Cannabis in beauty products

Well, it’s finally caught on, cannabis-based beauty products are now being sold at mass market retailers such as Sephora, boutique organic stores like Kiehl’s and even high end retailers like Neiman Marcus. But is it just a fad or does it really work? That’s a question that’s going to take some time to answer as these products haven’t been around that long. In fact, I just got my 1st bottle of cannabis sativa concentrate today and so far, it’s just like any other oil I’ve used on my face except it smells bad.

Nevertheless, I am very interested in this because several years ago, I worked on the regulations implementing the legalization of marijuana for medical use in Massachusetts. At the time, I hadn’t thought much about the plant because it was taboo. Not very many scientists were interested in studying it and as a DEA Schedule I drug (it still is btw) so not very many people COULD study it. Because of this, we didn’t really have a lot to go on as far as figuring out how to regulate its distribution and more importantly, ensure the safety and quality of the formulations that would eventually end up on the market. At the time, I never even considered that any element of the plant would be used in skin care.

To be clear, none of the cannabis-based skin care products on the market now contain any significant, if at all, amounts of the psychoactive compound in cannabis, THC…it wouldn’t be allowed entry into inter-state commerce if it did. Instead, the cannabis-based skin care products are focused on the cannabis sativa oil, which has been tested and shown to have high concentrations of antioxidants and omega 3 and 6 fatty acids. But here’s the thing…the beauty industry already has tons and tons of products that are cannabis-free and claim to have the same things so why are cannabis-derived skin care products proliferating?

Well, ’cause it’s new and novel. A quick Google search on the benefits of cannabis-derived skin care products will suggest to you that cannabis is an anti-inflammatory agent, skin hydrator and even anti-acne. But how can anyone be sure when up until 5-7 years ago, you couldn’t even work with the plant let alone make beauty products out of it? Personally, I don’t believe that cannabis-derived skin care products are better than other cannabis-free skin care products that contain the same concentration of anti-oxidants and fatty acids at treating anything.

The more interesting property of the plant to me, is that it’s active compounds have a longer half life once ingested or absorbed by the body, which means it stays in the body for a long time. Think about if you smoke pot today, you’ll probably fail the drug test for THC for weeks and this is just the dried version of the plant, no chemical manipulation, etc. So , to me, that means that there are properties of the plant that make it an excellent drug/chemical transporter.

In skin care, this property would be very useful because one of the challenges of developing skin care products is that it takes a long time to see the effects of the product and often times, it evaporates or changes its chemical composition before it can be absorbed by the skin. As an example, think about how hard it is to keep the SK-II essence or vitamin C on your face for long periods of time. That’s the whole premise of using sheet masks, keeping the active ingredients on your face long enough for it to work. So what if, we could use cannabis (minus its psychoactive compounds) to deliver and maintain active skin care ingredients on the skin? Now wouldn’t that be more useful than yet another, anti-inflammatory/anti-oxidant/anti-aging agent?

 

Would you buy a $1700 LED mask beauty device?

Gosh I hope not 😱!

One of the things I was most excited to see at the Korean Biomedical and Skin Care conference last week was the LED skin care mask by CELLRETURN Co. Ltd. (a 10 y.o. South Korean cosmetics device company). I kept seeing it on Instagram and it looked cool so I was curious. However, despite all the buzz on social media about this mask there wasn’t much information on the product itself. None of the captions under the pictures of the device on social media actually said anything substantive about the mask other than the generic description that went something like: fights wrinkles and acne while helping you look younger (helllooo every cosmetics product says that). This should have been a big red flag for me given that I had started a biomedical company that failed because it was based on a “cool tool” without much else but this thought evaded me until I actually met with the company.

There are actually 3 generations of the CELLRETURN LED mask and the one selling for $1700 is the latest one that was released mid to late last year (so, no long term study data on safety and efficacy). Although, when I asked, the 1st and 2nd generations from 2015 and 2016, respectively, weren’t that much cheaper. In fact, they are still in the $1100-$1500 range. Having been looking at LED skin care masks for nearly a year, I wanted to understand this particular price point given that most sit at the $400-$600 range (check out Amazon). I mean, the pioneering Opera LED mask from the UK that was all over Instagram and being touted by celebrities like Jessica Alba and Kim Kardashian retails for less than $1500 in the secondary market. Not quite sure how much it was sold for when it first launched. *On a side note, the Opera mask has been mysteriously pulled off the market by the manufacturer around summer of this year 🤷🏽‍♀️.

In any case, for this particular CELLRETURN mask, I wanted to know why it was hitting at $1000+ above the price median. Is it that much better than say, the Dr. Gross mask at $435 from Sephora (that sometimes qualify for 15-20% off coupons) that has gotten US FDA approval and is used in an actual dermatology clinic? Based on the sales pitch given to me by CELLRETURN, my answer is, ummmm NO.

Ok, first, what does the company claim that this can do? Well, it’s a UV-free, color light mask that, when used 2-4 times per week for 20-30 mins., will eliminate/treat acne, wrinkles or skin discoloration (depending whether you use the red, blue or purple light setting, respectively) over 2 months of continuous use for 20-30 mins, 2-3 times per week. This is actually not that absurd, there have been clinical trials conducted that have yielded data supporting this claim about LED light therapy. But NOTE: the clinical trial data available do not support any specific LED mask brand.

In addition to these in-home devices, you can actually get the strongest LED mask treatment at your dermatologist’s office as an add-on to any treatment for about $30-60 a pop. I have no idea what brand they favor but it’s been great when I’ve added it on because it’s warm. No clue if it actually “worked” at preventing wrinkles but it did nothing for my acne, I can say that much. But even in this scenario, at the highest price point and for the maximum treatment of 8 weeks, you’re looking at a total spend of $1440 ($60*(3 per week x 8 weeks)) AND you get the white light that’s only available through a medical professional. Now, I get that this is a flawed analysis given that you wouldn’t get the LED treatment by itself at $30-60 a pop, you would have to get it as an add-on to a treatment that may be 100+ on its own. But think about it from a value-add perspective. The value-add of using this device on top of another skin care treatment is about $30-$60.

So again, why is this one $1700? Well, according to one of their salespeople (a head guy nonetheless but I don’t wanna get him in trouble), it’s because they believe that they are the best in the market. My response to that was 🤯! This was a perfect example of pricing a “cool tool” rather than a solution for the affected population’s willingness to pay.

As an avid consumer of beauty products, I am always on the lookout for the latest and coolest tools and products. But as a scientist, lawyer and businesswoman, one way I avoid bankruptcy due to product consumption overload is to evaluate the value proposition of these new, cool tools. In this case, while cool, I don’t see a $1700 value proposition in this anti-wrinkle/anti-acne/skin brightening LED mask. For me, I’d rather spend the cash visiting my dermatologist.

Here’s to hoping the company prices right in the next iteration. Otherwise, it’s slated to come to you in the U.S. through door-to-door sales (according to the company).😬

Facials – the Korean Way (ouch!)

Since I got here, I’ve been bombarded with messages and texts from friends asking about Korean skin care and facials. Of course, I have been talking about it for a while 😝. I’ve done a lot of research and could tell you the brands and what their latest product releases are but I had no idea how people actually use the stuff, other than the mild 18 step Americanized version, until now.

What we can’t see in the U.S. is the intensive bi to tri weekly treatments used to supplement the mild daily rituals that we’ve all done or read about in American k-beauty blogs. The way they do facials here is so different than in other parts of the world where the “treatments” are more about pleasure. Here, there is no relaxation or light soothing touches. Instead, it’s deep pressure kneading, pressure application and sometimes, needles, lots and lots of them.

Most Asians know Seoul as a cosmetics surgery haven. One full day walking around Gangnam and you’d probably run into at least 50 (yes, FIFTY, and that’s an underestimate) plastic surgery offices. From cheek implants to eyelid reconstruction, you name it, you got it. I mean, why highlight and contour with makeup when you can just go under the knife and get that highlight and contour on your face permanently? While cosmetics surgery is a common thing here, it’s not why I came, at least not on this trip 😉 so I couldn’t tell you anything about that.

However, after sampling some of the more popular facial treatments here, I think I now understand why people find plastic surgery acceptable. I believe it’s because the facial treatments and beauty regimens here are painful in and of themselves. Now, I have a pretty high threshold for pain tolerance but I think this category of beauty rituals is its own special brand of torture. Thinking about going through these rituals, 2-3 times a week, makes me want to run to the nearest plastic surgeon’s office. 😜 (ok, not really but if I had an issue, I probably WOULD)

But despite the pain, I actually found these rituals fascinating. Based on traditional Korean medicine, these rituals have been practiced for centuries and it’s not seen as a luxury rather, a necessity for taking care of yourself. When going through this, I thought about the times when I had to brush through my daughters’ tangled hair. When they were little, I had to chase them around the house then bribe them to get them to let me brush their hair 🤣 (they thought hair brushing was painful). I’m sure they thought it was a special brand of torture too but I felt like it was something I had to do as a parent because it was my way of taking care of them. I didn’t want people to think of them as unkempt kids who didn’t have a mother. So, no matter the cost and no matter how long it took me to get them to brush their hair, I did it. Eventually, they learned to do it themselves because they now understand that walking around with unkempt hair is socially unacceptable. I think these beauty rituals in Seoul are practiced under the same philosophy. Mothers have been passing these beauty rituals down to their daughters for centuries as means of teaching them how to practice self-care.

When you think about the pain of these rituals as a means of practicing self-care, then I think the pain becomes a little bit more tolerable. Because it’s not so scary when it’s your choice. So, if you’re wondering how people here use this stuff, (and I mean like for realz) well they have great products but it’s used with a lot of mechanical facial manipulation that may not be all that pleasant. It’s quite painful, actually. But people here do it to feel good about themselves.

So, keep this in mind when reading the product reviews that follow this post. These products were created for a particular consumer: a woman who has a high pain threshold following the rituals and traditions that her mother has taught her. Rituals that are built on the philosophy that they are being used for self care rather than achieving a specific end goal.

Nails, Inspiration for Innovation? 🤔

First stop today was a visit to Unistella, a world-famous nail salon, founded by Eunkyung Park who is famous for her innovative designs and more recently, an intellectual property social media battle involving nail brand giant, Sally Hansen (article here: https://www.google.com/amp/s/www.verygoodlight.com/2018/04/03/unistella-sally-hansen/amp/ ). I had been seeing Unistella’s collection of Instagramable nail designs for years and even went to a nail artist in L.A. to get a copy of her shattered glass nails.

But the knock off job I got in L.A. was nothing compared to getting it done at the place that actually invented it. The version I had done in L.A. was made using machine cut mass produced stickers. There was no innovation or art just a paid “procedure”. In fact, I was told what it should look like and wasn’t given a choice on color and style. Here, it was hand cut and free style based on what the nail artist and I designed together. In L.A., the job took about 4 hours with the artist bitching the whole time. Here, it took less than hours with the artist being all happy because she wanted to see what our “vision” was going to look like as a finished product.

During the 2 hours I spent in the salon, I got to watch videos of Ms. Park because they were playing videos of all of her interviews right behind the nail desk. While I’d read about her before and found her interesting (Vogue article here: https://www.google.com/amp/s/www.vogue.com/article/shattered-glass-nails-unistella-park-eun-kyung/amp ) I never really understood her passion for nail art until I came to see it in person. This is truly a person who lives and breathes her craft, translating the world she sees into nail art. Someone who innovates beyond what is available just so she can share a tangible version of her vision with those who visit her salon.

Now, this isn’t a blog post promoting Unistella, I don’t think the salon needs anymore promotion, it’s written about in every major fashion magazine. Rather, it’s about finding your passion and running with it to take it as far as you can like Ms. Park at Unistella. I came to Seoul to learn about their innovation culture specifically in their beauty and wellness industry. And slowly but surely I’m starting to understand based on what I’ve seen from the nail salon to other establishments here like the spas (which needs its own blog post btw) and in their products. This isn’t a culture that’s huge on using laws to protect their intellectual property (as far as I know, Ms. Park still hasn’t filed anything to protect her IP) rather, most people are focused on honing their skills to the point where no one can replicate them.

The things I’ve found in the 2 days I’ve been here are things I haven’t been able to find in the U.S. While there may be knock-offs, the quality and the passion that shows through the work whether it be nail paint formulations or ingredient combinations in skin care products are unparalleled. There’s a certain magic that people have here in Seoul when it comes to taking an old, tried and true process (like nail art) and applying their own innovative new idea on top of it. And I think that’s part of the reason why their innovation culture is so strong. Truly an amazing place. I.Seoul.U

A day in Myeongdong

After a long 23 hours of traveling, I was finally able to explore the skin care shops of Myeongdong. I’ve read a lot about this place and can probably recall information on every single major brand that sells here and I’ve probably already been in their U.S. stores in Koreatowns from New York City to Los Angeles. But what I couldn’t tell you before I came to see this for myself is how do locals shop here and is it, for the most part, a tourist trap?

From my 3 hour night time visit I would have to say, yes, it is a tourist trap. What’s the giveaway? Well, in the way the stores package their products for sale. In each store I went to, every product was packaged in bulk. Packages of 6-12-20 or so units per package promising good prices if you buy in bulk. It was big red flag for me that this was not a place for the authentic Korean skin care shopping experience. For, what discerning consumer would buy in bulk before trying a product first? And even more so, Seoulistas are one of the most non-loyal skin care brand consumers. So, a Costco-style bulk buying business model wouldn’t work. Unless, of course, they weren’t selling to this consumer and instead, the typical foreigner after Korean skin care.

In the years I’ve been using Asian skin care, I know how we Asian women buy. We try it for free, test the crap out of it, then we haggle to death until we get what we want at the right price. But never too much, because we are always on the lookout for the next innovation. Furthermore, as I’ve been “living” the Seoul way, I noticed that people travel light. Taxis and private cars are hard to come by and most people use the subway (which is super clean and efficient btw so why wouldn’t they?). So, a bulk business model wouldn’t make sense here and that’s why I found the Myeondong experience more of a tourist trap rather than an authentic Korean skin care experience. Sure, the store keepers knew their products as I’m sure Seoulistas visit the stores here and have probably been trained by the brands to represent them this way. But, if you want the amazing dewy skin of a typical Korean (like the ones I’ve been riding the subway with, seeing at the grocery stores and overall not really walking around in Myeongdong), you would need to do more than just visit Myeongdong. So, that’s what I’m up to today. Going to well loved Korean skin care establishments like Shangpree and Sulwhasoo. I want to know how these brands sell before I head off to the K beauty expo. Stay tuned! 😉🇰🇷

From My Backyard to Seoul

While I was attending school at MIT, one of the things that we were constantly being reminded of is how important it is to seek out a global understanding of our industry. In fact, in one of our required readings, the author advised that we should, at least once a year, attend an international conference specific to our industry. Initially, I did not see the importance of this. Why would we ever need to go anywhere when we can Google everything? And what I quickly came to realize is that you can do all the research, build predictive analytics models and hypothesize all you want but only going to a place will actually enable you to understand its culture. And when it comes to launching a business idea and deploying an initiative, the culture of the place you’re deploying it at is more indicative of how well that business idea will be adopted than all those math models and computer research.

For my final project for my MBA from MIT Sloan, I was tasked with working on a global assignment studying the business models of biotech incubators in different biotech hubs (i.e. Paris, Boston and San Francisco). Now, I get that Boston and San Francisco are not exactly “global” relative to where I was at MIT but gaining the perspective of the biotech incubator business models based in these two American hubs compared with a foreign one gave me the global perspective I needed to better understand the biotech incubator business model. In Boston, I learned that the concept of sharing lab space and expensive research instruments in an incubator was seen by its residents as an opportunity to collaborate with co-inhabitants in an academic setting to solve problems. However, in San Francisco, the perspective was that shared incubator space was an opportunity to mingle with other entrepreneurs and dream up innovative ideas. While in Paris, this shared space was seen more as hindrance as people preferred the privacy of their own labs. Blog post summary here: https://emba.mit.edu/blog-post/one-size-does-not-fit-all-with-innovation-models/

From this experience, I realized the value of seeking a global perspective on various aspects of my industry (life sciences). For, in learning to analyze business models from a cultural lens, I’m better able see facets of a business initiative that may need to be adjusted before they are deployed in certain geographic regions.

It is under this lens that I’m heading to Seoul to understand their beauty and wellness industry. Why are they so much more ahead of the rest of the world in beauty innovation? How are their consumers driving this innovation and how are these products adopted by the market so quickly? What is it about their culture that makes this industry so successful? I’m searching for these answers in hopes of finding a way to make the door wider for South Korean beauty innovation to come into the United States. Stay tuned! 😉

Lipstick or Clique Ticket?

Back in May, I attended the inaugural Future of Beauty and Wellness event put together by the Wall Street Journal in NYC. At the time, I was mostly interested in learning more about the business side of the cosmetics industry, specifically how category leaders like Jessica Alba and Bobby Brown access capital markets in order to grow their beauty business empires. While we all know that there’s a lot of money to be made in this industry (market value estimated at $532.43 billion in 2017 with 5 year CAGR of 7.14% starting in 2018*) we also know that it is a highly competitive industry with at least 18,000 brands competing for its market share in South Korea alone. With that in mind, I went to NYC in order to learn the answer this question: Is there investor interest left in this overly saturated market? To my surprise, the answer is “yes” and not only that, the market is still growing.

What I find fascinating about this industry is that despite the saturation of beauty products, new brands are still entering the market, including small businesses. And, to top it off, it also has a fairly low barrier to entry. For example, if I wanted to create a lipstick, all I’d need is to find a place like Spatz Laboratories in California (in case some of you didn’t know is the chemical company that manufactures Kylie Cosmetics products), plunk down anywhere from $5,000 to $7,000 per formulation, scale up, package, market and then sell, sell, sell. No clinical trials, no need for venture capital money, just straight up product development. Yet, despite the ease of product development, lipstick producers/brands can still command high prices for their products and the best brands can command close to $100 for one tube of lipstick (Christian Louboutin anyone?). Is there anything special about these products at their core? Absolutely not! But innovators in this space are constantly finding new ways to set themselves apart and the market seems to love it. In fact, just in the U.S. alone, the average woman spends about $313 per month** on cosmetics and that number is only expected to rise.

So what is it about the cosmetics industry that, despite being primarily focused on selling consumables, still constantly grows and innovates (I mean, since when did anyone care about the latest innovation in dish soap)? Well, after attending more beauty conferences, I’ve come to realize that each innovation in beauty brings with it a cultural component and enables a sense of belonging for people who subscribe to one brand or another, like a clique. For example, when I went to Beautycon in L.A. in July, I learned about a brand called Lime Crime. It has a fairly limited product line…maybe a dozen lipsticks, a couple eyeshadow palettes but nothing spectacular like a L’Oreal or Proctor and Gamble. Yet, despite this limitation, this particular booth at Beautycon had one of the longest lines and they were limiting the number of products fans could purchase. Out of curiousity, I actually purchased a few products from this line and found that none of my purchases were anything special, I basically got eyeshadows with a bunch of glitter, which are available through any brand. But what they were selling wasn’t really their makeup. Instead, they were catering to those who wanted to wear theatrical, fanciful makeup on a daily basis. Hence, buying a lipstick from Lime Crime wasn’t just about buying glittery lipstick, it was about subscribing to a brand where culturally, it was acceptable to wear glitter, loud lipstick and clown-like eyeshadows as part of their normal routine. This cultural aspect of beauty is one of the reasons why brand ambassadors and trend setters on Instagram as well as other social media sites are so powerwful in the beauty industry. They’re not just selling makeup, they’re also creating a culture that their followers can follow and subscribe to.

So, next time you’re in the market for cosmetics products, look into what you’re buying. Are you buying into a clique or purchasing something that is fit for your intended purpose? Every brand is on Instagram (and if not, then do you really want to try that product on your face?! Signing up for Instagram is FREE so really, why would they not be on there?) and in about a single finger swipe, you can see what kind of community the brand is trying to cultivate. If you find the one that works for you, you’ll be much happier with your cosmetics purchase and if you don’t, then there’s your market entry opportunity (in case you were dreaming of starting a cosmetics brand).

*Source: https://www.reuters.com/brandfeatures/venture-capital/article?id=30351

** Source: https://nypost.com/2017/07/06/vanity-costs-american-women-nearly-a-quarter-of-a-million-dollars/

Masking and Mommy Tasking with the Glow Recipe Jelly Mask

Last week, Glow Recipe (online K-beauty curator) launched their first ever jelly sheet mask, which is an extension of their super popular watermelon moisturizer and sleep mask. I love both of these products and actually bought the watermelon moisturizer for my daughter too. We’re now both super fans! So, of course, when they came out with a new sheet mask, I just had to try it.

The main feature that I wanted to try was the clear jelly material. Before the product launch, the company’s CEOs were advertising the mask on their personal Instagram pages as something that could be integrated into your skin care regimen on-the-go because it’s clear and you can barely tell it’s on. If you haven’t sheet masked before, a masking session will take you anywhere between 10-45 minutes depending on the mask with the average being around 20 minutes so it’s super helpful to have something you can use that doesn’t require you to sit alone in the dark for that time frame. Most masks are made of some cotton material so if you wear it outside around other people, you can easily be mistaken for Jason on Friday the 13th 😱…NOT socializing friendly.at.all. So, when I got the Glow Recipe mask, I was super excited about seeing if this clear jelly feature actually made masking less noticeable than the other masks out there. I mean, if this worked, I could just mask in my office right before meetings 😁 and no one just walking by would really notice. To test it, I put it on right before I ran my “mommy errands” such as, picking up my middle schooler from school for a doctor’s appointment, buying groceries, etc.

After running around with the mask for obviously longer than the recommended 10 minutes, I reached the conclusion that it is NOT less noticeable than any of the other ones (at least not for my face shape). It’s equally weird to have on as a white sheet mask because the texture is rough and doesn’t contour to my face. It feels like those cheap, clear plastic table cloths that you put on a picnic table and it’s actually a little itchy.

I think at this point, it’s either you’re okay with sheet masking in public or not, it has nothing to do with this jelly mask vs. another one. I personally don’t give a 💩 if people stare while I mask. I’ve put on sheet masks and even bright green seaweed masks on while riding on airplanes, driving to work, etc. Sure, I get stares but no one ever says anything so it doesn’t matter.

Having gotten my fair share of public sheet masking stares, I will say that I got the same stares wearing this compared to any other mask. I thought this would be my solution to sheet masking on-the-go so I could minimize the rubber-necking from curious strangers. But, after running around with this, I don’t think it has much of a competitive advantage over any other mask in that respect.

Furthermore there were a few other issues:

  1. The mask material is thicker than most so it’s just as noticeable as the white ones
  2. It’s split into 2 masks (for top and bottom of the face). For me, I absolutely HATE when masks do this because the bottom half just slides off. To be fair though, I think that’s just a personal issue.
  3. The mask material is not very flexible. Compared to the high-end biocellulose masks made by luxury K-beauty brands like History of Whoo, this had a very K-mart quality feel to me. Video: 
  4. The serum was not as moisturizing as say the Biooxidea masks, which are similar in texture as these and also split the masks in 2. And btw, those masks are about $7/sheet or less if you buy in bulk. The serum in this mask is nothing special compared to any other one and it doesn’t give you much of a glow. If your really want to glow, use active Vitamin C like Drunk Elephant’s C-Firma.

All in all, as a daily (and sometimes even thrice daily) masker, I would put this on my: “omg what was I thinking?!😱” category of sheet mask purchases. And trust me, I have a LOT of sheet masks (see my first box of many below 🤣)

While it was fun to try,  I don’t think it’s a solution to being uncomfortable about public sheet masking as the company’s CEOs advertise. It looks great on them at their chosen selfie angles but as someone who was actually walking around with it, I got the same reaction wearing this as I always have with my white masks, which is: stare, look away, look back again and try to figure out if I have a skin infection. LOL. Without the benefit of the mask actually being more adaptable to on-the-go use, it’s nothing special. It’s just a mask that smells a little like watermelon and is probably meant for 20-year olds because it feels kinda cheap.

If you’re like me and want something that feels more luxurious, appropriate for a  middle aged mom and don’t have a problem with people staring at you, the History of Whoo masks made of biocellulose actually hug the face more and it’s thinner so it’s more malleable. They soak it in this luxurious serum from rare natural products and it truly feels amazing! It’s about twice the cost of this but if you’re going to mask, why spend half the money making your face itch and feel like it’s covered in cheap plastic without any benefit in the end?

Consumers are PEOPLE not numbers

Well they are in! After a grueling week of reviewing business plans, making edit suggestions and coaching, my mentees got their business plans in to the MIT100K competition. The MIT100K Launch finale is on May 14 and I’ve always had a lot of fun at this event. I never fail to learn something new watching the finalists talk about launching their own startups. Given that this is a student run event, you’d think that it’s just a bunch of 20-something year old undergrads competing but it’s not. True, MIT attracts the best and brightest kids for their undergrad programs but the institution also has several graduate programs that attract experienced professionals who are the best in their fields and also compete in this contest. The only requirement to enter the competition is that at least one member of the team is a current MIT student so it’s likely to have highly sophisticated teams comprised of working professional engineers and seasoned entrepreneurs on board with a MIT student who may be an experienced working professional as well. As an example, when I entered the contest, I was a student who had already been a lawyer for several years and also had over a decade of experience managing projects and divisions in biotech and government organizations. My team members consisted of MIT bioengineering professors and even a physician from one of the Harvard-affiliated hospitals.

One of the main reasons why I’ve stayed on to participate in the MIT100K, besides enjoying being part of the community, is that I get to learn from my mentees. Whether it’s about their technology or ideas or just what they know about their target markets, there is always something to learn. In addition, I’ve found that working with entrepreneurs in an academic setting helps me continue to improve as a lawyer in that I get the opportunity to really learn about my clients. As a corporate lawyer, I work with a variety of companies but where I believe that I bring value is in helping new entrepreneurs. I don’t particularly think it’s because I’m an amazing lawyer, rather, it’s because I’ve invested the time to work with, learn from and be among them. I happen to believe that there is no better teacher on how to create value for your clients/customers other than your clients and customers.

Learning to take lessons from my clients wasn’t an easy thing for me to pick up. In fact, during my first week of business school at MIT, I heard the title of this post from one of my professors and immediately thought: Did I accidentally wander into a classroom at Harvard? I mean, haven’t you seen Goodwill Hunting? This place is supposed to be crawling with math geniuses, they love numbers! Shouldn’t I be learning advanced quantitative and predictive analytics methods from them? If I develop an amazing product (in my case, an amazing set of quant skills) then the masses will just have to follow, regardless of whether I know who they are…right? However, as I quickly learned, by trial and error as well as some math models, the answer to this is no. In fact, not just a no but a hell no, for if no one understands or cares about what you’re offering, no matter how brilliant you think it is, no one is going to show up to listen to you, let alone buy whatever you’re selling. This is why it’s so important, in addition to understanding the numbers, that we also remember to consider who our customers are and know that they are not merely variables in a math equation. Because it is in knowing and understanding who they are that we’re able to create value for them and when we do that, then they will follow and buy the valuable product/service that we’re trying to sell. I eventually learned this from my esteemed professors after years of fighting it, which is why I think it’s funny that it’s what I’ve mainly been working on all week to convey to my startup mentees. And it’s not just this year, it’s actually every year that this is where I seem to spend a lot of time on in the business plans I review.

Oftentimes, we develop business plans around numbers. I’ve read so many business plans that have this statement: “the market size of X product = $Y.” This semi-equation hardly makes any sense to me because I have no idea what number of people (“P”) the solution, “X”, applies to and WHY they are willing to pay a total of “$Y”. Are they all willing to pay equally or is there some variability? What if we have people who can’t pay the price of $Y/P now but can likely pay more than $Y/P later or even better, become a loyal, price inelastic customer forever? We can’t really distinguish these other factors from the numbers alone, which is why, when I read a business plan that has that statement, I ask the authors to tell me about the potential subscribers of “X” (e.g. who are they? what do they do? what is their problem? do they have any ability to segment their problem? What solutions are they applying now?). True, this might require more time than just having a computer generate variables and apply equations but it’s the most effective way to learn about your consumer. And at the end of the day, no matter what it is you’re selling, the person buying is still going to be a person and not a number on a financial statement.

One thing that I love about skin care brands is that they are actually very good at knowing who their customers are. Take SK-II for example, in their financial statements they describe their 3 market segments (i.e. customers). Their first customer, who they’ve named “Madam” is described as an older and affluent indepedent woman who has a lot of disposable income to spend on pampering herself and is loyal to SK-II. According to SK-II, in 2012, Madam helped generate about 70% of SK-II’s revenue so, naturally, the company spends a majority of their customer outreach efforts to Madam. This is probably why we see so many ads for SK-II that don’t make much sense from a problem-solution perspective…Madam isn’t looking for a solution, she’s jut a loyal customer and will buy SK-II regardless of what the brand puts out there and how much it costs.

The next customer is named “Missus,” who is a young, adventurous and successful woman who has a little bit of disposable income to spend on pampering herself but also needs it to work as a solution to her problem within a short amount of time. She can’t afford to keep buying SK-II at her current income so she’s a more problem-solution oriented customer.  In 2012, Missus helped SK-II generate about 20% of its revenue. However, given that Missus converts to other brands easily and doesn’t do as much as Madam in terms of helping SK-II generate revenue, SK-II does very little to target them. I, for one, am a Missus and glad that SK-II doesn’t target me in their ads because I think they’re meaningless. I started buying SK-II over 10 years ago because I wanted a good over-the-counter anti-aging product. At the time, I had great skin that I’d maintained and wanted to make sure it stayed that way. I didn’t have any skin issues rather, I just wanted a good anti-wrinkle regimen. Well, 10+ years later, I’m still using SK-II and have no wrinkles despite the fact that I turn 40 this year. While I think SK-II is great, I have no brand loyalty. Instead, I merely buy their stuff because it’s provided a good solution to my anti-aging problem all these years. At the same time, I do understand that it’s an expensive brand so I would be easily converted by another solution if one came along that performed as well as SK-II at a lower cost. BUT they would need to convince me with data, not Cate Blanchett dancing around in a white gown trying to sell me a “miracle”.

“Gentleman”, the third and last class of SK-II customers, helped SK-II generate about 10% of its revenue in 2012. Gentleman is a contemporary man who appreciates good skin care and likes to take care of his skin. While there aren’t very many men who fall within this category, SK-II believes that it may be able to generate more revenue from this customer if he was effectively swayed to become SK-II’s loyal fan. So, of course, the company spends a lot of money targeting Gentleman. I, personally, don’t know any men who spend as much time thinking about skin care as I do. However, being around men and being married to one, I understand that if they get used to something, they tend to stick with it and not bother shopping around just for the sake of shopping around. Guessing on SK-II’s perspective, investing in acquiring this customer segment now is a great strategy to reap the rewards of price inelasticity from this customer segment later.

SK-II isn’t the only brand that does this. If you go to any social media platform such as Instagram, Twitter or Facebook, you’ll quickly realize that cosmetics brands are investing heavily in gaining access to and understanding their customers. I personally interact, on an almost daily basis, with brands I use such as, Drunk Elephant and Tatcha on social media. They even ask me to post what my daily skin care regimen is and ask if I have any questions or concerns. At first, I thought this was creepy but over time I’ve come to realize that giving them feedback actually enables them to deliver a better product to me. If not, consumers who are reading my concerns on social media are more than happy to recommend other skin care lines. In any case, it’s not surprising that these brands have successfully entered an already crowded skincare/cosmetics market. They invest in knowing who their customers are and by doing so, they are able to target their products to the right customers, ones who actually care about what they’re selling and are willing to buy. This is also how these brands are able to develop customer loyalty. In fact, Drunk Elephant has such a loyal customer base that Sephora (their primary retail outlet) has had to limit the number of Drunk Elephant products it’s customers can buy during its annual sale event so they don’t sell out. Pretty good for a 6-year old company that sells 12 products and hasn’t used any celebrity endorsements yet.

Identifying your customer isn’t just for driving up sales but it gives you an opportunity to figure out how much to spend to get them and how. What do they need? How can you help? What can you offer so that they don’t go somewhere else? How do you establish loyalty so that they are wiling to tolerate any price increases (within reason of course) that you may need to implement in order to survive as a business? Because buiiding a business isn’t just about selling a great solution to a market that spends a lot of money. Rather, it’s about knowing and understanding your customers so that you can adapt your numbers (e.g. expenditures, revenue) and solutions accordingly in order to deliver value to them. Because no matter how smart you are or how good your numbers look, there is always going to be someone at the purchasing end making the decision to buy and that someone is a person, not a number.

Are you solving a problem or selling beer?

It’s my favorite time of the year! No, not because it’s spring time…this is not a post about warm weather, sunshine and butterflies. Instead, this is the first post in a series of posts I’m planning to write, about entrepreneurship. Every year, around this time, the Massachusetts Institute of Technology (MIT) holds its annual business plan competition called the MIT100K Launch. For those of you who are unfamiliar, the MIT100K is one of the largest business plan competitions in the U.S. and it’s 100% run and managed by MIT students. It primarily caters to start up entrepeneurs who have an innovative idea and are looking for capital in order to launch their product or idea into an unknown market. The winner (usually a team) receives $100K to launch or grow their companies, hence, the name 100K. While there is only one winner of the competition itself, all participants who make it into the semi-finals receive a great amount of mentoring from advisers and exposure to potential investors, which is worth way more than the prize money. I’ve actually competed in this competition several times and landed in the semi-finals twice. To me, the mentorship and guidance I’ve received from the sponsors and participants at this event has been absolutely priceless.

I love this competition because of the energy and supportive community that you become a part of by participating in it, which lasts for years after the end of the competition. I’ve received so much help and support from the MIT100K community over the years and I’ve always wanted to give back, which is the reason why I’ve participated year after year as a mentor. But I do have to say, that being a mentor is way more fun than being a competitor (isn’t it always?) and what I love about it is that I get to look at business ideas and/or inventions from a completely objective perspective.

Given that this IS MIT, when I meet my team for the first time, they are super eager to show me how cool their new technology or idea is. I get dazzled with these really spectacular pitch decks and digital presentations that are absolutely awe-inspiring. On the flipside, however, every year, without fail and regardless of how experienced my mentoring team members are in their respective fields, no one seems to know the first step in creating a business plan. This is very important because this IS a business plan competition after all. This is not to say that they don’t know what a business plan is – I’m sure everyone knows what it is. But the first step in writing a business plan is not generating data or even listing an amazing collection of granted patents at the end of your pitch deck. Instead, it is about effectively answering the question: what problem are you trying to solve? Yes, I can hear the groans now because this is such a cliche, I get it. But for some reason, most people I meet, when they’re trying to launch a company get so focused on their cool solution that they often forget to find the right problem to go along with it.

I don’t currently (and don’t want to ever) have a cheat sheet that tells people how to effectively create a problem statement because I want a founder to be passionate about what he/or she is trying to sell me as a “solution.” That does not come from being formulaic, but rather having a true passion for what it is that you’re trying to accomplish. Let’s take skin care products, for example (my fave!). My first stop when I’m unhappy about something on my skin is my dermatologist. Why? Because I don’t know enough about skin to figure out what the problem is when I see something on it that I’ve never seen before. So, I go see my favorite dermatologist in Boston and say: Dr. I have this thing…see? What is it and what is the problem? Usually, she will write a prescription for me or tell me about a hideously expensive procedure that I can’t and don’t want to afford. But the most value I actually take from these visits (other than I love seeing my dermatologist) is that she’ll tell me what the problem is and then leave it up to me to go figure out what will work as a solution that I can also afford and comply with.

Now that I have a definitive problem, I actually know what I’m looking for. So, I read copious amounts of PubMed articles on the issue looking for compounds and/or therapies that might help and spend days researching companies that sell or provide them. When I do this type of research, it usually takes days to find what I’m looking for because the cosmetics industry, especially in the U.S., is inundated with so many “solutions” looking for a problem. Take for instance, SK-II (which used to be my favorite skin care line). Their marketing strategy is to blast commercials with a very ethereal-looking Cate Blanchett showcasing the product, talking about her crystal clear skin and telling us all about the “miracle” that is Pitera. However, if you do a search on the term Pitera, you’ll quickly learn that it’s the trademarked name of Saccharomycopsis Yeast Ferment Filtrate, which comes from the same species as the stuff that makes beer. Now, I do agree that most college kids, including me when I was that age, would probably say that beer is a miracle especially on a Friday or Saturday night. However, I seriously doubt that anyone would call it a miracle if instead of drinking it, they had to splatter it all over their face at $155 a bottle.

When the ferment was discovered in the 1970’s, scientists had made the observation that older workers in some rice factory in Japan who had spent years working 8+ hour shifts with their hands submerged in the yeast ferment that is now “Pitera” had youthful, wrinkle-free hands compared to their faces. Based on that observation, SK-II (which is now owned by P&G), started selling Pitera as an anti-aging solution way back when. 40+ years later, we’re now claiming this anti-aging (almost beer-like) product as a “miracle” for achieving crystal clear skin. Sounds like the wrong solution if my problem is that I have a lot of acne and my definition of “crystal clear” skin is skin without acne and not wrinkles, don’t you think? This is an example of marketing a cool solution (heck, not just cool, but a MIRACLE nonetheless!) without identifying a problem. Sure, SK-II sells a lot of products year after year but they are constantly going to be subject to consumers who will switch to different brands because it’s not clear who they are selling their “miracle” solution to. If someone struggling with acne buys SK-II they’re going to quickly find that it’s not going to work. So what do these consumers do? They go on their blogs, twitter, or other social media sites and talk about how SK-II sucks because it did nothing for them. The thing about cosmetics is, once you lose a customer, there are thousands of other brands or “solutions” waiting around to catch them. This makes it extremely important for these companies to find their target customers and offer a really good solution. Because once a customer finds a solution, they are not likely to let it go. I mean, who wants to go and solve a problem they already solved?

While this might seem like a silly example, it’s a very common issue when launching a company. Sometimes, we get so disillusioned with our amazing solutions that we forget to identify the problem that it’s trying to solve and most importantly, the people who will support our products. There are so many cool ideas out there just like there are many cosmetics and skin care products already out in the market but the ones that survive and truly gain a loyal following are the ones who can best pinpoint the right problem that their solution works for. Because once you establish a strong relationship between the problem and your solution to that problem, marketing and writing a business plan just flows.