In this episode of the JumpStart Beauty Brand Guest Series, Divya Gugnani, co-founder and CEO of Wander Beauty, answers three questions around the theme “What Beauty Founders Don’t Know.”
[00:01:57.580] -what do beauty founders not know about consumer acquisition?
[00:11:57.750] – Many brands are so focused on throwing an assortment at the customer, and we don’t do that.
[00:17:22.250] – How important is fundraising for success? Is it a necessity, or is it something that you will attract if you’re doing well?
[00:19:44.790] – Raising money too quickly and too much money too soon is a typical, classic, first-time founder mistake.
[00:21:47.260] – What do the founders not understand about product development?
[00:00:00.330] – Divya
But the most important thing is we’re empowering our customers to be gorgeous on the go. And I think so many brands have gone after this segment and they’ve gone after it with different angles, and none of them have been successful.
[00:00:11.750] – Intro
Fasten your seatbelts. This is Jumpstart, where women-led early-stage beauty brands learn counterintuitive insights to accelerate from approximately $1 million to $20 million to $100 million without spending a fortune on ads, influencers or retailers. With your host, Rohit Banota, founder of Toronto based Jump Accelerator and an ex-P&G. Let’s together create a more humane, conscious and beautiful planet. A woman’s world. Please subscribe to the podcast if you haven’t already.
[00:00:53.400] – Rohit
Divya, I welcome you to Jumpstart Beauty Brand podcast. We are focused on women-led beauty brands and it is about counterintuitive insights. What founders do not know, and this series is themed, what is it that the beauty founders do not know? And for everybody who doesn’t know? Who Divya Gugnani is. I hope I got your surname, I pronounced it right. Divya Gugnani. She got a Harvard MBA. And this is the closest I have gotten to a Harvard MBA. I applied twice. She has 20 plus years of investment and entrepreneurial experience. She has founded a brand called 5 SENS, which is bringing clean and sensorial approach to fine fragrance. She’s the founder of Concept to Co. and she is the co-founder and CEO of Wander Beauty, which is all about everyday makeup essentials. So, wow, that’s quite something. And you have accomplished a lot even though you look 22. You have over 20 years of experience, so that’s quite a lot. Is there anything that you have to say before I get started with my questions?
[00:01:52.780] – Divya
Anything? No. I’m super excited to chat.
[00:01:57.580] – Rohit
Perfect. So, I’ll start with my first question, which was, what is it that beauty founders do not know about consumer acquisition?
[00:02:07.500] – Divya
So, I think customer acquisition people are so focused on making the metrics work. So I acquire a customer using Instagram ads, Meta ads or TikTok ads. It costs me this much money to acquire a customer. This is what my payback period is. They’re looking at all the metrics. What I think you need to do is take a step back and think about customer acquisition in a totally different lens. Create product and services that actually add value to the consumer’s life, and then that will be your customer acquisition. Customers will continue to come in and buy if they understand the value of your brand or your business. So, we launched Wander Beauty with our On the Glow Blush and Illuminator. It’s a double-sided stick. It’s got a blush. It’s basically lip and cheek formula. You can use on your lips, use on your cheeks, blush or a lipstick. And then we have a Nude Glow Illuminator, which can multitask tremendously. It can be cream eyeshadow. It can be a highlighter for the high points of your face. It can be a body highlighter. So, this one product basically replaces four beauty products in your bag.
[00:03:08.980] – Divya
Replaces your lipstick, your blush, your highlighter, your cream eyeshadow, your body highlighter. Essentially, we’re creating value for the consumer because she’s buying fewer things. So, we’re saving her money, we’re saving her space, because she doesn’t have to have four things in her beauty bag. And most importantly, her most precious commodity is saving her time. And so by saving her time, she can go from looking like she looks when she wakes up in the morning to looking polished and pretty in one and a half minutes by using this double sided stick. And that’s value for the consumer. They’re doing it very quickly, effortlessly, no brushes required, no tools required. In the back of a taxi, at their desk, at work, in the bathroom, at the gym, wherever they wander. And that’s really about when you create value for the consumer. You save them time, you save them money, you save them space, they’re always going to come back. So, create products and services that create value for the consumer, and that should be your best customer acquisition strategy.
[00:04:08.140] – Rohit
Wow, that’s a brilliant insight. And I love the fact that you gave the example of your illuminator, which replaces four or five different products. Just to follow up on that, because it’s a bit of a segue from the three questions I had for you. A lot of other beauty brands go with essential products or products on the travel minimizing the number of products you need, but I don’t see as many of them succeed because I speak to a lot of beauty founders. What is it? What is it about the value that you manage to add? If there’s an insight there which the other people who go for less is more or on the go, miss out on?
[00:04:47.840] – Divya
Yeah. So, our basic tenet at Wander beauty is effortless, essentials things you reach for every day, wherever you wander across makeup and skincare. But the most important thing is we’re empowering our customers to be gorgeous on the go. And I think so many brands have gone after this segment, and they’ve gone after it with different angles and none of them have been successful. So, a lot of people are trying to do overly fussy packaging, to create travel friendly products which in a daily routine when someone’s not traveling can be a little bit fussy and time consuming to assemble, disassemble, have add on packaging, removing packaging. I think people are trying to solve a problem, but actually they’re creating more friction in the process of people using their brand. And so, what I’ve learned as a founder is when you make things easy for the customer, your brand will work. You’ll have that product market fit and you will scale. So, our idea is ease. We’re giving you the things that you always want, but we’re giving you them in a travel friendly format that they can use. Lightweight packaging, travel friendly. And we don’t compromise on the formulas, we don’t compromise on the size impressions, we don’t compromise in all these different areas. A lot of other brands also going after the segment are going after minis and travel sizes.
[00:11:03.700] – Divya
And that to me is just creating more waste in the environment. It’s like you’re not going to have a whole set of beauty products at home that you always use and then have a whole separate set that you always travel with. Unless you’re traveling for a living, you want to be able to have multiuse products that can go with you seamlessly throughout your lifestyle, whether it’s going from work, going from brunch to a lunch, or going to breakfast to dinner and on a weekday to weekend, you want to have that seamless transition. And so, we have to make it easy for the customer. So, making it easy for them I think is the most important tenet that has really allowed us to be successful.
[00:11:40.740] – Rohit
Well, that’s a brilliant insight even though we were focusing more on business fundamentals. But I think this insight that you are making it easy for them to switch between everyday situations or rituals, which I think those who are focused primarily on travel miss out on because not everybody is traveling all the time, right?
[00:11:57.750] – Divya
I think that’s it really and I think also so many brands are so focused on throwing an assortment at the customer and we don’t do that. So, we have a gateway product and I think that’s very important. As a brand founder, you have to train the prospect into how to become a customer. So ,someone comes and visits your website, you have to navigate that journey to take them to their conversion point. And so, we have the Baggage Claim Gold Eye Mask. We’ve sold over 14 million of them. They’re basically coffee for your face. They depuff, hydrate and brighten that delicate undereye area which really wakes you up. That hero product has won numerous beauty awards. It’s a $26 price point. It’s something that’s accessible, luxury, and it has proven results. And so, we drive people through a path of purchase where they buy that, they trust the brand, they know the brand, and then they take it from there.
[00:12:48.210] – Rohit
[00:12:49.110] – Divya
Having a gateway product, I think it’s very important for our brand. And for 5 SENS, we have a gateway product as well. We have a discovery kit. So, we have five scents, five fine fragrances and one beautiful visual box. And you can take that with you whenever you travel or wherever you go, but you can also use that as a discovery experience to discover the brand, the Ethos and the Scents. And then you can come back and redeem a full-size product and you get a credit to redeem the full size. So, we’re navigating that journey of trial, discovery, awareness and conversion to full size.
[00:13:21.230] – Rohit
Love it. Love it. I love the fact that you spoke about Five SENS, too, because I was curious about what is the five senses in the fragrance because I thought there’s only one sense to it. But I love you added four more senses. Yeah.
[00:13:33.800] – Divya
So, the name Five SENS comes from French and sens means senses. It’s truly a sensory experience in fine fragrance. So, everything from the visual packaging, which is aura driven, mood driven, you really get this impact. The brand is very colorful and very visual. It has a very strong appeal. Then obviously layered in that is the sense of smell and the sense of taste, because of all the fragrance notes we use. And then it’s really like tactile as well. When you touch the packaging, it’s soft touch. Everything about it is sensory, which is the whole concept of the brand: Five SENS: a sensory experience in fine fragrance. It’s your mood bottled. It’s about wearing your mood. And that is really the story of the brand. And it really comes alive 360 degrees: everything from the packaging to the formulation to the experience.
[00:14:26.290] – Rohit
Love it. Amazing. Just one last follow-up on this question around consumer acquisition, where it’s about the value that you add to the consumer. Now, a lot of founders and you are accomplished, you have done it right, so you have validation there. But I also meet a lot of founders who believe their products add value. How do they know, let’s say the consumer aquisition is not working for them that well? Or maybe it’s working, but not to an extent. Should they look at some benchmark to see if it’s really working well or not? And second, what is the way to find out it is actually adding the value that they intended? How would they know that they’re adding the value? A lot of them just go, yeah.
[00:15:08.740] – Divya
It’s super important to take all of your early customers and to interview them and to talk to them and to have focus groups and do surveys and post purchase surveys so you understand the customer’s journey. Why did people buy a brand? Why did they buy this product? And you can learn from that whether the product is making sense for them and the brand is resonating with them. And I think all that early data is data that you should collect as a founder. And then further, you can look at metrics for customer acquisition. What is your average order value? What does it cost you to acquire a customer? And when you think through these metrics and you look at the cost of acquisition and the average order value and the payback period, are you breaking even on the first purchase? Are you breaking even on the second purchase? What does the replenishment cycle look like? Are people coming back in 30, 60 or 90 days? So, you have to model out the math to see the metrics, to see if your brand is working and if you’re acquiring customers at a cost-effective rate. And then you can put money behind that and scale it.
[00:16:05.270] – Divya
And if it’s not working, it’s very important to have those conversations with early customers and understand what went right and what went wrong so that you can attract the right group of customers going forward and build successful metrics for your business.
[00:16:19.830] – Rohit
That’s just amazing. It’s a brilliant insight because behind this insight is your mindset that you’re open to feedback. And, I can tell you how many founders I speak to who do not want to do this process of going and speaking to their end consumers, because they just don’t want to hear stuff that they don’t want to hear. Like in Kung Fu Panda. If you have seen the second part, the father was walking with the sun, and says, son, you know, there’s no secret ingredient, right? So, there are no secrets. But because the world has come to such a place, like there’s a lot of shiny objects coming at you every day, and we see success of others and we start imitating it, we sometimes lose focus on fundamentals. I think that was brilliant to go back to your consumers and ask them why they buy and get that data along with the acquisition cost & average order value. I think that was absolutely brilliant. Moving on to the second question and for my viewers, Divya is extremely busy and that’s why I gave that elaborate introduction. And we’re keeping the format of the podcast short. So, the second question is, where does fundraising fit in the formula?
[00:17:22.250] – Rohit
How important it is for success? Is it a necessity or is it like something that you will attract if you’re doing well? Maybe it’s not necessity, but it helps you in increasing your speed to the market. Where do you see fundraising? And I’ll ask you a follow up question which will make it clearer, but please.
[00:17:40.990] – Divya
I think that fundraising is very misunderstood. I think a lot of brand founders want all the articles written about them. And they realize that a lot of that press is generated from dollar amounts that they’re raising. And so, they chase this idea and this notion that, oh, I have to raise money to have credibility in this space. And that’s not true at all as a founder. And if you want to maximize your own personal outcome and own personal gain from building a brand, it’s actually in your best interest to not raise money. And so, raising money should be decided on an individual basis based on the business, the brand, the founder and the company they’re trying to create. And really, money should be raised when you need it, not when you want it. And when and if you do raise money, I always have a rule of raising about ten to 15%, what I call mistake capital, because it doesn’t matter how seasoned you are, you will use ten to 15% of the money on mistakes. And so, having that buffer, you always raise money in increments of like, how much money do I need for the next twelve to 18 months?
[00:18:40.840] – Divya
And then adding a buffer on that because building a business is very similar to doing a construction project in your home. It takes longer and costs more money than you anticipated.
[00:18:53.030] – Rohit
That’s brilliant. You’re throwing one nugget of wisdom after another when you said you should not raise money, which is so counterintuitive, because every founder who’s not succeeding, they then easily put the blame on, oh, you know what? I don’t have the money. Now, I’ll ask you this. It’s slightly tricky and some people might find it offensive in today’s cancel culture, but the brands that have made it with funding, do you think they would have made it without funding? Second, the brands that are not making it, who are on a treadmill like they’re still not 100 million, they are still not on a rocket ship. If they got the funding, would they equal the performance of, I won’t call them unicorns, but like the Camels, I don’t know who wrote that article. Would they equal the performance of brands like Glossier or even Wander Beauty?
[00:19:44.790] – Divya
So, I will tell you, when you raise money too quickly and too much money too soon, which is a typical, classic, first-time founder mistake, to raise too much money and to raise it too soon, you can mask the most important thing, which is product market fit. So, if you’re generating revenue based on pouring money into marketing and driving so much, top of funnel awareness driving, trial driving, discovery, all from dollars spent, you mask product market fit. And so, I think that brands that raise too much money too quickly end up not doing well long term because they basically are buying customers. And if the product and the product market fit is not there and the quality is not there, then a customer will buy something once. But if they don’t like it and it isn’t great. They’re not coming back for it the second time. And the reality is, a one-time purchase doesn’t build a brand. It’s that repetitive replenishment cycle that builds long term profit and growth for a company over time. And so too many brands mask their product performance based on raising too much money too early. On the flip side, I agree that a lot of times, when you have product market fit, if you don’t put money behind it, you can’t accelerate your growth in a meaningful way to catch up with your competitors.
[00:21:05.100] – Divya
So, the best time to raise money is really when you need it. It’s when you’ve built that product market fit. And when you see that your brand is resonating with consumers and your product is working and you have a strong repeat purchase rate, and now you’re ready to put money behind that fit and scale. So, yes, I think that money can be debilitating if you don’t have it. At that point where you have that Fit and others are raising money and accelerating, you can fall behind.
[00:21:29.530] – Rohit
Brilliant insight. Just one last follow up on that, very small so, can I summarize that money cannot guarantee you growth, but if you focus on fundamentals, you might not become a unicorn or grow very fast, but you will build a sustainable and profitable business. And that should be the goal of every founder.
[00:21:45.890] – Divya
Yes, I agree.
[00:21:47.260] – Rohit
Perfect. Moving on to the third. I’ve already taken eleven minutes, 21 minutes of your time. I said only ten minutes. Just one last question, I promise. Divya, so, coming to product. What do they do not know about product development? I have my theory, but I want to hear from you. What is it that the founders do not understand about product development? Because a lot of them feel their products are amazing. Like, everybody goes gaga about their products, right? But I don’t see that validation in the results, please.
[00:22:12.870] – Divya
So, I think product development has evolved over time. I think the beauty consumer has become way more sophisticated. I think particularly in skincare, we have skintellectuals, people who are very well versed on skincare. So, I do believe that when you put out product, it’s very important for your product to have really strong quality and have really strong results. And I think that’s something that beauty founders kind of underemphasize initially when they’re launching their brand, they’re so consumed with the marketing, the packaging, the cool factor, the wow factor. And the reality is that your product needs to work. And so, focusing on product development from a lens of,” is this effective, and is there data and consumer information?” Like, we just launched at Wander Beauty, our Everyday Eye Cream. And this has a Meiview™Complex in it, which has incredible clinical data behind it, that de-puffs, hydrates and kind of tightens and brightens your undereye area, which is an area where you see the signs of aging first and so having products that really work is very important. And I think that focusing on the consumer use data, the clinical data, the performance, the results of a product comes first to me as a brand founder and product developer before having a clever name like this is called Mist Connection.
[00:23:29.220] – Divya
Our Baggage Claim Gold Eye Mask or Sight C-er which is our Vitamin C complex. Having great branding, great marketing, great packaging, these are things are all important in product development. But I take a formulation first approach with results.
[00:23:47.030] – Rohit
Love it. Did you say missed connection or mist connection?
[00:23:50.030] – Divya
Mist missed. M-I-S-T.
[00:23:56.630] – Rohit
So, thank you so much. You have answered three questions very well. Let’s go back to Wander Beauty and who is it absolutely for? If you want to give a bit of a I won’t call it a spiel, but who is that consumer who cannot live without Wander Beauty and there is no alternative and who is it not for?
[00:24:16.190] – Divya
I think it’s the time starved consumer who’s on the go. And I think that many, many people fall into this bucket of all age groups, all ethnicities and all lifestyles, whether it’s a student or a career mom or someone who’s a working professional. I think this is a pain point that we all have. We’re all short on time, we’re all time starved and we’re all living busy, active lives more than ever before. And we’re all on a wellness journey. So, you want clean beauty, and you want results. And that’s why Wander Beauty really ticks and works for that group. For someone who’s a really strong makeup enthusiastic enthusiast, so for someone who’s a really strong makeup enthusiast and is into trend and color and wants to spend 25 minutes doing their eye look and use 20 brushes and 20 different electric colors, that’s not our brand. We are fuss free, foolproof, do it yourself and on the go, easy and effortless. And so that’s what the brand is.
[00:25:11.090] – Rohit
Love it. And I see that you’re doing very well in Sephora. Have you also secured? Are you thinking of going to other places?
[00:25:20.130] – Divya
Wander Beauty is distributed globally through various retail partners. So, we have lots of different retail partners, Sephora and Nordstrom being two of them. We have many more and we’re continuing to grow and expand.
[00:25:34.550] – Rohit
Perfect. Well, do you have anything else to say about Wander Beauty or 5 SENS, you answered my questions in as detail as I would have expected from you. Perfect. Every answer was great. When I go back and I’ll look at the transcripts, I think I can use it to write a few of them under my name in my blogs. So, thank you so much.
[00:25:55.120] – Divya
Amazing. You’re most welcome. I’m going to run late for my next meeting. Okay, take care.
[00:25:59.280] – Speaker 2
You have fun. Thank you. Thank you. Bye.
[00:26:01.210] – Outro
Thank you for listening. Please subscribe. If you haven’t already, go to our website www.jumpaccelerator.com, and take the quiz on how ready is your beauty brand for hyper Growth. Also, do not forget to submit your application to our next batch of Jump Accelerator to accelerate your beauty brand to $20 to $100 million without spend spending a fortune on ads, agencies, influencers or retailers.