Alicia Yoon [00:00:23]: Hi, I’m Alicia Yoon, I’m the founder of Peach & Lily, and for me, it’s a matter of care.
Kelly Kovack [00:00:35]: Some people are pre-disposed to the adrenaline-fueled world of start-ups, while others have the skills to master the navigation of corporate structures. I’m Kelly Kovack, founder of Beauty Matter. One path is not necessarily easier or better than the other, but they are wildly different. There are some people who have the ability and the personalities to not only comfortably reside in both worlds, but be successful in both worlds. Often, these founders find success and build businesses at the intersection of these skillsets, leveraging the discipline and process of big business to add structure to the passion and vision necessary to fuel a start-up. Alicia Yoon, the Founder and CEO of Peach & Lily, is one of those people. She grew up seeing success as possible following either path and has built a business that’s at the intersection of both, defining the K-beauty opportunity by translating it for the U.S. market.
So, Alicia, thank you so much for coming.
Alicia Yoon [00:01:48]: Thanks for having me.
Kelly Kovack [00:01:50]: Yeah, you know, it’s always fun to have guests on where there’s sort of a history. So, we actually, for the audience, met really sort of early on in your Peach & Lily journey, and it’s evolved so much and it’s been so fun to watch it evolve, because I think – you launched in 2012, right?
Alicia Yoon [00:02:11]: That’s right.
Kelly Kovack [00:02:12]: And, I think we met sort of around then?
Alicia Yoon [00:02:15]: Yeah, eight years ago.
Kelly Kovack [00:02:18]: Eight years ago, right? Because you had sort of – Korean beauty was kind of bubbling up and there was obviously an opportunity, but it was way before you became sort of the Korean brand whisperer. You know, I think you’ve really kind of become the face of Korean beauty for a lot of people in the U.S. market, because you kind of bridged that lost-in-translation moment that happened both with packaging and language and products, and you know, you really started from a more traditional sort of corporate background. Can you sort of share that kind of jumping off point to kind of going full-on into the life of an entrepreneur?
Alicia Yoon [00:03:00]: Yeah. So, I first started off working at Goldman Sachs, and then I was a consultant for a while, in between I had gone to business school, and I was at the Boston Consulting Group, and – well, first, that company is an incredibly supportive company, I loved working there, and I had thought about doing something entrepreneurial for a few years, but actually going back into my, like, deeper kind of mind, it had always been on my mind for a long, long time, since I was very young, because my grandfather is a serial entrepreneur. So, there was this constant kind of thing I had in my mind, and so when I was at BCG, there was a moment where I just realized, “Wow, I can actually pursue my passion as my full-time job,” and that moment was actually when I was happenstance talking to a cosmetic chemist from a global beauty brand, and you know, rewind back to 1999…
Kelly Kovack [00:04:02]: It seems like a totally different world.
Alicia Yoon [00:04:05]: Oh my god, 20 years ago, 21 years ago. I had actually started going to skincare school in Korea, and I was doing facials nights and weekends, and that was my hobby, my deep-rooted passion, and actually bringing a lot of Korean beauty products for these facials from Korea because I grew up there and my parents are still there, but it was when I talked to this cosmetic chemist and he really started explaining to me – and it was just like this happenstance conversation, “Did you know that the science is a lot more advanced in a lot of ways, that the formulas are super absorbable?” and if you don’t have lab equipment, I could see that the ingredient lists are different, that the textures are different, that these products are truly helping people, but seeing that scientific sort of lab data is what gave me that moment where the light bulb went off in my head, and I said, “Wait a minute, I’m so passionate about helping people transform their skin after seeing my own eczema-riddled skin transform and just how it looks and feels,” so it’s like 2012, it’s a globalized world, and the fact that these really incredible products and technologies were just not available stateside in a meaningful way, I was like, who doesn’t want the best for their skin? And this is just not accessible. So, it was actually this moment where I went to HR, and it was just that day where it made so much sense and I just went to HR and said, “I want to do this,” and they were very supportive, like open door policy back if it doesn’t work out, but best of luck to you, which gave me that courage.
Kelly Kovack [00:05:47]: That’s amazing.
Alicia Yoon [00:05:48]: Amazing.
Kelly Kovack [00:05:49]: Because it kind of gives you a safety net, like, “I’m going to do this, but if it doesn’t work out, I just pick up where I left off.”
Alicia Yoon [00:05:56]: Exactly. It was a psychological safety net, and so that was a really kind of big moment, but I think when I really look back, it was kind of a journey to get to that point where I was able to kind of make that decision in that moment. So, oftentimes I think life is like that, where there’s this one critical moment where that watershed decision in your life happens, but actually, the history of your life leads with that moment.
Kelly Kovack [00:06:20]: Right, it’s kind of that tipping point, or like that gut instinct, but it’s not really a gut instinct, it’s informed by all of this history.
Alicia Yoon [00:06:28]: Exactly.
Kelly Kovack [00:06:29]: And plus, I think you probably coming from a family of entrepreneurs, there was, you know, I know when…I think my family still doesn’t know what I do, because they’re not entrepreneurs, but when you have sort of a family of entrepreneurs, there’s sort of probably sort of a comfort in that as well, because you must have used them as kind of a touchstone along the way.
Alicia Yoon [00:06:54]: Yeah, and I mean, my dad was an attorney, and my mom, you know, was a violinist, and then she was a stay-at-home mom, and having seen both my dad’s career, where he has a corporate job, and very fulfilled in that, and then having seen my grandfather, where he’s a serial entrepreneur, and also incredibly fulfilled, I feel very, very fortunate that both options felt like very viable kind of career paths, and in my mind, it kind of really opened up my eyes, where even though they weren’t going back and forth as the same person doing that, somehow in my mind it melded as it’s a fluid thing, you know, you can kind of start in the corporate world, you can become an entrepreneur or vice versa, and so I do feel very, very fortunate that I had that exposure.
Kelly Kovack [00:07:50]: Given kind of the current state of indie brands, or even the investment, call it appetite, for the beauty category, which has exploded, and sort of given your background, sort of Goldman Sachs and Boston Consulting Group, why did you decide to not sort of raise a pre-seed or seed round and sort of go kind of the traditional route, perhaps?
Alicia Yoon [00:08:19]: Yeah, so when I first started Peach & Lily, I had the privilege of having so many of my classmates from business school, they had become entrepreneurs and they started their businesses the year we graduated, actually, in 2010, and I had waited a couple of years in 2012, so I had friends who were kind of two years ahead, and they were sharing sort of, “Here’s a list of great VCs you could talk to,” and I actually did talk to them, and you know, in those conversations, it was like, actually doing your seed series is a little bit of an easier fundraising kind of hurdle than doing your series A, B, C, D.
Kelly Kovack [00:08:57]: Right, because you’re selling the idea yourself.
Alicia Yoon [00:09:01]: Exactly. It’s all potential.
Kelly Kovack [00:09:05]: All potential revenue doesn’t matter.
Alicia Yoon [00:09:08]: Exactly. It’s a great idea, okay, let’s see where this goes.
Kelly Kovack [00:09:11]: Great idea, we like you, we’ll take a chance.
Alicia Yoon [00:09:14]: Exactly. The conversations were going really well, and it became very real that one of these potential term sheets could go to a full-blown deal, and I started to really sleep on that concept and increasingly in my gut, I just knew that this was not right for our business, not right for me, and it’s because ultimately, when I thought about the business model, I realized I’m not building a tech platform like Instagram, where I have to have all of these users and then you monetize. In some ways, even though it’s new innovations and it’s a whole new category in an industry that you’re really getting into, it’s still run in a meat-and-potatoes type of way. You’re creating things or curating things, buying it and then selling it, and if that business model isn’t sustainable, there probably isn’t going to be a business model there in the future, because ultimately, you know, really marketing to customers, it’s only going to get more and more expensive as you are reaching customers who are harder and harder to reach, and so I thought to myself, it doesn’t feel quite right for me to take on funding to experiment how that’s going to play out, I would rather take on funding when I have a solid business model that I know exactly how we’re going to use those funds and what that return profile will look like, and then, potentially, that’s like a better time, and so kind of just listened to my intuition, and it wasn’t easy. It was definitely – the first few years of the business was incredibly hard, went from a relatively, very stable job, a very comfortable living, to at one point I had $7 to my name, I’m debating do I take the subway or eat pizza? I was almost evicted from my apartment a few times, which doubled as our office. Times were hard.
Kelly Kovack [00:11:15]: Yeah. But, do you think that…you know, I think, I sometimes think that it’s different when you have funding and when it’s sort of your own money. I mean, you know, some founders sort of have those same stories, having sort of raised money, but it is – I think the mindset is very different when it’s your own.
Alicia Yoon [00:11:35]: Oh, I think so. I mean, this was like my entire life savings. I had sold a lot of things to try to ensure there was continued liquidity. You’re beyond all in, like all in and negatively all-in, like I have nothing more to give, it’s everything I have. And so, the feeling is different. Failure just becomes not an option, and that really leads to creativity. That also – for us, that led to a lot of data-driven outcomes, so you know, I had this mantra saying every single month, we have to get smarter. Every single month, we have to figure out what worked, what didn’t work, and what to do differently, and that really is data-driven. It can’t just be like, “Oh, I think that kind of went well,” and so that actually created this rigor in the business to really have a clear understanding of what the insights are, because it’s really easy to have generic insights, like, “Oh, I think like people just really generally like the cream more.” Did they, or did you market that on a Sunday when people are opening up emails more? And so that was something that really became part of our DNA, as well as that resourcefulness and thinking outside the box. Up until a year ago, we actually hadn’t hired anybody really from the beauty industry, and that was just happenstance, but that’s because we were thinking very outside the box in building the business because there wasn’t this really – this playbook that we could follow, and I also didn’t come from a L’Oréal or Estee Lauder, so it was just applying, you know, whatever common sense to the business, versus…
Kelly Kovack [00:13:13]: Common sense goes a long way.
Alicia Yoon [00:13:15]: Yeah. You know, for sure, were there things that might have been easier if I had known certain things? For sure, but could common sense also get you through a lot? Definitely, and I would say that if I had to lean on one more than the other, any day of the week I would pick common sense, because every business is going to be unique. I also think that in those really early days when it was very, very tough, and you know, for sure there were times when I started doubting, “Why am I living my life like this? Is it the right choice? Should I actually bring on a partner?” and I would go back to my grandfather, who was such a mentor of mine, he’s a hundred years old, this year.
Kelly Kovack [00:13:58]: Oh my god, that’s amazing.
Alicia Yoon [00:14:00]: Still so, so…just so insightful, like super with it, and you know, eight years ago, I mean, he’s in his 90s, he has his whole life experience to share, and I started talking to him, a lot of my peers are raising funding and they’re just like raising huge amounts of funding actually, and here I am, super struggling, and he started actually really reminding me, and it really influenced me a lot, because he had the track record also to kind of really be seen as a credible source of advice, and he was like, “Well, look, at the end of the day, these valuations that are just on paper, what does that even mean? Why does that even matter? And, if you were to raise all of that money today, how would you even use that? Would it be an experiment? Or would it be like you know exactly what your business model is and you know exactly where to lean in to whatever you’re investing in?” and so he kept reassuring me, and he also said a few really incredible things. First, he was like, “There are no shortcuts in business. You have to treat it like you are climbing a series of staircases, and you have to…you can’t skip landings. You can’t go from the second floor, and all of the sudden you’re on the fifth floor. You have to go to the third floor, and then you’re like, ‘Okay, I’m on the third floor,’ and you have to have those landings, because invariably, challenges will come up in your business, and if you didn’t kind of build those landings, you will collapse all the way down, versus just going from the 17th floor to taking a step back to the 16th floor.” So, he was like, “There’s no rush. Build a sustainable business and don’t take the shortcuts,” and it was really encouraging.
Kelly Kovack [00:15:45]: It’s so…it makes such sense. You know, I think we’re sort of in an interesting time now, because with – well, with sort of everything that’s happened where sort of venture capital has gone from grow-grow-grow-grow-grow to union economics, what seemed like overnight, I think a lot of brands have kind of become…it’s almost like a drug, this like raising round after round after round to keep fueling this growth that’s not really…it’s like artificially inflated, there’s not like a business there.
Alicia Yoon [00:16:28]: Right, and I think that, you know, it’s not wise to think that scale just buys you profitability, or a sustainable business model, and in fact…
Kelly Kovack [00:16:41]: Scale just brings bigger bills.
Alicia Yoon [00:16:43]: Yeah, or bigger loses, you’re losing money with every sale that’s made. So, then the question to him, it became, okay so, I’m going to do this where we’re really just not taking on any institutional funding, and a few years in we did a small seed series with friends and family, and that felt right, and actually, at that juncture, we also had various funds wanting to infuse a lot more capital, and that just didn’t feel right. So, just kind of, you know, to get stuck by stuff. So then, you know, one other conversation I remember that was very memorable to me, I had asked him, “Okay, so growing this pretty much organically, what are some business principles to always keep in mind?” and I loved these two things he said. He said, “First of all, money has eyes. If you’re just in it for the money, and you’re just like doing whatever for money, I mean, money will run away from you,” and actually, he was like, “It’s a way of saying if you’re only doing it for that reason, you don’t always make the right decisions, because you know, money can also come with fear or greed and a lot of emotional decisions, and so what is the reason that you’re doing this? Always go back to that reason when times are tough.” And for me, having struggled with my own skin, it really was this passion to help people transform their skin; that’s why I was doing facials all nights and weekends, and whenever times get tough, until this day, I will read through DM messages, our customer emails, cards that people send us, I keep all of it, and I will go back to it, and every day feels like day one. It helps to get through those moments, so I love that piece of advice. And then, number two, he had said, “Fairness is really important. If you’re trying to create partnerships, let’s say with other, you know, retailers or vendors or suppliers, and you feel like you’ve got this great deal and they kind of, you know, are getting the short end of the stick, that’s never sustainable. Same with your customers, if you feel like you’re getting a more than fair margin to keep your business going, and you’re just kind of really just spinning the angling on marketing and you know that the value is not really a fair value that you’re offering, it’s not sustainable. People are smart, and eventually, that fairness is what keeps a business really, really solid, and if anything, lean on the side of generosity, because that is going to have longevity,” and that was amazing, amazing advice, and so he was like, “Greed actually can become the undoing. So, fairness is a principle to always uphold,” and I love that. That’s been something that time and time again, whatever contract we’re looking at, whatever – and, actually, that works the other way, too: if the other side is not being fair, you feel very empowered to negotiate, to push for that fairness, and also, it gives you a lens, like if that partner is really unwilling to come to terms in what seems reasonable and fair, you walk away. So, it really becomes you know, a north star in a lot of ways.
Kelly Kovack [00:20:01]: Your grandfather is a very wise man.
Alicia Yoon [00:20:04]: I’m biased, but yes, I agree.
Kelly Kovack [00:20:08]: At what point did you sort of realize there was sort of a tipping point where you’re like, “This is working,” and really sort of go from…I mean, I think when you’re an entrepreneur, you’re always bootstrapping to some extent, but with any business, there’s usually an inflection point where like, “Okay, we’ve got this,” and then you sort of focus on what’s next in the growth.
Alicia Yoon [00:20:35]: Yeah. I would say that there were two kind of moments, one moment was more just on a continuous basis. I think from the very beginning, we had a lot of signals that showed that there was demand for Korean beauty, and now for the Peach & Lily collection, which is 100% worry-free beauty is what we call it, and you know, that came in a lot of different forms, whether it’s things selling out a lot faster than we had ever anticipated, to on opening day of our e-commerce site, like completely unable to even pack the orders, like it was really mind-boggling, and so I think seeing that momentum reassured me that even though it will take a little bit to get your business model to a profitable place, there is potential. So, there is a market fit, there is potential if the timing is right. So, that was important to kind of see throughout the process, and then I would say about three and a half to four years into the business, so about – a little more than four years ago from today, was the point where the business, from a financial perspective, became very, very stable, and then that was like the first time I felt like, “I’m breathing a little bit,” I was like, “Ah, okay, maybe,” or like, maybe two and a half years into the business was the first time I started paying myself anything.
Kelly Kovack [00:22:04]: That’s a big deal.
Alicia Yoon [00:22:05]: And I was like, “Oh my god, I’m not just paying the bills and I can give myself a little bit of a salary,” that was a big day too.
Kelly Kovack [00:22:12]: Yeah, that’s a big deal. And you have been profitable, which, you know, is I think sort of in this day and age, nothing to be taken for granted, and I have to imagine that you have been approached over sort of the past eight years with lots of opportunity to take capital, and very recently, you took your first outside capital with Sandbridge, which is a very cool partner. Can you talk a little bit about the decision to sort of go down that path, and then also what the experience was like? Because I think that a lot of entrepreneurs go down the path without really understanding sort of what it entails, you certainly had sort of a little bit of context, so I have a feeling you probably knew what you were getting yourself into and you had your husband to help you, but if you could share that, I think it would be so helpful to a lot of entrepreneurs.
Alicia Yoon [00:23:15]: Yeah. Yeah, so Ed, my husband, we work together. I’ve hijacked his life starting four years ago. We met in business school, and his from the biotech industry, and I was like, “You should also be doing K-beauty with me,” so you know, it’s actually really incredible to have a partner who’s also just, you’re 100% aligned in every way. So, we started having really great conversations starting a few years ago, actually saying, would it make sense for us to take on outside institutional funding? And, ultimately, the decision, we couldn’t make that in a vacuum where it was just us talking about it, it really depended on, well, are there the right partners out there? So, the first thing we did was actually…
Kelly Kovack [00:24:01]: Because you didn’t need the money; you were profitable, you were growing.
Alicia Yoon [00:24:03]: We didn’t need the capital. Right. So, that was – yeah, that was another really big luxury or benefit that we had, is that we didn’t need the capital, and I actually think raising money when you don’t need the capital, that’s usually the best time to do it. And so, we thought about the specific terms that would make it work for us, and so we kind of put that on a piece of paper, and you know, on the top of the list, so there were like financial terms that were important to us, and also like, you know, governance terms and all sorts of things like that, but then, there was also sort of on the top of the list, a fit. Is there going to be 100% alignment of value, of vision, of strategy? And if those things aren’t there, yeah, it’s like getting married, it’s like disastrous.
Kelly Kovack [00:24:59]: There’s nothing worse.
Alicia Yoon [00:25:00]: Yeah, you can’t…it’s just not going to work if you’re not in agreement on the big picture things, and so once we had that clear in our heads, then we started having conversations with various folks, and actually, it was starting kind of a few years ago, and at this point, we’re not talking terms with them, we’re just getting a sense of these funds and the partners who are running the funds, and what are the values of these funds, so we took the time to do that, and we kept really actually gravitating towards Ken at Sandbridge, and we had known him, actually, at this point for a couple of years before we actually even did the deal, and so you know, we just were able to kind of find that first most important part and then it was a pretty – if partners were not amenable to specific terms, then it would be a no-go, and so once you have that kind of relationship and you know that alignment is there, and with Ken, the conversation was actually very easy and very efficient, because that relationship was there, the trust was there, the alignment was there, but then also, it was a pretty open-book conversation. We were like, “Okay, we know we really like and respect each other and we know we want to do something, but let’s just like talk about the specific terms that’s going to work for both parties,” and we were just transparent about that and pretty forthcoming, and that was kind of the process for us.
Kelly Kovack [00:26:34]: So, you know, Sandbridge is also interesting because they’re relatively new to beauty. So, was that appealing to you? Because the other sort of businesses in their portfolio, there’s definite sort of adjacencies, and I think it…Sandbridge is definitely sort of smart money. Were you looking for someone that was more than sort of writing a check, that was strategic?
Alicia Yoon [00:27:02]: Yeah, so to tie into your earlier question, we had decided, you know, if we find somebody who fits all of the above, we do want to take on the capital, because we were…just you’re growing so fast, and then it actually feels like the right time to take on funding because you know exactly how much you need and what you’re going to do with it, and it’s going to work. And so, once that decision was made, that was kind of the thinking behind it, then it was thinking, “Okay, provided that all of those terms were in alignment, what kind of partner would be best?” So, the strategic fit was an absolutely no-brainer, but then on top of that, loved that Sandbridge is very focused on branding and customer first and building a long-lasting brand, and the expertise both in the fund and the network around them of true kind of outside-the-box thinking with branding, because it’s also not just a beauty-focused company but just really great brands in general, and how do you think about building long-lasting brands? How do you think about always putting the customer first? That was very, very compelling for us, and so, yeah, that smart, value-add money, is definitely just a strategic partnership beyond just like a check.
Kelly Kovack [00:28:26]: So, what are you going to do with the money? You have it, what are you going to do with it?
Alicia Yoon [00:28:32]: So, for us, definitely when it comes to skincare, I think education is everything, and really providing this robust education on all different platforms in ways that people want to consume that content, and it’s not just like content for content’s sake, it always comes down to our mission: help people transform their skin. That’s it. So, what content is going to help people do that? How do we make sure that people are engaging with it in a way that they’re actually able to digest information even if they’re like, cooking something in the meantime? And so, a lot of investment in that, and also, with our community, we’re seeing that they’re very engaged and loyal, so last year, over 65% of our revenue came from repeat purchases.
Kelly Kovack [00:29:23]: That’s amazing.
Alicia Yoon [00:29:24]: Yeah, that loyalty, and community of consumers, just want that brand personified. So, more in life, you know, in kind of non-digital like analogue experiences, so definitely investing in that, and then we have actually, until today, even though it’s eight years in, we are not international. So, we ship internationally from our website, but we don’t have any partnerships internationally, and that was very intentional, because we didn’t want to grow by doing a little bit everywhere, you want to go really deep and do something really, really well. With the funding, we’ll be able to explore international plans faster and earlier, and really devote you know, real energy to that in a thoughtful manner.
Kelly Kovack [00:30:14]: That’s exciting.
Alicia Yoon [00:30:15]: Yeah, we’re super excited about that.
