Tatcha: Vicky Tsai (July 2020)

0:06 Hey everyone, it's Guy here. So this week we're bringing you a really great episode from our archive. It's the story of Vicky Tsai and her makeup brand, Tacha. As you'll hear, the company was pretty slow to launch. In fact, Vicky ran it from the garage at her parents' house for seven years and took no salary. But she stuck it out and in twenty nineteen, Tatcha was acquired by Unilever for a reported half a billion dollars. This episode first ran back in July of twenty twenty, and it's a great one. Hope you enjoy it. We ran out of money over and over and over again.

0:43 I couldn't afford a salary, my partner couldn't afford a salary. I couldn't afford rent anymore, and my parents had bought a h place in Um near the airport at that point. And they let me m move into there.

0:56 And like we had Just really, really incredible high end clientele and um And I was I was working on my mom's garage.

1:06 Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements. They built. I'm Guy Raz, and on today's show, how a trip to Japan and a meeting with a geisha inspired Viki Tsai to launch Tacha, a line of skincare products that almost nobody thought was a good idea. Until everybody did.

1:50 So, as you've heard on this show. Really good ideas often come from solving a problem that you and other people have. And of course, you can spend years solving that particular problem in just the right way, obsessing over countless designs, doing mountains of research to find the perfect fit between what you made. And what the market wants. But sometimes ideas just sort of reveal themselves, even when you're not looking. And that can often happen when you're visiting a different country.

2:24 Like Gordon and Carol Siegel, who came across Scandinavian furniture on their honeymoon and went on to build Crate and Barrel. Or Susan Griffin Black, who encountered lavender oil on a visit to Covent Garden in London, and came up with the body care company EO Products. Or Blake Mykowski, whose trip to Argentina exposed him to a type of espadrill shoe that he'd recreate. As Tom's. And for Vicky Ty Our guest today

2:53 The pivotal trip for her was to Kyoto, Japan in 2008. She went there to kind of decompress after leaving a job that left her feeling pretty bad about herself. And it was on that trip that Vicky came across the nearly impenetrable world of the geisha. And in particular, the natural beauty products that the geisha used on their skin to make it look smooth and flawless. And when Vicky started to research the idea of maybe introducing some of these products to American consumers,

3:26 She heard no from almost everyone. People in Japan told her that the skincare products used by the geisha were old-fashioned, the kind of stuff your grandma might use. And in the US Beauty experts told Vicky something even more disappointing, that Americans weren't even interested in beauty products from Asia. But it turns out

3:48 They were Though it would definitely take years for Vicky's brand, Tatcha, to gain traction. And much of that time? She worked out of her mom's garage, scrambling to pay her team and pitching her skincare products on QVC. Mm.

4:04 But by 2018, Tatcha was doing 70 million dollars in sales, and a year later, It was acquired by Unilever for a reported half a billion dollars. Now Vicky actually got her start in the beauty industry working for her mom who ran a small cosmetics shop in Houston. Both her mom and dad came to the US from Taiwan. And after high school, Vicky went to UT Austin before transferring to Wellesley, the women's liberal arts college in Massachusetts.

4:34 I loved my experience at Wellesley, but it was very, very small. Um U T Austin was huge school and I was I was used to my independence and um used to Big classes and lots of different kinds of people. So when I went to Wellesley, it it's a very small

4:52 boutique experience, tiny liberal arts college, and it's women only, um, which I understood Theoretically, but but it wasn't until I got there where I was like, Where are the guys But but I guess while you were there, um You Met

5:06 this guy who would eventually become your husband named Eric that you The story, right, is that you actually really Kind of p pursued him. that actually at the beginning he was

5:19 Not the kind of person who would ask someone out, I guess. Is that the story? Yeah. And it was the weekend before school started at Wellesley. And um it had hit me that there really were no men there. Um and uh they had this dance called

5:38 Tower Court. Mixer. And um Men from Surrounding schools.

5:44 Would come in. For the dance. And um I saw him And He wasn't at all interested in me and you know I kind of kept on doing laps around the dance floor with my With my new girlfriends.

5:56 And they kept on getting plucked off one by one. And then Every few months. I would Try to get his attention and

6:04 Email him and call him. But he just wasn't interested. So what got him interested? How did you eventually You know. Get him to agree to go out with you.

6:16 I'm not totally sure. I think I just wore him down. We've been together over twenty years now and um I just kept asking. Wow. So um Uh I guess after after graduation, both of you

6:32 Uh moved to New York to work in in finance and and both of you Wind up I think at at Maryland, right? Yeah. Mm-hmm.

6:40 Okay, so both of you are working in lower Manhattan. Yes, we were. And um And and you guys were there on On September eleventh, two thousand one, right? Yeah, we were in one of the world financial centers, um, that's actually connected to the trade centers via a land bridge.

6:57 And so I was on the trading floor, which was the seventh floor of that building, and my husband was on the twenty sixth floor, which is where he worked of the financial centers. And um I was in a a meeting When the first plane hit and there was no windows in the meeting room. So we we felt the rumble and we heard it, but we didn't know what it was. But my husband when um he heard the first plane hit

7:22 he went straight to the windows to see what was happening. Um and he actually watched the second plane. Come in? And bank and he watched it. Um

7:32 At that point. I was back on the trading floor we had gotten out of our meeting. And um When we heard the second plane hit.

7:44 We didn't know what was going on and nothing came On over the loudspeakers yet, but I remember Getting up. And walking seven flights down and

7:55 Actually being one of the first ones to leave. The building. Um And I I'm ashamed to say that it didn't even occur to me to call up to my husband to tell him What was going on I just split. And then I I waited outside for him.

8:09 On the sidewalk. And um I realized we were never gonna find each other because as as people start flowing out out of all the buildings it got uh pretty chaotic down there. Um and then and then the people were jumping. And I couldn't I couldn't watch it.

8:24 Any longer. So Um I Walked back to our apartment, which was in the West Village. And I thought

8:32 he's gonna know that we can't find each other here and he'll he'll come find me and he'll probably beat me there because I have heels on and he's fast. He was a marathon run at that point. So then when I got home and he still wasn't there, that's when I realized like shoot, he was looking for me. And then I had no way of getting a hold of him because the the mobile phones weren't working. Well. Both um Both the towers fell before he got home.

9:01 So there is a moment. There was a moment in there where I thought he was gone. Well. How long? before you saw him, before he got home.

9:12 It must have been it must have been minutes. Not not too long, but it was enough for me to be watching on the T V And see the power towers fall. Um It I I couldn't even quantify. How long?

9:23 But then he came up after and he was okay. When that happened, um I guess both of you decided You need to kinda rethink what you want to do with your life that maybe being a

9:36 A traitor in On Wall Street wasn't what you wanted to do. Yeah, I don't know if I don't know if I came up with that immediately, but I knew I didn't want to be there anymore. Um He got sick with an autoimmune disease.

9:51 Right. And it was not related unrelated to Well you know, we'll never we'll never really know. Um he never had any symptoms before that. He had run I think five marathons in two years prior to that. Super healthy, captain of the crew team, and then all of a sudden he couldn't move, he couldn't keep food down. He lost Forty pounds. Oh.

10:09 Wow. How long was he getting treated for it? About three years. Um, so we would spend the weekends In the emergency room. Um eventually we did go to the Mayo Clinic. Uh he had some procedures

10:22 They they didn't know what it was. Towards the end they were thinking about Remekade. uh which is a pretty strong um Treatment. The side effects included, you know, things like infections of the nervous system. I mean pretty horrifying stuff. And we decided to just pull the plug on all the treatments. Um

10:39 Stop with all the the medicine and the steroids and just quit it and see what happens. And thank goodness he got his health back. Wow. So for three years he was struggling with this autoimmune disease. You were spending your weekends emergency rooms, it must have just been Totally. Like debilitating and scare and scary.

10:57 Yeah. It It should have been. Um, but I think what I did at that time and I only realize it recently is I sort of I started to Almost disassociate.

11:09 I didn't want to be in Manhattan anymore. I didn't want to be It ground zero. I didn't I didn't want to have to go there every day. Um Especially because when The temporary trading floor in New Jersey was moved back to um ground zero uh right before Christmas time.

11:23 The only thing that I could see was out the window, which looked straight at the hole that was left. Yeah. And um You could always tell when they found a body or body parts because it it would be covered with an American flag. And that was my only view. Um For months. I couldn't see anything but that. And then I would go home and my husband would be sick. And so I actually just went really numb.

11:45 And um I just went on complete autopilot and I started planning how do we get out of Wall Street, um I just went into planning mode. Hm. And I guess eventually um

11:57 You did get out of New York. You you guys both Move her to Boston where you went to um to to business school, to Harvard Business School, right? Yes. And and right that while you were there, um, I guess I guess you could kinda get your first experien in the beauty industry, um Like you got an internship with Procter Gamble?

12:15 Yeah. So I was actually working on um SK Two, which is a Japanese skincare brand that they own. And um I treated my face like a science experiment and gave myself acute dermatitis. Wait, you treat your f when you say you treated your face like a science experiment you meant you you you were trying all the products that you were working with? Uh the products that we were working with, but then also um to do competitive benchmarking, I would go to the other luxury brands, so La Mer and La Pruri, doesn't matter, across the board I just would got a chance to to buy a lot of them, to use a lot of them.

12:50 Um to try to craft uh S K two strategy and it was at that point that I I ruined my face. You got you s you got acute dermatit what is acute dermatitis? It's when the barrier function of your skin has become disrupted and so things that would typically not irritate the skin suddenly start irritating it because it it's getting into the skin itself. So it looks like bleeding, blistering, scaling on my entire face, including my lips and my eyelids. It was very painful. Wow. And you had never had that before? Mm mm. Never.

13:21 And once you have disrupted the barrier function of your skin, after that it's not able to effectively keep things out. And so anything after that k can start irritating your skin, so detergents in my pillowcases or fragrants or my you know shampoos that had traditional ingredients in it. Um it was everything. If when the spring came pollution, whatever, I just It would freak out. It's like the the plagues in ancient Egypt. Like first there's nine eleven and then your husband's autoimmune disease and then your dermatitis. We're we're only into two thousand four here. Oh yeah. We didn't even get to the fun stuff yet. That's right. Wow. So you guys were dealing with a lot of stuff. How were you how did you

14:01 Eventually. Get it did it just go away on its own, or how did you eventually bring it under control? Um I Had it from

14:10 The Summer of business school. So between those two years, so I had it my entire second year of business school and then I had it two years after that when I graduated and I worked for Starbucks. So After business school we we moved to Seattle.

14:23 My job was to launch Starbucks's consumer products business in China. And I was flying all the time through Japan. There were not direct flights between Seattle and Beijing at that time. And the only thing I could put on my face that didn't irritate it was aquifore. Yeah.

14:41 Which you know, you put on uh babies butts when they have diaporosa. Um, but it it leaves you looking kinda greasy. So when I would go to China via Japan, I would pick up these blotting papers that I found in Japan that I couldn't find in the U. What are blotting papers? Oh, I'm sorry. Yeah, that's a great question. It's a piece of paper that is made out of um there's various kind of materials. The ones in the US are made out of cotton. The ones in Japan are made out of um a certain type of leaf. And you press it to your skin when it's oily and it lifts off the oil, but it won't um disrupt your makeup or or take any moisture from the skin.

15:17 And that helped. It helped. So you got the blotting paper. You go to China. Uh, you're working for Starbucks, which sounds like a pretty amazing job. And was there like a Starbucks craze in China already at that point? Like were people waiting in line to get their Starbucks and stuff? I don't know if there's lines, but it was already a a very p popular and admired brand. Got it. Okay. And your job is to uh is to Blanche.

15:44 What in in uh Starbucks? It's actually Frappuccino. Frapuccino, Fappuccino. So so I I I I I read a story and I don't know if it's entirely accurate that um You know, you were grinding away at Starbucks. You were just working really, really hard and going back and forth, and you're really proud of this initiative and then I guess it was time for you to get your annual review and it was like

16:05 meets expectations. That was what what is said. You do do your research on that. And and that that really hurt your feelings. Like you were really upset by that. I was offended. Honestly, I Would go forty days straight without taking a day off. I would fly over the weekends so that I wouldn't miss any time and be back in in the office by 8 a.m. Monday morning. Um the timeline for the project was extremely compressed.

16:34 I was a team of one with no manager. And in the middle of all of that, I broke my arm. And I had a I um all the way up to almost my shoulder that I had to wear for months.

16:48 And I missed zero days of work. Um and it ended up being a very successful launch. Um Howard was super happy with it and had me present to his board of directors and um I had a VP in my group who I had very little Yeah.

17:06 And at the end of the year he gave me my performance review and it was meets expectations and I just thought This is not a place where I'll be successful, even though I have so much admiration for Howard and the company and the brand. Yeah. Um so I left. Wow. Meets expectations. Yeah. Phew. So you you left Starbucks.

17:26 Yeah. And then I was recruited out to um Bay area to head up marketing for a sustainability startup. And then Howard Schultz found out and he called me on my mobile phone. And um

17:41 asked me to come in and and meet with him. So I went back to his office and it was the the week that my furniture was you know already on a truck to to San Francisco. Wow. And he kept on being like why? Why would you go? And tell me what you want to do and t tell me what job you're interested in. But I had a weird loyalty To the

17:59 Sure. Did the VP who gave me a meets expectations review. So all I said to Howard was Oh, you know, I just don't fit in here. Um So if I could do it all over again, Howard I left because I got a crappy review that I did not deserve. No, I mean of course like and and when you're like wait a minute, I've worked so hard and somebody else is You know, recruiting me now. Um it makes sense. So you went so you you got recruit by this this other company. And what what was the company?

18:27 It was called Well, it eventually became called uh Good guide. It's very hard to say. Um Good Guide. Good guide. And it brought me to Berkeley. It was a few scientists out of Berkeley um and they wanted to create sustainability ratings for consumers by scraping the internet. So that a consumer could plug in their values. You know, I care about I care about gay rights, I care about you know animal testing, I care about carcinogens, but I

18:54 I also want to Shampoo for curly hair. And be able to check all these things off and how have it Pop out. A recommendation.

19:02 They were really ahead of their time. I give so much credit for that. Just as the iPhone's coming out, so pre app. Really and yeah. Mm-hmm. It was married at this point. You guys did in between you did get married. Yes. We were married. We still had a house in Seattle and so I picked up and I left so quickly that I moved here I moved to To the Barry alone.

19:26 Got it. Okay. And and what was your what was your job at that internet startup? What were you t tar tasked to do? I was their first business hire, um, and so my job. was effectively to come up with a launch plan for them as well as you know a marketing strategy. And so I was with them for only I think Maybe four months um so did you I mean so you four months and in and did you have a plan when you quit? Or did you just say I'm I'm I'm gonna walk I'm gonna step aside?

19:58 You know, I think it it dates back to Nine eleven and the experiences there, but I was becoming increasingly impatient with spending the hours of my waking life doing things that I didn't believe in or if I believed in but it just didn't feel like the right fit or the right people. So I typed up a letter, a resignation letter, and I drove into the office and I handed it to them and I told them that I

20:22 I very much respected what they were doing, but it wasn't the right fit for me. And I tried to leave rather elegantly, but um One, I was crying because I was so lost. And then two, I had brought this Big clunky. Uh chair with me.

20:38 And I was trying to take the chair out. Like an ergonomic chair. Oh yeah. And then so when I left I had to take the chair with me and and I couldn't fit it in my car on the way out. And so I had to actually call up someone in the office and have them help me compress the chair so I can close the trunk and drive away. It was the m the messiest resignation. It's humiliating. So you're like four months in and you're out of work. Did you Did a part of you kind of regret leaving Starbucks at that point? Or does a part of you think, like, God, what am I doing with my life?

21:13 Oh yeah. I I thought to myself, Howard Schultz call me my cell phone and offered me any job that I wanted at Starbucks, and now I am unemployed, standing in the street crying with my chair. In a different city than my husband, um'cause he was up in in Seattle. Yeah. Mm-hmm. And I definitely was thinking about all the debt that we had because we had two business school debts Plus a mortgage in Seattle, plus a lease for an apartment in San Francisco.

21:42 Um And my husband had undergrad debt on top of that, and I just remember thinking I've really made a mess for myself. Yeah, I mean, you probably had hundreds of thousands of dollars in debt. I is probably About six hundred thousand at that point. Mm.

21:56 But then now this is two thousand eight. Yeah. Which is just the the beginning of The Great Recession. What was your w what did you what did you want to do immediately? Did you want to like hide in bed and put the covers over your head? Like what what was your plan? Um

22:12 Well I uh Told my My landlord that I was not Working

22:19 And she let me Help be the almost like the super for my building. Oh and um rent out apartments for her in her other buildings for four hundred bucks a pop. Had you and and was that was that Pretty good, was that enough to kinda keep you going?

22:32 Um it w I worked about four jobs at that point. That was one of them. Um I think the only thing that was interesting about that was Oftentimes. the business school types when they move to San Francisco will live in the marina. So when I was out there

22:47 It was not uncommon for me to see my business school. classmates. Um and they would be like, Is this your apartment? And I was like No I'm like, why are you renting it out? And I'm like,

22:59 For the money. They would give me this look of pity and confusion. Um But it didn't matter. So you've left the job at the start up. And you're kind of

23:11 doing a bunch of different things to to make money. And And then I guess you At some point took a trip to to to Kyoto, to Japan. Just just to go visit? Like was there a reason why you you went to Kyoto in two thousand eight?

23:26 So I was unemployed, I still have dermatitis, I'm still using uh aqua for my face. And I ran out of my blotting papers. Um, I tried to find those botting papers around in the US and they're not available. They There's different kinds here, but not that kind. And so I called up my friend from Starbucks Japan and I asked her where to find

23:47 And she said they're actually from um Around Kyoto and they come from Gold Leaf Artisans. From gold. Gold Leaf Artisans.

23:58 Mm. She said they're they're hammering papers. They're beating papers. And I was like, What are you talking about, Tomoko? And I I didn't really understand what she was saying, but I I thought the whole thing was so fascinating and I felt drawn to travel. I think I think I was trying to find myself. So I just picked up and I I went to Japan. Alright, so most people wouldn't just go to Japan to get a fresh batch of blotting papers. I have to imagine that you're thinking

24:25 These work really well for me. I wanna go check them out and see if they're maybe I can I don't know, do something with them in the US. I did not have a commercial idea yet at that point. Um I felt Broken. Hm.

24:40 We had had a pretty rough first ten years of our adult life. And And pretty rough as relative. I wouldn't say that it's no rough. No, no. You you own that. You have. You get to you get to say that. Um you know I just I felt Like

24:55 I didn't believe in anything anymore. And I questioned my value system and I questioned What I had been chasing my whole life. Because my parents is first generation.

25:06 Asian immigrants, you know, it's a very clear equation for success. You go to an Ivy League school, become a doctor or lawyer. And then make your parents super proud and make their sacrifices worth it. Yep. Um and I had sort of veered off every one of these paths. And I just started traveling and I I I think like a lot of people I was traveling to find myself. And when she said Kyoto, there was something about it that drew me even though I had never really spent significant time in Japan before. I knew nothing about Japanese culture because I'm not Japanese. But I just felt drawn.

25:41 So I went there. And um what happens when you get there. Did you get your blotting papers? When I got to Kyoto

25:50 Um I went to um the artisans who are a couple hours outside of Kyoto and when I Went to the workshop there, all they make there is gold. And there's gold Everywhere. There's like

26:02 There's gold on their eyelashes, there's gold in their clothes, just like it's like a mess of gold. And this is gold leaf for like art for like paintings and decorative works. Mm-hmm. In Japan, things that are precious are often leafed in gold, including um the golden temple. In Japan. Or basically. For centuries.

26:20 Bl blotting like blotting paper in Japan came from these gold leaf artisans who were using it to hammer Gold into into You know, thin sheets of paper. Exactly. So gold is soft. And what they would do is they take gold paper, gold, paper, gold paper, gold paper, and then these massive hammers made out of like stones. And um it protects the gold during the hammering process because gold leaf is only a few micrometers in thickness. So it really has to get hammered down to almost nothing.

26:48 And so this paper would get hammered with the gold and it would protect the gold. And then when they were done w hammering The hammering paper would get thrown away. So how did they figure out that this is a p this paper that you were that they were using to hammer gold into into leaf.

27:05 would be useful on human skin. That was my question, because it that's such a weird leap. And so they they actually said uh you would have to ask a geisha or a kabuki actor because they're the ones who've been coming around getting them at the end of the day. Um And I was like, Can I meet one? They said yeah. And so they introduced me to one, which is crazy because Well they they like got you in touch with some with a geisha?

27:31 Mm-hmm. They introduced me, um, to a geisha that they knew and they helped arrange for me to meet her in a tea house either later that day or the next day. Wow. And I had a translator with me named Uco who's wonderful and um A beautiful

27:52 Unreal Geisha walked in and I was just Completely beside myself. I was pregnant. Um

28:02 I was trying to sit on my knees, which I'm not very good at, and I was sweating and I kept sliding off of my legs because of the sweat. And it's Just the picture of perfection in wrapped in kimono. Um no sweat, never had to budge, never broke character. I just remember thinking, I'm a hot mess, but you're amazing.

28:22 Was she in in her uniform? With makeup on and uh she was in full performance. Make up and and uh chimon. Alright, so you meet this woman and and you start asking her, hey

28:37 Tell me the story about this blotting paper. Yeah, and honestly she didn't have a great answer. She just said I don't know, we always knew that if we went and we used it before we put on our makeup, it would help um create the nice canvas for makeup and if we use it after it would keep our makeup fresh. But she didn't have a lot to tell me about how that leap happened from one industry to in the next. But at the same time I was So enchanted by her look, especially the makeup.

29:02 And They told me that Gaisha had been around. Three to four hundred years. And I knew a lot of the things that scared me about ingredients in personal care were largely from the petrochemical industry. And so I knew whatever they're using

29:17 Largely pre dated. the petrochemical industry and so I started asking her questions about her makeup. Not because I wanted that look, but I was looking for anything at that point full that I felt safe putting on my skin because I still had my skin issue too. And now I'm pregnant, so I'm super careful about what I'm putting on my skin. Right. And and what was her advice? What did she tell you to buy? Um, but she just told me some basic stuff. We use oil to take off our makeup. Um, we use a lot of rice powder and chameleo oil and sake.

29:45 And then you go took me to Go find some of those things afterwards. And that's when I started seeing Kaisa flitting in and out of the store while we were there without any makeup on.

29:58 Wow. Their skin Looks like a child skin. And so if they reached for you know, a bottle of oil, I would reach for that bottle of oil. And then if they reached for a powder, I would reach for a powder. And what were the like the materials that were so different that you hadn't seen anywhere else? Like what

30:14 Of the cosmetics. Like what were they making it out of? Mm largely food ingredients. Um The when I took them home, Yuko had to write down on post it note saying you know This is uh rice powder. Um

30:30 add water, uh create a foam, massage onto the skin, or leave on as a mask. Because everything was in Japanese. And so I I just came home with this box of things like that. And I used half of them wrong. Hm. But About eight weeks later my skin had pretty much healed.

30:49 And that was after three years of dermatitis and Steroids and antibiotics. And at the same time. I was so enchanted with the story

30:59 the gold leaf artisans, the geisha and the history And to me it It embodied So much of what I was looking for as a woman. It was authentic, it was beautiful, it was steeped in true history.

31:11 And so I guess if I take one step back is when I was still in Kyoto After I'm at the geisha, I went back to the Goldie Fartisans and I did ask if I could bring the blotting papers to the US. If you could buy some from them. Mm and they said no we're not

31:25 We're not interested in In Distribution. And by the way, were they selling the blotting papers to the geisha or were they just like it was just refuse and the geisha were just picking it up? Originally it was Refuse and now now they sell it to them. they were being sold in Japan because you had already used these blotting papers before.

31:45 Exactly. And I I was just asking if I could bring them to the US because they weren't available in the US. And they said we're not interested. They said they they weren't interested. So then I said how many would I have to buy to To get you interested. And they said ten thousand. And I was like, I'll buy it. And um Do you say I'll buy ten thousand pieces of paper? I'll buy ten thousand booklets. Right.

32:06 And how much does that cost you? Mm. But like a h a th couple thousand bucks? No, like thirty thousand, more than thirty thousand. Wow, so you sorry, so they said you have to buy ten thousand of these booklets and you said all right, I'll do it. But first of all, how did you how are you going to do that?

32:23 Yeah. Well, first I said I'll buy it, then I went back to my hotel room and call my husband that night, so it's maybe six AM his time. And I say, Good morning. I hope you're doing great. I just um I just bought ten thousand blotting papers. To bring back with me to the US. Yeah. And and he he said how are you gonna pay for them?

32:46 And you said. Uh I looked around the room and the only thing of value that I had left at that point was my engager ring in my hand. So I said I'll I'll just sell my engage ring. Wow. You said you'll sell your engagement rate. Did you pawn it at a pawn shop? I called the place in New York where I

33:03 bought my engagement ring, um because I had I had proposed to my husband and and bought my ring and so I just called them and said I need to sell it back to you. Would you buy it? Um so they took it on consignment. It took it took a few months for them to find a buyer. Okay. And w and what were you gonna do with the blotting paper with ten thousand

33:22 Booklets of blotting paper. In the US. I had not really thought it that far out, honestly. But you just thought these work really well for me, there's something here. There's something here, maybe I'll keep like a thousand for myself and then I'll figure I'll give everybody I'll sell the other nine thousand and then I'll I'll have a steady supply for myself. Got it. All right. So you come back to

33:42 San Francisco. And did you ship the plotting papers or It took them about a month to actually make them and send them to me, or maybe a couple of months. And so they showed up in big crates a few months later. So did you have a an apartment just full of blotting papers? Yes.

34:00 But like What wow then what? Like do you start calling friends? Do you have like a A a blotting paper party at your apartment, invite people over? Like w what do you do with them? I I I still can't explain it, but I saw this

34:18 vision in my head of Sharing these beautiful little treasures that I found in Japan with other women like me who were looking for th something that was real and beautiful.

34:32 And um safe. Mm-hmm. And so I thought maybe maybe I can create a way to keep sharing these things that I'm finding because There's these ingredients that heal my skin. There's this paper with this beautiful history that's, you know, fantastic and simple. And so I actually created Tatcha as just as a way of sharing these things I was finding when I go there.

34:52 And how did you come up with the name Tatcha? I I had been helping out my friend Stanley, who had been the global head of creative for Starbucks and had left to start his own creative agency. And um

35:07 I had asked him for his advice on Creating A brand because I didn't know how to do that. And When I was

35:16 Telling him what I wanted it to feel like, I just said I want it to feel Like an exhale. Okay. Um like a breath of fresh air. And so he actually came up with the name Tatcha.

35:29 And then shortly thereafter he introduced me to This incredible woman, Nami Onadera, who's still with us. who's our director of uh culture. And she said When I saw the name Tatcha, I assumed that it was short for um

35:44 Tate Hana. which is one of the classical Japanese arts of um flowery arrangement and it speaks to The Uh Beauty of simplicity.

35:54 In nature. And so We said, you know what? That's far. That's far more beautiful then.

36:01 Just being an exhaler and a breath of fresh air, so let's imbue it with meaning. And did you start to talk to people about it? I mean you had gone to business school, so you knew a little bit about like what it takes to fundraise and did you build a deck and start like Pitching the the the idea? Mm, I knew enough about fundraising that I didn't want to do it.

36:21 Because I wanted to create something Really, really pure. And really, really true. And

36:30 A lot of people from business school end up in the private equity world and in the VC world and the ROI is is very straightforward there. It's it's about money. Yeah. They want 10X. Yeah. It's money and it's growth. And it's money and it's growth. And I wasn't interested in creating something for money or for growth I was interested in creating something Worth loving. And that I would want to spend the waking hours of my life doing. So I I just wanted to self finance it and and just see what it could become. Yeah. Um but the only thing I wanted was to make sure it stayed really true.

37:01 But he here's a question, right? And I get this question a lot from people listen, they say, Guy, you know I keep hearing these stories about people who self finance, but how? How do they do it? I mean, I don't have any money. You sold your engagement ring. But and and presumably you you had some savings from your Starbucks days and

37:17 Stuff like that. But I mean it was gone. But d how did you do that? How did you how did you finance it without any I mean'cause to do a Create a company, a cosmetics company, presumably requires a lot of Capital, right? Indeed. Indeed, yeah. Well I started before I even started the idea there was

37:35 Uh maybe half a million in debt. Um So we've uh immediately went to credit cards. Which I I don't recommend, but it is what we did. Um I worked four jobs.

37:47 I begged my landlord for a a discount in rent in exchange for renting out the apartments and being the super for the building. I sold anything that I had that was of any worth. Including my car and my furniture. My husband is very good at poker.

38:04 And so when he moved to San Francisco every Tuesday night he would go Play poker. And it would be just enough. I would wake up Wednesday there would be a little stack of cash. We'd use that to buy food.

38:16 Um and then I just I was just a team of one. Working out of your apartment. working out of my apartment. But I mean, to be to be completely honest, financially things were dire. Um

38:28 we would when we maxed out one credit card, we would roll it all over to another credit card to buy ourselves some time. And I I have a distinct um memory of being Nine months pregnant, I couldn't afford maternity clothes so I just sort of pulled the drawstring out of my sweatpants. But then I'm like humpty dumpty without the suspenders. So like I have to hold on to the pants when I walk or else they're on the ground. And um I went to the grocery store.

38:55 I was checking out and my credit card got declined. And um The people behind me in the the cash The cashier. looked at me with a great deal of pity because I was super pregnant and I couldn't afford my groceries. Um

39:11 And I left them there and I walked out without them. Well. When we come back in just a moment, how Vicky finally got Tacha off the ground and into her parents' garage. Where she would begin an eight year long struggle. to keep the company from sinking.

39:30 Stay with us, I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2009 and Vicky and her husband Eric are about to become new parents. With a bank account that's almost empty. And an apartment that's pretty much full.

40:09 of Japanese blotting papers. And Vicky needs to come up with a plan to launch her brand new business. Tacha. I Was completely mistaken about how I would bring it to life. I

40:25 thought if they're beautifully designed and I tell, you know, this this beautiful and true story about where they're from I'll be able to find partners to work with. So retailers who would want to carry it, PR agencies who want to work with us. And we were Turned down everywhere. Uh you pitched everybody. You said hey, I've got this great cr product. And then retailers were not interested at all. Um

40:52 So and everybody also told me at the time too. That there is no demand or interest in Asian beauty in the US because it's not aspirational. Wow. And they had pointed out that, you know, Shisted had been in the US for over two decades and um had not been able to

41:11 really make it beyond Chinatown. Um SK two Proctor and Gamble was behind them, they weren't having Yeah, any meaningful success yet.

41:20 Um, shoe you a more uh which was own by L'Oreal had been pulled out of the market and shut down. And there was no other Asian brands and you know, people told me very Very Plainly that um

41:32 Skincare's not really a thing in the US. People care about. They care about makeup. And then Asian Beauty. in totality is not aspirational here. So don't do it.

41:42 But you You Did do it. I mean you You started putting the blotting papers out into the world, so Like h how like how did you

41:50 How did you get the word out? Well I went to the library. And I couldn't afford the magazines, but I flipped through them and I wrote down the names of the editors and their mailing addresses and the makeup artists that I admired. And I started sending out care packages with handwritten letters to them, just with the blotting papers, and all I did was tell the truth of their story.

42:14 Um and I said I hope you enjoy them and That was where the press coverage start coming from. And so you just and these are just blind I mean you were doing your own PR. This was you literally mailing it to somebody at one of those places? Mm-hmm.

42:30 And the makeup artists? The makeup artists I saw the names in the credits on the side of the picture and then I looked them up online and I found their agencies and I would send them to their agencies. Wh where was the coverage? Well like what magazines? Pretty much everyone. Um Vogue Did I Spread um

42:49 Oprah. It was on the Today Show pretty quickly. Um we got A ton of press. It was amazing. And and so in your first year you're doing great. I mean,

42:59 It was difficult. I I had the labels. made um uh in Marin. And then when I got

43:09 The labels home, I realized that the adhesive wasn't sticking the way that I needed it to. And so I got like a purple cow. Um paper cutter and had to cut down ten thousand tops off of these stickers, but I was pregnant, so like I was it was hard to even reach the table. So I did those ten thousand. Then um

43:29 I bundled it all up and my husband helped me and um A lot of the I would say half that order. I actually shipped To the UK. Space and K was my first retailer. Space and K is the that's the the the the beauty retailer in Britain. Yeah.

43:45 Um how do they even find out about you? Um the magazines. And and you're still running this out of your apartment? Out of my apartment, mm-hmm. So

43:54 Um So they weren't buying huge amounts, they were buying manageable amounts. A few thousand. Okay. Yeah. And then I had merchandising units made Um

44:05 So it's pr pretty much every single dollar I could scrape together turned into either merchandising units or these blotting papers and they ended up hitting stores the day that I was in labor. With my daughter. Mm. So we we officially launched the day that my daughter was born. Yeah.

44:21 What was what was yeah, what was Eric doing? What was his job at the time? Eric had found a job at that point, I think he was with Cisco. We were fortunate. We had one income. So you're a brand new mom. Um, d h w how are you guys dealing with childcare? I was taking care of her myself, but I also was really lucky. My mom had visited and she helped me find a nanny, um, Mrs. Leo.

44:47 who didn't speak English, um she's originally from China. And She took care of my daughter in my And then when my daughter napped, she would help me pack out orders.

44:59 Oh and then she became our first employee. But was it clear to you that you could make a go? Just of it just by selling blotting paper, that you that that could be Uh sustainable business. No, it was not. I I was making

45:14 far less revenue doing that than uh Then my lowest paid salary. job I had ever had. It was not it was not a business. It was a hobby business at that point. Aaron Ross Powell And did you have huge ambitions for it, or did you think it w was gonna kinda be a side hustle? Because it sounds like in a way It was Definitely not a side hustle in the sense that I

45:34 worked seventy hours a week doing it. I took one day off in the hospital when I gave birth and then I went back to work. So um About two weeks after that I flipped. After the birth of your after the birth of my daughter. going to Japan and um continuing to research this and it was horrible to leave a newborn. Yeah. Wait, you were

46:00 You were doing part time consulting gigs, like to make ends meet. In addition to running the company? Yes. And how how long did you do that? Like how long was it Was it before you were able to to stop doing outside work and just focus on on the company? It was like like two years, three years in?

46:16 Three to four years? Wow. And then About a year into it, um I had

46:24 exhausted my search for those other ingredients that I had found in Japan and used. The the rice powder, the mineral powders, the um camellia oil, the things that had healed my skin. were not available in the US. Um even in San Francisco with an incredible Japan town. Japan town. No Japan I went to Japan Town, Chinatown, Koreatown. I went to traditional Chinese medicine places because they there's lots of herbal treatments there. I went to eBay. I mean I went everywhere. It was it's just not here. Whatever like foaming powder that you were using and the camelli oil you could not find I'm surprised you could not find that.

47:02 Could not find it. And then even even then I did not realize how unique it was. And so on one of my um trips back to Japan I actually flew to Tokyo. And I just went to the department stores and I went straight to the cosmetics counters for the Japanese brands. And They they all sort of looked at me like I was crazy too and in um You go was like, Yeah, they don't sell that kind of stuff. The people don't use that kind of stuff here in Japan anymore.

47:28 It's for like old it's like what, for like old fashioned people or like Yeah It was things that like your their great grandmothers or grandmothers had used. And you're like, No, no, this is actually really great stuff. Yeah, and I'm like, No, this is super legit. I have no idea why it's super legit, but it is So it seems like Like at this point, Vicky.

47:46 Um you were thinking of selling these products because you knew you couldn't make a go of it just Just doing the blotting papers? That's exactly right. And then I started working with scientists to Develop these formulas.

47:59 Yeah. So you found a lab in Tokyo. Yes, and I got really lucky because it turns out that they're some of the most famous skincare scientists in Japan. By the way, from what I understand, like the three main ingredients. And a lot of these products are

48:14 Green tea? Rice and algae seaweed. That's yeah, that's exactly right. Those were the ingredients that I had first used that healed my skin, and then we went really deep. So we interviewed a dozen geisha. Um We went to old texts including the oldest beauty book ever written in Japan, which was written in eighteen thirteen, and The more that we dug.

48:36 The more that we realize that the Japanese traditional approach to beautiful skin was not some sort of exotic flower that only grows on the dark side of the moon. Like Many other cultures. hundreds of years ago when women found that their skin was dry or patchy or breaking out, they go to what's within reach and what's within reach is in the kitchen. And so the basis of the Japanese diet is the basis of their beauty. And that's it. It's amazing. It is amazing straightforward. So they started tinkering with um different different products. And what what did you say? You said I want to do a lotion.

49:09 I wanna do a face cream, I wanna do like d was it that specific? I brought them the things that I had been uh using that the geisha had shown me. Um this was to wash your face or to clean your face or to to to to do what? Yeah, there's a camellia oil that you use to melt off your makeup. There is a rice powder that you use to um enzymatically exfoliate your skin. Okay. And then a moisturizer that was made out of silk extracts. And when I showed them the things that I was hoping to create, I remember that they laughed a little bit because they said, Why do you like these old fashioned things? Nobody will like this. Nobody uses these anymore. Um

49:46 And I was like, because they work. I don't I don't really care what sexy it works for me. But it's interesting because they were old fashioned, right? Like but but you understood that if you just updated the design. It could appeal to people. in the US. Because so much of so much of these things is about design, right? You have great product and and the design sucks, no one's gonna notice it. That's exactly right.

50:08 You know The way that most beauty brands come to life these days is, you know, if you if you've ever wondered how does this model or this actress suddenly come out with a 80 piece skincare collection? What does she know about skincare? It's pretty easy if you wanna do it um the fast way. You go to a contract manufacturer, they have stock formulas and stock packaging. You pick it, you put in 0.01% of a marketing level ingredient, you put your name on it, you pick a fragrance, and it's out the door. And that is how the vast majority of skincare is made in the world. And I will be completely honest, I did go to labs in Japan and say, Do you Do you have formulas like this? Because no brands are making anything like this. And they said no, we don't make formulas like this.

50:51 Product. Because that's that's the way you make things in in the beauty world. Yeah. And so they would take me to their um like glass cases. Where they would say, We used to make something like that. Um a hundred twenty years ago. But no, we don't make that anymore. And so that's why I had to find my own scientists. Yeah.

51:09 How are you how are you able to I mean, at this point did you did you get some outside money? Because how are you be able to pay that lab and those scientists? Um At that point I had gone and started doing a friends and family round and by friends and family was mostly my family. This is like twenty twenty ten, twenty eleven.

51:27 Mm-hmm. And so I went to my mom and my dad, um, Stanley, my co founder. And then some people who eventually started working for Tatcha, they invested as well. And so it really was it was just us. Were you able to raise more than a million dollars? I think it was I think it was

51:44 Over the course of a few rounds it added up to a million. And that was gonna be certainly gonna be enough to get the lab to come up with The formulas. The formulas, yeah. We also did custom packaging. Mm-hmm. Um, which is unusual as well. So building our own molds and um from scratch and molds for bottles and and and tubes. Mm. And the molds are expensive because they're they're huge and they're made out of steel. And so having custom molds made and the engineering and the design that goes into that, that that's quite expensive as well.

52:13 Oh Yeah. So w in those first Like you know, while you were developing the product line.

52:19 Um H like what was you were you burning through cash? Yes. And um You know, you asked me i about the fundraising and I I mentioned that over the course of a few rounds it was it came to maybe a million dollars, um, eventually two, but

52:34 It was not an organized affair in any way. Yeah. It wasn't like we had a thoughtful business plan despite having multiple Ivy League MBAs On the team. Yeah. We sh we were all finance people. We should have known better. Right. Um and been able to stick to a budget and a forecast and a business plan. And it that didn't happen at all. And we ran out of money over and over and over again. I couldn't afford a salary. My partner couldn't afford a salary. I couldn't afford rent anymore. My parents had bought a place in

53:06 Um near the airport at that point. In San Francisco, New Millbrae, and they let me move into there. Wait, where was your husband? My husband moved with me. But we couldn't afford the apartment in the marina anymore. But he had a job. He did, but every single dollar that he had I took. And I put into the company.

53:26 So you so you moved into their apartment for how long? Into their house for seven years. For seven years. And worked out of their garage with no salary. So uh I'm just I'm just curious, you were making

53:40 essentially a high end brand, right? You were making A beauty product that was Gonna appeal to People who had Money to spend.

53:50 Um, and you uh c you could not live that kind of life. Certainly at the beginning. But I I guess at the same time, didn't you kinda have to present yourself that way a little bit? Like kind of as glamorous and, you know, just to At least a To people you were talking about the product to?

54:09 I try to hide and not meet them in person. Um and only speak with them or send them letters. And you're right, one of our first customers and I I don't normally mention our customers, but one of our first customers was Donatella Versace. And like we had Just really, really Incredible high end clientele and um And I was I was working on my mom's garage.

54:31 Well. All right. So you you launch the private line. And You already had a customer base. Were people buying the product in in twenty twelve when it when it started?

54:43 No. When we launched the skin care This little four piece collection with just, you know, a cleanser and exfoliant to serum and a moisturizer. I was so fortunate in that I had sort of the holy grail of of press hit uh the same week or weekend that um the products launched online. And so that was it was like a two page spread in vogue. It was a feature in Oprah. It was the Today Show again. And we had this website set up and it was beautiful. And I remember we sold exactly one serum.

55:13 Mm. And then that was maybe on a Friday. And then that That weekend I was trying to cr figure out how to create a promotion code and I made a mistake and I zeroed out all the pricing on the website. And

55:26 I didn't know it for two days. Finally, a woman that I knew from Starbucks who had seen a Facebook plea that I had put up, like, please come check out my website. Um She went through the website and saw that everything was Zero dollars. purchased and made an order and then forwarded the order to me and was like, Hey girl, you shouldn't give your stuff away. And

55:46 Wait, sorry. There was like a glitch on your website? Yes. And so the weekend after we got The holy grill of press. The only order that I got for zero dollars because I had zeroed out all the pricing was from someone I know. Got it. Okay. And

56:02 No retailers wanted to to carry us and they said I don't think this is interesting or compelling. I don't think that anybody will think that Asian beauty is compelling. And you needed retailers. You needed it to be in Sephora and in the the the the department stores for to work. You couldn't just do direct to consumer? I had hoped that um I could do a combination of direct to consumer in retail, but there was no traffic per website. Even when I made the price to zero, nobody came. Um, even when I had great press, nobody came. And then all of the retailers said that they weren't interested. When we come back after a quick break, Vicky faces a difficult decision about her role at Tatcha. Just at the moment she feels like the company is finally stable. Stay with us, I'm Guy Roz, and you're listening to how I built this.

57:02 Hey, welcome back to How I Built This. I'm Guy Raz. So it's around the end of 2012 and Vikisai has been grinding away a tacha for years without a salary. Living and working at her parents house. And and by the way, at this point, h how many people are working for you, like in your mom's garage in in Millbrae. Up to fifteen.

57:24 Every day. Every day. Yeah. I um And the orders because then around that point I started going on Q V C. And Q V C volume is significant. How did you get onto QVC? I

57:36 begged and begged and begged and begged for an introduction, um and I was turned down um swiftly, at least four times to even get a meeting And then finally this one merchant was kind enough to take a meeting with me, and then they gave me a chance to go up there and we sold out. Um you went on to QVC as like the pitch the pitch. Person?

57:58 Mm-hmm. Yep. What was that like? Were you nervous?'Cause'cause it's live TV, right? Were you or were you just like, Yep, I'm I'm here, I'm ready to go. I wasn't nervous about the T V part of it because I just um When I get too s stressed out, I just sort of leave my body. Um, but I was nervous about whether I would hit my sales because if I didn't hit my sales goal, I didn't know I was going to make salary.

58:19 And I had already called my mom probably by that point four times for an emergency loan to pay salaries. Because fifteen people means fifteen salaries or fourteen salaries,'cause I didn't take one. And then I I would come home and my house would be full of half packed boxes. Um and they would go from floor to about five feet up. In every single room of my house. There was inventory coming in from Japan and then there was orders going out through Tatcha.com and then for QVC. And so it was just boxes halfway up the wall. At one point we lost the baby in the boxes.

58:52 Well. All right, when you went on Q V C and and you're talking about the product and the story and and and how how much of a turning point was that? I mean did did the Q V C sales Like lead to

59:10 You know, online sales from from your your website? It was symbiotic. But the what happened in between, which I I think I jumped over Is that after we launched the blotting paper

59:22 Um We had two acquisition offers within a few weeks of starting the company. In two thousand nine. Mm-hmm. Thousand nine, two thousand ten.

59:31 Wow. And and Wha what was the story? I mean that's pretty great. Um one uh was a retail uh partner and the other one was uh a large strategic acquirer and I had no intention of selling the company but one

59:48 The strategic acquire said Uh and it was a mentor of mine who Who I really, really respect, he's a a beauty veteran, and said, You have lucked into a brand. that has the potential f to be one of the greats. And if you love it like you love your child, then you'll give it to a mother who knows how to raise it because you do not have what it takes. You don't have the money, you don't have the know how, you don't have the team.

1:00:10 And I had a newborn child. at home when he said that to me. Wow. And um I mean If it was me, I would've taken the deal. I would have said, Yes, please throw me a lifeline and and I mean I think

1:00:22 It would have been crazy f of you not to Considered it at that point. I did consider it and it would have been just enough to pay down the debt and that's what was that what was crushing me at that point was that um

1:00:35 I had been I'd taken my parents' retirement. Um, I had taken money from my friends and family who were not rich. Yeah. Um we were probably eight hundred thousand in debt at that point and maxed out all of our credit cards. And then when he said

1:00:52 You don't have what it takes. I felt terrified that I had bitten off more than I can chew and that I would lose people's money and disrespect a culture that's not my own. And so I was going to do it, um For no No personal profit, but just to just to get out. Just to pay everybody back. And to let the brand live on and you would have no equity in it.

1:01:14 No. Yeah. So you were gonna do it and why didn't it happen? Um right when We thought we were going to do the deal.

1:01:22 I wake up one day and I turn on the news and there had been a tsunami. And then a radioactive incident with nuclear event. This is the earth we can. And then um The acquire pulled out.

1:01:38 They pulled out. Because of the earthquake in Japan. You know, they didn't really give me an i a reason at that time. They just Within twenty four, forty hours they they were out. Wow.

1:01:50 Yeah. And and so you would have taken that deal had they not pulled out. I would have taken a deal. And we would not be be talking about Tatcha today. Mm mm. Not with me. With them. Yeah. Yeah. And so I think the reason I told you the story is because you asked if I was ever scared or did I know that it was gonna work out. And no, at no point

1:02:09 Did I think it was gonna work out? I just At some point I realized that um The fear finally went away when About Three years into it we formed a partnership

1:02:20 Uh with an organization called Room to Read. And they are one of the leading non profits globally for children's education. And they have a special fund for girls and uh fund uh girls education including um Second uh skills, life skills training. Throughout Southeast Asian Africa.

1:02:39 And I always knew that I wanted anything that we created to give back, and so we created a one to one model. Um where every single purchase funded a day of school. And before we started that partnership I wanted to make sure that what we We're going to tell our clients we were doing was actually happening, so I flew to Cambodia. And I spent

1:02:58 A few days with the girls in their schools with their Teachers in their houses, um Seeing what Roomtree was doing firsthand. And when I saw that That's when my fear evaporated because I was surrounded by children

1:03:14 Who had No electricity. No running water. Maybe no parents. Not a lot of personal safety over their bodies.

1:03:21 And yet they showed up every day with hope and with courage about The fact that their their past wasn't going to define their future. And they They look like my daughter. Yeah. They look like me.

1:03:33 And so that completely reframed for me what risk is. And with sacrifices. And what's dangerous. Hm.

1:03:43 And how did the brand I mean, I think by like by twenty fourteen, um I I think your revenue was like twelve million dollars that year. Um I don't know, once people start to buy the product, did it just was it just kind of like a self generating process where it just grew and grew just Just organically?

1:03:59 Mm mm. No. Um We were not profitable for the first eight years. Uh so we had to personally finance the losses. Um and then when we ran out of money we would have to go to friends and family and and ask for help. But no, every step of the way um was like figuring out from scratch again how to

1:04:20 knew that we existed. If it he if you started the b the business in two thousand nine, it took you like eight years to get to profitability. So you weren't really profitable until like two thousand sixteen. Right. Or seventeen.

1:04:35 I mean Like at what point did you start to kind of breathed a sigh of relief a bit. I mean at what point were you able to say, Okay 'Cause you had uh been through, you know, periods where you almost accepted a deal, right, to to basically Take care of your your debt.

1:04:49 Um and you had to borrow money and you were constantly worrying about paying your team and Nobody was making a whole lot of money. They were all, you know, promised equity. Like at what point did you start to feel a like, okay, this is gonna be okay? W was there a point? It every year it felt like a high wire act where the wire was getting moved. Higher and higher and higher. And

1:05:13 It was probably Only when Our private equity company came in. Um and it was the only institutional round of of capital that that we did.

1:05:25 Um that I started feeling less alone. Yeah. So uh it was probably easier to attract that at that point'cause you o had proven the concept. Exactly, exactly. And they they were wonderful partners and so that that was the first time I started to breathe a sigh of relief, but It came with its own different pressures because uh private equity doesn't invest for very long and so I knew that the second that they invested the clock started, um and there would have to be another capital event to buy them out.

1:05:53 And it was at that time that um One of the operating partners Um Told me. That he thought I should

1:06:03 Higher A real CEO? Um And It w it was

1:06:11 It was a gut punch. This is in two thousand seventeen. This was in two thousand seventeen or eighteen, I have to double check the timeline. And and it was a gut punch because You were like I'm the CEO. Yeah, I I had founded this company and been the CEO for at that point nine years and um had

1:06:33 But it To You know pretty m meaningful growth and meaningful in our industry and meaningful to our customers. Um I mean I think two thousand seventeen you're probably doing like

1:06:44 thirty, forty million dollars in sales a year. Probably. I I would have to go look at the numbers. So I mean you had a degree from Harvard Business School. I mean you clearly were Qualified. Yeah.

1:06:57 And I'm not trying to to to to to disparage this person. Maybe they were really genuinely trying But what was it that they felt you didn't have? I asked that question. And the only answer that he gave me was If

1:07:12 You Are willing to hurt the company. for your own ego, then we can have that conversation. Uh why Well why would you be hurting the company? And that's what I said. I said I would never hurt the company. I love the company like I love my my family. It is my family. It's in my house. I mean, what are you talking about? So I never actually got an answer, but it it took the wind out of my sails. But what was it what do you think? I mean, if you could step out

1:07:37 of your own body and go down the balcony and look down, what would you have said about Your leadership. If you were being critical of it. Um I was

1:07:45 Definitely learning on the fly. But I would say that most founder CEOs do learn on the fly because the job changes every day. Yes. Um I was trying to negotiate between being um Vicky and Victoria.

1:07:58 Victoria is is uh what a lot of people see on QBC and in magazines and Victoria is always then and Victoria is always grateful. But you know, Vicky is an executive leader who needs to manage um an agile and uh demanding business. Um and I I didn't have a model of female leadership that

1:08:25 I had seen before that I could look up to the Um And so I never really felt comfortable asking my team To do

1:08:34 Um I think I needed To be liked. too much. I didn't want to come across as um

1:08:43 A difficult female leader. So I I hadn't grown into my own skin, I think as a leader. The results were there. Um But the confidence was not.

1:08:52 And so when when he suggested that I go in. Find a real CEO. I I They did.

1:09:02 I mean that must have been really hard. It's your baby and your company and Uh, but at the same time you want what's best for your your company in the future and all these people who'd invested some money into it and hadn't seen a return yet.

1:09:18 You know, the employees and your parents and the friends and right? I mean. And I'm sure that was a lot of pressure on you. It was it was a ton of pressure. I was I was burning out. I was on the road two hundred fifty days out of the year, missing my child's Childhood. Um

1:09:34 I miss Thanksgiving. I've left my husband and daughter in line at Disney World to catch a flight to go on QVC. Um And I would've never told the story. You're the only person I would ever tell the story to.

1:09:47 And it's because um Your listeners are thinking about starting their own company or they're running their own companies right now. And if I could do anything over again. I would have that you're actually doing a great job and if you want to hire a new leader of the company for all sorts of different reasons, that's okay. But you shouldn't doubt yourself, especially just because you're a woman, and especially just because this is your first time

1:10:11 At the rodeo. So if I have one regret at the company, it's that I didn't believe in myself. Um, and the good news is it did lead me to hire a new CEO who is The light of my life, the best partner. I could ever ask for for this stage of growth of the company. And um it gives me the freedom to focus on what I love most, which is taking care of our clients. Yeah. And creating formulas. So it all ended up

1:10:38 Great. But It. It gutted me. At that time.

1:10:43 Yeah. Yeah. In twenty nineteen. You get

1:10:49 um acquired. I'm and I'm assuming that this was a long drawn out process, Unilever. Um Ba Tacha's it's been reported for m about half a billion dollars. How how did that happen? Did they did they approach you, were you guys, did you did you at this point feel like, look, the investors are all in, we should shop our brand around and see if we can You know, partner with a bigger brand at this point.

1:11:14 We were not intending on selling the company at that point. We had gotten Acquisition offers or interest almost annually from our first year. And every every time we said no outside of the one time where it just fell apart. Yeah. And after we did a private equity deal

1:11:31 We assume that we would You know, be independent and with a private equity company for five to seven years. Right. But then I had to sit back with myself and, you know, really have one of those Hard to hard conversations with yourself about it. Why did you really start this? Yeah. What was what was this all about? It was

1:11:46 We know it wasn't For the money. And what I realized was that I created it because at that point in my life um I very much

1:11:57 Felt. Empty. And um when I went to Japan I had experienced

1:12:04 A beauty and a kindness and a humanity. And a craft that I had never seen in my life. And it healed my skin, but it healed my soul. And I created This thing To share what I was learning because I needed it in my life. Um I needed it in my heart and I

1:12:20 I have always believed that a brand is a promise. And it's a promise that I can't break. And I want it to live A hundred years I want it to outlive me. And so while I love running it and I wish it could be independent forever, I have no intention on living forever. Like dying is definitely on my bucket list. And so I ha I know that eventually I have to find it a home. Um

1:12:42 And then I met Unilever and I knew nothing about Unilever and had certainly never thought about them as a a strategic partner, but there's this woman Vasiliki. who was creating um a group within Unilever and the rule was that they had to be purpose driven brands and they had to have a purpose above um commercial And we had a conversation and she brought me to tears. Um and she's a mother and she's a female leader that I admire. And one of the things that she loved most about the brand was um the giving model. And so um

1:13:17 While I would love to run this. Myself independently forever. I know that's not possible, so I would I would rather than get it into a forever home where it can be protected and I w I stay with it, but then that's

1:13:32 It's a forever home. Hm. Do you when you think about all the things that have happen to you in and the success of the of the brand the business. Do you do you attribute most of that to your

1:13:44 your intelligence and your your work ethic, or do you think a lot of that had to do with luck? For sure not intelligence. I am no smarter than anybody else. Um I think When you start any company the most important thing is to show up every day. You just you just have to you just have to keep showing up for the game. Um I did get very, very, very

1:14:06 Blessed with amazing people. um who believed in us when there was nothing to believe in and who stayed with us. So our scientists from day one are still our scientists today. Our packaging partners from day one are still our packaging partners today. Our retail partner Sephora who did believe in us in day one, I just couldn't Afford to be with them. until you're five because it it requires more investment. They're our best partners today. Um so I I've been really blessed Um but I'm definitely not smarter. I'm definitely not more strategic. And that's why I love what you do. And that's why I love this podcast. And I wish

1:14:42 I wish it was around when I first started because it would have been my lifeline to believe in myself and it would have felt uh less lonely. to do this and so um I'm so grateful for this opportunity to tell you the story because The other hundreds of times that people have asked me over the last ten years about building this company, um, they've only asked about the the highlights.

1:15:03 And so I think about the entrepreneurs and and hopeful entrepreneurs out there. who read stories like the ones like mine and think that it was sort of Leaping from one gilded uh Lily

1:15:20 And that I'm at home meditating and it's all been very Zen and beautiful. And it has been very Zen and Beautiful, but it has also been death defyingly difficult and treacherous and um it has uh broken me down to to my very core and caused me to question who I am as a person and what I'm made of. So I'm just a really big believer that if I can do it Um

1:15:45 and it's in the cards for you, then anybody can do it. That's Vicki Tsai, founder of Tatcha. We first interviewed Vicky back in the summer of 2020. And by the way, two years after Vicky stepped down as CEO, Unilever asked her to come back because things were kind of heading in the wrong, Atacha. And just like her former boss at Starbucks, Howard Schultz, Vicky came back to the company she founded and quickly turned things around. In fact, she talked with me about this last fall when she came back as a guest on the How I Built This Advice line, and you should check out that episode as well. Vicky gives some great advice to three up and coming entrepreneurs. Anyway, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at guyroz.com or on Substack.

1:16:41 This episode was originally produced by Jet Anderson and updated by Casey Herman, with music composed by Ramteen Erablui. It was edited by Neva Grant. Our production staff also includes Alex Chung, JC Howard, Carla Esteves, Chris Massini, Sam Paulson, John Isabella, Carrie Thompson, and Elaine Coates. I'm Guy Raz and you've been listening. How I built this.

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