Hero Cosmetics: Ju Rhyu and Dwight Lee

The company behind the blockbuster acne fighter, Mighty Patch, was launched in 2017 with a single product sold exclusively on Amazon. It was inspired by similar patches Ju Rhyu had seen while living in Korea. Ju struggled with breakouts herself, and when she tried a patch and saw how well they worked, she was inspired to tailor a patch for the U. S. market. So, while the product wasn’t new, Ju recognized a niche to be filled. Over the next five years, Ju and her co-founders—brothers Dwight and Andy Lee—grew Mighty Patch from a niche product to a cosmetics industry sensation. Seemingly overnight, teens and young adults across America and all over social media could be seen proudly wearing patches on their faces. The Mighty Patch became so successful that in 2022 Hero Cosmetics sold for $630 million. And today, Hero is the number one selling acne treatment brand in the United States. This episode was produced by Chris Maccini with music by Ramtin Arablouei and Sam Paulson. Edited by Andrea Bruce, with research from Olivia Rockeman. Our engineers were Gilly Moon and Robert Rodriguez. You can follow HIBT on X https://twitter.com/HowIBuiltThis & Instagram https://www.instagram.com/howibuiltthis, and email us at [email protected] mailto:[email protected]. Sign up for Guy’s free newsletter at guyraz.com http://guyraz.com/ See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

  Our presenting sponsor today is Anthropic, the team behind Claude. Every founder on this show started with a hard question. Not the marketing plan, the 2 a.m. kind. Is this idea any good? Am I the one to build it? Should I quit my job? Anthropic got built the same way. A public benefit corporation founded on one hard question. How do we make sure AI goes well for people? So they asked over 100,000 people their hopes and their fears and are publishing what they find, even the uncomfortable parts. Me? I've got my own hard question about AI. Here it is. If everyone has access to something that can help them write the business plan,

• 0:46Guy Raz?

  build the prototype, analyze the market, maybe even come up with the idea, what separates the people who actually build something from everyone else? I don't have a clean answer yet, so I've been sitting with it with Claude. There's hope in hard questions. Ask yours at claude.ai/hibt. We get support from U.S. Bank. A question I love asking founders. What's the one decision you almost didn't make? The one that changed everything? Because it's never the obvious stuff. It's never, I decided to start a company. It's the small, boring, Tuesday afternoon decision you barely remember making until you realize it's the reason everything after it either worked or didn't.

• 1:32Guy Raz?

  Say you're 18 months in. Business is growing. You've got expenses coming from six directions. Gas for the van, office supplies, your phone bill, team lunches that are actually client meetings, and you're putting it all on whatever card you grabbed in year one. You're not thinking about it. Why would you? You've got bigger problems. But here's the thing. Path A, you keep going like that. End of the year, you're sorting through statements, trying to figure out what went where. You've left hundreds, maybe thousands, on the table in rewards you never earned, money that could have gone back into the business. Path B, you pause and get the US Bank Triple Cash Rewards Visa Business Card. Now, you're earning 3% cash back

• 2:16Guy Raz?

  on gas and EV charging, office supply stores, cellphone service, and restaurants. You pick up an extra $750 cash back as a bonus. And you've got a low APR on purchases and balance transfers for 12 months while you're scaling. Same business, same expenses, two completely different outcomes based on one small decision. Visit usbank.com/business to learn more. The creditor and issuer of this card is US Bank National Association, pursuant to a license from Visa USA, Inc. Some restrictions apply. If you travel often, you'll want to hear about this unprecedented offer. For the first time ever,

• 3:00Guy Raz?

  new Delta SkyMiles Reserve American Express Card members can earn two Delta Comfort Round Trip flights for travel within the 48 contiguous US states, Puerto Rico, or the US Virgin Islands. Plus, you can earn 50,000 bonus miles towards your next getaway. And who doesn't appreciate an elevated airport experience? Delta SkyMiles Reserve Card members get access to the Delta Sky Club, your pre-flight oasis to recharge, with 15 visits and four one-time guest passes each medallion year when flying Delta together. That's up to $950 in annual value. Value estimate based on $50 per visit rate to purchase additional visits

• 3:45Guy Raz?

  or bring a guest to the Delta Sky Club. Make every trip feel more rewarding with the car that upgrades your travel. Apply today at delta.com/cardsocial. Offer ends November 4, 2026. Minimum spending requirements and terms apply. Flights are fulfilled as flight certificates valid for Delta Comfort or Delta Maine to select domestic destinations. Book 21-plus days in advance. Up to $80 per person and taxes and fees apply. Other restrictions apply. When I pull up to a gas pump to fill my car, I'm not thinking about chemistry or engineering. I'm thinking about getting in, filling up, and getting on with my day. And it reminds me a little bit of the founders I talked to on this show, because the best

• 4:27Guy Raz?

  ones obsess over things their customers will never see. Tiny details, invisible improvements, relentless iteration. And not because anyone's watching, but because it makes the product better. That's what the mobile brand does. It engineers fuel the same way great founders engineer their products. Mobile Supreme Plus Premium Gas helps keep engines three times cleaner, which can mean better performance and improved gas mileage. It's for people who care about what's under the hood, even if they never see it. Three times cleaner compared to mobile regular gas in port fuel-injected engines. Actual results may vary. Visit mobilefuels.com for details.

• 5:20Speaker 01

  So yeah, I went down the rabbit hole of launching this. This was probably 2013, 2014. And then, in the end, it's a lot of money, it's a lot of work. Do I know that it's going to work out? I don't know. So yeah, I chickened out, got cold feet.

• 5:49Guy Raz?

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 6:00Guy Raz?

  I'm Guy Raz, and on the show today, how JuRu was inspired to create the acne treatment Mighty Patches and grew them into a $630 million business in just five years.

• 6:19Guy Raz?

  There's a concept in psychology called functional fixedness. Basically, it describes a fixed or limited way of thinking about how to use something. So, for example, if I gave you a shoe, you might try to put it on, but you might not think about using the shoe to hammer a nail into a board. The most famous example of this concept was an experiment where researchers gave people a candle, a matchbox, and thumbtacks. And the participants were then asked to attach the candle to the wall. Now understandably, many people tried to push the thumbtacks directly into the candle wax to attach it that way. But they soon discovered that wouldn't work. But they tried it anyway because that's what they were asked to do.

• 7:04Guy Raz?

  Anyway, the point of the study was to see if people would think differently, you know, outside the box. So, for example, maybe they would melt the candles onto the cardboard matchboxes first, and then attach the matchboxes to the wall with thumbtacks. The idea here was to figure out if people can overcome functional fixedness with training. And by and large, the answer is yes, because this is a path to creative thinking. So what does this have to do with today's story? Actually, a lot, because the product we're talking about, Mighty Patches, by a brand called Hero Cosmetics, were designed for a different purpose. It just took another way of looking at them to figure out that there was a whole other opportunity.

• 7:50Guy Raz?

  Now, if you don't know what I'm talking about, mighty patches are small, round bandages that cover up zits. You can find them on the faces of thousands of adolescents on TikTok. And how do they work? Well, they basically trap, seal, and absorb moisture from the pimple to help heal up the acne spot faster. And the thing about them? The technology has been around for decades. In fact, you could have gone to the drugstore in the 1980s and picked up a box of something called hydrocolloid bandages. These are bandages used to heal regular wounds. And it turns out that there was a secret tribe of people who, for many years, would buy those bandages and cut them up into squares and use them to get rid of zits.

• 8:34Guy Raz?

  But it would take a very observant entrepreneur named Ju Rui to realize that there was a business opportunity here. See, these hydrocolloid patches had been popular in Korea as acne fighters for years. And because Ju is Korean-American and spent a lot of time going back and forth as a kid, she had a hunch that these patches could be popular in the US as well. And so after years of working in marketing and dreaming of starting a business, Ju linked up with two brothers, Dwight and Andy Lee, to try and launch Hero Cosmetics. This was in 2017, and they did it with just $50,000 all in.

• 9:16Guy Raz?

  And just five years later, Ju, Dwight, and Andy sold the business for $630 million. It's an incredible story, and we'll hear from Dwight a little bit later. But first, to Ju. She was born in Korea in the late 70s, and her family moved to Seattle when she was just three years old. Her dad worked as a broker in the logging industry, sending American wood back to Asia for construction projects.

• 9:43Speaker 01

  My dad is a log broker. So he's working in the log industry. And he was with this Korean conglomerate.

• 9:51Guy Raz?

  Yeah.

• 9:51Speaker 01

  But they sent him over to grow the business in the US. And a few years after doing that, I think he realized it was better for him to start his own business. So he actually left and then started his own log broker business.

• 10:08Guy Raz?

  And log broker is literally the guy, like the middle man between the people who chop down the logs and then the people who buy it and then, I guess, sell it on to people who build houses.

• 10:20Speaker 01

  Right. So a lot of my dad's customers were based in Korea and they needed logs for, yeah, construction, furniture. I mean, Korea itself doesn't have a lot of natural resources. So they had to source from other parts of the world. So my dad was actually a buyer's broker. And, you know, he would source the logs, he would negotiate, arrange the transportation, you know, book the containers and all that.

• 10:48Guy Raz?

  And tell me a little about, about, you know, you as a kid. I mean, did your parents speak to you in Korean? Was their culture, the culture of their birth country, something that they really was important for them to transmit to you growing up?

• 11:06Speaker 01

  Yes. So I still speak to them in Korean, even though my Korean has progressively gotten worse. But culturally, yeah. I mean, we were very much a Korean household, ate Korean food. A lot of their friends, therefore our childhood friends, were Korean. And there were still a lot of sort of community, you know, amongst other Koreans who had immigrated around the same time in the Seattle area. So when I was young, we went back every summer and we spent a good month to two months in Korea. I remember staying at my grandparents' house and it just being so hot and me hanging out with all my cousins. So Korean culture was still a big part of my upbringing.

• 11:51Guy Raz?

  Yeah. I guess, from what I read, you were kind of thinking, maybe in high school, or as you were getting ready for college, of like, becoming a doctor one day. And I was surprised to learn that your parents actually discouraged that. And this is interesting, because I come from an immigrant family, and so many people who've been on the show from immigrant families, like, that's what your parents tell you to do: be a doctor, be a lawyer, be an engineer.

• 12:18Speaker 01

  Yeah, I wanted, I thought I wanted to be a doctor, and my parents, they said, "Don't do it. It's way too hard. It's gonna be years and years of study." Also, they're probably biased, because my dad's a businessman.

• 12:33Guy Raz?

  Yeah.

• 12:33Speaker 01

  So he doesn't come from, like, a science or medical background, but for him, there were better ways to make a living that didn't involve, you know, eight years of grad school and hours and hours of training. But I do remember, they told me, "Well, if you do want to be a doctor, you should be an ophthalmologist, because there's no blood, and it's gonna be a lot, like, the hours will be a lot more bearable." So for them, I think it was sort of more lifestyle.

• 13:03Guy Raz?

  Yeah. Ju, were you, I know that you went to Brown University, and from what I read, you studied history and international relations, and that, those are usually majors, like, to set you up for, like, because that's what I did, you know, like, a career in, like, law, or I went into journalism originally, or, like, publishing, or, you know, that kind of, but even, even, you know, marketing and other things. I have to imagine, maybe I'm wrong, that, like, when you went into college, you didn't really have a plan, right? You didn't know necessarily what you would do after it was over.

• 13:36Speaker 01

  No, I had no idea. My dad was not happy with my concentration. He was like, "History and international relations? What is this? You should be studying economics," you know? But, I don't know, I just remember in college, always being drawn to creative things, but then also liking analytical and business-oriented things. And so for me, it was always sort of, "How can I do both?" So I remember, I think it was, like, my sophomore year in college, I was like, you know, "Marketing might be the thing that helps immerse those two elements."

• 14:14Guy Raz?

  All right, so you you finish college and and this is, I think, around 2000, 2001. And this was the sort of the dot com kind of mini recession. I remember that time. It was I had just recently graduated too. I got lucky, an internship, but it was a tough time.

• 14:34Speaker 01

  Yeah.

• 14:35Guy Raz?

  But I guess you got this opportunity to go work for a private school for low income students called Epiphany, which was was. And tell me what you did there.

• 14:46Speaker 01

  It was in development, which is a fundraising role.

• 14:50Guy Raz?

  Right.

• 14:51Speaker 01

  So if we go back a little bit, right after college, I actually spent that summer in Kenya. And so I did some volunteer work there. And, you know, there was always kind of that part of me where I wanted to do something sort of giving back to the community. And one of the reasons why I took this job at Epiphany Schools is because I thought, OK, well, maybe this is a way that, again, I can impact community is by actually working for a local nonprofit and and sort of leveraging my interest in marketing and sales to help out fundraising for the school.

• 15:26Guy Raz?

  So you were there for a few years, but but I think that that I think it actually introduced you to the idea of your next step, right? Because you would from there, you went to business school, but you didn't that idea didn't come to you until you were doing this job for the nonprofit. How did that happen?

• 15:44Speaker 01

  Well, actually, the woman who preceded me at Epiphany School, she actually went to business school.

• 15:50Guy Raz?

  Oh, she left? She left to go to business school, right?

• 15:53Speaker 01

  Right. And so I took her job. I basically took her job. And so that was sort of the first seed, like, OK, well, that could be a path for myself as well. And then, having worked there, I mean, I enjoyed it, but there was an aspect of, well, I feel like I could do so much more. And also, there are other ways to, I think, positively impact the community or society. It doesn't have to be directly working for a charity or a nonprofit. And I started realizing you could do things in business and really make more of a, I think, positive impact that way as well.

• 16:33Speaker 01

  So so I got I started thinking about it kind of earlier on, and then, you know, I started applying to business schools and then. And then I ended up going to Columbia.

• 16:44Guy Raz?

  So, all right, you go to, you get your MBA. And, and I guess while you're there, you got an internship with Kraft.

• 16:53Speaker 01

  Right.

• 16:53Guy Raz?

  Which you would go, and that, after you graduated, you go and work for Kraft.

• 16:59Guy Raz?

  Working on food brands.

• 17:00Speaker 01

  Right, so I did my internship at Kraft Foods, which actually is now Mondelez. So I worked at the snacks division on the Planters brand. So Mr. Peanut and, you know, all the nuts that they have.

• 17:12Guy Raz?

  It's amazing, that's a, Planters Peanuts is like a billion dollar brand.

• 17:16Speaker 01

  It is.

• 17:16Guy Raz?

  And it's been around forever.

• 17:18Speaker 01

  Yes.

• 17:19Guy Raz?

  It's unbelievable.

• 17:20Speaker 01

  Yeah, I mean, they have in-house commodity people who, because, you know, you're buying commodities really.

• 17:25Guy Raz?

  Yeah.

• 17:26Speaker 01

  So I always thought those meetings were fascinating because they're tracking like the commodity prices and like, you know, the weather patterns and how it's going to impact the farmers and whether that's going to

• 17:36Guy Raz?

  Wow.

• 17:37Speaker 01

  increase the, the, the prices of peanuts and cashews and things like that.

• 17:42Guy Raz?

  It's amazing, because even a sort of marginally, fractionally lower price could be millions and millions of dollars for them.

• 17:50Speaker 01

  Right.

• 17:50Guy Raz?

  If they're buying peanuts at that scale.

• 17:52Speaker 01

  Right, exactly, yeah. But, I mean, that experience is, I mean, it really was very foundational for me. You know, I had a very traditional brand management experience. They, they train you in a very specific way.

• 18:07Speaker 01

  So it was, you know, it was really great training grounds for me, just learning about retail. And back then, like D to C didn't exist, so the only sales channel was selling into retail.

• 18:19Guy Raz?

  Yeah.

• 18:19Speaker 01

  And learning about, thinking about the consumer and, and forecasting and marketing and brand and all of that was, was, you know, really critical to our success.

• 18:31Guy Raz?

  Did you think that maybe, you know, this could be the, the path that I want to take? Like in management and then corporate leadership eventually? Or already at that point, 2008, 2009, were you thinking, I want to start my own thing one day?

• 18:47Speaker 01

  I was always very frustrated because at that time, this was like 2009, 2010. I saw the world changing very quickly around me. So, you know, Facebook had just started and social media was really becoming a thing. And, you know, big companies, they just move slower. I think that's just a fact. And so I didn't really feel like, you know, Mondelez or Kraft at that time was really moving as quickly as I personally wanted to. But also, I think even in college, I kind of always had this entrepreneurial bug. Actually, in college, I remember with two other girlfriends, we tried to start a design studio. It was

• 19:29Speaker 01

  called Three P's. And so I think that entrepreneurial energy was sort of always there, even, you know, in college.

• 19:38Guy Raz?

  Hmm. So, all right. So you're at Kraft for a few years. And then I know that you went to work for American Express for a short period of time. But then I guess around 2012, in what would be a pivotal moment, you get a job offer and then you moved to Korea.

• 19:55Speaker 01

  Right.

• 19:56Guy Raz?

  Tell me a little bit about why and what happened and what the offer was, what you ended up doing there?

• 20:03Speaker 01

  I joined Samsung in their card division.

• 20:07Guy Raz?

  Card like?

• 20:08Speaker 01

  Credit cards.

• 20:09Guy Raz?

  Credit cards. Okay. Yep.

• 20:10Speaker 01

  So Samsung and Korea, yeah, they, it's a huge conglomerate. Every vertical you can imagine, they probably have a presence there. So one of their verticals, in addition to electronics, which we all know, is financial services. And part of financial services is their credit card division, kind of like Amex. So they had a, like, overall initiative to diversify the talent pool. And one of the things that they wanted to do was bring Korean Americans to their offices in Korea.

• 20:47Speaker 01

  To bring a little bit more like diversity and experience and thought. And so they had recruiters who were based in New York, who would actively scout the right profile in all of America to do expat stints in Korea. So I got contacted by one and I remember just taking the meeting, just, you know, why not just have a conversation and became more and more serious. And then they had me meet certain executives who were in town, et cetera. And then one day I got the job offer. So then, I mean, then it became real, like I had to make a decision and then ended up deciding, you know, why not?

• 21:31Speaker 01

  If anything, it'll be an interesting experience and it was a two-year assignment. So at the end of two years, I can always come back.

• 21:38Guy Raz?

  So tell me a little bit about life at Samsung. I mean, obviously you are Korean-American, but I mean, you didn't grow up in Korean corporate culture.

• 21:50Speaker 01

  Right.

• 21:51Guy Raz?

  Very different than American corporate culture.

• 21:53Speaker 01

  Very.

• 21:54Guy Raz?

  Just a different level of commitment. And tell me what a normal day was like.

• 22:01Speaker 01

  It was definitely for a foreigner, it is a, it's a very foreign place. So for example, sometimes, you know, you wouldn't leave the office until like eight or nine, just because your boss was still there and so you had to stay because you can't leave before the boss. So they were worried about people staying at the office too long and they instituted something called Family Day. And Family Day was every Wednesday and you were supposed to leave the office at six. And it wasn't enough just to have the policy. They literally reconfigured everyone's computers to shut down at 6:00 PM, like 6:00. I just remember at 5:59, you know, I would be writing this email and then you get a

• 22:45Speaker 01

  message that would pop up on your computer, your computer is going to shut down in 10, nine, eight. And, and you just, you know, try to get that last email out. But it's sort of, you know, I think the intent was really good. And then the way that they would sort of enforce some of these things were very kind of micromanaging.

• 23:05Guy Raz?

  So it wasn't like, it was, I mean, there were like enforcers, like you were expected to. Be at your desk on time and focused. And I mean, it wasn't like, we just trust you're going to do your work. Like, people really were literally like, looking out to make sure you were doing that.

• 23:24Speaker 01

  Another anecdote related to that is, you know, they had another rule where everyone had to be in their seat at 8:00 a.m. watching what they call Samsung News, because they would have sort of like corporate communications at 8:00. And they'd have people with clipboards walking the aisle at 8:01. And if you were not in your seat with your eyes on TV, they would like, you'd get a little like, demerit, you know?

• 23:49Guy Raz?

  Like in your performance review or something? Yeah, and if you racked them up, what would happen?

• 23:54Speaker 01

  You would lose vacation days.

• 23:56Guy Raz?

  Wow. See, I, part of me is like, I really admire that. Like, there's a reason why Samsung is such an effective company. I mean, it became one of the biggest electronics companies in the world in a very rapid period of time. I mean, American companies just couldn't do that, you know, kind of put that kind of discipline on their workforce. There'd be uproar, there'd be articles, there'd be lawsuits, there'd be all kinds of things.

• 24:23Speaker 01

  Totally, I know. So on one hand, it's, you know, you kind of admire it in some ways, or like, okay, well, this is why they've made so much progress. But then, on the other hand, I don't know, I mean, culture's changing, you know, work culture's changing.

• 24:39Guy Raz?

  Yeah, I wonder if it's still the same at Samsung in Korea.

• 24:41Speaker 01

  Yeah, I don't know, I'd be curious.

• 24:43Guy Raz?

  Yeah. So, all right, so you're doing this job and in Seoul, which is an amazing city. I mean, even more so now than it was in 2012. It's just such a cool place, I've been there. But one of the things that you, you know, as sort of visitors or expats or foreigners notice when they come to new countries, is you just notice things that people living there just don't notice, right? You just, you're like, wow, that's interesting. And people living there wouldn't even see it, because it's just part of the wallpaper. And one of the things you noticed was these stickers that people put on their faces.

• 25:19Speaker 01

  Yeah, I mean, I just noticed a lot of people walking around with these patches on their faces.

• 25:25Guy Raz?

  And these were like, just like, like flesh colored?

• 25:28Speaker 01

  They're pretty transparent. They were round. They're like round circle patches that people-

• 25:33Guy Raz?

  Like Band-Aids on their face?

• 25:35Speaker 01

  Yeah. People would have them sort of, like, they would have several of them on their faces. And they'd go to the office like that. Like, no, no questions. It was just very normal.

• 25:45Guy Raz?

  And you quickly inquired, or assumed, I guess, put two together, and realized this was for pimples, for acne?

• 25:52Speaker 01

  Yes. And I, at the time, was breaking out, unfortunately. I've always had a history of sensitive skin that, like, at the tiniest thing, I would just break out. And so I tried it for myself. I went to a pharmacy. I bought some of these acne patches. And, I mean, literally, I was so amazed at how effective it was because, you know, even just with the first use, it got all the gunk out of the pimple that I put it on, and that pimple had flattened overnight.

• 26:24Guy Raz?

  And these patches, okay, so just to kind of explain, and help me kind of to, if I'm right here, they're, they have an ingredient called hydrocolloid in them. It's basically a polymer. And I guess it extracts, like, liquid from inside a pimple.

• 26:40Speaker 01

  Yes.

• 26:41Guy Raz?

  Brings it, so it's, it's basically a way of popping a zit without popping it, because that can-

• 26:45Speaker 01

  Correct.

• 26:46Guy Raz?

  Create a, create a scar, right?

• 26:47Speaker 01

  That's right.

• 26:48Guy Raz?

  Um, and this material, hydrocolloid, it's been around in, like, Band-Aids and in, like, hospitals for a long time. But I guess in Korea, they realized, hey, this actually works really well on skin blemishes.

• 27:04Speaker 01

  Yes. So hydrocolloid, the concept, you know, originally started as kind of a new type of bandage or wound dressing. And what they realized was that if you keep the, the kind of damaged skin area moist, it actually helps with the healing of the skin.

• 27:23Guy Raz?

  Yeah.

• 27:23Speaker 01

  Like, dryness is not good.

• 27:25Guy Raz?

  Right.

• 27:25Speaker 01

  So you want to keep it, like, well moisturized, in a moist environment. And so, so that's how it started. And then- You know, Koreans being very ingenious also realized, well, acne, you know, has inflammatory fluid and pus inside. And, you know, perhaps if you cut it up and make it round and make it a little bit smaller, it could work on pimples. And I mean, I think it started getting popularized in Korea, you know, probably in the early 2000s.

• 27:57Guy Raz?

  All right. So you see this and you're using this and you're like, wow, these are cool. These really work. They like, they, you know, get rid of zits fast.

• 28:05Speaker 01

  Right.

• 28:05Guy Raz?

  And, you know, but you're working at Samsung. Help me understand, at what point does a light bulb kind of go off and say, wait a minute, maybe I can do something with these in the US?

• 28:18Speaker 01

  Well, I mean, after that first use, I was like, why is this not more available or well-known? Like, it works so well, so much better than anything I've used before. And I started doing research and I just saw all these Reddit threads. I remember of people talking about these hydrocolloid patches. Oh, you know, I can't get them here. I just asked my sister who's going to Hong Kong or to Korea, can she pick some up? And so for me, like, reading that showed me that there was actually demand for this type of product. And people, you know, people were already talking about it on the web. But, you know, there was no brand really focused on the US market. There was, I think, a Korean

• 29:02Speaker 01

  brand, even at that time, I think they were probably starting to slowly sell in the US.

• 29:07Guy Raz?

  Yeah.

• 29:08Speaker 01

  There were some Band-Aid oriented brands that had the big ones. And people would comment, oh, I buy the big ones and I cut them up into small squares and just put them on my, on my face.

• 29:18Guy Raz?

  But those Band-Aid companies were not marketing it towards skin blemishes. They were marketing it towards wound healing.

• 29:23Speaker 01

  Correct.

• 29:23Guy Raz?

  So people would like just DIY it and be like, oh, I just cut little patches from these hydrocolloid Band-Aids.

• 29:30Speaker 01

  Right.

• 29:31Guy Raz?

  And put on my skin.

• 29:33Speaker 01

  Yeah, and I mean, this is where, you know, I can connect sort of this insight with an experience I had when I was working at Kraft Foods Mondelez. So you know the 100 calorie packs?

• 29:43Guy Raz?

  Of course, yeah.

• 29:44Speaker 01

  So the way that that got innovated or launched is because they were doing focus groups and they saw women, moms, buy a whole box of Triscuits or Ritz or whatever and decamp them into their own small Ziploc bags for portion control.

• 30:01Guy Raz?

  Ah.

• 30:01Speaker 01

  So when people saw that, they were like, oh, there is an opportunity here. So similarly, when I read that people were buying the big ones and cutting them up into smaller squares and using them for their pimples, I just, I thought, you know, this is it. This is more proof that people want this type of product.

• 30:20Guy Raz?

  Yeah, there's the Triscuits right there.

• 30:22Speaker 01

  Yeah, exactly.

• 30:23Guy Raz?

  Yeah. All right. So you're, I mean, you get this idea in your head, but you're of course, you know, doing the corporate thing at Samsung. But I mean, as you start to think, well, maybe there is something, you go on Reddit boards, chat rooms, you're seeing that there's, people are talking about this, but there's, you know, there's a lot more to do if you're going to kind of even think about getting something going. What did you start to do?

• 30:49Speaker 01

  You know what? In Korea, cosmetic manufacturers are required to list the name of the manufacturer.

• 30:57Guy Raz?

  Oh, like if they white label it, which most of them do, they have to tell you, wow, because in the US, they don't want to tell you that at all.

• 31:03Speaker 01

  Right.

• 31:03Guy Raz?

  They want to keep it secret.

• 31:04Speaker 01

  Yeah. So I went to a pharmacy, I bought up like 10 to 15 different brands. I turned over the box and they listed the name of all the manufacturers that these brands were using. And I just, I started cold contacting them. I would call them, I would email them. And I mean, most of them didn't write back to me, but there were two or three maybe that did. And I remember there was one where I had to buy some samples. I asked for some samples. And so that was sort of the first step in identifying a potential supplier to kind of figure out how I would get this product created.

• 31:43Guy Raz?

  Yeah. So tell me what you, you find one of these companies is like, yeah, we're open to working with you. And what did that mean? I mean, it was just a matter of like, okay, just buying a bunch of these things and shipping them over? Like, what did you start to do?

• 32:03Speaker 01

  So first I got some samples and then actually one of them, I actually visited their factory. They invited me. They were like, come, come visit, you know, we'll show you a little bit about, you know, how we make these products. And then it was just sort of conversations around like, well, can this be changed? Can that be changed? Can I increase this? Can, you know, can I change that? To see, you know, if the capabilities were there to make something more unique for the American audience.

• 32:36Guy Raz?

  Okay, so, sounds like a plan. And, and, and how much, I mean, how much money was it gonna take to do like, because some of these places have minimum per buys, like you gotta, well, you know, we're not gonna talk to you unless you spend a hundred grand. Or, what, what were they saying?

• 32:51Speaker 01

  I think it was 10,000 units.

• 32:53Guy Raz?

  And so that probably would have been?

• 32:55Speaker 01

  Probably, I don't know, 15, 20 grand or something like that.

• 32:58Guy Raz?

  And did you have the cash to do that?

• 33:00Speaker 01

  You know, I did. And I went down the, the rabbit hole. Like, I had a name, I hired a designer, I had like a sleeve design that was like, ready to go. And then I remember I submitted it to the manufacturer and they were like,

• 33:17Guy Raz?

  Because they could do everything. They would package it up, they would put your label on the, yeah, okay.

• 33:21Speaker 01

  Right. Yeah. And I remember him saying like, oh, it's not going to work because it has to be in a box to protect the patches, because the patches, you know, if there's too much weight on them, like the gel could squeeze out. I remember I had some other colleagues, you know, who are in my like, social circle, who are also like, wanting to do something entrepreneurial. And I kept like pitching the idea to them, like, oh, you know, like, what about this? And, you know, I think it could do well. So yeah, I went down the rabbit hole of, of launching this. This was probably 2013, 2014. And then in the end, did not do it.

• 34:02Guy Raz?

  Why not?

• 34:04Speaker 01

  You know, when it came time to submit that PO, I just, I don't know, I chickened out.

• 34:09Guy Raz?

  It's a lot of money.

• 34:11Speaker 01

  It's a lot of money. It's a lot of work. Like, do I know that it's going to work out? I don't know. So, yeah, I chickened out, got cold feet.

• 34:25Guy Raz?

  When we come back in just a moment, Jew finds the courage to launch her idea after joining forces with friend and future co-founder Dwight Lee, who joins us after the break. Stay with us. I'm Guy Raz and you're listening to How I Built This.

• 34:43Guy Raz?

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• 36:10Guy Raz?

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• 36:55Guy Raz?

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• 37:40Guy Raz?

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• 38:20Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2014, and Ju's contract with Samsung is over. So she heads to New York and lands a job in the Korean beauty industry, which is how she meets the guys who will be her future business partners, brothers Dwight and Andy Lee.

• 38:38Speaker 01

  At that time, K-beauty, Korean beauty, was really trending. And I was doing a little bit of consultancy. And then I ended up taking a marketing job at a K-beauty startup called Peach and Lily.

• 38:51Guy Raz?

  And just to kind of give me like the sort of the basic description of what is K-beauty? What is, what is, what makes something Korean beauty?

• 39:01Speaker 01

  I mean, I think there's probably maybe a little bit of debate about the definition. But really, it's Korean brands.

• 39:07Guy Raz?

  Yeah.

• 39:07Speaker 01

  Korean beauty brands that have a Korean approach to beauty and skincare. So that's usually like innovative textures, very interesting ingredients. Like, you know, one of the really popular products is a snail mucin moisturizer.

• 39:25Guy Raz?

  Snail, like from a snail?

• 39:27Speaker 01

  Yes, right.

• 39:28Guy Raz?

  Wow, that's interesting. Like from snail shells or?

• 39:31Speaker 01

  No, they, like, the snails will just crawl and they leave like a little trail of-

• 39:35Guy Raz?

  Of that gonk, like-

• 39:36Speaker 01

  The gonk, yeah. And apparently that's really good for your skin.

• 39:39Guy Raz?

  Wow, I did not know that. I'm going to start collecting snail slime.

• 39:47Speaker 01

  So the American audience just suddenly became really interested in products that were, beauty products that were Korean, from Korean brands. And it spurred a whole industry in the US where there were these e-commerce sites. So Peach and Lily is one, where they would bring these Korean brands into the US and create a marketplace for the American consumer to access them.

• 40:15Guy Raz?

  All right, so you're working for this startup. But meantime, I think you still have this idea in your head, right? Like this idea of these patches. Because it hadn't, no one had really brought them to the US at this point. And now you're like a year, two years later since when you first started this.

• 40:34Speaker 01

  Yeah, I mean, it was still nagging at me. It was still in the back of my head. And, you know, now I work at this K-beauty startup. And I am kind of watching the industry. And I see that some of these Korean brands that have these acne patches are doing quite well. And I'm seeing this kind of emerging category take off. And I just kept thinking to myself like, oh, my gosh, like, someone needs to do this.

• 41:03Guy Raz?

  And meantime, I guess, you know, sort of you're working for this startup for some time, but you also end up starting your own beauty consulting company, doing some consulting work. And this is where I want to bring in Dwight, who's been patiently waiting here on this, in this interview, because around this time is when you meet a guy named Dwight Lee. And Dwight, what were you, what were you doing at the time? And how did you, how did you meet you?

• 41:30Speaker 02

  So Andy, my brother, who's the third co-founder of Hero and I, we were running a digital agency called Division of. It was mostly a production studio. We're building, designing and building experiences for screens. So think like websites, apps, interactive kiosks, out of home displays, things like that.

• 41:48Guy Raz?

  Yep.

• 41:49Speaker 02

  And so we had met you through Peach and Lily. They were one of our clients. And so we met and we started working on the projects for Peach and Lily.

• 42:01Guy Raz?

  And you, I mean, I guess at a certain point, you tell Dwight about this, this idea that you had, or this pimple patch thing. Dwight, what do you remember for, when you first heard, like, what do you remember Jew telling you about it when you first heard about it?

• 42:17Speaker 02

  We'd, we'd meet up for dinner and sort of talk shop and spitball a lot of ideas. I think there was a lot of interest on both sides to try to get something going. And I do remember talking about sort of different cosmetic products and, hey, maybe we should try this. Should we try moisturizer or like a cleansing balm or stuff like that? And she mentioned the patches and it seemed really interesting to me. I remember, you know, sort of later on, Jew gave me the product and I tried it myself and I was sort of blown away. So that really helped the cause too.

• 42:52Guy Raz?

  So Jew, did you, I mean, at what point did you?

• 42:58Guy Raz?

  Feel like maybe Dwight was the person that you you might want to work with. Did you think that?

• 43:04Speaker 01

  So this is where I feel like we were so lucky in many ways because it was not that I had this idea and it was looking for a co-founder. It really was a very organic discussion where like, oh, gosh, like someone should do this. I think it's such a good idea. And I just remember Dwight saying like, hey, if you want to do it, I'll do it with you. And it turns out, so there's three of us, right? There's Andy, myself and Dwight. It actually turned out that we have very complementary experiences and skills. So, you know, I sort of had more of this like corporate marketing experience.

• 43:45Speaker 01

  And then Dwight is a technical engineer and then Andy is a creative person. And now in retrospect, I'm like, oh, that's a really good kind of cross section of skillsets because we covered big parts of the business just with the three of us. Luckily, I mean, it just happened very organically.

• 44:07Guy Raz?

  So Dwight, what was it about this product that seemed interesting to you? I mean, you you were, I don't, were you selling stuff? Like, were you? I know you'd worked with brands that launched products, but what? Why did you think that this was particularly interesting?

• 44:24Speaker 02

  So in the early years of the agency, we're always trying to launch our own products internally. And I mean, we had like a list of products. I have a list of products that just never took off.

• 44:37Guy Raz?

  Like, what were you looking at launching?

• 44:38Speaker 02

  Oh, man, I mean, we were trying to do wedding management software at one point, LinkedIn for lawyers. We launched a web hosting platform to some to some success. We started a wine subscription app at one point. I mean, you name it, we were just, we were just always building things in the agency. But we wanted a product to sell particularly on Amazon. And the acne patches seemed like a really good product because of, you know, the size, the entry, the sort of low barriers to entry in terms of cost. And then, but there was no market in the in it for the US. And it just seemed like a really innovative product.

• 45:20Speaker 02

  But I think more so than the product, I was really interested also in working with you. And you know, I think when you're starting a business, finding a good partner is sort of like 90% of the battle.

• 45:32Guy Raz?

  Yeah.

• 45:32Speaker 02

  And so I think when, when Ju suggested the idea, I was, I was game. I mean, I think if she had suggested vacuum cleaners or something like that, I might be like, well, maybe, yeah, okay, maybe. But you know, the, I think that patches were a really good product, but also, you know, working with you was a, one of the, one of the draws as well.

• 45:56Guy Raz?

  Um, all right. So you Dwight, your brother Andy and you Ju decide to kind of join forces and to try and see if you could sell these products, which you were really excited about. First of all, let's talk about the name that you came up with.

• 46:12Guy Raz?

  Tell me about how, how you came up with it.

• 46:15Speaker 01

  We started with a product name, which is the Mighty Patch. So that's the hydrocolic acne patch that we were talking about. And I just, I remember for me, it was really important that the name be emotional because my insight was that acne, like it sucks to get acne. No matter your age, you wake up, you have that pimple, you're like, oh, you know? And, um, I mean, I personally know because it happens to me. And so I, I knew the power of this product. It was an amazing product with real results and I wanted a name that was like positive and punchy and emotive. And it's actually Andy that came up with the name.

• 46:57Speaker 01

  I remember we were like just brainstorming all sorts of different names. And I think when he was like, oh, mighty, mighty patch. And we're like, that's the one. And then with hero, again, like wanted something positive, emotional. And the product, you know, I mean, it's a little bit literal, but it literally can save the day. Because when you again have, when you wake up with that breakout, you know, before an important moment, you, you panic. And, um, yeah, and then it's always like a little bit of like, is it trademark free? Is it URL free?

• 47:34Guy Raz?

  Yeah.

• 47:34Speaker 01

  You know, all that stuff. And, um, but really behind it was more of a emotional motivation.

• 47:42Guy Raz?

  And, and in terms of like,

• 47:46Guy Raz?

  Just startup capital also. I mean, you guys were going to bootstrap this initially. How much money did it take initially to do the kinds of things you need to do, which is order the inventory, get the branding and the packaging put together, and basically import all this stuff and use third-party logistics, or however you're doing it. Like, did you need like 100,000, 200,000, 300,000 bucks to get this off the ground?

• 48:19Speaker 01

  We started with $50,000.

• 48:22Guy Raz?

  Between the three of you?

• 48:24Speaker 01

  Yes.

• 48:24Guy Raz?

  And did you go back to that same company that you went to in 2014 to order the patches?

• 48:31Speaker 01

  Yes.

• 48:33Guy Raz?

  All right. And by the way, tell me about launching on Amazon, because there are millions, millions of products on Amazon, right? Like, type anything in and you will just find tons of just obscure brands you've never heard of that make the same thing. So there's a strategy to getting noticed on Amazon too, right? Like, did you set up a store? Did you use other sellers who are influential? Like, how does it work?

• 49:01Speaker 02

  Well, I think the first thing we did was, I mean, we looked at Amazon as a sort of store shelf. So we just thought about it that way. And we took a step back and said, how can our product stand out on this digital shelf? And so we designed the package very intentionally to stand out. I mean, the early thesis was that we wanted to feel like an OTC product, so feel very medical, but also sort of playful, right? So that's why the early packaging was, it was white with a pop of color. So it felt playful, but still medical.

• 49:37Guy Raz?

  You wanted it to be like an over-the-counter medicine, but something that was fun, too.

• 49:41Speaker 02

  Correct. And we also wanted to be unisex. We didn't want it to be solely targeted for females. Acne affects everybody, male and female. And so we wanted to be conscious of that.

• 49:53Guy Raz?

  Okay, so you have packaging. I think you launched it on Amazon in September of 2017. How did you get anybody to be aware of it? What did you do?

• 50:05Speaker 01

  We ran ads. I mean, that's always kind of the Amazon playbook.

• 50:09Guy Raz?

  Yep.

• 50:11Speaker 01

  Gifted influencers, press back then was a big one. I remember back then Into the Gloss, which is a beauty blog.

• 50:19Guy Raz?

  Sure.

• 50:20Speaker 01

  Was really popular and we got a write-up in Into the Gloss. And we only had one channel. We were only selling on Amazon. So I remember that article went out and then our sales on Amazon spiked. And, and so that was a moment where I thought like, we've got to double down on press.

• 50:40Guy Raz?

  Did you hire a PR firm? I mean, you had 50 grand. So presumably at least a third, maybe half of that went to that first order, maybe more.

• 50:48Speaker 01

  So there is a website where it's almost like DIY PR. So you pay for the service and then you log on and they, because there are a lot of editors who are doing articles and they'll submit their requests. They'll say, I'm doing an article on this, so I'm sourcing brands that are in acne or in baby care or in whatnot, you know, and they, they share their email. So I took that, I took their emails and I would pitch them.

• 51:16Guy Raz?

  How, how many, roughly how many emails do you think you wrote?

• 51:19Speaker 01

  Oh gosh, I mean, it was just constant. But every month, a good, I don't know, 20 emails or something.

• 51:27Speaker 02

  And I think leaning into PR was, that earned media was, was really helpful for us. You know, it saved us from having to dump a bunch of money into Instagram or Facebook or, or even Amazon ads. I mean, you get, you get a, a press release or an article and who was the big one, like New York Times like early in the day? And that, that can really transform your business overnight.

• 51:51Guy Raz?

  All right. So you've got, you know, the middle of 2017, or I think September of 2017, you're on Amazon. And how much did that Into the Gloss or those, those like hits on those websites affect sales? Did it, I mean, did it, did you start to see traction right away?

• 52:09Speaker 01

  Yeah, we did. I mean, I think within 90 days, we had run out of our initial inventory. So, and I remember before launch, we were talking about like, how long do you think it's going to take us to sell through 10,000 units? Would it take us a year? Is it going to take us six months? And ended up taking us 90 days. So the traction was there, yeah, from early on, pretty quickly. And I think we also benefited from the fact that the category wasn't as saturated as it is today. I mean, today, if you go to Amazon and you search pimple patches, you have like pages and pages of search results. But when we launched in 2017, it wasn't like that. We were one of like a handful.

• 52:51Speaker 01

  So I think that also helped us stand out a bit.

• 52:55Guy Raz?

  Yeah, I mean, it totally makes sense. And, and so, I mean, because you sold out your initial inventory so fast, and you know, you had experience in the, in the Korean beauty industry, were you kind of thinking that the next big push would be into like the K beauty market?

• 53:12Speaker 01

  So I actually did not want it to be K beauty.

• 53:14Guy Raz?

  You didn't?

• 53:14Speaker 01

  Yeah. Just because I thought it should be an American brand for this American audience. And that was actually part of the value prop, because sometimes when you buy, I mean, even today, it still happens, like, I think there's a little bit of a trust issue, because the supply chain of sometimes the products that come from one country that end up in another, it's not always clear. And I mean, sometimes there are a lot of dupes or a lot of fakes and things like that. So us being like this American-based brand for the American audience, and then adjusting our marketing.

• 53:53Speaker 02

  You also have to think, seven years ago, I mean, it's super popular now, but seven years ago, it wasn't as popular. It was just sort of coming into its own, in terms of K beauty and things like that. And so, it was really important that we removed all sort of barriers for

• 54:10Speaker 02

  Someone that's maybe not on the coast, that's not familiar with K-beauty, to try that product. And so, you know, if you go and see a product that has a different language on it, you're almost immediately turned off. And so, we just wanted to steer clear of that as much as possible.

• 54:24Guy Raz?

  Right. And so, you really didn't want people to, I mean, some people would have been like, oh, I know these because I went to Korea. But, but really, you just wanted people to think, oh, that's interesting. What an interesting idea.

• 54:35Speaker 02

  Yep, absolutely.

• 54:36Guy Raz?

  Okay, so you, you sell 10,000 units by the end of 2017 entirely through Amazon. And that really proves out this, that there's something there. And I guess, at this point, you're, you really want to figure out how to get this onto shelves of, in retail, how to get this into shops. So what do you do? How do you start that process?

• 54:55Speaker 01

  Yeah, I also cold emailed retailers. So, I just shot off a bunch of emails to different buyers at different retailers. Some of them, I had had their contact, some of them, I literally just, I went onto LinkedIn, found the name of the buyer, guessed their email, pitched the product and why I thought they needed it. And the first retailer to say yes was Anthropologie.

• 55:23Guy Raz?

  Wow. And, and it's interesting because Anthropologie, right, it's a fashion retailer. I think, I don't think they, in lifestyle, I don't think they sell men's clothing, right? I think it's mainly women's clothing.

• 55:33Speaker 01

  Yeah, I think it's mostly, yeah, women's and home.

• 55:36Guy Raz?

  Yeah. And they, you know, it's, it's a, it's a national chain, but not that many stores, I think.

• 55:43Speaker 01

  Right.

• 55:43Guy Raz?

  About 200. So, it's a, it's a great brand, right? But at the same time, like, it's not, it's not a shop that like, everyone's going into every day all the time, but also influential. And were they the only ones initially that, that bid? Or were there others who were like, yeah, we want, we want to do this too?

• 56:01Speaker 01

  They were the only ones at the time. So, I mean, we launched September, probably immediately I started pitching retailers. And then, yeah, I can't remember exactly when, maybe like October, November, Anthropologie said, okay, like, we'll test you in 80 stores. And that started in January of 2018. So just a few months after launch.

• 56:21Guy Raz?

  And Anthropologie is interesting because their demographic is, right? I mean, let's, let's just be honest. I'm 50, so it's very rare when I get acne. Just because your body changes and you just don't develop those things that cause that as much. Right? But, you know, between the ages of, I don't know, 12 and let's say 35, you are more likely to develop skin blemishes of that type.

• 56:47Speaker 01

  Right.

• 56:48Guy Raz?

  And that's who's going to Anthropologie, particularly women.

• 56:51Speaker 01

  Yep, exactly.

• 56:54Guy Raz?

  So it's a great place to be, even though it's not huge. It's a pretty good place to be.

• 56:59Speaker 01

  Yeah, and I think retailers like that, they tend to be more trend forward too, and they can take more risks versus like a massive chain that has, I don't know, 10,000 stores. And then I think for us too, like it was good for us to sort of dip our toe into retail because we weren't launching again like with a massive retailer. It was 80 stores, you know? And then we expanded to 200. So it was very sort of thoughtfully approached.

• 57:27Speaker 02

  Yeah, we got that call, I think it was a week or two weeks after the buyer called and said, we're selling so well that we're going to go full chain immediately.

• 57:36Guy Raz?

  Wow.

• 57:37Speaker 02

  But I, I think the size of Anthropologie was just perfect for us to, to dip into retail. Like you said, what we did in those early days with both Anthropologie and Amazon was do a lot of updates to the product. So, you know, how you sell a product in retail is much different than how you sell it online. And so this, the box has to stand upright. The text has to be legible from say 10 feet away as opposed to, you know, three feet from your monitor. And so we did a lot of testing. We, you know, we updated the packaging. We created display packs. There was a lot of learning that we took and we updated the packaging quite a bit, which set us up for bigger retailers later.

• 58:23Guy Raz?

  So when you, you know, when you had that success with anthropology, presumably you could use that in your pitches to other retailers. I mean, this is like 2018 now. And Ju, from what I gather, like you, you were still up until this point consulting, doing consulting work for other brands to, just to bring in some income for yourself, right?

• 58:45Speaker 01

  Consulting, full-time job. So this, yeah, this was basically my side hustle.

• 58:51Guy Raz?

  And, but with the success, I guess, in anthropology, that maybe prompted you to kind of shut down your consulting business and leave that behind?

• 59:01Speaker 01

  Well, I did that when I was able to pay myself a salary from Hero, which I want to say, you know, we launched in September 2017. I want to say it was around March or April of 2018. I mean, it wasn't a big salary. It was a small salary, but still that was when I decided, okay, I'm all in on this.

• 59:24Guy Raz?

  All right. So, once the anthropology thing worked out, where did you go next? Because you want to presumably go into other retailers. Who did you approach?

• 59:32Speaker 01

  2018 was a year of specialty retail. So after anthropology, it was Free People, Neiman Marcus, Goop, Urban Outfitters, like those types of kind of lifestyle fashion retailers that had a beauty assortment.

• 59:50Guy Raz?

  Okay, one of the things that's interesting to me about cosmetics brands, especially if they work, is the margins are, can be really high compared to other products, right? Because to make them isn't that, doesn't often cost that much, but you can sell them at a premium. People are willing to pay for good products at work. And, and so were you, I mean, I guess your sales were financing the business, right? That there was cash flow.

• 1:00:15Speaker 01

  Yeah, so Amazon for us was a very profitable channel and the money we made from Amazon, we put towards launching our D to C site, launching slowly in retail. And I mean, we were, we bootstrapped for the first three years and I think largely the economics of our product and the way that we built the business, it lent itself to a lot of efficiency.

• 1:00:39Guy Raz?

  And how, I mean, you know, marketing is a big part of a success of a brand, but it can take hundreds of thousands, millions of dollars. I mean, were you guys spending a lot on marketing at, by this point?

• 1:00:52Speaker 01

  No, we spent, I mean, a lot of sampling, again, gifting, gifting to influencers. Anything free, we would try.

• 1:01:02Speaker 02

  I think sampling for us was really helpful. We got on all these sort of box programs. We had college ambassadors really early on. The key with this product is that once you get it in someone's hand and they try a patch and it works, I mean, that, that person is a customer for life. And so for us, we sort of realized that early on. And so we, we got samples made, little six packs, and we were just giving samples out to everybody and anybody we could. So that, that was a big part of the strategy.

• 1:01:33Guy Raz?

  What are, tell me more about these college ambassadors.

• 1:01:36Speaker 02

  Yeah, I mean, we were trying to find people on college campuses that would be sort of an ambassador for Hero. And we'd get, we'd send them a box with some collateral, little postcards and things like that, as well as a box of samples. And we were, you know, it wasn't too complex of a program. It was kind of an honesty policy where we just give them a box of samples and trust that they would give it out to all their friends and people on campus and things like that. But we were really targeting, I mean, college, that, that age group is a big demographic for us. And so we were targeting it pretty heavily.

• 1:02:09Guy Raz?

  And, you know, Jew, I'm curious because when you were in Korea, right, in 2012, you noticed people wearing these patches on their faces, which was unusual to you because you hadn't seen it before. And so what's interesting to me is like, how was this adopted so quickly by young people in the United States? I mean, all of a sudden, people felt comfortable just having like a patch on their face, like overnight?

• 1:02:33Speaker 01

  Yeah, I mean, overnight, yeah, it probably took a few years to get there. But, I mean, we did a lot of the education. I consider us a category creator in the US. And, you know, sampling and talking about the benefits. And then also, a big thing that we did with Hero was really kind of what we call like normalize acne, because I think there's a lot of shame associated with having that breakout or having acne. And so just being a brand that says, you break out, you have acne, it's okay, like, we understand, we have it too. And I think that's communication that resonates with people.

• 1:03:15Speaker 01

  And so we're seeing, I think, a whole generation that is okay now with that occasional breakout. And sometimes, you know, they kind of flunk the fact that they have that breakout and they wear the patch on their face and they just, they don't care. And I think it's great.

• 1:03:34Guy Raz?

  When we come back in just a moment, Jew and Dwight deal with the challenges of a growing business, whether to expand into new products, take on investors, and ultimately, sell their brand. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

• 1:04:07Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2018 and Hero Cosmetics is making more and more retail deals and their online sales are growing. Jew, Dwight, and Andy want to capitalize on this and they think that new product lines might be the answer.

• 1:04:23Speaker 01

  We had one of those sort of like pivotal moments that really, I think, in my opinion, changed the trajectory of the business. But we had this product, the Mighty Patch. It was doing really well. And so logically, you think, well, you know, you're going to launch a new product, offer something else in your product portfolio. And we were talking about doing a wash off mask. It was going to be like a clay mask that you mix with water, you apply it to your face, and you rinse off. And then I had a coffee chat with this investor in the space. I showed her Mighty Patch. I said, I want to do this new product. I think it's going to be a wash off face mask. She said, no, you should not do that. You should stick to patches. You should dominate this category. Do them in

• 1:05:07Speaker 01

  every shape, every size, for every need. Just go all in. And I just remember thinking, she's right. And so we shelved the face mask product. And then we came out with Mighty Patch Invisible Plus Surface Variety Pack.

• 1:05:22Guy Raz?

  It was just go all in on focusing on the, on kind of dominating this category of blemish patches.

• 1:05:30Speaker 01

  Yeah, one for daytime, one for nighttime, a bigger one for larger surface areas, any type of like acne problem that we could solve with our patches. That's what we tried to do for a good like two years.

• 1:05:44Guy Raz?

  Okay, so you are focused on doing this meantime, around this time when the business is really starting to take off, Jew. You do something quite unusual, which is you move to Paris with your husband. Because in the meantime, you were married, you got married. I guess he's French and he wanted to go to France. That's, I mean, how are you going to do, like, if I, my question to you at the time would have been like, well, how are you going to run the business from France? Like, how are we going to do this?

• 1:06:18Speaker 01

  A lot of travel, a lot of frequent flyer miles. Yeah.

• 1:06:21Guy Raz?

  Dwight, were you worried about that when she was like, oh, I'm moving to Paris?

• 1:06:25Speaker 02

  I wasn't worried because shortly after I moved to Seattle.

• 1:06:28Guy Raz?

  Okay. Wow. And you know what? Let's have a nine hour time difference between us. Let's make it even more fun.

• 1:06:35Speaker 02

  Yeah, poor Andy. We left him with the office and all the employees. And we're like, good luck.

• 1:06:40Guy Raz?

  So how did that work? Were you working at like 2:00 in the morning? And, and I don't know. And you, you were working until like 11, 12 at night?

• 1:06:48Speaker 01

  I, I would structure my days where my meetings started at 2:00 PM. My time, yeah, because it's a six hour difference with New York. And New York was really the hub because that's where the team was, the office was. So my meetings didn't really start until two, but you know, in the mornings I would do all my catch up work or my thinking work. And then I stopped taking meetings at 8:00 PM, which is 2:00 PM Eastern. So, I mean, there wasn't a lot of overlap with anyone Pacific time. But I mean, at the time, like really Dwight was the only one who was on the West Coast.

• 1:07:19Guy Raz?

  How often did you guys meet, given that nine hour time difference?

• 1:07:23Speaker 01

  Once a week.

• 1:07:24Speaker 02

  And then whenever we would overlap in New York, we would, we would get together. But we were on Slack and Zoom, I mean, just all day long.

• 1:07:32Speaker 01

  The good part of it was that it meant like when COVID happened, we were set up because we were already a remote office. And we already had people, you know, dispersed and on all the communication systems. So, I mean, of course there were other difficulties, but I think we were pretty used to, used to a remote working situation.

• 1:07:53Guy Raz?

  Yeah. Meantime, 2019, you guys get into Target and I think it did like 700 Targets, right? Now, here's the thing about Target again, like you have a product and, and now there's awareness around this product. And if Target just puts you on the, on the shelves, people still have to discover it. Was that an issue for you? Or, or did you already have enough awareness where you could just send people to Target now to get it?

• 1:08:25Speaker 01

  I mean, the dilemma that I think the buyer had was they were intrigued, but we didn't have a lot of SKUs at the time. And then also, she didn't know where to put us. And so what we decided together was they had this new beauty mini section, which kind of acts like a discovery cash wrap type of thing. And they were like, we had this new thing, it's doing really well. Can you do a mini SKU version of your mighty patch for it? And it'll be in around 700, 800 doors. So that's what we did. We created a special

• 1:09:03Speaker 01

  SKU. I think we priced it at like $7. And it was kind of a sampler. And I mean, yeah, the worry was, well, it's one thing to get in, and then it's another thing to get people to buy it. So I remember we had queued up some, I mean, this was 2019. So we didn't, I mean, TikTok wasn't even a thing, but we had hired someone who had the foresight to tell us we should be on TikTok. So I remember we made a big TikTok push, Instagram push, just letting everyone know. I mean, every channel we had control over, we pushed them to Target because we knew it had to be a success.

• 1:09:40Guy Raz?

  Yeah. So I guess heading into 2020, all right, this is still pre-COVID. And I mean, you've made like $6.5 million in revenue, which is pretty amazing. And you've been entirely self-funded up until this point. So, so like, was that when you thought that you might need investor money to scale up?

• 1:10:02Speaker 02

  Yeah, you have to remember, I mean, we were profitable early on. The problem with the business was we're always chasing growth in terms of the, we were growing so rapidly, and the POs were getting bigger and bigger, that even though our top line was really high, I mean, at the end of the day, we had so little money in the bank, because we're always just cutting bigger POs to have more inventory on hand, to fulfill these orders for Target.

• 1:10:26Guy Raz?

  So the money would come in and go out right away?

• 1:10:29Speaker 02

  Oh, yeah. 100%.

• 1:10:31Guy Raz?

  All right. So you start having conversations and And did you get any term sheets?

• 1:10:37Speaker 01

  We did, but the term sheets were due the week of lockdown.

• 1:10:42Guy Raz?

  Right.

• 1:10:43Speaker 01

  I remember the Dow dropped by a thousand points.

• 1:10:46Guy Raz?

  Yeah.

• 1:10:46Speaker 01

  And then there were a bunch of firms that were interested who suddenly dropped out because they had to do triage on their current portfolio companies. But we got, we did, we did get some term sheets.

• 1:10:57Guy Raz?

  Uh, and did you take, did you decide to take some of that, some of those offers?

• 1:11:03Speaker 02

  No, we didn't take any.

• 1:11:05Guy Raz?

  You didn't take any?

• 1:11:06Speaker 02

  The term sheets we got were so bad.

• 1:11:11Speaker 02

  Possibly because they just didn't have faith in the company or because they smelled blood in the water with everything that was going on in the market. It's tough to say, who knows, right? But they were just so bad and they seemed so onerous to us, to the point where, I mean, the, our attorneys at the time, we were on a call and the, the lead attorney, he, he said, hey, guys, I'm going to take off my attorney hat right now and I'm just going to put on my business hat. And I have to say frankly, this is a terrible, these are terrible term sheets. Like, I, I would not recommend taking them.

• 1:11:41Guy Raz?

  What were they, I mean, what were some of the, the, the term, I mean, presumably they were looking for huge percentage ownership and things like that.

• 1:11:49Speaker 02

  Yeah, and there were just a lot of, a lot of little tricks, a lot of trap doors and, you know, onerous press structures so that essentially we could sell the business later on and still walk away with barely anything. I mean, they were just very investor friendly, very founder unfriendly.

• 1:12:05Guy Raz?

  So you turned them down?

• 1:12:07Speaker 02

  We did turn them down, yes.

• 1:12:09Guy Raz?

  Um, okay, so now it's COVID time and, and there was a, I mean, around this time, there was a real, real risk that, you know, everything could go south, right? Of course, that, that wouldn't happen for, certainly for a lot of direct to consumer brands, but, you know, all of a sudden people are focusing on like buying energy bars and

• 1:12:28Speaker 01

  hand sanitizer.

• 1:12:29Guy Raz?

  And toilet paper, whatever they are, but hand sanitizer, yeah. So did you see a, a brief dip in your business?

• 1:12:37Speaker 01

  No, we didn't. I mean,

• 1:12:38Guy Raz?

  Wow.

• 1:12:40Speaker 01

  Luckily, we were in the channels that were still deemed like essential retailers. So Amazon was still online, Target was deemed essential retailer. So. So we really didn't see much impact.

• 1:12:56Guy Raz?

  What about the supply chain challenge? I mean, with, you know, just ships not being able to come in and you were bringing the stuff from Korea.

• 1:13:03Speaker 02

  Yeah, it was, it was a real nightmare. I mean, every day we were trying to just triage an issue, whether there was delays with, with ships on the water, or the ports were shut down because of COVID outbreaks, or our suppliers couldn't get the ingredients for something. I mean, it was just every day for probably three years was very stressful, for sure.

• 1:13:25Guy Raz?

  So how did you keep your inventory stocked?

• 1:13:29Speaker 02

  For us, the strategy was to just lean into the inventory, which is risky. So we went essentially from one month of inventory on hand with lots of orders to, at one point, we're up to six months of inventory on hand.

• 1:13:44Guy Raz?

  Oh, you just bought as much as you could get?

• 1:13:46Speaker 02

  Oh, yeah. Oh, yeah. Which is a huge risk, right? I mean, if sales dropped at any point, we would have been stuck with just millions of units in a warehouse that we would have gotten rid of. But luckily, sales kept up and we were able to sort of keep, keep things moving. But for, for me, the main thing, the main strategy was just never going out of stock.

• 1:14:08Guy Raz?

  Yeah.

• 1:14:11Guy Raz?

  Okay, so now you get through the first year of COVID 2020. You're in 2021, which is now the second year of COVID. And I guess you decide to try and re-engage with some of these investors that had originally gave you terms to see if maybe you could negotiate something a little bit better. Is that right?

• 1:14:33Speaker 02

  Actually, there was one investor that we wanted to work with. So in the first process in early 2020, this guy Trevor, he was just really smart, really engaged. Every meeting that he would come to, every discussion that we'd have with him, he'd leave us thinking about something. And so even in those early days, we felt like he, he helped contribute and shape the business. The funny thing is, he turned us down the first, the first time around, not because of COVID or anything. He just said, you guys aren't ready yet. You know, I see a lot of potential in this business, but you aren't ready yet. So maybe we can talk in a couple of years or something like that, which totally baffled me because I was like, look at these

• 1:15:14Speaker 02

  numbers. I mean, this, this brand is exploding. But I mean, talk about discipline. This guy, he basically turned us down. We still wanted him. So we kept talking to him. We kept sort of the relationship warm. And then when it came time later on, I think it was October of 2020, actually, we went back to him and said, hey, here's some updated information about our target sales. Here's how the business is doing. Do you want to, do you want to do a deal? And he responded, he came back with a really good, clean, fair deal.

• 1:15:47Guy Raz?

  All right. So I guess one of the things that, that you, I mean, because at this point, you must be, I think you start to think, hey, we're getting close to acquisition time, right? I mean, is that fair to say? And if so, what was the threshold you had to reach in order to become attractive to a buyer?

• 1:16:08Speaker 01

  Hundred million dollars.

• 1:16:09Guy Raz?

  Hundred million in sales. Okay.

• 1:16:11Speaker 01

  Yep.

• 1:16:12Guy Raz?

  Tell me about, about the, the process of finding an acquirer because I mean, God, it's amazing. Just two and a half years in, barely three years in, you start to have serious conversations about an acquisition.

• 1:16:26Speaker 01

  Yeah. I mean, the first is sort of, you know, are we, are we at that scale where we would be attractive to people? And I remember, you know, 2021, it was clear we were going to hit that hundred million dollar threshold. So there was a board meeting and then it was a topic and the question was like, should we start a process? Should we, should we think about this? And then everyone was like, yes, it is time. So we kicked that off in 2022.

• 1:16:58Guy Raz?

  You eventually did start to engage in a deeper discussion with Church and Dwight. And I think they own, man, a bunch of brands, Arm & Hammer and Waterpik and even own Trojan condoms. I mean, they own a bunch of different brands. And so you engage in a conversation with them and they're, I mean, this is going to take a bit of time. Tell me a little bit about about that process because, you know, when you sign an engagement letter, it's not guaranteed that it's going to go through either.

• 1:17:32Speaker 01

  Yeah, you're right. I mean, signing it is just one step and then there's a whole due diligence process.

• 1:17:39Guy Raz?

  Yeah.

• 1:17:40Speaker 01

  But, you know, for us, when we were selling the company, partnership was really critical. Like, culture fit was a must. So we wanted someone who, you know, we could trust with the culture and the team and someone who also had the platform to continue to grow and scale this business. And, you know, we got to know the management team at Church and Dwight and they ended up being the one.

• 1:18:07Speaker 02

  The acquisition also meant for us that the brand would have a sort of forever home, a place that it could live and grow beyond us and after us. We were really focused on having a place where this brand could live on for 50 years, where I could bring my kids to Target later on and say, hey, this brand is still here, is still flourishing. And so that, more so than anything, first and foremost, was really important that the brand had a home. And so Church and Dwight was good. We felt like the best place for it.

• 1:18:37Guy Raz?

  The acquisition was announced in August of 2022, $630 million acquisition. Amazing for a brand that really launched in September of 2017 on Amazon. So, you know, a little under, what, five years after your official launch for, you know, just a really incredible exit. At that point, I mean, what did that mean for you guys? Did that also mean that you were committing yourselves to working for Church and Dwight for, you know, for a period of time?

• 1:19:12Speaker 01

  Yeah, for three years.

• 1:19:14Guy Raz?

  So tell me a little bit about what that means. Now, I mean, now you have this brand that you started and you controlled, really. And now you work for it. So you're not the decision makers anymore. What is that like?

• 1:19:27Speaker 02

  I mean, I think a founder's role is sort of ever evolving. The three of us, the work that we were doing in 2017 is different than what it was, what we were doing in 2019. And it's different today. It changes all the time. I mean, like, I don't really oversee supply chain and look at the ship, the list of ships coming in and stuff like that anymore. It wouldn't make sense for me to do it when Church and Dwight has, you know, vast infrastructure to do that.

• 1:19:52Guy Raz?

  Yeah.

• 1:19:53Speaker 02

  So the role is evolving, but for us, number one is to make sure that the brand is safe, the brand is going to continue to grow, and the culture does evolve in a way that we want it to. And, you know, it'll be successful at Church and Dwight.

• 1:20:09Guy Raz?

  When you guys think about, you know, where you got in the journey, how much of this do you attribute to the work you put in? And how much do you think has to do with just luck? Dwight, first to you.

• 1:20:23Speaker 02

  I think hard work is the baseline for any sort of success. I mean, you just have to work your tail off and make the sacrifices. But, but also, I think we're all just floating or being carried, really, in a river of randomness that sometimes we call luck. I've been blessed with an immense amount of luck in my life, and for that, I'm so appreciative and grateful.

• 1:20:49Guy Raz?

  You?

• 1:20:51Speaker 01

  I agree. I mean, I think the hard work is, you know, that's what it takes, really, if you're going to commit to an entrepreneurial journey, like, you gotta work really hard. But, I mean, I think we were so lucky in many, many instances. Like, you know, I think the timing of when we launched, the timing of when we sold, you know, me meeting Dwight and Andy and us turning out to be a really great team, actually, like, there are a lot of, I think, happy accidents that I attribute to luck.

• 1:21:28Guy Raz?

  That's Ju Ru and Dwight Lee, co-founders of Hero Cosmetics. By the way, Ju mentioned it earlier in the interview, but a big way that Mighty Patch really took off was through social media platforms like TikTok. I have watched, preparing for this interview, so many TikTok videos of young people showing me their skin up close and their zits. I can tell you, I should be paid extra just for doing that. Yeah. But I really understand it now. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And as always, it's free. And if you're interested in insights, ideas, and lessons from some of the world's greatest

• 1:22:13Guy Raz?

  entrepreneurs, sign up for my newsletter at guyraz.com or on Substack. This episode was produced by Chris Messini with music composed by Ramtin Arablouei and Sam Paulson. It was edited by Andrea Bruce with research assistance from Olivia Rikman. Our engineers were Gilly Moon and Robert Rodriguez. Our production staff also includes Alex Chung, Carla Estevez, J.C. Howard, Devin Schwartz, Catherine Seifer, Kerry Thompson, Neva Grant, John Isabella, and Elaine Coats. I'm Guy Raz, and you've been listening to How I Built This.