¶ Intro / Opening
Good morning, and welcome to Essential Ingredients. I'm here with Kelly Kovack. She is the Founder and CEO of Beauty Matter. She is a thought leader in the beauty industry, and I'm so pleased to have you here.
Thanks for having me.
Yes, welcome Kelly. So as my friend and as somebody that's in this industry, I'm super excited to have this conversation, because I already have so much trust. I want to know what you have to tell me about the future of food, and how we can see it impacting beauty as beauty continues to innovate. Can you tell me about when you first started seeing food impacting the future of food?
I think the food industry has always been an adjacent, an adjacency that made sense for beauty. And I think historically, where we saw the impact was on an ingredient level. So very often, the food industry tends to be a little further ahead when it comes to ingredient friends, especially,
obviously related to naturals, right? And I think that as beauty and wellness have merged, I think now, we're seeing a lot of products that would have once been considered kind of food and beverage actually being on the shelves next to beauty products, and they're kind of live in the functional food space. And in some cases as ingestible beauty is growing, a lot of the formats are based on food trends. So I think we're seeing the convergence as beauty, wellness and health have merged.
I'm curious about the food and beverage, and
¶ Ingestible Beauty
the products that you were talking about there. Can you give us a few examples?
I knew you were going to ask me that one. What comes to mind is like Alice mushrooms. So there's a ton of functional beverages. One of the things that we do at our events, lieu of a goodie bag, we create this pop up market called the Supermarket, and we always include startup food and beverage companies. So we've had tons of them come in and out, a lot of CBD drinks, some drinks that are based on supporting
collagen. There are functional ingredients. Actually one of our partners is called Tosla, and they produce collagen, and a lot of ingestible collagen. Usually ingestible collagen is disgusting. It's absolutely gross. But they have this technology that masks the labor, and it actually tastes great without the sugar. So we're actually seeing a lot of suppliers supplying food and beverage companies and beauty companies from an ingestible standpoint.
Wow, super interesting. Do you use ingestibles?
I do, but not necessarily. I think more from a supplementation standpoint. I think some of the mushroom ingestibles. Not the micro dosing mushroom ingestibles, but more. But those are interesting too. The more adaptogens. So putting them in coffee and that kind of stuff, we have them around the office. So we're always trying stuff out.
Is there any statistics you could share around the impact of that? What we're seeing with that new product versus doing it the old fashioned way?
There are many that I could, if I were to conjure up any statistics, they would probably be wrong. But what I can tell you is that it's a growing segment. So what we're seeing is a lot of early stage investors that were focused on beauty and have expanded into wellness, and some of them have expanded into these functional food and beverages under the wellness umbrella. So I think one of the things we do when we do trends is, one marker is following the money. It becomes
a self fulfilling prophecy from a trend perspective. I think the other indicator is Ulta and Sephora are leaning into wellness a bit more. So in order to really scale these businesses, you need to have retail distribution. So the fact that the two largest beauty retailers are playing in this space, or have begun to play in this space, I think bodes well for growth. But the ingestible side is still a little tricky.
Because if you're building a business to sell and the path is a strategic exit, and you're a beauty ingestible brand, the only one really acquiring them is Unilever.None of the other yet. Estee Lauder, L'Oreal, the Japanese strategics, no one has touched ingestibles other than Unilever so there's not a clear path to an exit. Doesn't mean that it's not going to happen, but I guess it's a traditional path if you've chosen to grow that way. If you're self funding, it's a totally different story.
I'm curious, I don't know if you know the answer to this. Do you know why Unilever has taken this on?
I think probably is because part of their portfolio is nutrition, so they're already in supplementation. Was it liquid IV that they acquired? I don't know. They made two very big acquisitions collagen and hydration. IV is all over the place now.
We had one of the founders on the podcast previously.
Hydration is always tied to beauty too because it impacts the skin.
Actually, there's a spa out in the Hamptons. I forget where, because I don't really remember. But it was just opened a couple years ago. And one of the women that I had on the podcast is an anthropologist and a scientist, and did all this work on water. Her name was Gina Bria in the Hydration Foundation. She's a leader resource for hydration. She wrote a book called Quench, and it was a five day plan to optimal hydration, and recommended for New York Times
blah, blah, blah. But anyway, it was all about the impact of water on beauty, and that's why the spot brought her in was to create a more hydrating system to include in their beauty.
Yeah. It's super interesting because I just went to the press event for the global wellness Institute, and they had thermal spa's as one of the big growth areas, really, for the wellness space, which is really interesting. Because if you think about it, it's this ancient practice that is become new again. But there is a ton of research, not only around the benefits of water, but the ability to manipulate the
molecular structure of water. But on the flip side of it, the crisis of certain areas running out of water is also real.
¶ Historical Context of Food and Beauty
Yeah, it's true. So when did you first start to see the beauty industry changing as a result of food? I know that we've always seen it as part of it, but when did you really see that it made this big pivot, if you will. Or not pivot, but took this direction on.
I think it's always been there, but I think it lived on the professional side of the industry. And more specifically, the spa side. And destination resort spa's where food is always integral into their programming, whether it's cleansing or eating a certain way, or farm to table. That has always been there as long as I've been in the industry. The concept of beauty from the inside out has also always been
in the beauty industry, but it lived in the world of spa's. I started my career in spa's, albeit the reinvention of the urban day spa with bliss. But that was in 1996. All of these conversations were happening in the professional space, and I think it really started, I don't know, probably 10 years ago if I had to put a time on it where it kind of came out of the
professional space and became a bit more mainstream. And I think it was really, perhaps driven by millennials who were more focused on balanced lives and eating well, journaling and all those things apply balance, all that kind of stuff. I think where it probably the biggest inflection point, like so many trends, was COVID. People really started looking at how they were living and what they were putting in and on their body in
a very different way. But I would also say that there's a whole other aspect of the correlation between food and beauty. And I would say that started also about 10 years ago, and it is kind of around the conversation of clean beauty. So there were some really innovative founders who were trying to take on the task of the beauty supply chain. Where we get ingredients from, and how products are made? So you saw euro waste brands kind of emerge, and you also saw
ingredient upcycling. So taking a byproduct of the food industry and then turning that byproduct into an ingredient to be used in beauty products, and it is being scaled to a certain extent. But a lot of these things start out small, right? And the ability to commercialize them, you have to find someone who is going to create enough volume to build a business out of it. But there's a ton of food waste that can be repurposed for beauty.
The skins of oranges and eggplants, and all sorts of things. I want to go back to something that you just said about, people are concerned, or the millennials. It was about what you're putting on your body and what you're ingesting in your body. There's a lot of conversation around, when you put it on your body, it's not going into the bloodstream. So if that's the case, how do you look at that if
it's not going into the bloodstream? I care what I put on my body, but I feel like if I'm allergic to sugar, why should I put sugar on my body. Like a sugar scrub. That is an example, right? People are really concerned about it being
¶ Biotech in Beauty
clean beauty, and not having anything that they can't pronounce or they don't know what it is. And I'm wondering, as we shift over to these clean beauty products, and we know everything of the most of what's in there, are we getting the same kinds of results? Are they showing this being as, are we giving anything up?
It depends. Clean beauty, first of all, there is no definition of what clean beauty is. And I think it started out with the right intentions, and then it turned into a bit of fear mongering and scaring people. And it doesn't mean anything at the end of the day. It's not black and white because there is not an inherently good or bad ingredient. It's about how it's being used in the formulation
and the percentage at which it's being used. The most common example is, Poison Ivy is natural, but you're not going to rub it all over your body, right? So there are also needs to be sort of a level of common sense around these conversations into a certain extent. Cean beauty has become table stakes. But I will say that regardless of what people say, they want?
Purchasing is different. They want products that work. But I think what the next step of beauty is when it comes to dealing with kind of the clean beauty conversation, are biotech ingredients. They're inherently more sustainable than natural ingredients. They're more reliable than natural ingredients, so that if you sort of extrapolate further, that makes them safer too. You know what you're getting every single time. It's made in the lab, but it's made through fermentation.
It's a natural process. So this merging of biotech and beauty, there are some really powerful novel molecules that are being extracted from nature in really interesting ways.
What role does education play in this for the businesses? Because the consumers don't necessarily know all this, right? They read something, they read two words of it, they hear some green washing, and they don't really know the answers. They don't know that some of these ingredients are not as amazing just because they're natural.
I think beauty is a big business, and I would argue that beauty marketers are some of the best in the world. We know our way around regulations. And I think that there's always a spectrum when it comes to trends. There are people who are pushing trends forward, and then there are people who follow them. There are people who create brands and do things because they really believe in it. And then you have others that are just trying to optimize a business opportunity.
And all of those intentions are very different when you build a business and educating the consumer for beauty. It kind of goes hand in hand with marketing, but it is this tightrope. Because even if you lead with science, not everyone cares about it. You kind of have to build these levels of communication so you have super high level marketing focused on
benefits. People want to know what things are going to do, and what the result is going to be. And then you have these citizen scientists that have emerged during the pandemic that really get into the weeds on the science. The science of there, I think, where the beauty industry is going is far more clinical. It's substantiation of claims. So a lot of these natural products that can't stand up like, I love a face oil. Love
it. But am I going to get the same result as I would with something that's biotech based and has done clinical, probably not. So some of it is just about sensations and feeling good. And then I think some products are about performance. But educating consumers is, I think, the biggest challenge for brands because there's always a lot of misinformation out there. Although it seems like the the federal government was more interested in regulating beauty. We'll see how that goes and
claims around greenwashing, and all these tools. You have apps that can scan anything, but they're always working on this binary system of good, bad. I also wonder, it's like, are they really helping anyone? Or are they perpetuating this misinformation?
That was going to be my next question to you. It is about misinformation, and about what people latch on to that's actually not really the reason they should make that choice.
The clean beauty movement, one of the ingredients that there were these ingredients that, all of a sudden, it was like the fear mongering was insane around parabens and sulfates. And the funny thing is, a lot of people don't even want to go on the record. They're just like, screw it. I'm gonna take the parabens out of the formulation. If you ask most cog medic chemists, they will tell you that parabens are the safest preservative, and they're used at such a small
percentage that they're not really doing any harm. I mean, highly loaded question. And there are a lot of natural preservatives that have come. It's the chemistry around clean preservatives has come a long way, but they're more expensive. You need to use more of them. And if you think about it, these ingredients are there to inhibit the growth of bacteria. And it's
important. But that's an ingredient where it's like, there was a lot of press around it, and it just became so ingrained in the consumer's mind that parabens are bad, sulfates are bad. But there was never a conversation. There was like one study. It's in food as well. You have this group of lawyers that are looking for brands that look like they're big enough to have some money, but not so big enough that they will go to
court, and they go after these brands and file lawsuits. So some of it is also defensive, because there's someone that does a one off report that makes some claim, it gets picked up by the press, and it becomes a thing. The lawyers come, the lawsuits come, and it's one of the things about having business in the United States. Culturally, we are very litigious.
¶ Lawsuits and Legal Threats in Product Innovation
Yeah. And I think that a lot of times, by making those claims and by the press enhancing it and bringing attention to it, we're guiding people in the wrong way. We're telling them to think this when this may not even be right. So I think it's kind of irresponsible.
I agree. I get press releases all the time from law firms or PR firms that are like, this study has been done, and they take a product, and they put it in these really extreme conditions where something happens. But all you need is someone to pick that story up, and then the narrative is out there.
And it's hard to change the narrative when they're saying it with conviction, and they're saying it like they own it. It is emphatic. People take on that energy for lack of a better word and are like, oh, this must be true. And then all of the sudden, people are no longer looking for different answers or being curious. They're just taking that as if it's gospel.
Some of these lawsuits have done significant financial damage to businesses. And even if the lawsuit, even if the it goes through the courts and they are found that the lawsuit was frivolous, it doesn't matter. The damage has been done. Really hard to recover from it.
The name, the information, it's really hard to recover both financially, but also to change that narrative back.
The reputational damage is tough. It's kind of the world we live in. It's like some things you want to go viral, and then others where you're like, I hope no one finds out about this. These lawsuits are a real thing. I'm sure they happen in food as well.
Yeah, every kind of business. And I think for startups, when people try to swash them with these things, people end up losing their shirts. They no longer get in themselves. Because if they were self funded, they now used all their money to get this pushed away, which didn't even move the needle. And frankly, whether they're going to succeed or not, their idea could have impacted and influenced other people to continue to innovate. That's doing a disservice to everyone.
I agree. Personally, I think there should A $1,000 an hour for an attorney. One's doing research. be consequences. If you bring a lawsuit and it goes to the courts and you lose, there should be consequences. But I don't think that's gonna happen anytime soon, but it is something that startup founders need to be aware of. They need to invest in having the legal review of their labels to make sure they're not making any claims, because these lawsuits
can cost hundreds of thousands of dollars. The legal fees, most startups are not going to litigate. But they're going to have to get a lawyer, and then they're going to have to come to somesettlement. And that's money that could have been spent somewhere else. One's doing this. It gets really prohibitively expensive where they're not even in a position to be able to afford to do that.
And their idea, it's sort of psychic energy too. You're trying to learn your business, and you have this legal thing hanging over your head. But we've totally gone off on a bizarre tangent. It's real.
And to our founders, it's important whether you're in beauty or in wellness. When we started this conversation, you kind of said that they were coming underneath the umbrella, and underneath that umbrella are the startups too. All the information kind of interconnects. We did distract from the impact of food on the future of beauty. That being
said. So if we get back to what you had said, biotech companies could be the future of beauty, or you see them as being, are there any that you could call out that are doing anything interesting in this moment that you're seeing?
One that is really interesting is called Debut. They are based in San Diego, and they have a really interesting approach. Because the challenge with biotech is, like you said, the education. So there is a moment where people don't really know what biotech means, but they have set up a very interesting business structure. So they've launched a brand called Diende, and they use Diende as almost like a lab to learn. And when I say that, it's out there, it's being sold on
retail shelves. But they they're constantly changing the messaging and learning, what works and what doesn't work. And that informs how they build products for their other beauty brands. So they also got a lot of investment from L'Oreal, sothey have a path to commercialization that has volume behind it. They've also partnered with one of the largest contract manufacturers in the world, KDC/ONE, and so they are able to help brands formulate with these ingredients
and get to market. Depend on what you're doing between 9 and 18 Months, which is very fast for a product like this. So there's another biotech company called Archaea that's doing very interesting work. And then you also have some beauty brands that are founded by scientists. So one of them that I'm personally obsessed with is OneSkin, they're based in San Francisco. It's three female PhDs, and they have done all this research around a peptide, and the products are phenomenal.
So you have scientists launching brands, and then you have biotech ingredient companies trying to compete with big ingredient companies. And these ingredients are more sustainable. Ultimately, they're derived from nature, and they're more sustainable than taking it from nature. But I think Archaea, and also called Mibelle in Geneva, is another biotech company. They've been doing these ingredients for 30 years. They were the company that kind of broke through with plant stem
cells, and specifically the apple plant stem cells. The research is not new, but it's becoming much more mainstream.
I think that I haven't heard of these brands, which I'm very excited.
They're way down the value chain. So these are the people making the molecules and making the ingredients that then go into products. Unless you're in the industry, you probably wouldn't care about them.
Well, I'm curious now, when I was in Switzerland a long time ago, you may remember 20 years ago that a lot of the creams and stuff just seemed natural and had a lot more advanced technology to them when we were in Switzerland. I don't know what your thoughts are on that today, because they talked a lot about the regulations in Europe and Switzerland versus the regulations here. Are they able to create other products that we're not because of certain regulations?
Yeah, in the regulatory world. So the EU has been more restrictive from an ingredient standpoint than the US. But I don't know, it doesn't really impact the efficacy of products, I would say. With the exception of sunscreen, in the It's super interesting. So for the future, if you look at the United States, we do not have the best sunscreens because the regulations are so old, and so some of the more sophisticated SPF ingredients can't be used here. So if you want to buy
sunscreen, buy it in Asia, Australia or Europe. Even some of the big brands, the formulas aren't the same. The Australian sunscreens are pretty amazing. I just had a conversation there, seems like there's a lot of innovation happening in Switzerland right now, and it is around biotech. It's around longevity. It's always been there. But for some more reason, it's sort of bubbling up, and in a different way.
¶ The Future of Clean Beauty
next three to five years, how do you see Clean Beauty and the biotech beauty, whether converging or surpassing as it relates to the overall industry? Clean beauty, it depends on where you live. Like in the US, I don't know that clean beauty is really a thing anymore. I think consumers assume, and I would say most beauty brands are trying to use sort of what is perceived as clean beauty
guidelines. But in other markets like the Middle East or even Asia, the concept of clean beauty is totally new to them. We kind of assume, like trends move at the speed of Tiktok and they're global, but they're not really right. And so clean beauty is a really nascent conversation in the Middle East and Asia. But where I really think the beauty industry is
going in 5 to 10 years, it is going to go a step further. I believe we're going to see beauty and a pharma going head to head, and I think it is going to be led by these, what biotech can achieve? And consumers doubling down on wanting efficacy and demanding clinical studies. If you think about where longevity is going, it's all about performance and optimization. So I honestly think it's lean, will be like a distant memory, and you're gonna see beauty and pharma kind of
going head to head. Which is interesting because for pharma, beauty brands just don't get big enough to be interesting for them. But I think that might change.
There's the whole thing around big pharma, and people don't like that. You have that obstacle and challenge for many people.
I think in terms of beauty, though, the rigor that comes with pharma, it would actually be a good thing for beauty from the testing required, the test--
The studies and everything, it's really expensive to do when you're independent.
I think science has become more important. If you're just talking about biotech, there's always going to be people who love just beautiful natural products. But there's the implication of climate on the supply chain. So if you base your products on natural ingredients, you have the fluctuation of the ingredient cost that's based on the climate, you have issues around availability. So there are all these things that,if you are truly in the kind of in the
natural space, you have to think about. And you also have to think that these natural ingredients are living organisms. So as their environment changes, they change and evolve. So what the extract 1 to 10 years ago could be very different than what you're getting from the plant today that is evolving to deal with all the crazy climate things that are happening.
We just had snow in Florida, I know it's insane. If you think about all the things that are natural to Florida and indigenous to Florida, and can grow as the weather changes, it's going to change what you can grow there, what's going to thrive. That the availability of those things are going to be fewer and far between, and it's going to change across around the world as we see stuff like that. So as
¶ Doctor-Made Products and Brand Innovation
people start to build their products and they think about, oh, we only want to be within a 30 mile radius in five years, that ingredient list. My other question too is, what role do you think the doctor made products? So you go to a dermatologist and they have their own line, and they all make their own lines a lot of. What role do you think that's going to play in here? And what direction will then go?
I think that there have always been Doctor brands. They kind of come in and out of fashion. And I think a lot of these brands also reflect the larger landscape of beauty. So some lean really into biotech, some lean more towards natural. Some are in between. But I think the interesting thing is that there's a segment of consumers that want to get their information from experts. So we've seen a rise in Doctor brands. We've seen a rise in brands created by estheticians
and even cosmetic chemists. So consumers, influencers like the traditional Instagram influencer still exists, but there are certain categories where people want to get their information from experts.
Vetted resource. Someone that's done their due diligence, that has the expertise in the industry. So if there are new brands out there that are innovating in this space, what are the top three things you tell them to look for brands that are looking to innovate as they're innovating? What are the top three things they should consider?
First thing is to really make sure that you have a point of difference, because it's a really crowded space. It's super competitive. So that's the first thing. Make sure that you have a truly unique point of difference, and you articulate it well through all of the touch points, from the name, through the marketing, through the package. I think the other thing is have a plan for where you're going to sell it, because creating a brand is the easy part. It's very easy to
say, I'm going to sell D to C on my website. And yeah, it's definitely an option, but acquiring customers is a whole different ball game. So know where you want to sell the product, and know that you have a plan for distribution. And when you're planning the launch, make sure that you don't spend all your money on the branding and the production, because you have to market the stuff. Make sure that you have enough money for operating expenses. And also be patient. It takes a long time
to build a brand. We've all heard these stories of brands launching and scaling to $100 million in three years. Yeah, it's possible, but it takes an awful lot of money. And, you know, I think even when, and I think this is not limited to beauty. I think launching a brand is hard, and it takes time. And even when you check all the boxes, it looks great. You win tons of awards. You're in the best retailers. You also need a little bit of luck because you can make decisions,
and they can kind of cut both ways. You can make a decision and your brand goes through the roof. And you can make a decision, and it was a good decision. But it just didn't work, and can't recover from it. I think you have to stick around long enough for luck to happen too. You just have to be
¶ The Timeline of Building a Product
patient.
This resonates with me. I remember when I had Bjorn Oste on who is one of the co founders of Oatly Milk. Oatly Milk to me seemed like it happened overnight. Like one that went into a coffee shop, and Oatly was everywhere. It was like this barista version, and it felt like, wow, that just came. So to me, that happened overnight, right? I sit down and have a conversation with him, and that was like 8 years later from where they started. That all the sudden, it became a
sensation. And it wasn't that they weren't selling, it just hadn't made that big leap yet. So 8 years later, there they are in every coffee shop. And now, they're sold in every store. It really resonated with me when you were saying that, I'm like, yeah, exactly. They went public.
I think a really great example is K18, that just sold the Unilever last year. That brand was kind of 20 years in the making, and it came out of another business. And so, yeah, it was a 20 year overnight success. And also, I think the other thing is a reality check for founders. The reality is most startups fail. I have a whole string of them. But I think if you're a real entrepreneurial, it's about reframing failure too. It's like some businesses just have a time
frame that they were supposed to exist. It doesn't mean that they were a failure, right? They could have been successful for that period of time. And I think what real entrepreneurs do is they learn, and then they move on again. And even some investors that I've talked to say, even founders that have had that huge exit, if that's been the only exit, they question it. How much of it was luck? Some investors like to see founders
that are scrappy, and they just don't give up. I think it is also important to be the whole founder, idea of founders has been so glamorized. It's not for everyone, and that's okay. But the reality is, most startups fail. Or it starts as one thing, and it evolves into something else. But it's a lot of patience and perseverance.
I would agree with that. I would agree with that wholeheartedly.
I know. I think since we've known each other, we've probably collectively started like 10 businesses.
God, you remember all the businesses? I remembered. I knew kitchens over dollar oysters.
Yes, I do you. And your virtual world, which you were so way ahead of things. Who was it? Cherry pie or someone that you're gonna deal with every day?
I can't believe you remember that other guy that worked for the UN interpreter, and there was something else? Oh, a psychiatrist.
It's kind of crazy because that was like 15 years ago, you were selling virtual goods, which are now like a billion dollar business. And I thought it was the craziest thing.
Yeah, we're like, what are you doing? I remember those rides back from the Hamptons.
Anyway, here we are older and wiser.
So for those folks interested in, I want to say in beauty, but I also want to say wellness, because I think it expand. You've expanded that category. And whether it's with a supermarket, which by the way only occurred to me that it's a supermarket. Exactly. So for those folks that are interested in learning more and getting more insight, what's the best way to connect with Beauty Matter and you?
Yeah. So beautymatter.com, very easy to find. And if you want to connect with me, don't DM me on Instagram. That's a horrible way. But LinkedIn, I check all the time.
I know you have a subscription based, yeah, is it newsletter? So for folks that are not familiar with this, can you just tell us a little bit about that and how? And if they wanted to sign up, what would be the best way to do?
There's different levels to engage. So we also have free membership. We have a lot of sponsored content, so that's available to everyone. And then if you sign up for our newsletter, you can get three free pieces of content a month. And then beyond that, we have premium and professional memberships that have different levels of benefits. But if you're just interested, you can poke around for free. It's not totally gated.
And what kind of content can they expect if they sign up to get three pieces of content?
We cover the business of beauty and wellness. It's a B to B proposition, but it can be anything from Tiktok trends to murders and acquisitions. We do a lot of profiles of founders and their businesses. We do round ups of launches,anything that's related to the business of beauty and wellness.
Awesome. Thank you so much, Kelly. We'll make sure to join our website and the details so that people can connect.
Thank you.
Thank you. It's great to connect. I'm going to thank our listeners for tuning. If you're watching the videocast, don't forget that you can download the podcast and listen to it on the go wherever you listen to your podcasts. And if you are listening to the podcast and haven't checked out the YouTube video, make sure to check us out under Essential Ingredients. It's in the NextGen Purpose channel, and we hope you'll follow along on Instagram at essential.ingredients. Talk to you soon. Bye.