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.

Edited with BlogPad Pro

Gold, is it worth its weight in skin care?

The short answer is no because the skin cannot easily absorb gold. If you think about all of the people who wear gold wedding bands, this actually makes sense. Many people wear gold wedding bands and yet, no one, including myself, who’s been wearing a gold band on my finger for over a decade, has reported any skin effects resulting from wearing one. If gold could easily seep into the skin, then people would notice a difference in the appearance of skin on their ring finger as opposed to that of their other fingers. In addition, we also know that gold is one of the least reactive chemical elements and is highly resistant to most acids. Taking this into account with the fact that we need to put slightly acidic toners onto our faces in order for it to absorb all of the serums and essences we put onto it, makes gold a highly unlikely candidate for being an effective skin care additive.

So why then, do skin care brands market products containing gold? And more importantly, why do women buy these products when they’re often sold at prices upwards of $300 for pure formulations? Well, gold is believed to have anti-aging and anti-inflammatory effects on the skin. In 1998, results from a clinical research study were published in JAMA Dermatology, which showed that gold was effective as a direct treatment for patients with pemphigus or as a steroid-sparing agent in this patient population. Pemphigus is an autoimmune disease in which patients experience painful blisters on their skin. In this study, treatment efficacy was measured by improvements in patient skin blistering, which was observed in 62% of patients treated with gold. Patients saw improvements in blistering due to the anti-inflammatory effects of gold therapy, which had comparable efficacy to the steroids used during the study as control group anti-inflammatories. While these results suggest that gold does indeed have anti-inflammatory properties, it’s important to note that there was a long delay before its therapeutic effects were observed in the study (and gold wasn’t applied topically).

Clinical trials studying the efficacy of gold in skin care applications are limited because sponsoring these trials would not make much economic sense for most skin care companies as gold is expensive. Even if someone paid for such a study and were able to show that gold did indeed have beneficial properties for skin care applications, they wouldn’t be able to patent it because it’s a naturally occurring metal. They’d just be giving the data for free so their competitors can use gold in their products too. So what then, would be the incentive to sponsor such a study? Nothing, which is why we don’t see it.

For the past 4 few months I’ve been using cleansers, moisturizers and masks that have been infused with gold not because I believe it will do anything to my skin but because I like the cosmetic effects of gold. To name a few, the products I’ve tried include:

• Saranghae cleanser (made with truffle oil and gold)
• Shangpree Gold Mask
• Chantecaille Nano Gold Cream
• Mimi Luzon 24K Gold Pure Gold Mask
• Mimi Luzon 24K Gold Flakes (to mix in with your favorite moisturizer)
• Bioxidea Elements 48 Natural Gold Mask
• Mrs Pick Gold Mask

I don’t believe that any of these products have any anti-aging properties or that they’re better at promoting collagen production in my skin (I’ve  heard that somewhere but haven’t found any scientific basis for this). Even if they did have these effects, I’d need many bottles and years of applying these products to my face in order to see them. However, at these price points, I cannot afford to invest in a long-term ritual involving gold. Instead, I purchase these products only when I want a little gold sparkle on my skin for special occasions, which is what I think they should be marketed for. Anything more then I would consider it to be false advertising.

What I like about gold in skin care is that when you add it to a skin care product like a moisturizer, little specks of gold get deposited on to your skin when you apply that product (like glitter). So, when light hits your face in a certain angle, it gives you a bit of a golden sparkle. This is why I think it’s more of a special occasion cosmetic product and not a therapy. There are so many other products out in the market that are great anti-aging and anti-inflammatory agents sold at a fraction of the cost of gold that you and your wallet are better off buying those instead.

So, the next time you go shopping for skin care and are tempted to buy a gold-infused product, remind yourself that it’s going to be a long-term investment before you actually see its skin therapeutic effects, if any. You’re better off buying serum containing vitamin C or resveratrol if that’s what you’re looking for because these products cost less and there are plenty of research studies showing that they work in skin care applications. However, if you want something just for a special occasion that gives a hint of sparkle, then go ahead and get some gold, it won’t hurt you.

Ritual or therapy: a primer on evaluating the price of skin care

In my previous post, I described general steps involved in practicing the basic Korean skin care ritual. The ritual generally consists of these 10 steps: 1) oil cleanse, 2) soap cleanse, 3) exfoliate, 4) balance with toner by gently patting toner onto the face each time toner is applied (preferably 7 times, see Korean 7-skin method YouTube link below), 5) apply essence, 6) spot treat skin problems with serum, ampoules or boosters, 7) mask (not with the ones you rinse off, those are part of exfoliation or pore cleansing in step 3 but sheet masks that are saturated with serums or essences), 8) pat eye cream under the eyes, 9) massage cream into the face (add a face oil if necessary), 10) apply sunscreen (day) or an acid peel (night). While I strongly believe in the practice and have been doing it for the past 25 years, I don’t actually believe that this is just a Korean “thing” rather, its a ritual that’s most popular in Korea. And because Koreans have been more consistent with practicing this ritual than those in other cultures, they’re able to cultivate an innovative environment to develop products that support this ritual. Furthermore, to support consumers in their ritualistic use of the products, Korean skin care brands price their products appropriately for consistent, long-term use.

While I don’t believe that there is anything special about K-beauty products when trying to achieve that sought after “gwang,” which is the Korean word for “glow,” they do make it more affordable to attain and maintain it by pricing their products appropriately to support the ritual. I’ve had glowy skin for over two decades and only got my hands on K-beauty products in the past year when they’ve become easily accessible through online K-beauty curators such as:

• http://www.glowrecipe.com
• http://www.peachandlily.com
• http://www.sokoglam.com

In practicing the ritual, I’ve used a variety of products from the U.S. Iceland, Israel, Japan and the list goes on, usually at exorbitantly high costs. Since gaining access to K-beauty brands in the past year, I’ve been able to maintain my skin at a fraction of the cost I was paying before. And because I’ve been able to cut down on the daily cost of the ritual, I’ve been able to afford therapeutic products, which are naturally sold at a higher cost (to account for patent applications, clinical trials, etc.).

This is not to say that K-beauty brands shouldn’t be appreciated for their ability to help users achieve the glowing, glasslike skin that Koreans are known for. What I mean is that all products, when appropriately selected to match a consumer’s skin care needs (depending on individual genetics, skin conditions, environment, etc.) and combined with a meaningful ritual that accomplishes the goal of cleansing, toning, treating and protecting the skin are effective regardless of the country of origin. In this regard, I believe that the value-add of K-beauty brands is not in that they help you achieve glowy skin (because any brand will do that) but that they price their products appropriately for incorporation into daily rituals and not as potential therapeutics.

Most K-beauty products range from $4-50 per product with most hovering around the $5 mark, especially cleansers that you use twice a day. Toners, while more expensive, hovering around $30, are usually sold in large bottles because they are meant to be applied to the skin in several layers on a daily basis. The low cost of these products make them easier to adopt in long-term, consistent daily rituals than their Western counterparts and hence, we can see more of an effect on ritualistic users.

On the other hand, popular Western skin care products are priced anywhere from $28-$300 but most of these prices are not related to efficacy and are yet overpriced for ritualistic use. From what I’ve observed over the years is that pricing often has little to do with consumer use expectations or efficacy. Instead, skin care product pricing appears to be largely dependent on brand value, packaging or exclusivity with a particular brand ambassador. Some of these brands even sell products that rival the cost of skin treatments that show actual clinical efficacy even though these branded products show no apparent therapeutic value. To illustrate my point, I’m going to compare two U.S. skin care brands, Tatcha and Skinceuticals. Both sell over the counter skin care products through beauty retailers such as, Sephora and Blue Mercury at price points between $40-300. However, one is ritual-based while the other is treatment-oriented with scientific backing.

Tatcha is a nine-year old Japanese-inspired luxury skin care company based in San Francisco and it develops products with time tested natural ingredients based off of Japanese beauty rituals. As they explain on their website, the CEO/founder (who appears to have grown up in the U.S., not Japan, and earned a MBA from Harvard) learned the Japanese beauty rituals from a geisha while visiting Japan in early 2000. Inspired by what she learned during this meeting, she launched a skin care company that incorporates natural Japanese ingredients into beautifully packaged jars (likely the primary driver of the price), which she claims are based off of the rituals of geishas. Now, I might be wrong, but my understanding is that geishas cover their faces with paint makeup and at some point used lead in their face paints until they developed serious skin problems and suffered from a variety of diseases. In addition, the estimated number of geishas in Japan today are estimated to be between 1000-2000, which suggests to me that this is really not a good sample population for widespread skin care product efficacy. I have actually used many of their products and absolutely love the packaging and texture of their formulations. And to be fair, I actually do notice the glow I get from using these products but it’s not any different than what I get when I use lower priced K-beauty products. This is clearly a ritual-based skin care line that entices consumers by offering their formulations in beautiful packaging and luxurious textures but at that price point, it should have a therapeutic benefit but it doesn’t. Yet, their prices are exorbitantly high, which makes it difficult for consumers to incorporate into daily, ritual use.

On the other hand, Skinceuticals is 21-year old Texas-based company that sells both clinical and over-the-counter grade skin care products. Most of their products have been clinically tested, with descriptions of the study conduct provided on their website (and even in some scientific papers on PubMed). They also incorporate natural products in their line at price points similar to Tatcha. However, unlike Tatcha, Skinceuticals has obtained numerous patents for their innovative formulations, treatments and treatment combinations. They also package their products in boring containers but the packaging is purposefully designed for each active ingredient in order to maximize the ingredient’s chemical stability for storage. For example, their leading product, CE Ferulic, which contains the most active form of ascorbic acid (or vitamin C) is sold in an amber jar to prevent light induced oxidation of the vitamin so that it maintains its chemical composition. Hence, while not pretty, you’re really paying for the patented formulation as well as the research and development of a clinically active compound. In other words, Skinceuticals products are priced as therapeutics and you’re paying a premium with the expectation that it will treat a condition within a specified period of time that’s in line with their clinical trial results.

While neither Tatcha nor Skinceuticals are part of K-beauty, they sell products that can also be incorporated into a Korean beauty routine. However, it’s important to note that brands like Tatcha can easily be substituted with lower-cost K-beauty brands because they don’t have any scientific benefits that are solely based on their formulations (only anecdotal evidence from ancient Japanese rituals)**. Brands like Skinceuticals, however, are not as easy to substitute with K-beauty products because they sell patented, therapeutic products.  While expensive (like Tatcha), these therapeutic products are solely available through Skinceuticals, which has actually time tested their formulations in larger populations. So, in essence, what you’re really paying for is a treatment that yields results and not a soap that feels luxurious.

* Explanation of Korean 7 Skin Method available at https://youtu.be/gw_8n6eSSg4

**Note, I have seen the clinical results pictures that Tatcha has posted on their website for certain products. However, they do not provide any study details (e.g. length of time between initial application and stated result, any concurrent treatment, etc.). For this reason, I still don’t believe that these are therapeutic products, rather ritual-based products priced as therapeutics.