Pod Insights How I Built This with Guy Raz Dr. Dennis Gross Skincare: Dennis and Carrie Gross About this episode Dr. Dennis Gross was worried about putting his name on his skincare brand: would the word “gross” turn shoppers away? But Dennis and his wife and business partner, Carrie, realized that the key to the brand’s success lay in another part of the name – “Dr.” Dennis was able to use his experience as a dermatologist to develop effective skincare products, starting with a peel that could be done at home without causing blotchy skin. Later, the brand introduced an LED face mask, which looked like C-3P0 and lit up TikTok in glowing red and blue. In 2023, after being bootstrapped for much of its existence, the business was sold to cosmetics giant Shiseido in a deal worth $450 million.
This episode was researched and produced by Alex Cheng and edited by Neva Grant, with music composed by Ramtin Arablouei. Our engineers were Patrick Murray and Gilly Moon.
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5:19 Speaker 01 We were getting close to signing the deal, and then the pandemic hit. And the deal was off.
5:27 Guy Raz? They pulled the deal.
5:29 Speaker 01 It was like, oh, my God. We thought it was bad enough going through like 9/11 and then the 2008 crash. The pandemic was just like Dennis's practice closed, Sephora's doors closed. I think I was laying on the floor thinking, I can't believe this. I can't believe this. Are we going to lose our company?
6:00 Guy Raz? Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.
6:11 Guy Raz? I'm Guy Raz, and on the show today, how Dennis Gross filled a white space in skincare by perfecting the peel, and how he and his wife Carrie grew their first product into a $450 million brand.
6:29 Guy Raz? You may remember a few years ago, seeing a space-age-looking beauty device that went absolutely viral on TikTok. It was a plastic face mask that makes you sort of look like a neon glowing C3PO. The glow comes from these red and blue LED lights, which are meant to reduce acne and make your skin look younger and smoother. Anyway, this particular mask I'm talking about was designed by a brand called Dr. Dennis Gross Skincare. It's a bit of a clunky name, I'll admit, but it's also been the brand's superpower, because Dennis Gross is a real person, a real doctor, a real dermatologist, who's been making and selling a line of skincare products for more than 25 years.
7:13 Guy Raz? But in the early days, there wasn't a brand at all. There was just Dennis and his patients at his clinic in New York. Now, back in the 1990s, skin peel started to take off, especially among affluent women in New York. But the process would often leave their skin blotchy and red for a few days afterwards. So Dennis decided to come up with his own formula, ideally, a recipe that would be as effective without the splotchy side effects. His formula became so popular that he decided to come up with a consumer version. And this is where Carrie comes in, because she is Dennis's partner in life and in business.
7:54 Guy Raz? And together, they came up with a plan to turn Dennis's dermatology expertise into a skincare brand. In the early years, they funded the business mainly from Dennis's income. And for the first two decades, the brand was entirely bootstrapped, and relatively small for much of that time. But in 2023, the cosmetics giant Shiseido acquired Dr. Dennis Gross Skincare in a monster deal worth around $450 million.
8:24 Guy Raz? As for Dennis and Carrie, they were both born in the late 1950s. Dennis grew up in New York City and Carrie in California. By the early 90s, they were both living in New York. Carrie was working as a fashion buyer for Nordstrom, and Dennis had just started his own dermatology practice. And they were about to find out that they were neighbors.
8:47 Speaker 01 We were living in the same apartment building on 3rd Avenue in New York City. I had moved in just a few months before. And so it took us a couple of months, I guess, to end up at the elevator at the exact same moment.
9:03 Guy Raz? And that's how you met?
9:04 Speaker 01 Yes.
9:04 Guy Raz? Just at the elevator, right? OK, but normally, I mean, you just push the elevator button and then you get in the elevator and you might look down. Or, you know, today, people look at their phones. But, you know, this is early 90s. You'd look up at the ceiling. But that didn't happen. What?
9:17 Speaker 01 No.
9:17 Guy Raz? What? Yeah.
9:18 Speaker 01 I tell my kids all the time, if there were cell phones back then, I probably never would have had a conversation with your dad. So I think we all need to like, put our cell phones in our pockets when we're in the elevator.
9:31 Guy Raz? Yeah.
9:32 Speaker 02 The story was, from my point of view, is, so here I am, this bachelor, and I was coming up 3rd Avenue, as I always did on a Friday. I remember to this day, it was a Friday. And I walk in the lobby and there's Carrie talking to the doorman, talking to Orlando. And I was literally struck by her. First of all, she looked incredible. She was wearing this incredible, like, mid-length skirt and these crazy sexy blue suede mules, as they were called. And she had her dry cleaning draped over her arms. And she was talking to Orlando. And I just was moved by how she was so friendly to him. You know, it wasn't like the doorman has hired help.
10:17 Speaker 02 She was engaged in conversation. They were laughing, they were talking. And in any event, I, yeah, we rode up the elevator. And she, you looked at me and she said, you look tired. And I said, yeah, I'm tired. It was Friday afternoon and, and that was it. That was the end of the conversation. But I got off my floor, I got up at six and I watched to see like what floor she got out of. And she got off at, I think it was 18 or 19. And I, this was, this was not me. This was a moment where, you know, I, something was more powerful than what had led my bachelor life before. I got onto the intercom, I called Orlando in the lobby. I said, I just rode up the elevator with this woman. What's her story?
11:02 Speaker 02 And he said, oh, Orlando said, oh, that's Carrie. She's great. She doesn't have a boyfriend. She's really nice. You two should, you should really meet her. So he intercoms me back a few minutes later and says, hey, I got Carrie right here. You want to talk to her? And Orlando puts her on the phone and I said, hi, I'm the guy who you said was tired. Do you want to go out for dinners in time? And she said, uh, let me think about it. And she gave me her work number, which was kind of crazy because you think about it. I know where you live. I know your name. It's like, okay, fine, let me call you at work.
11:38 Guy Raz? But this is pre-cell phones.
11:40 Speaker 02 Yeah.
11:40 Guy Raz? Yeah.
11:40 Speaker 02 So three weeks later, I got to go out with Carrie. So we went out to dinner.
11:45 Guy Raz? Nice. Well.
11:46 Speaker 01 It's funny that I have a slightly different memories of what happened, but I definitely remember looking at him and I, he had a doctor's bag in his hand and his head was leaning against the wall and he was, he was looking at me. It was a little uncomfortable, but I was just friendly.
12:05 Guy Raz? Yeah. So you guys, so you agreed to go on a date and obviously Carrie, you've learned that Dennis is a dermatologist and Dennis, you learn about Carrie's background. And what, what do you guys remember about, I mean, what, what did you talk about? Where did you connect over?
12:22 Speaker 01 Skin. Are you kidding? So I grew up in California. I had sun damage. I was on the beach almost my entire life, or a tennis court. And I was in my 30s and I was seeing signs of aging. And I was spending a lot of time and energy and money on my skin. So I would shop the beauty counters. I would go to spas. And I thought I was doing the best I could. And then I met Dennis and had a conversation about what was really happening with my skin and what my future was going to look like. And I have to tell you, he gave me such hope and optimism. Because in my experience, like, I went to a dermatologist for poison ivy.
13:05 Guy Raz? Right.
13:06 Speaker 01 You know, I didn't think of them as the healthy aging gurus that they are today. So it was really a very, very exciting dinner for me.
13:17 Guy Raz? Yeah, Dennis, I mean, on that point, I mean, at that time, the early 90s, right? I mean, most people went to dermatologists for rashes or, you know, poison ivy or certain diseases of the skin, right? They didn't go necessarily for, you know, things that people go to for today, like Botox treatment or, you know, skincare, right? I mean, it really wasn't about that in any way at all, was it?
13:41 Speaker 02 No, that's right. The whole cosmetic component of dermatology at that time was in its infancy. Very little in the way of active ingredients. But it was growing. You know, there was a little bit of movement there. I certainly was seeing it in my practice. But it was actually through this conversation that I had with Carrie that we both together sort of learned about the opportunity and the state of the art and the lack of the science and...
14:09 Speaker 01 The white space, basically.
14:11 Guy Raz? Yeah, tell me about that. I mean, in the early 90s, if you, you know, imagine, like, most people who had a sort of a skincare regimen would get some creams and, you know, at the department store.
14:21 Speaker 01 They would go to the department store. And they would, you know, decide between Estee Lauder and Lancome. And it was moisturizers, basically. And the serums were just in their infancy, I think. But there were no indie brands. There was no disruption, so to speak. And there was really nothing with an active ingredient.
14:47 Guy Raz? Yeah, explain that. I mean, Dennis, when you were looking at the ingredients of what was available over the counter... What would an active ingredient be that you weren't seeing?
14:56 Speaker 02 Yeah, that's what we did for fun. We used to look at labels together. And, you know, she literally would say, what about this one? What about this one?
15:04 Speaker 01 I would bring products home, like, every week.
15:07 Speaker 02 And I was amazed at how little there was in terms of efficacy built into the actual product. A lot of it struck me as being packaging and promise. But in terms of really delivering what could be done to the skin, I felt like there is so much more possible. So it was through our relationship and our conversations that we really started to think, you know, like, what could be done here? And in my practice, again, I was seeing it too. And the real thing that was going on was it was the beginning of the lunchtime peels in dermatology.
15:50 Guy Raz? Yeah, what was that? Tell me about that.
15:52 Speaker 02 It was the idea of doing something to a patient by the dermatologist, where they would come in and in a matter of a few minutes, get what was called a peel. And so it was glycolic acid. You were being sold by detail people coming into the dermatology office, like kits where you would have the patient come in and then you would do a 30% peel on them. And then they would come back a week later and you'd do a 40% and then 50%, all the way up to 70%.
16:21 Guy Raz? And literally, these chemicals would peel your skin?
16:23 Speaker 02 By design, yes. That was the idea. And it was going to make the skin red and raw and flaky and peel, and you couldn't go out and...
16:32 Guy Raz? Hmm. So, wait, you go for these peels to the dermatologist, but then for a couple of weeks, your face would be blotchy?
16:38 Speaker 02 Blotchy, exactly. Now, that was considered good.
16:41 Guy Raz? Okay, okay. I seem to remember this. I seem to remember people having blotchy faces in the mid-'90s.
16:47 Speaker 01 Sex and the City guy.
16:50 Guy Raz? Yes.
16:50 Speaker 01 Samantha.
16:51 Speaker 02 Right, yes.
16:53 Speaker 01 These peels were aggressive and you had downtime. I mean, you couldn't leave the house, perhaps.
16:59 Speaker 02 So I felt like it made no sense. There's no organ in the body that you injure to make it come back better and stronger.
17:07 Guy Raz? Yeah.
17:08 Speaker 02 If you're a runner, you're never going to hurt your lungs so that you're going to be able to... Be even more efficient as a runner. It didn't make sense to me. At the same time, it really was catching on and I tried it. I did it, you know? And what I saw was that the patients were A, not happy with the downtime. Two, they didn't see results. It didn't work.
17:30 Guy Raz? Yeah.
17:31 Speaker 02 I wanted to introduce and design a treatment that had no downtime. So I designed a peel for my patients in my office that was an alternative and it worked better.
17:45 Guy Raz? And just to like, understand, I mean, you're obviously a medical doctor. So you have a science background. And so what would you do? I mean, in like, at night, when you closed up shop, you would start to mix ingredients and try to get the proportions to your specifications?
18:02 Speaker 02 So yes, what I did was I had several new ideas that I put to work in creating a brand new formula. The first one was instead of one acid at a high concentration, I determined and discovered and it worked multiple acids, different ones, at lower concentrations that together additively had a benefit, but no downtime.
18:26 Guy Raz? When you say downtime, there was no like period of red, splotchy skin?
18:30 Speaker 02 Precisely. No blotchiness.
18:32 Guy Raz? Yep.
18:32 Speaker 02 No inflammation. The second, most important second thing was a second step to neutralize it, right? In chemistry, you have your acids, but you also have the base. You have things that are alkaline. You have things of a higher pH versus low pH of acids.
18:47 Guy Raz? That's why you take Pepto Bismol.
18:48 Speaker 02 Exactly. So acids may be okay and good, but for a limited time only. And then I determined that you needed a second step to turn it off. And that was the secret sauce here. So I created a system, a product, a treatment, multiple acids, followed by a second step. And that innovation led to my practice really blossoming.
19:11 Guy Raz? All right, let's get back to, to your relationship for a moment because you guys meet in the early 90s. And how long before, I mean, it sounds like you guys hit it off very quickly and have a lot of common interests. Carrie, how long? Between the time you meet and the time you get married.
19:27 Speaker 01 I think we got engaged after nine months of dating.
19:31 Guy Raz? Wow.
19:31 Speaker 02 Yeah.
19:32 Guy Raz? So it was, it was fast.
19:33 Speaker 01 Yeah.
19:34 Speaker 02 And then had an engagement that lasted nine months. And my feeling was I needed to go through four seasons with Carrie just to make sure it was right. So we got through three seasons and got married, but the fourth season was okay, too. So we're good.
19:49 Guy Raz? I mean, you guys also, I think both of you really wanted to start a family very quickly.
19:56 Speaker 01 Correct.
19:57 Speaker 02 I was very much a family person, too. Yeah.
20:00 Guy Raz? And of course, you know, both of you guys in your 30s and it gets harder to have kids after 40 and, and later. So was there, was that part of the thinking as well?
20:09 Speaker 01 Yeah, the biological clock was ticking for me for sure. But I think I kind of had like this idea of myself being a working mother and we got pregnant. I actually resigned from, from Nordstrom and I had twins, which was quite a delight and a shock all at once. But in any case, all the while we were thinking about a business. You know, it was when Dennis would look at my beauty products and my, my skincare and he would say like, why do these chemists put these ingredients in here? There's no skin benefit. And when he said that, I was like, wow, he's going to think very differently than a cosmetic chemist.
20:54 Guy Raz? Yeah.
20:54 Speaker 01 Because he's seeing patients every day. And so Dennis's practice, we call it the living lab because his patients, there were just so many ideas coming to mind. So, you know, we're in the mid 90s at this point. We're married. We have our beautiful twins, Daniel and Allison. And all the while we're thinking, thinking, thinking about a business.
21:20 Speaker 02 And I must say that to that point, my practice did teach me a lot because I also had a very international practice. My office was at NYU was near the United Nations and literally I had the United Nations Medical Office send me people. So I saw, I saw people from all over the world. And, you know, I learned about different skin types, different skin tones, issues. And the other thing is, I started to ask my patients, what products are you using? Right? And I was amazed at what I learned, which was that, pretty much, they were what I called going through the merry-go-round of discontent.
22:02 Speaker 02 The patients were using a product for some hope, to get benefits of some sort. They weren't seeing it. They would then stop that one and buy another one, hoping that would work. That one didn't work. Now we're on to the next horse in the merry-go-round, another one. And after the third one didn't work, well, they go back to the first one, hoping this one would work. So that's when I said, let me at it.
22:25 Guy Raz? I mean, clearly, because of your background, you were looking at the ingredients on over-the-counter products, and you were saying, well, this doesn't make sense. But I'm surprised that more people weren't doing that. I mean, what were in the products that didn't make sense? I mean, clearly, I mean, I would assume they were formulated by people with some background in chemistry, otherwise, why would they be making skincare products?
22:50 Speaker 02 They weren't dermatologists. That's the key. You know, there's a difference between being a chemist in a laboratory and actually having a background, as I did, in the chemistry, the science to actually using ingredients, and seeing patients. So my first product was the Alpha Beta Peel. And that was really what put us on the map, because it was an at-home, two-step peel treatment. So we brought the clinic into the home of the consumer. And so it was a game changer, it was a disruptor.
23:26 Speaker 01 So between 1995 and 2000, Dennis had his clinical peel, his doctor's peel, which was the strongest. And then we went to a contract manufacturer and asked them for pads in jars, a 30-day supply, which was sort of a go-to-market strategy, that you go into the clinic, you have a peel, you take home your 30-day supply of peel pads, step one and step two, you use that every morning at home, and then when your jar is empty, it's time to come back to the clinic for another treatment. And so his patients loved it. We were selling out of our home kits rapidly.
24:09 Speaker 01 And that to us was basically proof of concept. And that's when we moved ahead to start the brand.
24:17 Guy Raz? I got you. So initially, the idea was, let's see how this works in the clinic, right? Because it sounds like Dennis and Carrie, both of you, already in 1995, when you started to give this to your patients, Dennis, that in your minds, you were thinking, this is a brand. We can turn this into a brand. This is a business. Like, at the birth of this product, that was, it was already fully formed, this idea.
24:41 Speaker 02 It was. But you know what? It was so helpful to have the confidence that that experience, that living lab of the practice, gave us. Because, yeah, my patients would get this product to take home. But then we had people coming into my front desk at my practice, who were not my patients, saying, my friend bought these peel pads here, and the results are incredible. I'd like to buy them too.
25:05 Guy Raz? Yeah.
25:06 Speaker 02 And so there was a time where it got to such a proportion of people coming in, asking for that product, that literally, one day, I came home to Carrie. I said, I think we may have a business here.
25:18 Guy Raz? All right, let me, let me just dig into this bit. So, first of all, the name of the brand. You guys gave it a name, right?
25:23 Speaker 01 Yes, we did.
25:24 Guy Raz? And you called it?
25:25 Speaker 01 MD Skincare.
25:27 Guy Raz? MD, Medical Doctor Skincare. Okay, good sounds. And it, it was, I guess, designed to sort of signal that this was made by a doctor, a skin doctor. This was scientifically formulated, to differentiate it from what you would find at a department store.
25:43 Speaker 02 That's true.
25:44 Guy Raz? And this was just in your practice? You were not offering this up to other dermatologists quite yet?
25:49 Speaker 02 Correct.
25:50 Guy Raz? Okay.
25:51 Speaker 01 So what we did was, our go-to-market strategy was to go to spas, day spas, resorts. There was quite a few in New York City.
26:01 Guy Raz? And this was, just to clarify, this was about five years after just doing this in Dennis's clinic.
26:07 Speaker 01 We were ready to go in 2000 and our first accounts was the Ritz Carlton, Paula Breck Day Spa. There were beautiful spas in Connecticut.
26:17 Guy Raz? How did you get those accounts? Is that, did you already have some media attention by that point? Was there, were people aware of this thing that was happening?
26:25 Speaker 01 Absolutely.
26:26 Guy Raz? Yeah.
26:26 Speaker 01 The beauty press were Dennis's patients. We never advertised. We just had articles in Elle and Vogue and Harper's and this was before the internet. There was no internet. There were no, as you said, no cell phones and no Botox even. It was super exciting. We went to spas initially and, you know, when I had retired from Nordstrom, I indicated to them that I might be coming back to you with the brand. And so I got my Nordstrom girls on board and Nordstrom had spas also. So we did the cosmetic floor, the beauty floor, as well as the spa treatment rooms.
27:08 Speaker 02 And to the press, which was a really important component for us in the early days, the press were equally nonbelievers that you could actually have skincare results without the blotchiness. And so they were invited into my practice. We would do the treatment on them. And like my clients, my patients, they were amazed at the immediate results they saw and then how things got better and better with the retail product. So I earned their trust.
27:36 Speaker 01 Yeah.
27:36 Speaker 02 And then they actually started to come to me privately.
27:39 Guy Raz? And you would be quoted in newspapers and magazines and so.
27:43 Speaker 02 Precisely.
27:44 Guy Raz? How did you, when you started initially selling to spas, you know, did you have to also go in and show them how to use the product? Or was it something that they could just read in the instructions and?
27:55 Speaker 01 Absolutely. No, we, we had trainers. I mean, it was a lot of, you know, writing protocols for the estheticians and creating manuals and brochures and old school videos. And it was a lot. And I was starting to feel like a little bit of imposter syndrome, like, am I really going to be able to do this? It was pretty crazy. And here we are, being very disruptive in the industry by asking people to put acid on their face every day.
28:30 Guy Raz? When we come back in just a moment, how a lawsuit forces the brand to totally change its name. Stay with us. I'm Guy Raz and you're listening to How I Built This.
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32:24 Guy Raz? Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2002, and MD Skincare is moving into spas, and even a few stores like Nordstrom. And then Carrie decides to pitch it to a French beauty store that's relatively new to the US, Sephora.
32:42 Speaker 01 And I remember flying out to San Francisco and, you know, sitting down in their conference room. Imposter syndrome, I'm thinking, the Nordstrom people knew me, so I was fine there. But I'm thinking, are they gonna just think I'm the doctor's wife? That I don't know what I'm doing? And so it was a little nerve wracking, and I sat down with them, and then we fell in love with each other. But we actually, so we had this like beautiful business model. I just want to tell you that like our clients would travel and they'd go to the Four Seasons in Maui, or they'd go to Florida and stay at a resort and see our products.
33:25 Speaker 01 And then they'd go back home and they'd go to Nordstrom or Sephora and see our products again. And they're like, wow, this is a pretty interesting brand. It's a professional brand, but I can also buy it in my local department stores. And so they, they had this journey and it had this beautiful kind of halo effect on our brand of really being authoritative in this space.
33:48 Guy Raz? And Carrie, I mean, when you guys decide, okay, we're going to go to a contract manufacturer, we're going to have them make this stuff, we're initially going to just sell it to our own customers. So it probably wasn't that expensive because you were probably able to sell it at a premium. But then when you decided to make it for cosmetologists working at spas, I mean, was it hard to finance that? Or was it, I mean, was it relatively straightforward, like from a cash flow perspective?
34:14 Speaker 01 So we had a business plan. We found a graphic artist, we did a logo, we set up the initial SKU assortment. Of course, we had to have a sunscreen in there for sure. We had a cleanser, we had, you know, it was a tight assortment, maybe like 12 SKUs. And when I needed money, I would have to have Dennis write me a check.
34:36 Guy Raz? Right. Basically, the money from your practice, Dennis, was going to finance this thing, right?
34:41 Speaker 02 It did. Right. Just went into my savings account, had the guts and did it.
34:46 Speaker 01 You know, I have to tell you that in those early years, we were so busy. I mean, at this point now, I've got four kids, not me, we have four kids.
34:57 Guy Raz? It's amazing. You guys built this business and raised four kids, but keep going.
35:00 Speaker 01 It was crazy. But, you know, I started off with a team of independent account executives. Like, we had consultants, we didn't have any employees.
35:12 Guy Raz? Right.
35:12 Speaker 01 So, you know, my best friend was helping and like we would be working out of our apartment.
35:19 Guy Raz? And what were you doing? Were you trying to like sell? What were they mainly doing?
35:23 Speaker 01 Yeah, we were opening new accounts, opening new spa accounts, and then trying to figure out a forecast and how are we going to enter into the Sephora market? And how are we going to service those doors? And So in any case, I think by 2002, we hired our first full-time employee.
35:43 Guy Raz? And what did that person, what was that person's role? Were they like a Swiss Army knife? Did they do everything?
35:48 Speaker 01 She was in the field. She was in the field. So we had opened our first official office in 2002 on Madison Avenue.
35:56 Speaker 02 It was an exciting time because the product literally sold itself. You know, once, once someone tried it consistently, people were taking us as an account.
36:08 Guy Raz? This was the alpha beta peel that you developed. And by the way, how much was, was it to like, to buy the, to do the, the alpha beta process at the time?
36:17 Speaker 01 It was about $75, I think, for a month's supply. That was a lot. That was a lot to ask. I think the clients expected, okay, I know I need a cleanser. I know I need a moisturizer, but this is something different. This is a different step in my regimen. And so they really, you know, we had clients that were coming to us with skin problems like acne, hyperpigmentation, advanced aging. So they were, it was an emotional purchase and they became super fans. They were incredibly loyal. And there's one other thing that I want to talk about really quickly.
36:58 Speaker 01 So we packaged the peel in packets, tandem packets, step one and step two. And this format gave us the ability to sample. And also like back in the day, like we were doing direct mail. We were mailing these little packets on, in envelopes and we were doing skincare challenges. And, you know, you could get on an airplane and then pass them out to the flight attendants and the people next to you. And people were, you know, they could go on vacation and pack them easily. They just were really easy to use and they were perfectly dosed.
37:39 Speaker 01 You know, so it was just the design of our peel packets, I think, was part of our secret to success.
37:48 Guy Raz? I know that you eventually got it patented. You had to because you had to protect this thing. But was that expensive? Was that time consuming? Tell me about the process of getting that patent done because that was critical.
38:00 Speaker 02 It was both.
38:01 Guy Raz? Yeah.
38:01 Speaker 02 Crucial, crucial.
38:02 Guy Raz? How much does it cost, by the way, to get a patent on something like that?
38:06 Speaker 02 You know, my recollection is it was somewhere in the order of $100,000.
38:10 Guy Raz? God, that's so crazy that it costs that. But you got lawyers and you got... But it is very challenging.
38:16 Speaker 02 It is very challenging. But I really felt like my motto then was, you know, if there's any justice in this business world, this product works so well that we are going to be very successful. And all I wanted was, you know, for it to be a meritocracy.
38:31 Guy Raz? Yeah.
38:31 Speaker 02 And as we grew, there were times where we were, in the early days, Carrie, right? We were losing money and that was tough, you know? And actually, actually, we went through our savings and I took a mortgage on our home to get extra and I put it towards the company. Now, that was challenging and that's where I had some concern with what am I doing? And I have four kids and I'm supporting my family through my practice and now I'm investing in the company. And it's teetering because growth costs money.
39:03 Guy Raz? Yeah.
39:04 Speaker 02 And before you turn into profit, you have to have the confidence to put more money in at that point.
39:11 Speaker 01 But I think by the time we got to 2005, Dennis wrote a book and that was a big deal for us. That gave us a lot of... He did a book tour. We started winning awards. And at that point, we were on the brink of breaking even. Before that, it was kind of like, OK, who are we going to pay this week? Are we going to be able to collect $200,000 by Friday? And that was kind of the startup energy every single day that we would... I would go into the office and Dennis formulates all of our products himself. He hand selects meticulously every ingredient that goes into every single one of our products.
39:53 Speaker 01 And in addition to that, we do clinical testing and that's very expensive. So it was becoming quite an endeavor, this, the company, so.
40:03 Guy Raz? Yeah, I'm curious about... I mean, tell me a little bit more about what cost you money because... What were the other big expenses? Advertising? I mean, what cost so much?
40:12 Speaker 01 We'd never advertised in those days. But I mean, as far as the money goes, a lot of it really was staffing. It was people.
40:20 Guy Raz? I mean, do you remember, you know, by, you know, five years in, 2005, 2006? I mean, was your revenue, you know, were you bringing in more than $10 million?
40:31 Speaker 01 So, you know, it's funny that there's certain financial milestones that I always really remember. And I remember the first time we hit a million dollar month. And it was just like, woo! You know, we all were like celebrating in the, in the conference rooms, but we were definitely breaking even. And then we all of a sudden started to turn a profit.
40:56 Guy Raz? So you hit profitability roughly when? Do you remember?
41:00 Speaker 01 I think we hit break even around 2006, but we didn't even have an e-commerce site until 2007. So that's when we really started to see some profits coming in.
41:13 Guy Raz? Mm-hmm. I mean, in terms of, of growing, I mean, this was, it was organic growth, but do you remember, just to give me a sense of where you were, do you remember, you mentioned that you, you know, once you hit a million dollars in sales a month, do you remember what year that was?
41:30 Speaker 01 So we started to grow, then in 2008, we slowed down a bit. So it was probably around, around that time, 2008, 2009.
41:40 Guy Raz? Tell me why you started to slow down a bit.
41:42 Speaker 01 Because of the, the crash.
41:44 Guy Raz? The crash, okay.
41:45 Speaker 01 That was a disaster.
41:46 Guy Raz? You got spooked by the financial crisis. Did it, how did it affect your business? Yeah.
41:51 Speaker 01 We actually fared very well because at that point, we were going through a name change and I had reduced our inventory. So we weren't sitting on millions and millions of dollars of inventory that wasn't moving.
42:08 Speaker 02 I also want to add one thing to a little more texture to the, the crash of '08 and how we navigated that. The way we got through it was literally our employees were so loyal and we had such an incredible culture to our company that they agreed to go for weeks without pay for us to catch our breath financially. And it was one of the greatest highlights of my career when I saw our employees just say, we believe in you, we want to support you and we're not going to leave and find a job someplace else. So, you know, being good to our employees was really important for us to survive that little era.
42:52 Guy Raz? Yeah. But right around the same time, I think you guys had another problem on your hands because you got sued, right? You got sued by, I guess, by a similar company that was called MD Formulations. And basically, they sue you because your name, of course, was MD Skincare. And you're several years in now and then they're pointing out, or they're saying that your names are too similar.
43:15 Speaker 01 Right. They slapped us with a lawsuit and then they tried to buy our brand.
43:20 Guy Raz? And so had they been around longer than you guys?
43:22 Speaker 01 A little bit longer and they were owned by a company by the name of Allergan. And so, in any case, the company itself, I think, was going through some trouble and they were sold and they tried to buy us. It was just, it was craziness and we just decided we wanted out. We weren't going to fight the lawsuit. We were just going to change our name.
43:44 Guy Raz? So you decided not to fight the lawsuit?
43:46 Speaker 01 Yeah, we settled with them.
43:48 Guy Raz? How long did it take before you got there? Because I think you decided you were going to fight the lawsuit.
43:53 Speaker 01 Well, initially, we started to go through depositions and it was a total nightmare. It was a distraction. It definitely took a lot of time and energy away from actually building our business. But we decided that we didn't want to fight the lawsuit, that we were going to change the name. And yeah, it was tough times. We had to make a decent-sized settlement, payment, to MD Formulations and, you know, pay the lawyer's fees. And so that year was really tough for us and Dennis and I had... A lot of back and forth because he didn't want to put his name on our brand, but I convinced him.
44:36 Guy Raz? Tell me, Dennis, why didn't you want to put your name on the brand? Because it was called MD Skincare up until 2010.
44:41 Speaker 02 Right.
44:42 Guy Raz? And now it's going to be called Dr. Dennis Gross Skincare. Tell me why you were reluctant.
44:46 Speaker 02 Well, you know, because the last name Gross is sort of a disconnect with beauty, you might say. And maybe I still was, you know, thinking about my being ridiculed in the schoolyard and junior high school, you're gross, you know? And it was a thing. I did not know how that would be received. It's not actually how you pronounce my last name, to be honest. It's Gross, but that's a different story. Nonetheless, that was really the reason.
45:14 Speaker 01 Yeah, he did. He was, I had to pull rank on him. I was CEO of the company. I'm like, sorry, babe, we're going for it. And it was, it was a blessing in disguise for sure. But I will tell you, it would be kind of humorous where I'd be like, you know, sneaking around like Nordstrom and walking through Sephora and hearing people saying like, oh, my God, Gross? Are you serious?
45:40 Guy Raz? When we come back in just a moment, Dr. Dennis Gross Skincare does a star turn on TikTok with a mask that uses LED light. Stay with us. I'm Guy Raz and you're listening to How I Built This.
46:09 Guy Raz? Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2010 and Dennis and Carrie have a new name for their brand and a new twist on their most important product.
46:20 Speaker 01 We came back in 2010. As Dr. Dennis Gross. And we launched a new version of our Alpha Beta Peel. It was that extra strength Alpha Beta Peel. And that was also disruptive and risky. And Sephora was a huge, huge, huge help to us at that point because I think they were scared too. I think we were all a little nervous. Are we doing the right thing? We've got this one peel that we've been selling for 10 years. And it was our hero SKU. And now we're going to launch an extra strength version of an acid peel to put on your face.
46:59 Speaker 02 But I was just seeing it in my practice. You know, people were saying, bring it on. You know, we know what the original version is. And if this is going to be even better and the two steps will save me from getting blotchy. And, you know, people went from being skeptics and concerned to full, you know, all out believers in what they can see on their skin. So the extra strength peel really was a big hit and still to this day outperforms.
47:23 Guy Raz? Yeah. Tell me about, so basically you're focusing on the brand and it's steadily growing every year. I mean, was there any moments where you start to think, okay, maybe we should bring in some outside investors to really supercharge the growth? Or because I know it would happen later, but between 2010 and 2020, was there conversations that you guys had about that?
47:48 Speaker 01 You know, one thing that I always tell an entrepreneur or somebody that's starting out a brand, like, take every single meeting. Take all the meetings because you never know who you're going to meet and what you're going to learn. And so over the years, we had quite a few meetings, wouldn't you say, Dennis?
48:08 Speaker 02 Yes, we did. But I must say, we reinvested every dollar back into the business in those years. So we had the cash flow and we had the revenues to support our growth. We, instead of taking an investor and taking money out of the company, we continued to live off the income of my dermatology practice and just believed in the brand and reinvested every day.
48:33 Speaker 01 And we didn't take a salary. Neither of us took a salary for 20 years.
48:38 Guy Raz? And Dennis, you were still practicing and you were still seeing patients every day.
48:42 Speaker 02 Absolutely. First of all, I needed to. Number two, it's what I love. And number three, it was actually in tandem with the skincare brand. So I maintain my practice to this day because it really is still what we call the living lab.
48:58 Guy Raz? Yeah, it probably became difficult to get an appointment there at a certain point because your name was on the brand and shops. And so, you know, one thing kind of, whether that was intentional or not, it kind of bolsters the other.
49:12 Speaker 01 He had some pretty frantic years, frantic days, long, long hours.
49:17 Speaker 02 Mm hmm.
49:18 Guy Raz? Yeah, I bet. Tell me about moving into like light technology, right? I mean, basically you developed a plastic mask with LED light to treat skin. And this thing went totally viral on TikTok a few years ago. How did that technology even start to emerge?
49:34 Speaker 02 It was a procedure done in my practice, right? LED is, you know, something that dermatologists do.
49:41 Guy Raz? What does it do for your skin?
49:43 Speaker 02 Two major things. Number one, it stimulates collagen.
49:47 Guy Raz? How does LED light do that? It's so crazy.
49:49 Speaker 02 It is crazy, but it is absolutely true. There's receptors in the skin, in the cells that produce the collagen, the fibroblast cell. And it turns on the production of collagen. It stimulates them. And as we get older, the amount of collagen we make diminishes. So LED in my practice was a big winner. Number two, it works on acne. The two biggest components really of dermatology were addressed by a treatment in my office. So one of the main things we do is bringing what we do in the dermatology clinic to the home of the consumer. There was an opportunity and it was the impetus to say, let's create an at-home device. And that's what the LED device, that's the backstory.
50:34 Speaker 01 But I want to point out that our very first device was actually a facial steamer. We launched a steamer back in, I think, 2012.
50:48 Speaker 01 And it was very, very popular for many years and it showed us that there was a hunger for devices. And the other piece of it that is so exciting from my perspective is the tools that our teams use when they go out in the field and they do facial events at stores and at spas. We use these, these devices on the consumer and it creates theater and excitement and it's really, really fun to be able to offer this to clients to be able to use in their home.
51:22 Speaker 02 But the thing about LED is you have to use it daily in order to see the results. And if you do, the results are spectacular. But to get the consumer to actually stay on the plan, it had to be convenient, right? So three minutes a day was the game changer and we got results and it's, it's FDA cleared because it works.
51:40 Guy Raz? Hmm.
51:41 Speaker 02 And some people just are concerned about the area around the eyes aging. So that's another device. And now the newest one is the lip. And, you know, trends, as I see in my practice, is that lips are just huge in terms of what people want. And it's just something that is part of our culture now, larger lips, people coming in for lip plumping with fillers and injectables. So there was a trend we saw early and that's where we brought that product to market.
52:10 Guy Raz? All right. So around 2020, either around the time of the pandemic or before, you bring in outside capital, a private equity group buys a minority stake in the brand. Tell me about the decision to do that. What was the, the thinking was we'll take this money and we'll do what with it?
52:30 Speaker 01 So I'm going to back up and just give you a little, you know, little story.
52:35 Guy Raz? Sure.
52:36 Speaker 01 Leading up to this. So our business is growing and I wanted to focus on international expansion.
52:44 Speaker 01 And so by 2018, 2019, now I'm starting to feel like, oh, my God, I actually don't need capital. We're successful, we're profitable, we're making money each year. But I need a board of directors. I need some partners to really help me figure out how to really take this brand and turn it into a global force. So we hired an investment banker and we met with multiple, multiple private equity groups and strategics. And we kind of fell in love with a group called MainPost Partners, based in San Francisco.
53:28 Speaker 01 And we went through the whole deal process. And we were getting close to signing the deal. And then the pandemic hit. And the deal was off.
53:41 Guy Raz? They pulled the deal?
53:42 Speaker 01 Stores closed. And it was like, oh, my God. You know, we thought it was bad enough going through like 9/11 and then the, you know, 2008 crash. The pandemic was just like shocking. It was shocking. And Dennis's practice closed, Sephora's doors closed, every spa closed. And we were sitting, looking at each other, thinking, oh, my God. I think I was laying on the floor thinking, I can't believe this. I can't believe this. Are we going to lose our company?
54:20 Guy Raz? So what'd you guys do? How did you handle it?
54:23 Speaker 01 Basically, we just rolled up our sleeves and went all in in the digital space. And we put Dennis on Instagram. And we did master classes for our clients so that we could stay in touch with them and make sure that they were OK. And About three months into the pandemic, I got a phone call from MainPost and they're like, "We want back in. We figured out a way to make the deal happen." And so we got the deal done in June of 2020.
54:57 Guy Raz? A couple of years after that, you got an acquisition offer, which you would then accept, from Shiseido to buy you guys out. $450 million. Amazing exit. I mean, I imagine by that point, you felt, all right, we've been doing this for 23 years, more. It's time to kind of enjoy the fruits of our labor, I guess.
55:20 Speaker 01 Well, we wanted to find just the right partner with a company that would respect our culture, respect the brand that we built. And that was Shiseido.
55:33 Speaker 02 And we're still with them, by the way. We're still full time and I still create the products. And it's been a great journey.
55:41 Guy Raz? Yeah, obviously a huge brand and the ability to kind of superscale things globally.
55:47 Speaker 01 That was one of the key, you know, timing factors. We actually, in 2023, launched into Sephora Europe. So I think we opened something like 17 countries in a period of like three months. It was crazy. And having Shiseido support us with talent and with experience has been incredible.
56:16 Guy Raz? And so now you're probably committed for a few years to stay with the brand.
56:20 Speaker 01 We have a three-year contract. And I don't know what's going to happen, but for right now, it's been wonderful.
56:28 Speaker 02 They're true partners, you know?
56:30 Guy Raz? Yeah.
56:30 Speaker 02 This is still a changing world in terms of skincare. Going full circle, going back to the day where skincare was just a moisturizer, you know? The future, I think, is absolutely incredibly exciting. And our pipeline, I think, is really exciting to me. I still want to create and innovate.
56:50 Guy Raz? When you think about how, you know, about the journey of building this, I mean, how much do you attribute to the work you put in and the time? And how much do you think had to do with luck and timing?
57:02 Speaker 01 I don't think it was luck, to be honest with you. I think it was really a lot of discipline, a lot of creativity, curiosity, just like seeking out the white space and disrupting.
57:15 Speaker 02 And results. You know, if you really are distinctive in your, what you're bringing to the consumer and to the industry, then I think that people will support you. People will buy your product. And that is top line for me, is the results. Nowadays, the consumer wants to see the difference. And we have consistently done that. And that's what I'm most proud of, and I think we earned it.
57:48 Guy Raz? That's Dennis and Carrie Gross, co-founders of Dr. Dennis Gross Skincare. By the way, that LED face mask that went viral, it doesn't just look like it's from outer space. The technology was actually developed by NASA. NASA thought that LED light might help speed up healing of cuts and scrapes when astronauts were in zero gravity. They didn't end up using the technology in space, but they did end up funding research that led to some of the first medical LED light devices back here on Earth. 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 if you're interested in insights, ideas, and lessons from some of the world's greatest
58:30 Guy Raz? entrepreneurs, please sign up for my newsletter at guyraz.com or on Substack. This episode was researched and produced by Alex Cheng and edited by Neva Grant, with music composed by Ramtin Arablouei. Our engineers were Patrick Murray and Gilly Moon. Our production staff also includes Chris Messini, J.C. Howard, Casey Herman, Iman Maani, Sam Paulson, Carrie Thompson, Catherine Seifer, John Isabella, and Elaine Coats. I'm Guy Raz, and you've been listening to How I Built This.
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