After Achieving Two Significant Beauty Brand Exits, Can Tula And Bobbi Brown Co-Founder Ken Landis Land A Third With DIBS Beauty?
Ken Landis could pull a beauty brand exit hat trick. He co-founded Bobbi Brown Cosmetics, which sold to Estée Lauder in 1995, and Tula Skincare, which sold to Procter & Gamble in 2022. Now, he’s on the founding team at DIBS Beauty along with his Tula co-founder Dan Reich, the technology investor and entrepreneur, CEO Jeff Lee, former COO of A-Rod Corp., and influencer Courtney Shields.
The color cosmetics brand, known for highlighter Status Stick and blush-bronzer combo Desert Island Duo, received $2.6 million from L Catterton partners Michael Farello and Jonathan Owsley, Reich and Landis to support its launch in September 2021. Earlier this year, L Catterton, the private equity firm that previously backed Tula, made a growth investment in DIBS Beauty.
Landis, who also founded Landis Capital, a technology, fashion, wellness and beauty investment firm with Veracity, Something Navy, AllWork, Joor, Papa & Barkley and Leaf Trade in its portfolio, is taking pages out of Bobbi Brown’s and Tula’s playbooks at DIBS Beauty. Those pages have the word “no” written on them often. The biggest mistake Landis sees emerging beauty brands make is expanding too fast. “That’s what I’ve learned and that’s why I’m very disciplined when I invest in any consumer product,” he says.
Beauty Independent asked him to elaborate on Bobbi Brown’s and Tula’s disciplined retail strategies, influencers as a distribution channel, the standing of celebrity brands today, what beauty entrepreneurs need to do to break through in a crowded market, and whether he’ll build yet another beauty brand to potentially score an exit haul.
How did you get started at Bobbi Brown?
I was the CEO of the cosmetic division of the Benetton Group out of Italy, and my wife [Rosalind Landis] was in the PR industry at a PR company that focused on beauty. So, we were in the beauty industry at the time, and we became friends with Bobbi and her husband [Steven Plofker]. It was just a matter of four friends hanging around one day talking about the industry and opportunities.
We started very small. I knew the industry, obviously my wife knew the industry, and Bobbi was a working makeup artist. Her husband was a real estate developer. The four of us basically did it in our spare time. No one wanted to give up their day jobs. We met in the evenings and started very small, 10 lipsticks and one door. That one door was Bergdorf Goodman. And that’s how that started.
What did it take to build that brand, and how does it inform your perspective today?
This was the early 1990s. It’s different retail environment than we have right now, and there was very clear demarcation between the high-end specialty stores, department stores and mass stores. We chose a very specific strategy. We wanted to be very narrow and deep. We wanted to limit our distribution to high-end specialty stores and be very relevant in every door we were in. We never raised any capital. We were self-funding the entire company. So, we really didn’t want to expand too quickly.
We would say no to everybody and focus on being either No. 1 or certainly top five in every door we were in. We were very exclusive in certain chains. We were exclusive with Bergdorf Goodman, and then we became exclusive with Neiman Marcus, and we would say no to Saks or we’d say no to Bloomingdale’s or we’d say no to Nordstrom until we felt we got the level of penetration that we wanted.
We also cherry-picked certain international markets where we felt there was similar type of distribution. We were in very narrow distribution in the international markets as well. We were in Harrods, Joyce and Galleries Lafayette. So, we were very, very specific with our distribution. We didn’t expand to anywhere we didn’t feel was the proper distribution for us.
When it came time to sell the brand, what were the considerations you were weighing?
My wife actually ran the company day to day. She left her job after we started scaling, and she ran it. We built an excellent infrastructure to manage the business, and we were very profitable. We were under no pressure to either sell the company or raise capital.
Because we got hot relatively quickly, people would come to us to want to buy, and we would say, “Well, we really don’t know how to value a company where we say no to most of the distribution. We could triple our sales tomorrow if we wanted to.” But we knew at some point we would want to partner with a major company.
As I said, I was running the cosmetic division of the Benetton Group at that point, and I was aware of dealing with distributors when you go into different countries. I didn’t feel that was the right approach for Bobbi Brown. As a prestige company, we wanted to have boots on the ground, and we didn’t feel we had the infrastructure to be able to accommodate that.
When Estée Lauder came, we gave them the same test. We said, “Look, we’re really not ready yet.” But, in about five years, we felt that we could penetrate that specialty store distribution in the United States, which was about 200 to 250 doors. And we felt that’s where we can maximize that business. We didn’t want to start trickling down into department stores. We didn’t want to really roll out in a big way internationally. That was really as far as we felt we could take the company.
Lauder basically said, “Well, maybe we can do something now.” We did an earn-out that allowed us to value the company at different points of its development, and we maintained autonomy during that period of time. So, it was a good deal all around. We were happy with them, they were very good partners. And that’s how that deal came about.
Did you think you were going to continue getting involved in beauty brands after that?
Benetton sold its cosmetics division, and I got into private investing. For a number of years, I actually stayed away from beauty. Bobbi Brown and MAC were really the first of the indie companies that were acquired. Since then, there have been many, many, many indie companies, and I felt it was really hard to break through the noise.
I saw many, many early-stage media companies. Some of the indie companies I saw were dealing with Sephora at that time. They would roll out, and they realized that it required a significant amount of capital to really develop the business the way it should be, and they hit walls. I was concerned about getting involved in an industry where it was going to be more capital intensive than I wanted. As I said with Bobbi Brown, it was minimal capital to start it, and we were profitable from the beginning. We never needed outside capital.
So, I stayed away from the beauty business for a while until I did Tula, which was about eight years ago.
That’s when you partnered with Dan Reich, right?
It’s a great partnership. He comes from a technology background. I come from beauty background. He had a tech company that sold, and QVC was a client. He was just networking with his old clients as to what opportunities were out there. And they said, “We would really love to try to build our direct-to-consumer business on QVC and support a brand that would be willing to launch with them.” They didn’t want to own the brand, they just wanted to see if they could take the brand and launch it.
He said, “Well, I certainly know the direct-to-consumer business, but I don’t know beauty. But I do know somebody who does.” He and I had met several times. I was sharing the office with seed venture fund Great Oaks Venture Capital, and he was actually hanging out there, so we knew each other quite well. He came to me and said, “Would you be interested in meeting in talking to QVC?”
Like I said earlier, I was trying to stay away from the beauty industry because I thought it was too crowded, but I did see that doing something direct-to-consumer definitely de-risks a launch. And having a $12 billion company behind you, a motivated company who wants you to succeed, I thought was quite compelling. So, that was what started the process.
How did you develop a seed of an idea it into what would become Tula?
We knew we wanted a price point that was going to be at an entry-level price point for prestige. We thought we needed another partner that would give us more credibility and help us really to develop a concept. We discovered a doctor, Roshini Raj. Dan’s wife saw her on television, and we reached out to her, met her a few times and said, “Well, let’s think about doing a line together.”
She’s a gastroenterologist, so she was very, very familiar with probiotics. She said to us, “I prescribe probiotics all the time to my patients, and I find that their skin is glowing. Maybe there’s something there.” We did some research, and lo and behold there was a recent study by the American Academy of Dermatologists, which basically said that probiotics applied topically could be beneficial to your skin. So, we developed the concept of probiotics being a key ingredient in a very clean and effective skincare line.
You mentioned you didn’t take funding with Bobbi Brown, but you did at Tula. Had your perspective on funding changed?
At first, we self-funded just the three of us partners. Then, we brought in friends and family, but we didn’t really go out for funding. We ended up doing a series A round with L Catterton, but we didn’t do that until we were on our way. We started out with an exclusive deal with QVC for one year. We launched our own website, and our own website really took off. In fact, QVC became a relatively small part of our business. We were able to grow the business online without significant funding through a combination of paid advertising and a significant push with influencers.
At one point we were ready to go with a brick-and-mortar retailer. We talked to Sephora, we talked to Ulta, and we decided at that time to go with Ulta. We felt that we needed some significant capital to be able to roll it out properly and the in-store infrastructure to support the brand on a retail rollout. That’s why we went for outside financing.
One of the main reasons why we were able to grow Bobbi Brown without outside financing is there were no other independent brands. So, by offering exclusives to certain stores in certain markets, we were able to get some real benefits that really allowed us to scale the business with a minimum capital. Nowadays, there are so many indie brands offering exclusives, it gets you some real value, but not nearly the value we were able to get in the early days where we were really the only show in town as an independent brand.
What was the influencer recipe at Tula?
We didn’t go to traditional beauty influencers. We went to lifestyle influences, mommy bloggers, people that were just interesting people who had good, engaged followings. We were more concerned with the engagement than we were the eyeballs. And we created the influencer channel as a specific distribution channel, separate from paid marketing, separate from wholesale.
Wherever possible, we offered rev-share deals, and we really worked with the influencers. We hired a whole team of people to work with them, to be friends with them, to get to know them and to make them part of the strategy of product development as well as distribution. So, they were a major part of the distribution strategy of Tula. We had several thousand influencers at one point primarily on a rev-share basis. You have to get a return on investment, and we monitor that wherever possible.
You had another exit with Tula. Walk us through that.
The world has changed a lot since Bobbi Brown. Now, the major brands really see the indie companies as a major source of growth for them. So, there is a relatively clear path to an exit if you can develop a brand to a certain scale and demonstrate that the brand can live outside the United States. It makes sense for indie brands to take it to a certain level and then work with or sell to a major brand who can then maximize their value throughout the world. With Tula, we always had that in mind.
We got to a point where we had reached about $150 million in sales primarily the United States. We were the No. 1 brand in prestige skincare at Ulta, and we felt it was the right time to have a process.
You and Reich started DIBS Beauty, too. How did that happen?
We got to know a number of the influencers at Tula well, and one influencer in particular (Shields) was very, very successful, really one of our top influencers at Tula. We did a co-brand with her on a product and did phenomenally well. It was our No. 1 sales day ever. It certainly got our attention. She reached out to us and said she’s always dreamed about doing a color cosmetic line, would we be interested? At that point, we were in the process of exiting Tula and decided this might be the right time.
About a year and a half ago we started DIBS purely in direct-to-consumer, but again focused on the influencer model. We brought in Jeff Lee as a CEO to partner with. We started with a relatively small amount of money, and we recently closed on our series A round with L Catterton.
How can influencer- and celebrity-led brands resonate today in a market that’s more skeptical of them?
You have to start small and see if the concept and the strategy connects with the consumer. If it does, you really fuel it. If it doesn’t, you shift course. The beauty of starting with the direct-to-consumer model is that it de-risks a startup. Basically, instead of dealing with a big chain like a Sephora or an Ulta, you’re dealing with one door, and you can make your mistakes while you’re small and grow from strength if you’re successful.
Not every celebrity brand is going to succeed, but not every celebrity brand is going to fail. There’s a lot of talk about celebrity brands not being that popular anymore. My attitude with celebrity brands is you can’t look at their following. They may have millions of followers, but it’s not about the amount of eyeballs, it’s the amount of engagement. And is there a raison d’etre for the brand other than just slapping the name of a celebrity on a product?
There has to be a real DNA of the brand that ties in with the celebrity, and there has to be an engaged community working with that celebrity to really build it. But, nevertheless, you still need to start small. Even if you’re well capitalized, I’m not a big fan of starting with a major chain. I’d rather make my mistakes when you’re small and learn what works and what doesn’t work.
DIBS Beauty’s first retail partner is Revolve. Why, and what’s your thoughts on the distribution strategy for the brand?
Our distribution strategy is direct-to-consumer. Revolve is an important partner. It’s more for a halo effect. They’ve got a very cool, hip clientele, but it’s relatively small. Now, we expect to roll out [to physical retail] when the time is right, but we’re trying to create our own demand, and we’re growing month-over-month and very happy with the trend. Matter of fact, we’re trending faster than Tula trended. So, we’re really very excited about that.
At Tula, you took on outside investment in preparation for a retail launch. Is that similar at DIBS Beauty?
Yes, and beyond the traditional direct-to-consumer strategy, we also are investing quite a lot on doing events throughout the country. That’s a kind of departure from the strategy we have with Tula because it seems to be working very well with DIBS.
We have now over 700 in influencers for DIBS throughout the country, and we travel around the country having special events, inviting the key influencers from those towns to our events. We just talk about the product, talk about how we want to work with them and really make them feel important.
Right now, we’re having a major event in Puerto Rico for some of our influencers. That requires capital, and that’s why we decided to raise the capital sooner rather than later with DIBS. Also, the market has accelerated a bit, so we are probably going to enter retail sooner than we did in Tula. So, that’s one of the reasons why we raised capital when we did.
Do you see the path to an eventual exit as sooner?
I don’t necessarily build a company for an exit. My strategy is I build a company to be profitable, to be sustainable, and if an exit comes, an exit comes. As an investor, when people come to me and they seem to have a clear path on how they’re exiting and don’t have a dollar of revenue yet, I roll my eyes when I hear that. So, would we anticipate an exit down the road? Possibly. But our strategy is we are profitable now at DIBS, and we want to stay profitable. And the capital we raise is really working capital.
The brand Veracity is in your portfolio at Landis Capital. It’s an interesting indie player.
They’ve been doing quite well, and they’re a good example that you need a point of difference. Veracity is taking a different angle, the hormonal health of a woman and that impact on skincare. That’s what attracted me. Quite often, I get pitched in the companies that I don’t see a real point of difference and no real way of breaking through the noise.
You’ve also invested in Papa & Barkley. How do you view the cannabis and CBD sector?
Going through a tough period right now. I think people were very much expecting, especially I know at Papa & Barkley when we started, that it would be legal nationally. And it really hasn’t been a priority for the government. So, you therefore have to license the product and grow in a non-organic way. And so that’s putting pressure on the market. Funding for the cannabis and CBD world has been tough.
But it’s all cyclical. You just have to hang in there. Papa & Barkley is a good brand. It’s got a very good niche in the pain relief and medicinal cannabis category in California. It has a CBD presence throughout the country, but the original goal was to be able to take the Papa & Barkley cannabis products and roll them out throughout the country. That will happen, but it’s going through a quiet period right now.
When you think about other investment possibilities that come across your desk today, are there specific areas you’re focusing on?
Dan and I do a lot of deals together, and we’re finding a lot of opportunities where we get founder status and we’re basically starting the company. So, the opportunities I think Dan and I are seeing are where it’s like DIBS or Tula where we bring in the team to create the company ourselves.
What’s next on that front?
A number of things. We’re in the process of looking at a few different companies right now.
Will you continue in beauty?
There is a beauty company that we’re looking at right now, but, unfortunately, I can’t get into it in detail.
Going forward, would it be same roadmap as DIBS Beauty and Tula, starting primarily in DTC and building from there?
The same script doesn’t work in every situation. The only script that I believe in from a purely financial and strategic point of view is start small, be narrow and deep, and build from strength. And I don’t roll the dice. I’m passionate about, especially in consumer products, that it be not that capital intensive. You can see what you have with a relatively small amount of money.
As you look ahead at building a business in the beauty industry, what excites you most?
There’s nothing better than the first dollar sale. I can’t put into words. That’s what I do it for. And the only thing that’s better is the second sale.