this, you know, great impetus to go to the marketplace with a new idea or a new product, and they could actually get it made and see it on the shelf. And so that was kind of, I guess, I sort of played into that trend, when when I launched Ernest Supplies back in the day
Lara Schmoisman 6:42
Okay, hold on hold on, I think I went missing a chunk of the story here, you went from being in the financial world, and investments, and then how, how did you get to launch your own line and to be on Beauty Matter?
John Cafarelli 6:58
So one, okay, so one of the things that I used to do, as part of my job, at the private equity fund that I was at, was I used to go to Expo West every year. And this is this, this is the true sign of how things have changed. Because at the time, there were not a ton of investors at Expo West. Now, if you go in 2023, or if you went in 2023. Expo West is overrun with investors, there’s like 10,000 investor events like that strip of all of the of all of the restaurants that sort of, you know, right right near the convention center. Every night, there’s every night of the event, there’s like, you know, 10, investor dinners and cocktail parties to go to, I mean, now it is completely overrun. And it’s a little hard to stand out if you’re an investor in that space. But at the time, there really weren’t that many investors that were focused on, on the healthy living and the wellness space. And so I used to go out and with a few people, we used to occasionally put together a dinner, we used to get an investment bank, or we get like a big financial advisory firm, to sponsor it, an accounting firm or a law firm or something to sponsor it. And it would be this like great event where we bring people together and we get to know them, and we get to know their businesses, and it would sort of set us up to be able to make an investment if we were really intrigued. I had met a formulator, who, at the time was a younger guy who I was telling about this idea that I had for a moisturizer, and he was like, Hey, let’s let’s work on it together. Let’s make that moisturizer, right. So we, we worked out a formula for this moisturizer, which is now our Protective Matte Moisturizer. And really, at the beginning, it was just to make a moisturizer, because I thought that was cool. And I was going to use it just for myself, I wasn’t going to sell it, I was just going to keep it and I would buy it in these like gallon. These gallon like pumps from him. And I would pump it into smaller bottles, and I would share it with people and I would take it with me when I would travel. And that was that was my my the early stages of earnest supplies. It was sort of like, I’m just going to do this because I think it’s cool, and it’s fun. And it’s you know, I designed the product, it was exactly what I wanted. So I loved it. I thought other people would like it. So it was fun to share it. And people including like, like my mom, my aunt, my friends, they would all tell me that like you know, this moisturizer is awesome. Like we really love it, you should sell it. And so, you know, we were sort of coming to the end of our first fund. And I was looking for something that was a little bit more creative than what I was doing. Although I loved my job. By the way. I loved working in the investment space. It was so fun to meet all you know all of the entrepreneurs that were doing great things and to help them to to build their business. But I was looking for something I was I was I was young enough and maybe dumb enough to want to take the chance to be one of those entrepreneurs and to and to give it a shot on my own. And so while I was still working, and that’s a big thing, I actually, I actually tell people this all the time, you know, get started while you still have another job because it takes a long time to put together a skincare brand.
Lara Schmoisman 10:20
It is and I wanted to talk about something we were talking about earlier that how we got your inspiration about the packaging.
John Cafarelli 10:27
Oh, yeah. Well, so, you know, there’s always this notion of, you know, we obviously wanted to do something that was a little bit different. I have been, I’ve been an environmentalist, since I was a little kid, you could ask my parents, because I will I, I’m old, I’m old enough that recycling was a was a brand new thing. When I was a kid, no one recycled until sort of like maybe it was like the late 80s, early 90s. Here in New York, which is where I grew up. And we, we were given recycling bins by the town, and I was the rule enforcer, I would rinse out every single thing that could be rinsed out, I would pull apart packaging and make sure. And I was just adamant about it, because I just It killed me to for things to just go into a landfill. And so I’ve sort of always been very focused on you know, environmental issues and taking being a good steward of our environment. And so when when, when I was designing the packaging for Ernest Supplies, I wanted something that was different, but also wanted to steal inspiration from outside of the beauty space, which sometimes I think is really fun to do like to look outside of your space for inspiration. And I realized that food had a lot of the same problems as beauty in terms of, you know, packaging and keeping things fresh. You know, I think you know, foods similar to beauty products, because I’m an active person, either it’s going to the gym or getting on a plane and going to California, which I used to live between New York and California. So I’m always on the road, I wanted the products to be not delicate, I wanted them to be easy to travel one
Lara Schmoisman 12:02
Thats the worst thing, when you put a one of your beauty products, and you’re traveling, I travel also a lot and it explode.
John Cafarelli 12:11
Totally, I actually used to do this thing at trade shows where I used to take one of our pouches, and I used to put it on the ground. And I used to step on it. And at the time, I was a little bit lighter than I am now. But I used to step on it just to prove that they were so resilient, that you could actually stand on it and it wouldn’t explode. So if you throw it in a bag and it ends up in the bottom of the bag, it’s not going to explode
Lara Schmoisman 12:35
Let’s be honest, beauty products are not cheap. And they’re not. And if you can, if you are spending your money you are investing because you’re investing in how we’re going to be looking at how you feel. And if you have any issues, many of those beauty products are going to help you to feel better, and to be better than it’s a lot of money. It’s just too because it’s glass. Oh, it dropped, it’s all broken. Are there many things that I feel like were failing in the beauty industry because we’re not thinking ahead, they can be really, really pretty, but I think that you can be very pretty but also safe because you need to think about the consumer.
John Cafarelli 13:13
Totally. I you know, I’m a big believer that so in my mind, luxury to me, like I’m not a Rolex watch person. So when I think of like luxury, I don’t automatically go to like the Rolex watch, right? When I think of luxury, I think of products that are well designed that fit my lifestyle and just make my life easier, right? That to me is luxury, right? And so when
Lara Schmoisman 13:39
I hate waste, so I cannot deal with those packages that I can be really pretty but then you cannot get the last drop I want to use until the last drop
John Cafarelli 13:50
Totally, totally, you could squeeze every drop out of our pouches. I love that. And the best part is so here’s a couple of great things about the pouch. Not to be selling the pouch. But here’s some great things about l. So So first I’m going to brag and I’m going to say that we were one of the first we were the first American skincare brand to use the standups spouted pouch. And it was that we had the benefit of getting us a lot of press to start. So here we were this brand that I had literally started in my living room on nights and weekends while I was working at a private equity fund. I’m not someone who’s ever designed anything before in my life, but learned how to use you know, Illustrator and Photoshop and all those things to put together you know, design work I actually was working with someone as well who was teaching me all this stuff. And we put together you know the the basics of of what these pouches were going to look like then we had to go out and find someone to manufacture them right so we went out and
Lara Schmoisman 14:55
And people, that’s not easy that was say like that was It’s the hardest part because of the quantities also,
John Cafarelli 15:03
Totally. So there was that challenge and then the challenge of filling them because you know, there was no supply chain for this in the US at the time. And so I actually had to go out and buy equipment. And I, there’s a machine shop here in New York City that I had to work with that sort of made custom fittings so that we could top fill our stand up spouted pouches. So being first has the advantage of allowing you to sort of stand out. But being first also has the disadvantage of there’s no supply chain, there’s really no no path to follow. And so you have to sort of cut your own path. But here’s some great things about the pouch. So not only do they stand out on the shelf, not only did they get us a lot of press when we first launched, but they are a smaller carbon footprint, because there’s a very high package product to package ratio. So there was less waste in that respect, they use about 75% less plastic than a traditional plastic bottle, which was really important to me. And they sort of fit all the things that we talked about in terms of like lifestyle, so I was traveling a lot. I wanted it to be, you know, beautiful, but not delicate. You know, the there’s there’s a there’s,
Lara Schmoisman 16:16
Also you want it to appeal to certain target audience, did you know who your target audience was?
John Cafarelli 16:22
I mean, at the time, the way, the way we were talking about the brand, when we first started, was different than sort of the way it ended up. So I was a big believer in again, sort of a little bit too early, I think, to the conversation, but I was a big believer in creating products that were sort of non gender specific, I didn’t think that I needed like, I thought that men and women, and however someone identifies would be would be really interested in just a high quality moisturizer at the time. We’ll talk about this in a second about the time, you know, this was a quote unquote, clean formulation, that definition has changed. So the formula that we launched with has been adjusted, but at the time, you know it based on today’s standards, it would not have been considered a clean formulation. But back then it was. So it was a little bit cleaner than the average in terms of the formulation. The you know, it had sort of the sustainable packaging attached to it. I felt like men, you know, were often very overlooked in the beauty space. But I also wanted to create a product that was not going to be, you know, overly masculine that anyone who was interested in this sort of wellness lifestyle would be interested in our products. And here’s a fact, Ernest Supplies, its customer base today is roughly 50/50 Believe it or not. So in the early 2010s, a lot of retailers were looking for men’s, it was like a growth area for them. And there weren’t a lot of men’s brands. And so we always kind of got pigeonholed into being a men’s brand, because that’s how retailers at the time worked. There was like you were either in the men’s aisle or you’re in the women’s aisle, there was no like, no gender specific. Yeah, now it’s a little different. But back in the day, it was sort of like you had to be one or the other.
Lara Schmoisman 18:13
You need to fit on a shelf
John Cafarelli 18:14
Totally like, which aisle do you want to be in John. Yeah, you have to decide so. So there was more of an opportunity to be in the men’s aisle. So of course, we took the opportunities. But that’s how we started it was just, it was just an interest. And I thought there was a there was a hole in the market a gap in the market for it. And I was looking for something myself. And that’s sort of how we started. And so it started with our moisturizer, and then we added a few products and, and then we went to the market. And you know, we were really, really, really lucky like, the packaging helped us to stand out. And I remember GQ saw the products and reached out. And they wrote a whole piece on our on our packaging and how unique it was. And they were big fans of our of our moisturizer formulation. And then, you know, we were covered. I mean, we were covered in every place from like, you know, Vogue with Men’s Health, women’s health. Oh, Oprah Magazine. I mean, you name it. We were in every single magazine at the time. It was just we got a lot of attention.
Lara Schmoisman 19:17
That’s incredible. I bet how from there I mean, and in what part of this timeline you started at Beauty Matter? So because I have to tell if you’re in the beauty industry, John knows you.
John Cafarelli 19:30
Well, so, so what happened was, it was probably a little over 10 years ago. I so I don’t come from the beauty industry. I don’t know anything about the beauty industry. And I always felt like an outsider. Always. And I still to this day kind of feel like an outsider sometimes as well, but I always felt like an outsider. And, you know, I had brought the the products to Barney’s multiple times and they were just like, man, no one wants to buy skincare in a pouch like Sorry, like no one wants this. And, you know, I had always sort of, you know, we had some really good success. With some online retailers, we had some really good success with some smaller specialty retailers. I still I actually was just with with, with, with Ian Ginsberg, from CO Bigelow co Bigelow was our first account here in Greenwich Village in New York City. And, you know, we had these like amazing sort of marquee specialty accounts. But for some reason, we could never break into like the big time, which at the time, believe it or not, was department store, everyone wants to be in the department stores. Now, no one, no one really cares about the department stores. But everyone wanted to be in the department stores, and we just couldn’t break into the department stores. And so,
Lara Schmoisman 20:45
Hold on, let’s get this mystify that for a second, because everyone wants to be in department stores, everyone wants to go into retail, and immediately that a brand can be very successful, even if they decide not to go on that path.
John Cafarelli 21:02
Which I am faceted, I cannot wait to we have that conversation because I was so we did not. I never took any money at Ernest Supplies. And my, the way I funded my business was I funded it through purchase orders from retailers, and retailers, especially the ones that we were dealing with at the time, like the smaller specialty retailers are fantastic accounts, because most of them pay by credit card.
Lara Schmoisman 21:32
They’re fantastic, but still yourself wholesale. So your margins are much lower
John Cafarelli 21:37
Margins are lower, for sure you’re giving up a bunch of margin. But we, you know, we didn’t have a ton of money. And you know, it was a very small team. And so we decided just strategically that we were going to grow our business with wholesale revenue. And so we went out and you know, we most of our business, in fact, for a long time, I would say 80 to 90% of our business was, was wholesale. And and yeah, we just weren’t having success breaking into these larger accounts. And so a friend of mine introduced me to Kelly Kovack, who was the, you know, the consultant to know, at the time, everyone was like, Oh, you have to do you still as right, everyone was like, Oh, you have to talk to Kelly, she is just brilliant. She’ll, you know, she’ll be able to give you some feedback, and she’ll be able to give you some advice. And she’ll be able to help you break, break into, you know, some of these larger places and make some really smart decisions about how to sort of direct the brand. And so, so I was introduced to Kelly, we worked together on a consulting basis. You know, she helped me with the brand. And once the project was over, we remained friends. And so,
Lara Schmoisman 22:47
I want to say something that what we were talking about completely different times that we’re talking now. Now there is a completely different ecosystem in the digital. Oh, 100%. So back then I think it was really smart that you try to go retail because it was a great way to get exposure.
John Cafarelli 23:08
Totally. Yeah, the world is so different. Today. It’s changed actually, probably multiple times since back in the day. But yeah, this is this is, you know, we started I started working on this, you know, in 2009, I think is when we set up the company, I started working on the formulas 2009 2010 You know, my first delivery was, I don’t remember when we got it 2011 The packages leaked all over the place. And so we had to send them back and,
Lara Schmoisman 23:37
I want to say something, what was your reaction when you got the first order?
John Cafarelli 23:41
I you know, it was, you know, we spent so much time, like consuming. This was one of the first times in my life where I had actually like, created something. And you know, we had like no customers, we, I set up a rudimentary website, we had no customers. But slowly but surely we built like a little a little customer base online. And I remember I went to a party here in New York City. And the guy actually was an editor at a magazine that we had sent, sent the products out to. And I was in the bathroom and of course I was like snooping because I wanted to see like what products he used. And I looked and I saw our our shaving cream and our facewash in his shower. And I was like holy cow, like this is crazy. Like this person who I don’t really know. I’m at their house and I’m looking in their shower and there is the stuff that you know, I
Lara Schmoisman 24:42
Those things are incredible, I met someone and then casually I had mentioned that I have a podcast and she was like it’s you?
John Cafarelli 24:51
Isn’t it so crazy?
Lara Schmoisman 24:53
So crazy. When you do something you do it because you love it and you never expect to be recognized
John Cafarelli 25:01
You know, like, even with your podcast, like, you know, this is just like energy that we have creative energy, it’s energy that we have that we’re putting out into the world, and you just hope someone’s going to appreciate it. And when someone does, you’re just like, wow, that is crazy. Oh, it’s almost like you can’t believe it.
Lara Schmoisman 25:17
Yeah, but finish telling the story about how it’s working with Kelly, because I already –
John Cafarelli 25:23
So it was probably around 20 2015 or 2016, Kelly, and I, you know, we had remained friends and we had gone out for a coffee. And we were, we were talking about this idea that she had about creating a media property for the beauty space. And so, because because of my work, in the fashion industry, I had been getting, if you can remember, Women’s Wear Daily, used to be a newspaper, it used to be delivered to your to your front door every morning. And so I had been getting Women’s Wear Daily delivered to my front door since the early 2000s. And I loved it. But I always waited for Friday, because Friday was when they cover beauty, right? And so I was like, okay, you know, I’m interested in the fashion show and all the other things that you’re covering during the week, but Friday was the day that I would never miss reading my Women’s Wear Daily, because that was when they covered beauty. And, you know, at the time, the beauty industry for for being such a marketing driven, brand driven dynamic, incredibly, you know, creative industry, the media that sort of covered, the beauty industry was not very dynamic. It was it was very, very bad. And this is, you know, this is this is back in, you know, 2014 or so. So, I think there are some some people that are doing a great job covering it, including women’s wear, I think they do a great job covering the industry, you know, business of fashion, does a great job covering beauty, glossy, beauty independent, you know, there’s a whole bunch of outlets now that sort of do it. But for the most part, most of them are, you know, first fashion coverage. And then beauty coverage. Right? Yeah. But back in the day, those those outlets, you know, like business of fashion didn’t even exist, probably. And you know, they certainly weren’t covering Beauty Independent didn’t exist. And so Kelly had this idea. And I was a big advocate of it, I thought it was a brilliant idea, at the time had gotten myself involved in a media company, which is another story altogether. But needless, needless to say, podcasts were that, yeah, it’ll be another podcast, but but I was I was a big advocate of it. And so she, you know, started the business on her own. She had a few partners that she was working with someone who was helping her build out the tech and you know, she had gotten some people roped in as, as all entrepreneurs do. And she was writing everything herself, you know, for years, literally writing 18 stories a week and publishing,
Lara Schmoisman 27:49
Honestly, today. I don’t know how she does it. I mean, the work that she gets done.
John Cafarelli 27:57
Today, it’s different. I mean, she’s still writes a lot of the stories that that you see on the beauty matter platform. But today, we have a team, which makes it a little bit easier. But, you know, she ran it as like a passion. She was also consulting. And, and yeah, it wasn’t a real business. But what was being built was this really formidable, very highly valuable in my mind,
Lara Schmoisman 28:25
But it happened in every business. I mean, community, to me is the key word of this year is work building community. But also it’s like you were doing what do you want me to do with it the entrepreneur route, and starting something is never easy, mostly also, when you’re self standing. So you’re going with your product line. And with Beauty Matter, you were starting two things at the same time, which is a lot.
John Cafarelli 28:51
Totally so when so. So I became available because I had been involved in something else. And we sold it back at the end of 2018. And then in 2019, I, you know, suddenly had a little bit of time on my hands. And so the thought was, I would like to, you know, focus a little bit more on earnest supplies, but then also help Kelly build Beauty Matter into an actual business. I mean, she had this really valuable community. And so we decided to work, you know, more intentionally together. And, and, you know, it was sort of interesting timing, because it was a few months before the pandemic hit. So, you know, our one of our first things that we were planning as a business was we were planning this big summit that was supposed to happen in March of 2020. Needless to say, it never happened.
Lara Schmoisman 29:48
Was a next there what that we’d had in LA 22 was kind of that?
John Cafarelli 29:54
it wasn’t it wasn’t gonna be that but you know, sometimes things happen and you know, it would have been a totally different type of event. But,
Lara Schmoisman 30:03
I have to say that’s the one is one of my favorite events from last year.
John Cafarelli 30:08
I’m so happy to hear you say that. Because we put our heart and soul into that event that was our that actually ended up being our first our first event, our first big event, right?
Lara Schmoisman 30:16
I honestly it was so well thought out. Every little thing is one if you want and what I really loved the study made it really exclusive for people in the beauty industry, that it was everyone they are knew what you were talking about. You then have to go one on one VOD.
John Cafarelli 30:38
Yeah, well, we, you know, we are, we are a content platform. So the content is always a really big piece of the puzzle for us. And we really, really agonize over making sure that we’re putting together really valuable content, everything that we do at Beauty Matter, we always have this perspective of, if someone’s gonna give us even five minutes of their day, we want to make sure that they get something out of it, so that they have something actionable to use in their business that day, right. So they can go back to their desk, they
Lara Schmoisman 31:08
At the same time, you guys had a trade publication. So you’re talking to experts in the industry.
John Cafarelli 31:14
Totally. Yeah. The other thing that’s really interesting, and I wouldn’t say that I’m an expert, or even, you know, Kelly’s an expert in everything, but the fact that we own businesses in the space, the fact that, you know, I mean, I have a warehouse, we manufacture we design packaging, you know, we do we we know, you know, logistics we sell into retail, you know, we we’ve we’ve both done, we are our audience in some ways, right. And I think that sort of helps us when we’re creating content for, for our audience, it helps us that we sort of sat in their chairs before
Lara Schmoisman 31:48
I was looking this article, and I have it open with me right now, that from glossy a couple of weeks ago, that it’s saying that the indie beauty brands are starting to shut down. What’s your take with that? because I do believe that the the in the pandemic exploded, that so many people want to have a side business, so they want to do something. And as we were discussing before, the having a beauty brand is not something that is completely ridiculous or difficult.
John Cafarelli 32:21
Yeah, so that is that is very true. And that’s great, because it’s encouraged a lot of people to sort of get into the space. The downside to that is that the market is extremely saturated. Back when I started Ernest Supplies, you know, in sort of 20, the 2010 2011 time timeframe of when we sort of just got started, it was possible, I believe, to bootstrap, a beauty brand. And, you know, I would say if you had a few access to, you know, to some to some level of cash flow through the business, or you were able to sort of friends and family together a few $100,000, you could put together a brand, and you could get it to scale. And you could get it to a place where it was self sustaining and able to grow. I am not to say that it’s impossible. But I am a big believer in if you start a beauty brand today, and you’re serious about it, you need to go out and you need to raise resources, and you need to bring you need to bring capital into the business because it is so incredibly expensive to operate a beauty business today. And to scale it, if you know, of course, if you’re looking just to keep it as like a little hobby or like as a side business, then you could probably get away without going.
Lara Schmoisman 33:42
It’s a competition and we you need to be it’s not about having the money to manufacture the product. Product is also about market. The product.
John Cafarelli 33:52
Yeah. And that’s this and that’s the thing. And so, when you think about the evolution of the distribution landscape in the beauty space, you know, it’s really markedly different today than it was even just five years ago. And so, you know, department stores have become a little bit less relevant. And that model that that sort of concession model, that was that was the department store model has become less relevant, and in its place has, you know, is sort of, you know, the advent of like Target and Ulta and Walmart and, you know, the collaborations between Ulta and Target and space NK and Walmart, you know, those are sort of the big retail growth drivers. Today. Those are, you know, combine that with all that with, you know, Ulta and Sephora and all the prestige, you know, points of distribution. And, and it amounts to a very, very expensive way to distribute your products.
Lara Schmoisman 34:53
It’s very difficult as an owner of a company doing it all yourself.
John Cafarelli 34:58
So it’s impossible impossible.
Lara Schmoisman 35:00
It’s impossible, you need to have a support team and which is expensive also,
John Cafarelli 35:04
Totally, because it’s not just so it’s, it’s a combination of you know, your once one I think the easiest part is, and by the way artists apply sold in Target, we did a collaboration with target in 2017. So we were a little early again, like we specialize in being a little early. So we were like sort of free Target and bracing like the indie the indie brands. But, but you know, the easiest thing was getting the meeting, even though that seems like it’s the hardest thing ever, the easiest thing was getting the meeting, flying out of Minneapolis, hanging out with like the buyer, telling the story and getting them excited about about the products, we designed like a little capsule collection. So we did like custom packaging for target because the price point was a little bit lower to fit the target customer. We did a great job, we did not lose money on the project. But the hardest part for us was driving sell through and marketing. So our audience was mainly on, you know, social media, and it was mainly through email and digital. We did our part to you know, to drive awareness to the fact that we were in target, but we were only in a few 100 Target stores, right. And there’s a there’s over 1800 throughout the United States. So and they were not in like big cities, right? So most of our audience is sort of in like the big cities, right? So New York, LA, Boston, Miami, Dallas, Chicago,
Lara Schmoisman 36:31
That happens a lot of times when you get into department stores that are going to test your product and not necessarily it’s going to be where you believe your target audience is.
John Cafarelli 36:42
Totally and so we were advertising but all the people that we speak to are in those places or in those big cities right and meanwhile, you know, we’re responsible for driving sell through in you know, our New Jersey like it that’s like an hour and a half outside of New York City, right or outside of Philly. It’s like it’s no one wanted to just to see it on the shelves. Of course I did. I was there. I would go everywhere. I mean, I am very active. When I was like really devoted to Ernest Supplies. I was very active. I you know, everything from like,
Lara Schmoisman 37:13
What do you have to do if it’s your own brand?
John Cafarelli 37:15
Totally, I was in the stores, I was making sure that things were merchandise. When things weren’t on the shelf, I’d go to the manager, I’d say Hey, this is I know I shipped it to you, it’s in the back, bring it out, get salad unless it’s on the shelf. You know, and then, you know, when we were in, we were in a lot of a lot of department store doors. You know, one of the most fun things actually was going to all the different department store doors and training the staff. I would love to do that. It was my favorite thing. I would buy them all lunch, I would bring them all samples. I would you know, hang out with them. I would text with them. Hey, how’s it going? Like any questions? You know, it was so important, but it is. It’s a it’s a lot of work for one person. And it’s impossible.
Lara Schmoisman 37:57
I always tell the story. I have this friend of mine. She got she developed a food dressing, salad dressing. Oh, wow. And what was killing her. She was very successful and up selling a lot of source but the demos, she had to go every weekend to a different store in different places in the United States. And she will go herself and do the demo.
John Cafarelli 38:22
Yeah. Because because it’s expensive, you know, it’s expensive to hire a group to do it. They don’t there is something to another outlet like yourself nobody Well, there is something to the owner showing up. And and being in the market and being with like, by the way, the most the most important people in your business are the people who are on the frontlines selling it. And so though that Sales Team at you know,
Lara Schmoisman 38:50
When you detach yourself, when can you let go?
John Cafarelli 38:54
When? When can I let go? Yeah. I’m waiting. I’m gonna figure that out one day.
Lara Schmoisman 39:02
It’s so hard. It’s so hard, but like
John Cafarelli 39:05
It is it is so hard, even with Beauty Matter. You know, Kelly and I, like we we really do put our heart and soul into these things. And, you know, we just hosted a really incredible event here in New York.
Lara Schmoisman 39:19
Yeah, I was out I couldn’t go. Yeah, I mean,
John Cafarelli 39:23
It was fantastic. But it’s almost like everyone is coming into our home. That’s how I view it. And you know, we had put together this like really incredible experience in this great space. But I felt the responsibility for every person that was there and I wanted to make sure everyone was connected and having a good time. You know, Kelly and I like I said, we we sometimes both have felt like outsiders in in the beauty industry, because we’re not sort of like the traditional like, we don’t come from like the L’Oreal’s or the Estee Lauder is the big beauty, you know, the big beauty companies. And so we don’t know as many people I would say and you know, we’re a little bit less Conventional we don’t, I’m a very casual person. So I’m in jeans and a T shirt every day. And so there have been moments where I’ve gone to events, and I definitely don’t know anyone, and you’re sort of like in the corner, and you don’t really know anyone. And so when people come to a Beauty Matter event, we want to make sure that everyone has a place everyone fits in. Everyone is there for a reason, of course, you know, we either we know them, or, you know, there are people who have found us and have decided to invest that, you know, invest their time or their money with us to be at that event. And so Kelly, and I take it very personally, we want to make sure that everyone is getting as much as they can out of the time that they’re spending with us. And so whether it’s putting together really great content for them, making sure that there’s lots of opportunities to network, or just going up to someone who might be like standing in a corner kind of by themselves and saying hi, and, you know, introducing ourselves
Lara Schmoisman 40:53
I remember in the event that you did in LA, I think that the only rule that you guys have that day is that you have to walk up to someone that you didn’t know,
John Cafarelli 41:03
Did you do it?
Lara Schmoisman 41:04
Of course. Good. Yeah, you don’t know me already?
John Cafarelli 41:08
I know you don’t have a problem saying hi to people.
Lara Schmoisman 41:12
No, I know. What can I say? I used to be very shy, but I learned that it. I mean, it’s Hi. I mean, you’re not soliciting. You’re just talking to people.
John Cafarelli 41:24
Yeah, for sure. And you know, you never know where you meet, like you might meet someone who, you know, there’s an opportunity to do some business with, but you might just meet someone who’s a friend, or someone who’s a familiar face that you’ll see at another event somewhere.
Lara Schmoisman 41:39
Actually I want I have to tell you this, I went to a social event the other day, and I met a woman say I met you at Beauty Matter!
John Cafarelli 41:47
I love that. I see Oh, I love that.
Lara Schmoisman 41:51
And it was a social event. And so we ended up and now we’re texting and we became friendly. And you never know.
John Cafarelli 41:56
Well, that that story is mission accomplished. In my mind. I love that. I mean, that is exactly why we why we do these events. It’s to sort of bring our community together. So I love that. Yeah, that makes me very happy.
Lara Schmoisman 42:10
I wouldn’t have never met her before, if I didn’t just go and speak to her. And that’s what I think is the beauty about networking. And I’m so grateful that you guys provide those opportunities, because your events have not stuffy that each has Oh, you need to listen to the panel. And that’s it.
John Cafarelli 42:29
Yeah. And we’re getting we’re getting better, you know, that that event, the next event in LA last year in September, which by the way we’re doing again, in October in downtown LA again. Okay, great. But yeah, that event was our first event. And I thought it was great. I thought it was you know, just so fantastic. But we definitely learned a lot. And you know, there were some notes that we that we all had for ourselves or notes that other people gave us about ways we could sort of make it better. And so, you know, we’re constantly evolving and evolving, you know, our concepts and evolving the way we gather,
Lara Schmoisman 43:10
I say industry is evolving. And I’m sure that this is something that you’re going to have to address also in the next event what how it’s affecting the, in the in the near industry. And all this conversation is something that is evolving constantly.
John Cafarelli 43:26
Yeah, I have to go back to what we started talking about before about, you know, indie brands, you know, now starting to show signs of of some weakness, there are some brands that are not indie brands that have gone out and raised a lot of money that are also showing some signs of weakness right now. The industry in general has been very resilient, it really has, we’ve been very fortunate in the beauty space that the space has withstood the sort of tests of the economy and inflation and you know, even through the pandemic, it has withstood those stresses in you know a lot better than a lot of other industries have. That being said the the success has not been distributed evenly. And you know, certain categories have been favored over others. So for example, during the pandemic, you had tons of color cosmetics companies and makeup companies you know having a tremendous amount of stress on their businesses because no one was really buying that stuff. But then you had body care companies and hair care companies
Lara Schmoisman 44:33
Yeah, I mean hair growth after the pandemic, it became like a new trend.
John Cafarelli 44:37
Totally. You know skincare is perennially like a pretty reliable category. And you know now color is back, colors have a fantastic category – a little you know, it’s a little little less exciting for,
Lara Schmoisman 44:54
But also we have new categories, like sexual wellness
John Cafarelli 44:57
Totally Yeah, yeah. I mean, there’s so many interesting subcategories and conversations that are happening within beauty. It is it is an incredibly dynamic industry. And there’s so many smart people who are doing so many, you know, incredible things. It’s what keeps us in business at Beauty Matter. You know, this is the stuff that we love to report on. There’s so many things happening on any given day.
Lara Schmoisman 45:21
And I love that. Well, thank you, John, for being here today. And for having coffee with me. This was amazing.
John Cafarelli 45:28
Thank you so much for having me at any time, and I look forward to hanging out with you either in LA or at some point before he next event.
Lara Schmoisman 45:35
Who knows. All right, to you guys. Thank you for being here. One more time, and I’ll see you next week. Find everything you need at LaraSchmoisman.com or in the Episode Notes right below. Don’t forget to subscribe. It was so good to have you here today. See you next time. Catch you on the flip side. Ciao ciao.