#99. Proven Beauty customizes skincare by uniting customer reviews with machine learning. We talk with co-founder Ming Zhao about building a comprehensive database of clinical ingredients that ultimately grew into a vertically integrated company producing unique skincare regimens. The Loose Threads Podcast features in-depth discussions with leaders across the rapidly changing consumer economy.

Check out the full transcript below.

Richie: [00:00:07] Welcome to The 99th episode of the Loose Threads Podcast, a show about the rapidly changing consumer economy. This episode is brought to you by Loose Threads Membership, which gives you actionable analysis, insights and events that drive growth, and Loose Threads Espresso, your energizing and high-pressure filter for consumer news—in context. We also have a newsletter that features the latest analysis of the consumer economy. Check it all out at LooseThreads.com.

Richie: [00:00:34] Joining me today is Ming Zhao, a co-founder of Proven Beauty, a company that’s using a massive database of scientific research and consumer reviews to build custom skincare products. Ming started the company with her co-founder Amy after they each had skincare needs that were going unfulfilled by existing solutions. They turned to machine learning to findings the ingredients they needed, which were often unexpected.

Ming: [00:00:55] We realized that the-data-plus-the-beauty-plus-the-product angle really has not been explored and we have something very unique here.

Richie: [00:01:06] What’s come since is a brand putting both individualism and technological skill ability at the forefront. Here is my talk with Ming Zhao.

Richie: [00:01:18] So why don’t we start. Talk a bit about your background and then we can work our way up to Proven existing.

Ming: [00:01:23] I have a business and startup background. My first job was at the Boston Consulting Group. I did strategy consulting and then worked in Atlanta and worked in India as part of some of the programs at BCG. And then went to work in private equity investing at a company called Bain Capital. Started in their Boston office and then worked in Hong Kong as well. And then I went to Harvard Business School and afterwards worked at a few tech companies including NerdWallet, which is a consumer fintech company. I led and started their partnerships team.

Ming: [00:01:58] It was actually because of my experience in private equity and finance that I founded Proven. When I was working in Hong Kong at Bain Cap, I was working long days in a foreign country and I felt that over the years I was working there, my skin had become so haggard. I had pretty much lost my youth and my soul. So after leaving that job, I was on this journey to try to rediscover both and found that it was actually harder to regain my youth than my soul. I had tried all kinds of expensive miracle-promising skincare products and nothing lived up to [its] promise. So it felt like a racket. It felt like a complete betrayal of the industry to me—someone who cares about my skin—and so many others around me. It wasn’t until I went to this skin guru who created personalized products for me that were based on who I was, my skin at the time—my specific situation did I feel like there were real benefits to the products I was using. So I wanted to make that experience available to more people and make that the norm for skincare and for other consumer products as well.

Richie: [00:03:08] There’s definitely no shortage of stuff on the market. It sounds like you put a good amount of work in, but why did you find that none of them were still satisfying the need when there are tens of thousands of products out there, one would think?

Ming: [00:03:19] Absolutely, yes.

Richie: [00:03:21] Why do you think that was? Was it a discovery problem? Was it an actual results problem? Was it both?

Ming: [00:03:25] There are actually more than 100,000 products. In our database, we looked at the entire universe and there are two problems. One is discovery. There are more than just your skin type—Is it oily? Is it dry? Or your—just a concern. Like my concern was anti-aging or hyper-pigmentation. There’s more to skincare than that. There’s so many facets to our skin and to creating long-term health for our skin. For us, we take into account more than 27 factors. So certainly what you are concerned about in your skin type but also your genetic background, your skin tone and your goals for your skin as well as elements of your environment such as the level of pollution and the type of pollution where you live—Is it smog? Is it industrial pollution?—such as the level of UV exposure you live in, such as even the harshness of the water that you drink and wash your face with every day. All that affects your skin in ways that might not be noticeable immediately, but are noticeable over the long run. So discovery is definitely a big issue.

Ming: [00:04:28] Another big issue is that as we evolve as humans, as we change, even in our everyday lives, as the weather changes, all of that affects what our skin needs. So you might have found something one month that works then—

Richie: [00:04:40] Right. For summer, but not for winter.

Ming: [00:04:42] Exactly. Or your body goes through some changes. People get pregnant, they start breastfeeding. For men, they shave their face differently sometimes and all of that will dictate different uses for different needs for your skin.

Richie: [00:04:56] I guess you have this experience, you understand the opportunity. When was this and then what were the first one or two steps you took to actually explore if this would become a viable product or company?

Ming: [00:05:07] I met my co-founder and she had her own journey into caring for her skin. My co-founder, Amy, is a computational physicist from Stanford. She actually broke the world record for the largest computer simulation when she was getting her PhD. For her, she had a specific skin condition and called atopic dermatitis and to resolve it, instead of the traditional method, she actually built herself an AI-powered database.

Richie: [00:05:34] Of course.

Ming: [00:05:35] Exactly. That scoured and collected all the scientific research and clinical research about the condition and how, from a dermatologic perspective, that could be resolved as well as all the empirical information of how consumers in chat rooms or on reviews will say, “I have this condition. I use this product. It didn’t work for me,” or, “It did.” And then she built AI algorithms to read through all of that and others to then narrow down the particular ingredient or products that would solve the issue. And that’s how she got her skin under control.

Richie: [00:06:09] Was the solution surprising to her?

Ming: [00:06:11] It certainly would have taken a long time before she got there, many years before she had gotten there.

Richie: [00:06:17] And it took how long with her process?

Ming: [00:06:18] It probably took a few months with her process. So instead of having to spend thousands of hours reading through all this and doing that research, the machines read it for her. We realized this mutual passion for this industry and for changing and improving the industry. Both are unusual approaches to it that got us the right answer. Proven is the combination of these two epiphanies of personalizing products as well as doing it based on real scientific research and data and knowledge. So for Proven, the underlying knowledge for us is the extension of the database she built. So we continued to build it over the past several years and we now call that database “The Skin Genome Project,” which we know to be the largest database on skin and on beauty in the world right now. We recently won MIT’s AI Technology Award of the Year for it. We had beat out 400 other AI companies to win the award and we’re applying it to beauty, which is really unheard of.

Richie: [00:07:22] So when did you meet her?

Ming: [00:07:23] She and I met about four years ago.

Richie: [00:07:25] Okay, so in 2014-ish.

Ming: [00:07:27] Yes.

Richie: [00:07:27] At what point did you actually say, “We should go start this as a company?”

Ming: [00:07:30] I would say in 2015 we started to expand on the database. We started to build it out. Started from several [hundreds of thousands of] reviews, a few hundred articles to now it has more than 4,000 scientific journal articles—basically all the scientific journal articles there are about skin—as well as 20 million consumer reviews. And that also was a gradual step up. The sophistication of the algorithms to understand all of this has also been improving during this time.

Richie: [00:07:57] So talk about the difference and the value that both the scientific and then the more anecdotal side provide and how those work together.

Ming: [00:08:05] The scientific underpinning comes from clinical research from universities from around the world. Amy was at Stanford at the time so she basically raided through all of Stanford’s database, which comes from all around the world, on research. And that gives us a clear understanding of, in the universe of what’s been tested, what’s been done in clinical trials, what ingredients or what combinations of ingredients prove well for different people. That gives us a clearer foundation for the universe of dermatological understanding. So anything that’s showed up in textbooks, in any of the dermatological textbooks, we would have known. And then overlaid on top, we also wanted to use empirical evidence, people’s real experiences. Now, when you and I purchase consumer products, the first thing we do is read reviews. We read Amazon reviews, we read other reviews for what people who may look like us or behave like us, how they would experience a certain product. So we wanted to allow that kind of information from as many people as possible to come into the database as well because real people’s experiences is just another side of scientific research. Scientific research has aggregated real people’s experiences. So we wanted to do that as much as possible too. In fact, most people, when they buy skincare products, they spend between 45 minutes and an hour and a half researching before they even buy one product. So we wanted to not need people to waste their time doing that research themselves and we can just let the machines do that.

Richie: [00:09:37] So the idea of online reviews being truthful and trustworthy is definitely, I would say, a question, I think on Amazon specifically. Lots of fake reviews pop up and so forth. How do you think through or account for the trustworthiness of when real people are writing, when people that hate the actual product are writing versus when bots or something are writing?

Ming: [00:09:58] Yeah, definitely. That’s a really important question and we’ve thought about it a lot. In fact, we’ve had to kick out some of the sources. I’m not gonna name names that are known to have a lot of fake testimonials or information. We’ve also built a false review filter. The algorithms can understand the semantics of language and say that this sounds very fake or very inconsistent.

Richie: [00:10:19] Or repetitive.

Ming: [00:10:19] Exactly. Exactly. So we’ve had to kick many of those reviews out of our system and the database has drawn from more than 14 different platforms, so over time you do see a pattern.

Richie: [00:10:29] It sounds like, at this point, you basically have a growing database of knowledge. You could just say, “Hey, let’s just make a tool where people can come and input their needs and we’ll direct them to the product that they want. It probably might exist. We’ll take some affiliate fee.” More of a media angle. Talk about when you realized, “We actually have to go build a brand on this and not just be sort of like a recommendation engine.”

Ming: [00:10:54] We wanted to complete the mission of using technology to improve people’s everyday lives. Specifically for Proven, when it comes to skin, we want to help people have good skin for life because our products evolve with you so that we can help you throughout your lifetime. To entrust that to current industry creators who we were frustrated with, who we already knew were not placing R&D and scientific research at the forefront of what they do. Major companies, names that you know, spend 20-times more on marketing than they do on R&D. So to entrust that mission to them would have been basically accomplishing only a small percentage of what we wanted to do. We wanted to, in a way, change an industry. And the way to do that is to be entirely vertically integrated and actually create products with experts [whom] we trust. Our products are created in partnership with the head of dermatology at Stanford University and are manufactured in an FDA-approved lab here in the states as well. We wanted to complete that entire journey.

Richie: [00:12:00] You met Amy in 2015. Talk through the priorities for that year in terms of how you were spending your time and then we can slowly work our way up to the present.

Ming: [00:12:07] Realizing our mission actually has been a process. We didn’t immediately know how we wanted to use the data or how we wanted to bring forth personalization. We just knew that both of those things made a lot of sense and helped us tremendously in our skin journey. What we first did was just we continued to build on the database and tried to find interesting elements out of it and learn what to do with it. In fact, we wanted to be entrepreneurs. We had entrepreneurial ambitions, but we didn’t actually think this was our idea. We thought this was a fun thing that we were doing on the side or helping friends know what ingredients would work for them, etc., and even mixing our own products at home.

Richie: [00:12:47] Talk more about that. I’m curious what friends were asking and what results you would give them and what other experiments you would run.

Ming: [00:12:53] I always enjoyed recommending different great things that I find, whether it’s restaurants or experiences. People did ask me about products that they would use and, initially, I would just say whatever I was using until I realized the clutch of personalization. And then I knew to not only look at what I’m using and the things that were working for me but also understand more about who they are, what their skin might be experiencing, what other factors about them, such as their skin tone, might be contributing to that. You really become interested in the topic and doing a lot of research on my own. So that, coupled with the database and being able to, at that time, send simple queries into it and then say, “These are the ingredients that are really correlated with good results and these with bad results. Really stay away from that,” was the start to being able to understand what works well for the people and then sharing that with different friends.

Richie: [00:13:42] What was their reaction when you would spit results back to them?

Ming: [00:13:44] I think for most people it’s kind of surprising because there are some ingredients that you would think are good for everybody but, in fact, many ingredients are not good for everybody. Knowing that, I think, is really eye-opening for a lot of people.

Richie: [00:13:56] And then you said you started making some of your own products as well.

Ming: [00:13:59] That’s right.

Richie: [00:13:59] Talk about how that happened.

Ming: [00:14:01] Yeah. Once you know what ingredients are good and what are bad and then you see on the market so many products have these bad ingredients for specific people, the next natural step is to then let me gather some ingredients myself that I know are good and start mixing them. And that’s what we did, Amy and I. We would sit at my dining room table. We’d have all these different vials of different colors, like purple, liquid, viscous things, and started to just try to compound with pipettes and others, products on our own. At first, we were just trying to create a product that was much better than La Mer. The ingredients in there are no… And eventually, we were creating products that were drastically better, at least from our experience.

Richie: [00:14:39] Because they’re one of the most expensive brands out there.

Ming: [00:14:41] That’s right. That’s right. One of the most venerated and we have tremendous respect for them and they’ve built something that’s an empire. We were just curious what we could do and the result was we basically switched to only using our own products that we made.

Richie: [00:14:54] When did you start using the first product that you created it yourself at the dining room table? And then when did you actually start seeing results from that? And why do you think you saw results from it?

Ming: [00:15:04] I think part of it is knowing what goes into something. It’s kind of like when you make your own green smoothie and it goes bananas, there is spinach, there is blue green algae and you just know from having read all this stuff that this will be beneficial for you. For us, part of that is that and part of it is I started getting my husband into using products as well and he used to be a completely no-products dude. In fact, at a party, somebody came up to him and was like, “Hey, are you using Ming’s products?” They were like, “Your skin looks really good!” And he was like, “Wow. In my life, nobody has ever talked to me about my skin, especially at a party.” So we knew that we were onto something.

Richie: [00:15:39] It sounds like, again, you’re still kind of experimenting in 2015. At what point do you realize, “we actually can commercialize this and take it further than just a home experiment”?

Ming: [00:15:49] I guess when more friends came to us and started to ask us about this and we realized it was not an issue that just Amy and I were having. It was an issue that many friends around us, smart people, people who are highly judicious, people who are willing to put in the work to do research. Nevertheless, they were coming up empty in terms of this particular category or a lot of their research [was] not paying off. We realized that the-data-plus-the-beauty-plus-the-product angle really has not been explored and we have something very unique here and the data itself could change the entire industry. For The Skin Genome Project, our now goal is to make it the de facto source of truth for all things in beauty. So no longer do you have to go to your cousin, your girlfriend, random person at Bloomingdale’s to ask for advice. You can come to one source of truth that has all the knowledge already encompassed in it.

Richie: [00:16:36] Friends are starting to ask. You realize there’s something here. Where are you at the end of 2015 and then working into 2016 in terms of priorities and focus?

Ming: [00:16:44] It wasn’t until the end of 2016, almost 2017 that we decided that this was the startup idea that we wanted to pursue. Amy was a senior data scientist at a major drug discovery company. I was leading partnerships at a successful startup. We first applied for some light startup programs. In SF, there’s the Nasdaq Center for Entrepreneurship and they had this light touch program, which they called the Milestone Makers program. It’s not quite an accelerator, but it was very helpful.

Richie: [00:17:16] Mentorship.

Ming: [00:17:16] Mentorship. Precisely. We got into that program and also got a little bit of friends and family funding. And that’s when we said, “It’s now or never. We should make a leap for it.” And in 2017, we left our jobs and pursued this full time.

Richie: [00:17:30] Where do you begin and start to put your energy to turn this into a real thing?

Ming: [00:17:36] In 2017, we started to try to find experts in the beauty industry, skincare specifically. Through Amy’s connections, she was able to meet one of our key scientist advisors. His name is Dr. Nick Conley. He’s an award-winning cosmetic chemist from Stanford. Prior to working with us, he already formulated more than six lines of cosmetic products. We just started to talk ingredient selection and started looking at the data more to say, “There are more than 20,000 in our database. What makes sense to be pulled out into making products?” We started to evaluate the data and started to think about products.

Richie: [00:18:16] What was his reaction to what you were doing? Because even, it sounds like, his job before was to almost do the job that the database did.

Ming: [00:18:23] Yes.

Richie: [00:18:23] Right?

Ming: [00:18:24] He was very excited. He himself was a startup founder. He has a company in the biome sector and for him, most formulation and creation processes take years. He was showing me some of these iterations that he had. They take 60, 70, 80 tries before you get anywhere and each try takes a few weeks so added up, the average production time for a large company or small company to create a brand new proprietary formulation takes 20, 30 months. When we started to dig through the data, he immediately saw the power of data to truncate that timeline because no longer are you going back to primary research from the beginning and just looking through every ingredient that you’re thinking about or how to even think about an ingredient. The data already has such an interesting and helpful starting point that he immediately saw the value in that.

Richie: [00:19:16] So he didn’t see this as something that will make him obsolete at some point, but something that would actually turbocharge his own abilities.

Ming: [00:19:23] No, he didn’t. That’s right. Absolutely. He saw the potential in it immediately.

Richie: [00:19:26] So you start talking to people like him.

Ming: [00:19:28] Yep.

Richie: [00:19:28] You’re seeking out experts. Is the goal there to put further context behind all the data just given you both had not really done that before at any sort of scale? Talk through the other goals of broadening the community of people involved.

Ming: [00:19:42] The other expert [whom] we met [whom] we were super lucky to have [met is] actually our current advisor who was the CEO of Lancôme. When I met her, she immediately took a liking to me and to the idea that [we were] working on which, coming from someone like her who’s been through entire life cycles of companies and of brands, was also tremendous. To have her approval at that time I think was another major subconscious boost for us to want to do something like this.

Richie: [00:20:11] So we’re in 2017 now. You’re starting to seek out experts. What else is happening in parallel as you continue putting this all together?

Ming: [00:20:20] Amy and I actually both became pregnant at about the same time in early 2017. That honestly put a little bit of a damper on what we were trying to do. We’re trying to disrupt an entire $400 billion dollar industry, which is the overall size of the beauty market, and here we were, unsure how we could sustain this kind of journey with a baby on the way. We had quit our jobs. We didn’t have regular insurance. We didn’t have maternal leave. So it did put us in a period of uncertainty, more uncertainty. And then we decided to push forward with the idea. And, unfortunately, Amy’s pregnancy turned somewhat dire. So she had a life-threatening pregnancy where, at any point, her life could be in danger and her then baby’s life could be in danger. So she actually had to go basically on bed rest where she was not allowed to do anything for several months. At that time, we decided it made sense to have her have the rest that she needed so we actually put a brake on the company during much of 2017.

Richie: [00:21:24] What’s going through your head during that time in terms of, obviously, caring for her wellbeing and wanting all of that? Is that weirdly energizing you more to go do this after? Is it actually just on hold? What was happening psychologically for you during that time, knowing you’re on to something, but also someone you deeply care about is not in the best state that they want to be?

Ming: [00:21:45] I would say it’s conflicting emotions.

Richie: [00:21:47] Yeah.

Ming: [00:21:48] For me, the focus was for her to get well.

Ming: [00:21:51] Of course.

Ming: [00:21:51] We can have other ideas. We can do things at other times. And then, for myself, it was [thinking]: Would it be irresponsible of me to try to be a mother and a founder at the same time? And I can’t understate the gravity of that, to try to be responsible for both. It wasn’t until we knew that Amy was fine. Actually, during her delivery process she actually literally almost died. She lost liters of blood. That was strangely a motivating point for her where she recovered out of that, her baby was fine, everybody recovered all of that eventually and, for her, she actually got more motivation to push this forward. And, for me, seeing that and seeing her being so energized, there was no excuse for me to not be energized as well. We applied to Y Combinator and we were really lucky to have been accepted. To really have that boost was probably the bigger turning point for us knowing that this may be the right path.

Richie: [00:22:48] You join a tech accelerator, which is known for the Airbnbs and the Reddits and so forth of the world. They’ve had some experiments in the consumer space. [But] I don’t think they’re really known for it, generally. It’s a very, very small piece of what they’ve done. What did you want to get out of it going into it? And also what do you think they saw that would want them to have you be a part of it?

Ming: [00:23:10] Skincare is not known to be a entrepreneur, startup hot topic. Not much technology has gone into it in the past 50 years. I would have to say, in parts of our journey, people would look at us like, “Oh, two women doing a small skincare startup,” as if it were just some side business that we should keep as a side business. And part of our reasoning for joining Y Combinator was to prove that this is more than that. This is not just a weekend idea. This is something that really could change the industry. And I think, for them, seeing the power of data, I think they also saw the potential for it to transform an entire industry from something that technology has basically forgotten for the past 50 years to something that could be brand new.

Richie: [00:23:56] During YC, what was the most exciting but also challenging moment of those three months?

Ming: [00:24:01] We had newborns when we were going through YC. So Amy and I would both take our giant packages of milk pumps. There wasn’t a specific lactation or mother room so we had to sometimes go to the bathroom, try to set the equipment up, pump milk. One time I forgot the milk bags.They come in these specific bags and you have to refrigerate them and everything. So I got coffee cups. I was walking around NYC, looking for my mentors with these two coffee cups of breast milk and then trying to talk about startups.

Richie: [00:24:29] Have they fixed that problem yet? Do they have a room? They should have a room.

Ming: [00:24:33] I think they have a conference room that is used for lactation now, yes.

Richie: [00:24:37] Baby steps.

Ming: [00:24:38] Baby steps, yes.

Richie: [00:24:39] So that was the one of the more challenging [things]?

Ming: [00:24:41] That, together with trying to build the company. Both challenging things. And knowing what to do. Amy has a data background. I have more of an investing and fintech startup background. Building a consumer company, just because it made sense to us, there are so many things that we didn’t know, So many things that we had to learn. Sometimes the hard way.

Richie: [00:25:00] What was the biggest one?

Ming: [00:25:01] How to communicate something that makes so much sense to you and that should just be so obvious to you that it should be the future. How to communicate that to everybody, to people who have not thought about this concept this much. If I had a two minute spiel with everybody then they would immediately get that.

Richie: [00:25:17] If only you could talk to them directly.

Ming: [00:25:19] Exactly. But when you’re building an ecommerce startup, you have so many words and a few images to tell that story. Telling that story is still something that we’re learning to do, how to do.

Richie: [00:25:29] Is it just you two at this point? Is there a team that’s starting to get built? How has that progressed into mid of this year?

Ming: [00:25:34] We do have a team. We’re all in San Francisco. We have a little workspace which is great. We’ve been lucky that many, actually, people have either read about us through some articles or found out about us elsewhere that many of our team members are actually inbound. So maybe it’s kind of a polarizing idea, where if you hear it and you believe it, there it is. So we’ve been lucky to have attracted many of those folks.

Richie: [00:25:59] And when you were going through YC, how many people were on the team?

Ming: [00:26:01] When we were going through YC, it was just Amy and me. It was just us.

Richie: [00:26:05] It was still two people. That’s great.

Ming: [00:26:07] Exactly. It was two women with an idea. When we came out of Y Combinator, we actually were also really lucky to have found the head of dermatology at Stanford University. His name is Dr. Tyler Hollmig, who also read about us somewhere and said, “I believe that this is the future of skincare.” And to have someone like that give us a stamp of approval, he actually then helped us formulate our entire philosophy around our products, helped us select the right ingredients based on these 27 factors about different people that help us build out the dermatological element of the algorithm. So from the ingredients selected by the data, what actually makes sense to go into different products? So that has been the work that we’ve been doing for the past seven or so months.

Richie: [00:26:48] Did you end YC with the goal of raising money? Did you want to stay stealth? How did you think through that? Because generally it can be somewhat of a launching pad for companies as well.

Ming: [00:26:57] Right. Even going through YC, we weren’t sure. We didn’t know. Should we raise money at this time? It was very early. So that’s a big difference for us. There were companies that have launched from [there] before, [that have been in operation for] sometimes years. They were 20-people deep. They had a lot of revenue, a lot of growth. For us, we were just still two women with an idea, with a database and not much else to show for it. So we weren’t sure if we’d be able to raise any money, first of all. Eventually, decided that we should push as much as we can. We should push forward as much as we can. So we did decide to raise an angel round and we were able to raise that at the end of YC, which we very much appreciate and, from there, build a team and now, over the past seven months, build our products, build our brand and we’re in the process of launching now.

Richie: [00:27:40] So talk about where you wanted to go with the products and what you thought they should be up to the point of “we actually could launch.”

Ming: [00:27:47] There was a lot of work that had to go into that. There was creating the products themselves, which for most companies takes many years. There was the dissecting. The obvious customer journey is for them to tell us a bit about them, basically answer the questions of the 27 factors; genetic background, your skin tone, your skin type, your skin goals, where you live. And then from our end, we can figure out the level of pollution, level of hardness of the water, etc. But turning their answers into something that made sense to a database and then for a database to tell us the ingredients, that entire process, for that to be seamless and basically in real time, takes quite a bit of data and engineering resources. That was something that maybe we initially underestimated actually, rather than the production side. The production side, because of the power of the data, we were able to create several dozen SKUs of product that are getting really good feedback in a seven-month period. But some of the other things took longer than we expected.

Richie: [00:28:50] What did you actually think those products would be? Because up to this point, the big focus has been on ingredients, not actual products as much.

Ming: [00:28:57] You’re right.

Richie: [00:28:57] So how do you start to build out what the SKUs are and what do you launch with from a SKU perspective?

Ming: [00:29:03] This is where Dr. Hollmig really helped us a lot. He helped us develop an entire philosophy around what products make sense. Together with the power of the data, he also has his years of clinical experience and we were able to couple that with the data. For him, he believes in using [a] few products that are right for you and nothing that is wrong for you, in which case, you can truncate your routine from however many steps, however long it takes you, to just a few right products. So basically quality over quantity. And we really believed in that as well. It’s a little bit of a different philosophy than what is currently touted by many trends. But even now, Korean skincare used to say 18 steps in the morning, 19 at night. But now, they’re going into a trend which is called “skin diet,” [for] which they do two in the morning, two a night. It’s like the pendulum is swinging this way and Dr. Hollmig has always had this philosophy. With this philosophy, we then formulated products that are just one or two steps in the morning, one or two steps a night.

Richie: [00:30:10] In terms of what matters or percentage-wise what matters, is it 80% ingredients, 20% product delivery? Is it 50/50? What’s the balance between those two? Because it also could seem that if you have the right ingredients but the wrong method, it kind of blunts the impact of everything you’ve been working on.

Ming: [00:30:28] Yeah. And I would say on both the method and the ingredients, Dr. Hollmig was a great help.

Richie: [00:30:33] What did he, and I guess by extension you, believe was the balance between those two pieces?

Ming: [00:30:38] The philosophy was bringing product and skin care [down] to the essentials. The essentials, what everybody needs, is they need to clean their skin because we’re exposed to all kinds of things during our day-to-day living. So clean your skin well with the right products and ingredients as well as care for it as you sleep at night. Moisturize it with the right level moisturization based on your own skin condition, how naturally dry [or] moisturized it is, as well as how the environment impacts your skin. And then in the morning, also care for it from a moisturization and nutrient level but also have at least SPF 30. So that was the essential philosophy we had. And then from there, from that sort of structure and mode of thinking, we then went into ingredient selection. The goal was to basically impact so much good nutrients ingredients into these products that they’re each so multifunctional that this is actually all you need. So you don’t need to spend a lot of time in front of your mirror. You can pack everything into a few products which actually was quite a formulation challenge. Dr. Tyler would help us think about ingredients and we will work with Dr. Conley to then actually make those, squeeze them into a few products. And that process, that back and forth was more challenging than usual because we were trying to create very multi-dimensional, multi-functional products.

Richie: [00:31:57] Right. Do the ingredients work in a way where they can overwhelm or cancel out each other?

Ming: [00:32:01] That’s right. Absolutely. There are synergistic effects among ingredients. There are also contraindicated effects. Some examples would be vitamin B, niacinamide and vitamin C, actually; If you put them together, they fight each other and they make each other basically nullified, possibly even with bad results.

Richie: [00:32:18] It’s a huge puzzle.

Ming: [00:32:19] It’s a huge puzzle, but it’s also really interesting to know. That is why we actually launched the products as a three-product set because there are certain ingredients that we definitely want you, as an individual, to have. But one had to be at nighttime, one had to be in the daytime, because these ingredients fight each other. So all of that sort of came together as one philosophy.

Richie: [00:32:41] And so the three are a moisturizer, a cleanser and what was the third?

Ming: [00:32:45] A night moisturizer, which also doubles as a night serum because there’s so many good things in there and a cleanser with the right acids or no acid, depending on your skin and the right botanicals, and a day moisturizer which also has a lot of anti-pollution ingredients that protect against all kinds of pollution; UV damage, digital pollution, like the blue light and HEV from your digital devices that we’re all just attached to so much.

Richie: [00:33:12] You mentioned before also trying to figure the brand out in terms of you have a very technologically-based thing that doesn’t always communicate when attention spans are fickle—[and it’s] probably generous to call it that. How do you think about starting the messaging and the aesthetic of how you sell this thing?

Ming: [00:33:28] Amy and I were not disillusioned that this was not our strength. Brand is not our strength. We’re more rational, logical people and the brand side is very much, I would say, more right-brained than we were naturally. And we knew that most of our customers would be people who overachieve in every era in their lives, but they don’t want to spend all their energy and time thinking about what to do for their skin. So the philosophy we wanted to have is that we will overachieve for you. We’ve already overanalyzed this entire industry for you so that all you have to think about is just tell us a bit about yourself and then your life changes. Tell us about that and then we’ve got your skin taken care of. That was the underlying thinking we wanted to communicate to our customers.

Richie: [00:34:11] And then in terms of the aesthetic or the look and feel, how did that come together?

Ming: [00:34:16] Yeah.

Richie: [00:34:16] And what did you want this to look and feel like? And also I guess I should ask, in terms of the customer, did you think this would go largely towards a female audience? Did you want it to be kind of gender neutral? Because that also would obviously play into these questions as well.

Ming: [00:34:28] Definitely. We had a few beta trials with our products and during one of the betas, at that time, we had a pink website, pink bottles because we assumed it would be for a female audience. But in fact, a quarter of our purchasers were men. And that was a huge lesson for us. So when we really had people to help us build the brand, we immediately knew that this had to be unisex. Our products, our philosophy, how you experience the brand is unisex. It’s still attractive and sexy. You look at the products and they look amazing, but it had to appeal to both genders.

Richie: [00:35:04] And then the other part of this right now is price because we talked about La Mer before. How did that evolve and where did you end up from a price perspective of where you wanted to land in terms of who this would be accessible to?

Ming: [00:35:14] Yeah. Back to why I even wanted to found this company, when I worked with a skin guru to have my personalized products, they cost me thousands of dollars.

Richie: [00:35:23] Annually?

Ming: [00:35:23] At one time. Not annually.

Richie: [00:35:25] How much were you spending per year?

Ming: [00:35:27] The products that were personalized would cost $700 dollars a bottle. That would last maybe two months or something.

Richie: [00:35:34] That’s crazy. Thousands of dollars year.

Ming: [00:35:37] Multiple thousands of dollars.

Richie: [00:35:37] You were playing with the top tier of that field, which was effectively inaccessible to 99.9%, let’s say, of the population from a cost perspective.

Ming: [00:35:48] Yeah and honestly, I was desperate at the time. For me personally, in my right mind, I would also not do that. At the time, I was very desperate. I wanted to make that experience and that kind of result available to more people.When we launched the products, we knew that it had to be at an accessible level. And from our data, we know that the average cost of skincare products is around $50.

Richie: [00:36:11] Which even seems high, right?

Ming: [00:36:11] It does feel high, right?

Richie: [00:36:14] Yeah.

Ming: [00:36:14] From our perspective, we wanted to come underneath that. We wanted to make it more accessible. But at the time, we were fighting against another consumer sentiment, which is that if a product is somewhat at a premium, it’s not good quality. So it’s two things that you have to balance. As we launch, we can’t launch at a completely inexpensive level either.

Richie: [00:36:35] So where did you end up from a price for that three-part bundle?

Ming: [00:36:38] Right now, our products, for our three-product bundle, which lasts you about two months, it’s $145.

Richie: [00:36:44] You’re generally going to spend under a thousand dollars a year on a regimen basically versus what you were spending on a single bottle, so to speak.

Ming: [00:36:50] That’s right.

Richie: [00:36:51] If a bottle costs $750, are you paying for that person’s time? Is that just insane markup? The actual cost structure of that purely custom, one-off product, if you were to justify it, what was going into it [do] you think? To make that bottle $750 or whatever it was?

Ming: [00:37:07] It’s the philosophy of personalization. It’s also the fact that it really can’t be scaled. Coming up with that philosophy, as well as the hand labor. It’s kind of like having a pair of handmade Italian shoes that [are] in the high hundreds.

Richie: [00:37:21] Right. Thousands of dollars.

Ming: [00:37:21] Exactly.

Richie: [00:37:21] So I guess we’re kind of working our way to 2018. Do you set a launch date or do you say, “This thing has to get out”? Because you’ve probably spent—and then obviously there are reasons out of your control in this—more time developing a brand than probably most other brands launching today. And obviously the science makes sense for that, but were you getting restless? How were you thinking about, “We have to get this thing into the public?” And how you go about starting that process?

Ming: [00:37:46] I would say we didn’t actually have real branding people in the team until July of this year. From that time period until now has been the work on the brand. And yes, as you mentioned, a lot of work has gone into the scientific element. That’s just who we are and that’s part of why we wanted to found the company. We just launched on ProductCon this week and yesterday we had our influencer launch as well. Yeah. So this is the week we’re finally launching and it’s super exciting to be bringing something that you’ve been thinking about for so long, finally, to the public. But we already know from some of the beta experiences that people really love the formulations that we make and we get thank you emails on a frequent basis. And that’s what is actually really exciting, to see people use it and know their reactions, even more so than an official launch itself.

Richie: [00:38:38] Right. Because you’ve had products in different beta tests and with people for a few years at this point almost, right? In various iterations?

Ming: [00:38:43] In various iterations.

Richie: [00:38:44] Right. And this is now the public.

Ming: [00:38:47] Yeah. So we started working with Dr. Hollmig earlier this year. So our real products, we started to test about June or so—[that] time period. So we’ve seen the integration of our products for the past five, six months, of our actual products with the philosophy that we wanted. We’ve seen the improvement as every iteration comes until, now, we’re really confident in our products. I wouldn’t count the things that Amy and I were making on our tables real product. That wouldn’t be fair to the company.

Richie: [00:39:17] But the beginning steps obviously played some role in getting you to this point.

Ming: [00:39:21] Definitely, yes.

Richie: [00:39:22] I’m curious to talk a bit about the production side in terms of—it’s one thing, as we talked about, to have a database. It’s another to actually turn that into products on paper and then it’s another thing to actually make that into a product that someone can actually put on their face. Did people tell you producing these would be insane or impossible? Did you actually think it wouldn’t be that bad? How did that process go about finding in the lab and in the U.S. and actually spitting out a product on the end after these things live digitally for so long?

Ming: [00:39:49] That process—the entire industry operates in a certain way and they’ve always operated a certain way. So most of the manufacturers that we talked to had super-high minimum quantities and didn’t want to produce the number of SKUs, which is really high, that we wanted to. So it really took a long process before we were able to find the lab that we’re working with now.

Richie: [00:40:12] Are you counting each custom product as a SKU, basically? Because it’s its own formulation.

Ming: [00:40:17] Exactly.

Richie: [00:40:17] So this, to them, was stupid.

Ming: [00:40:19] Exactly. They would count it as a SKU regardless of what we were thinking about it.

Richie: [00:40:23] Because they want to just make the same thing over and over and over again.

Ming: [00:40:26] Exactly. In very high volumes.

Richie: [00:40:27] Yes.

Ming: [00:40:28] It wasn’t until we found our current lab, who also knew that this was not an easy or convenient expedition. But they really believed in what we’re doing. They really believed that personalization could bring forth the future of skincare and they wanted to be on the forefront of that. So that’s why they were willing to work with us.

Richie: [00:40:47] Is it domestic from a convenience [point]? It’s great that it is. Would you have looked in other places around the world to do this. What role did that play, if any?

Ming: [00:40:55] Our supply chain, the sourcing of our ingredients, manufacturing. It’s super important to us. In fact, it’s the most important thing to us, that we have good products that attracts people to come back to us, month in, month out, year in, year out. We’re not going to try to skimp on that by going offshore and to different countries. The U.S. does have some of the most stringent regulations on production and we’re working with a lab that’s CGMP and all that and all of that was really important to us; product safety, product efficacy. So we didn’t look elsewhere.

Richie: [00:41:29] It’s interesting, going back to the brand communication piece a bit. There’s obviously so much happening in the wellness space right now, in the beauty space. It would seem, effectively, your product is purely predicated on efficacy at the core. What have you learned or seen from the beta results and also, I guess it’s only a few days of launch at this point, about how that message resonates or has evolved to better resonate with people?

Ming: [00:41:52] Yeah. You bring up a really good point. The science, the research is at the core of what we do and we do personalization because it’s more effective, not for the sake of personalization itself. So that’s absolutely true, what you say. With that, it does bring a set of challenges because this is skincare products that you put on your face. It’s not plastic surgery. You can’t expect overnight results or drastic, drastic changes. We do believe that with continued use, you will see the best skin that you’ve ever had. But nevertheless, it’s product that is externally applied. So the communication has to be done in a certain way where people trust the science and the thinking and the data that’s gone into it and reserve a special sliver of hope because of that.

Richie: [00:42:39] In terms of how big this gets from a product perspective, you have three, call them, “master SKUs” right now. Do you see that rapidly growing in the future or do you want to stay consistent? You also have an interesting mentality of “less is more,” but also you would, at some point, probably have other things to add? How are you thinking about that assortment growing over time?

Ming: [00:43:01] Yeah, it’s a good question. We have three major categories right now. From the customers [whom] we’ve so far acquired, they’re already asking for other SKUs. We’ll definitely listen to them in terms of thinking about what makes sense going forward. But definitely, we want to give our customers what they want and what they feel like would be more helpful. So we’re already working on those as well.

Richie: [00:43:23] What’s been the cheapest and most expensive lesson you’ve learned building the business?

Ming: [00:43:27] Oh, interesting. I think the most expensive lesson is work in progress, working progress. In our journey thus far, we’ve had to decide, do we come out with just the plan A that we’ve always wanted, but it might take a long time, or just come out with a plan B while working for plan A? But what we didn’t know until now was that, in pushing for both plan A and plan B, you actually double your effort and we should have just only pushed for Plan A even though it takes some time. So that has been, I think, the most expensive lesson.

Richie: [00:43:58] And was Plan B an abbreviated version of this?

Ming: [00:44:01] Possibly. An abbreviated, easier version in some way.

Richie: [00:44:05] Gotcha.

Ming: [00:44:06] I think the cheapest lesson—I’m not sure if cheap is the right word, but I think building a customer experience and knowing how to serve them in a timely manner has been a major learning for us through our betas. We knew that to some extent subconsciously, but we just didn’t know how important that is. And now we’ve actually built out a customer experience team [that has] the right attitudes towards responding to customers in the right way and that has been a tremendous help to the company overall.

Richie: [00:44:35] There’s a lot of money starting to flow from a venture perspective into this space. I’m sure you saw Prose just raised $18 million dollars to do this in the haircare area. How are you thinking about how big you want to get, how much capital that takes and then how those decisions basically affect the outcome of this company? Whether it’s something you want to or have to sell, whether it’s something you want to remain independent and work on for a long time. How do you, especially with your background, think about all those different variables?

Ming: [00:45:02] Yeah. We’ve been taking it one day, one week at a time. We do have a mission of changing the entire industry. I think that will take some time and some capital. I do think we will go down the path of raising additional capital based on good metrics and then continue to grow that way. In terms of the company, the database and the approach that we built, we actually want to take into other categories as well. In fact, Amy has already built a database for several other categories including baby care, including body care, vitamins and supplements. We want to take this exact approach with Proven. Also, similarly, partner with leading experts in those particular areas and create a platform for personalization in other areas as well, in a way, creating a much smarter, more interesting CPG company. So that’s the path we’re going down and we’ll probably try to do that for some time.

Richie: [00:45:53] Yeah. And then going into next year, what are you most excited about and what’s on the horizon?

Ming: [00:45:59] We’re really excited about our January campaigns of “new year, new you.” We’re thinking it really fits well with what we’re doing. We are looking to strengthen our customer community. We’re trying to figure out ways to best serve them and be their pocket cosmetic dermatologists [who] can care for their skin in different ways. Figuring out how that can happen, how best to engage our community is our number-one goal.

Richie: [00:46:23] Anything else we didn’t talk about that you want to?

Ming: [00:46:26] No. Thank you for the great questions.

Richie: [00:46:27] Awesome.

Ming: [00:46:27] It’s been super interesting.

Richie: [00:46:28] Thanks so much.

Richie: [00:46:33] Thanks for listening to the Loose Threads Podcast. You can read full transcripts of the podcast and join the newsletter at LooseThreads.com. Feel free to leave a review on iTunes—we always appreciate it. Thanks to George Drake, Jr. for editing this episode. The 100th episode is coming up next and we hope you tune in. Thanks for listening and talk to you soon.