Dr. Dennis Gross Skincare: Dennis and Carrie Gross

0:09 We were getting close to signing the deal. And then the pandemic hit. Mm and The deal was off. They pull the deal.

0:18 It was like Oh my god. You know, we thought it was bad enough going through like nine eleven and then the you know, two thousand eight crash. The pandemic was just Like

0:29 Dennis's practice closed. Sephora's doors closed. I think I was laying on the floor thinking I can't believe this. I can't believe this Are we gonna lose our company? Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements.

0:57 they built. I'm Guy Raz and on the show today how Dennis Gross filled a white space in skin care by perfecting the peel and how he and his wife Carrie grew their first product into a$450 million brand. You may remember a few years ago seeing a space age looking beauty device that went absolutely viral on TikTok. It was a plastic face mask that

1:29 Makes you sort of look like a neon glowing C3PO. The glow comes from these red and blue LED lights, which are meant to reduce acne and make your skin look younger and smoother. Anyway, this particular mask I'm talking about was designed by a brand called Dr. Dennis Gross Skincare. It's a bit of a clunky name, I'll admit, but It's also been the brand's superpower.

1:52 Because Dennis Gross is a real person, a real doctor, a real dermatologist who's been making and selling a line of skincare products for more than twenty five years. But in the early days there wasn't a brand at all. There was just Dennis and his patients at his clinic in New York. Now, back in the 1990s, skin peel started to take off, Especially among affluent women in New York.

2:17 but the process would often leave their skin blotchy and red for a few days afterwards. So Dennis decided to come up with his own formula. Ideally, a recipe that would be as effective Without the splotchy side effects. His formula became so popular that he decided to come up with a consumer version.

2:37 And this is where Carrie comes in. because she is Dennis's partner in life and in business. They came up with a plan to turn Dennis's dermatology expertise Into a skincare brand.

2:51 In the early years, they funded the business mainly from Dennis's income. And for the first two decades, the brand was entirely bootstrapped and Relatively small for much of that time. But in twenty twenty three the cosmetics giant Shiseido acquired Dr. Dennis Gros' skin care in a monster deal.

3:10 worth around 450 million dollars. As for Dennis and Carrie They were both born in the late 1950s. Dennis grew up in New York City and Cary in California. By the early 90s, they were both living in New York. Carrie was working as a fashion buyer for Nordstrom, and Dennis had just started his own dermatology practice.

3:32 And They were about to find out. that they were neighbors. We were living in the same apartment building on Third Avenue in New York City. Um, I had moved in

3:44 Just a few months before And so it took us a couple months, I guess, to end up at the elevator at the exact same moment. And that's how you met. Yes. Just at the elevator. Right. Okay. But nor normally I mean you just push the elevator button and then you get in the elevator and you might look down or You know, today people look at their phones, but you know, this night early nineties. You look up at the ceiling That didn't happen. Yeah.

4:08 I tell my kids all the time. If there were cell phones back then. I probably never would have had a conversation with your dad. So I think we n all need to like put our cellphones in our pockets when we're in the elevator.

4:21 Yeah. The story was, from m my point of view, is uh So here I am this bachelor. And I was coming up Third Avenue as I always did on a Friday, I remember to this day. It was a Friday and and I walk in the lobby and there's Carrie. Talking to the doorman, talking to Orlando.

4:39 And I was literally struck. By her. First of all, she looked incredible. Um she's wearing this incredible like

4:48 mid length skirt and these crazy sexy blue suede mules as they were called. And she had her dry cleaning draped over her arms and she was talking to Orlando, and I just was moved by how she was so friendly to him, you know, it wasn't like The doorman is hired help. She was engaged in conversation, they were laughing, they were talking. And in any event, I uh yeah, we rode up the elevator.

5:15 And She You looked at me. And she said. You look tired. And

5:21 I said, Yeah, I'm tired. It was Friday afternoon and uh And that was it. That was the end of the conversation. But I got off my floor, I got up at six and I watched to see like what floor she got out of and she got off it. I think with eighteen or nineteen. And I this is this was not me. This was a moment m where

5:39 You know, I I something was more powerful than what had led my bachelor life before. I got onto the intercom. I called Orlando in the lobby. I said, I just rode up the elevator. with this woman, uh, what's her story? And he said, Oh, and I said, Oh, that's Carrie, she's great. She doesn't have a boyfriend. She's really nice. You two should she should really meet her. So he intercoms me back a few minutes later and says, Hey, I got Carrie right here. You want to talk to her? And Orlando puts her on the phone and I said, Hi, I'm the guy who you said was tired. Do you want to go out for dinner sometime?

6:14 And uh She said. Uh let me think about it. And uh she gave me her work number, which was Kinda crazy'cause think about it. I know where you live, I know your name. It's like okay, fine, let me call you at work. But this is pre cell phones. Yeah. Yeah So three weeks later I got to God with Carrie. So we went out to dinner.

6:34 Nice. Wow. It's funny that I have a slightly different memories of what happened. But I definitely remember looking at him and I he had a doctor's bag in his hand and his head was leaning against the wall and he was he was looking at me. It was a little uncomfortable. But I was just

6:53 Friendly. Yeah. So you guys so you agreed to go on a date and Obviously, Carrie, you've learned that Dennis is a a dermatologist and Dennis you learn about Carrie's background. And wha what do you guys remember about I mean W what did you talk about? Where did you connect over? Skin. Are you kidding?

7:13 Hm. So I grew up in California. I had Sun damage. I was on the beach almost my entire life or a tennis court or And I was in my thirties and I was seeing signs of aging and I was spending a lot of time and energy and money on my skin. So I would shop the beauty counters, I would go to spas, and I thought I was doing the best I could.

7:38 And then I met Dennis and had a conversation about what was really happening with my skin and what what my future was gonna look like. And I have to tell you, he gave me such hope and optimism because in my experience, like I went to a dermatologist for poison ivy. Right. You know, I didn't think of them as the Healthy aging gurus. that they are today. So it was really a very very exciting dinner for me. Yeah, Dennis, I mean on that point, I mean at that time, the early nineties, right? I mean most people went to dermatologists for rashes or, you know, uh poison IV or or certain diseases of the skin, right? They didn't go necessarily for, you know, things that people go to f for today, like Botox treatment or you know, skin care, right? I mean it really wasn't about

8:28 About that in any way at all, was it? No. The whole cosmetic component of dermatology at that time was in its infancy. very little in in the way of active ingredients. But there w it was growing. You know, there was a there was a there was a little bit of movement there.

8:46 I certainly was seeing it in my practice, but it was actually through this conversation that I had with Carrie that we both together sort of learned about the opportunity and the state of the art and the lack of the science and The white space, basically. Yeah, tell me about that. I mean there there in the early nineties, if you you know, imagine like most people who had a sort of a skincare regimen Would get

9:08 Some creams and you know, with the department store. And they would you know, decide between Este and Lancombe. And it was Moisturisers, basically.

9:23 And the serums were just in their infancy, I think. But there were no indie brands, there was no disruption, so to speak, and There was really nothing with an active ingredient. Yeah, explain that. I mean Dennis, when you were looking at the ingredients of what was available over the country.

9:42 What would an active ingredient be that you weren't seeing? Yeah, that's what we did for fun. We used to look at labels together. And You know. She literally would say, What about this one? What about this one?

9:57 And I was Amazed at How Little there was in terms of efficacy built into the actual product. A lot of it struck me as being packaging and promise and

10:10 But in terms of really delivering uh what could be done to the skin, I felt like there is so much more possible. So it was through our relationship and our conversations that we really started to think. You know, like what could be done here.

10:28 And in my practice, again, I was seeing it too. And the real It was the beginning of the lunchtime peels in dermatology. Yeah, what what was that? Tell me about that.

10:42 It was the idea of doing something to a patient by the dermatologist, where they would come in and in a matter of a few minutes Get what was called appeal. And so It was glycolic acid. You were being sold by detail people coming into the dermatology office like kits where you would have the patient come in and then you would do a a thirty percent peel on them and then they would come back a week later when you do a forty percent and then fifty percent all the way up to seventy percent. And literally these chemicals would peel your skin.

11:13 By design. Yes, that was the idea. And it was going to make the skin red and raw and flaky and peel and you couldn't go out and So wait, you go for these peels to the dermatologist, but then for a couple weeks your face would be blotchy. Blache. Exactly. Now that was considered good.

11:31 Okay. Okay. I seem to remember this. I seem to remember people having blotchy faces in the mid nineties. Sex in the city guy. Yes. Yes. These peels were aggressive and you had downtime. Амі кунлив, со а

11:50 felt like it made no sense. There's no Organ in the body. That you injure To make it come back better and stronger. Yeah. If you're a runner, you're never gonna hurt your lungs so that you're gonna be able to

12:02 be even more efficient as a runner. It didn't make sense to me. At the same time, it really was catching on. And I tried it. I did it, you know. And what I saw was that The patients were

12:13 A Not happy with the downtime. Two. They didn't see results. It didn't work. And I wanted to introduce and design

12:23 A treatment. that had no downtime. So I designed appeal. For my patients in my office that was

12:32 An alternative and it worked better. And just to like understand, I mean, you're obviously uh a a medical doctor, so you have a science background and so what would you do? I mean, in like At night when you closed up shop you would start to mix ingredients and try to get the proportions to your specifications. So yes, what I did was I had

12:55 Several new ideas that I put to work in creating a brand new formula. The first one was instead of one acid. At a high concentration. I determined and discovered and it worked multiple acids, different ones, at lower concentrations that together additively had a benefit.

13:15 But no downtime. When you say downtime, there was no like period of red splotchy skin. Precisely. No blotchiness. No inflammation. The second Most important second thing was

13:25 A second step to neutralize it. Right. In chemistry you have your acids, but you also have the base. You have things that are alkaline, you have things that are a higher pH versus low pH of acids. That's why you take peptobizmol. Exactly. So acids may be okay and good. But For a limited time only.

13:44 And then I determined that you needed a second step to turn it off. And that was the secret sauce here. So I created a system, a product, a treatment Multiple acids. Followed by a second step.

13:56 And that innovation led to my practice really blossoming. All right, let's get back to to your relationship for a moment, because you guys meet in the early nineties and how long before mean, it sounds like you guys hit hit off qu very quickly and have a lot of common interests. Carrie, how long Between the time you meet and the time you get married. I think we got engaged after

14:19 Nine months of dating. Wow. Yeah. So it was it was fast. Yeah. And then had an engagement that lasted nine months. And my feeling was I needed to go through four seasons.

14:31 with Carrie just to make sure it was right. So we got through three seasons and got married, but uh the fourth season was okay too, so we're good. I mін you guys also, I think both of you. really wanted to start a family very quickly. Correct.

14:47 I was very much a family person too. Yeah. And of course, you you know, both of you guys in your thirties and uh it gets harder to have kids after Forty and And later. So was there was that part of the thinking as well?

14:59 Yeah, the biological clock was ticking for me for sure. But I think I kind of had like this idea of myself being a working mother and We got pregnant. I actually resigned from from Nordstrom. And I had twins, which was

15:17 quite a delight and a shock all at once, but In any case. All the while We were thinking about a business. You know, it was when Dennis would look at my beauty products and my my skin care and he would say like

15:32 Why do these chemists put these ingredients in here? There's no skin benefit. And when he said that I was like, Wow, he's gonna think very differently. Than a cosmetic chemist, because he's seeing patients every day. And so Dennis practice. We call it the living lab because his patients there were just so many ideas coming to mind. So you know, we're in the mid nineties at this point. We're married. We have our beautiful twins, Daniel and Alison, and

16:05 All the while we're thinking, thinking, thinking about A business. To that point, my practice

16:13 did teach me a lot because I also had a very international practice. My office was at NYU was near the United Nations and literally I had the United Nations um medical office send me people. So I saw I saw people from all over the world. And you know, I learned about different skin types, different skin tones, issues. And the other thing is I started to ask my patients What products are you using? Right.

16:40 And I was amazed at what I learned. Which was that pretty much they were what I called going through the merry-go round of discontent. The patients were using a product for some hope to get benefits of some sort. They weren't seeing it.

16:59 They would then Stop that one and buy another one. Hoping that would work. That one didn't work. Now we're on to the next horse in the merry-go-round, another one.

17:08 And after the third one didn't work, well they go back to the first one hoping this one would work. That's when I said, let me at it. I mean clearly because of your background you were looking at the ingredients on over the counter products and you were saying, Well this doesn't make sense, but I'm surprised That More people weren't doing that. I mean, what were in the products that didn't make sense? I mean, clearly, I mean I I would assume they were formulated by people with some background in chemistry, otherwise, why would they be making skin care products?

17:39 They weren't dermatologists. That's the key. You know, there's a difference between being a a chemist in a laboratory and actually s having a background as I did in The chemistry. in science to actually using ingredients.

17:54 And Seeing patients. So My first product was the alphabet appeal.

18:00 And that was really what put us on the map. Because It was an at home. Two step. peel treatment.

18:10 Into the home of the consumer. And so it was a game changer, it was a disruptor. So between nineteen ninety five and two thousand Dennis had his clinical peel, his doctor's peel. Which was the strongest.

18:24 And then we went to a contract manufacturer and asked them for Pads and jars. A thirty day supply. which was sort of a go to market strategy that You go into the clinic.

18:37 You have appeal. You take home your thirty day supply of peel pads, step one and step two. You use that every morning at home, and then when your jar is empty. It's time to come back to the clinic for another treatment. And so his patients loved it. We were selling out of our home kits. rapidly and that to us was basically

19:02 Proof of concept. And that's when we moved ahead to start the brand. I gotcha. So initially the idea was let's see how this works in the clinic, right? So'cause it sounds like Dennis and Carrie both of you. Already in nineteen ninety five when you started to give this to your patients, Dennis, that in your mind you were thinking.

19:22 This is a brand. We can turn this into a brand. This is a business. Like at the birth of this product that was you it was already fulfill this idea. It was, but you know what? It was so helpful to have the confidence that that experience that living lab of the practice.

19:39 Gave us. Because yeah, my patients would get this product to take home, but then we had people coming into my front desk at my practice. who were not my patients say my friend bought these peel pads here And the results are incredible. I'd like to buy them too. Yeah.

19:56 And so there was a time where it got to such a proportion of people coming in asking for that product. that literally one day I came home to Carrie I said, I think we may have a business here. Alright, let me let me just dig into this bit. So The n first of all, the name of the brand. You guys gave it a name, right? Yes, we did. And you called it?

20:15 M D skin care. M D Medical Doctor Skincare. Okay, good sounds and and it It was I guess designed to to sort of Signal. That this was made by a doctor, a skin doctor, this was

20:27 Scientifically formulated, To differentiate it from what you would find at a department store. And this was just in your practice. You were not offering this up to other dermatologists quite yet. Correct. Okay. So what we did was our go to market strategy was to go to spas, day spas, resorts. There was quite a few in New York City. And this was, just to clarify, this was about five years after just doing this in Dennis's clinic.

20:57 We were ready to go in two thousand and our first accounts was The Ritz Carlton, Paula Brecht Day spa, there were beautiful spas in Connecticut. How did you get those accounts? Is that did you already have some media attention by that point? Was there were people aware of this thing that was happening? Absolutely. Yeah. The beauty press Were Dennis's patients. We never advertised. We just had

21:22 articles in L and Vogue and Harper's and This was before the internet. There was no internet, there were no, as you said, no cellphones. And No Botox even.

21:35 It was super exciting. We went to Spa's initially, and you know, when I had retired from Nordstrom I indicated to them that I might be coming back to you with the brand. And so I got my Nordstrom girls on board and Nordstrom had spas also. So we did the Cosmetic floor. The beauty floor as well as the spa treatment rooms. Which was a really important component for us in the early days.

22:03 The press were equally non believers that you could actually have skincare results without the blotchiness. And so They were invited into my practice, we would do the treatment on them. And like my clients, my patients, they were amazed at the immediate results they saw, and then how things got better and better with the retail product.

22:23 So I earned their trust. Yeah, and then they actually start to come to me. Privately. And you would be quoted in newspapers and magazines and and and so forth. Precisely. How did you when you started initially selling to spa's, you know?

22:38 Did you have to also go in and show them how to use the product or was it something that they could just read in the instructions and Absolutely. No. We we had trainers. I mean it was A lot of you know, writing protocols for the estheticians and creating manuals and brochures and old school videos and It was a lot and

23:02 I was starting to feel like A little bit of imposter syndrome, like am I really gonna be able to do this? It was pretty crazy and here we are. being very disruptive in the industry by Asking people To put acid on their face every day.

23:20 When we come back in just a moment. How a lawsuit forces the brand T totally change its name. Stay with us, I'm Guy Roz, and you're listening to how I built this.

23:43 Hey, welcome back to how I built this. I'm Guy Roz. So it's two thousand two and MD skincare is moving into spas and even a few stores like Nordstrom. And then Carrie decides to pitch it to a French beauty store that's relatively new to the US. Sephora. And I remember flying out to San Francisco and

24:05 You know, sitting down in their conference room. Imposter syndrome. I'm thinking the Nordstrom people knew me, so I was fine there, but I'm thinking Are they gonna just think I'm the doctor's wife, that I don't know what I'm doing? And so it was a little nerve wracking, and I sat down with them and then We fell in love with each other. But we actually

24:26 So We had this like beautiful business model. I just wanna tell you that like our clients would travel and they'd go to the four seasons in Maui, or they'd go to Florida and Stay at a a resort and see our products. And then they'd go back home.

24:46 And they'd go to Nordstrom or Sephora. and see our products again and they're like, wow, this is a pretty interesting brand. It's a professional brand, but I can also buy it in my local department stores. And so they they had this journey and it had this beautiful kind of halo effect on our brand of really being authoritative. In the space. And Carrie. I mean when you guys decide, okay

25:09 We're gonna go to a contract manufacturer, we're gonna have them make this stuff. We're initially gonna just sell it to our own customers. So it probably wasn't that expensive'cause you were probably able to sell it at a premium. But then when you decided to make it for cosmetologists working at spas, I mean, was it hard to finance that or was it I mean, was it relatively straightforward, like From a cash flow perspective. So we had a business plan.

25:34 We found a graphic artist, we did a logo. We set up the initial SKU assortment. Of course it we had to have a sunscreen in there for sure. We had a cleanser. We had you know, it was a tight assortment. maybe like twelve skews. And When I needed money, I would have to have Dennis write me a check.

25:55 Right. Basically the money from your practice, Dennis, was gonna finance this thing, right? It did. Right. Had the the guts and did it. You know, I have to tell you that

26:07 In those early years we were so busy. I m at this point now I've got four kids. Not me. We're going to be able to do it It's amazing. You guys built this business and raised four kids, but Keep going.

26:19 It was crazy. But you know, I started off with a team of Independent. account executives. Like we had consultants. We didn't have any employees. Right. So You know, my best friend was helping And like we would be working out of our apartment. And what were you doing? Were you trying to like

26:39 Sell? What were they mainly doing? Yeah, we were opening new accounts, opening new spa accounts, and then trying to figure out a forecast and how are we gonna enter into the Sephora market and How are we gonna service those doors and So In any case, I think by two taus and two we hired our first

26:59 Full time. Employee. And what did that person what was that person's role? Were they like a Swiss army knife? Did they do everything? She was in a field. She was in a field, so we had

27:10 Opened our first official office. In two thousand two on Madison Avenue. It was an exciting time because The product literally sold itself. You know, once once someone tried it.

27:23 consistently people were taking us as an account. This was the alpha beta peel that you developed. And by the way, how much was was it to like to buy the to do the the alpha beta process at the time? It was about seventy five dollars, I think, for a month's supply. That was a lot. That was a lot to ask. I think the clients expected okay, I know I need a cleanser, I know I need a moisturizer. But this is something

27:50 Different. This is a different step in my regimen. And so they really, you know, we had clients that were coming to us. Вед skin problems like acne, hyperpigmentation Advanced aging. So they were it was an emotional purchase. And they became super fans. They were incredibly loyal. And there's one other thing that I want to talk about really quickly.

28:16 So we packaged the peel. And Packets. Tandem paquet, step one and step two. And

28:25 This Format gave us the ability to sample. And also like back in the day, like we were doing Direct mail.

28:35 We were mailing these little paquettes on in envelopes and we were doing skin care challenges and You know, you could get on an airplane and then pass them out to you the flight attendants and the people next to you and people were you know, they could go on vacation and pack them easily. They just were really easy to use and they were perfectly dosed. Yeah, so it was just the design of our peel paquettes, I think. Was part of our secret to success. I know that you eventually got it patented. You had to because you had to protect this thing, but was that expensive? Was that time consuming? Tell me about the process of getting that patent done, because that was critical. It was both. Yeah. Crucial. Crucial.

29:21 How much does it cost, by the way, to get a patent on something like that? You know, my recollection is it was somewhere in the order of a hundred thousand dollars. God, it's so crazy that it costs that, but lawyers and you got But it is very challenging. It is very challenging, but I really felt like my motto then was, you know what, if there's any justice in in this business world This product works so well that we are going to be very successful. And all I wanted was, you know, uh for it to be a meritocracy. Yeah. And as we grew, there were times where we were in the early days, Carrie, you're right, we were losing money and that was tough, you know, and actually Actually we went through our savings and I took a mortgage.

30:03 On our home. to ex get extra and I put it towards the company. Now that was challenging and that's where I had some concern with what am I doing and I have four kids and I'm supporting th my family through my practice and now I'm investing in a company and It's teetering cause growth.

30:21 costs money and before you turn into profit You have to have the confidence to put more money in at that point. But I think by the time we got to Two thousand five.

30:35 Dennis wrote a book. And that was a big deal for us. That gave us a lot of um he did a book tour. We started winning awards. And at that point We were on the brink of Breaking even.

30:48 Before that it was kind of like okay, who are we gonna pay this week? Are we gonna be able to collect two hundred thousand dollars by Friday? And that was kind of the startup energy every single day that we would I would go into the office and Dennis formulates all of our products himself. He hand selects meticulously every ingredient

31:09 That goes into every single one of our products. And in addition to that. We do clinical testing, and that's very expensive. So it was becoming a quite an endeavor this the company. So Yeah, I'm I'm curious about I mean, tell me a little bit more about what cost you money because

31:26 Wh were the other big expenses, advertising? I mean what cost so much. But I mean as far as the money goes, a lot of it really was staffing. It was people. I mean, do you remember, you know, by you know, five years in, two thousand five, two thousand six, I mean Was your revenue You know, were you bringing in more than ten million dollars?

31:49 So you know, it's funny that there's certain Financial milestones that I always really remember and I remember the first time we hit a million dollar month. And it was just like

32:02 Woo you know, w we all were like celebrating in the in the conference rooms, but We were definitely breaking even. And then We all of a sudden started to turn a profit. So you hit profitability roughly when, do you remember?

32:18 I think we hit break even around two thousand six. But we didn't even have an e commerce site until two tausin seven. So that's when we really started to see some profits coming in. Mm-hmm. I mean in terms of of growing, I mean this was it was

32:37 organic growth. But do I do you remember, just to give me a sense of where you were, do you remember W you mentioned that you you know, once you hit a million dollars in sales a month, do you remember what year that was? So we we started to grow then in two thousand eight we slowed down a bit. So it was probably around around that time, two thousand eight, two thousand nine. Tell me about why you started to slow down a bit.

33:01 Because of the the crash. The crash, okay. That was a disaster. Did you got spooked by the financial crisis? Did it how did it affect your business, yeah. We actually fared very well because At that point we were going through a name change and I had reduced our inventory so we weren't sitting on millions and millions of dollars of inventory that wasn't moving.

33:26 I also want to add one thing to a a little more texture to the uh the crash of of O eight and how we m navigated that. The way we got through it. Was literally our employees were so loyal. And

33:41 We had such an incredible culture to our company. That they agree to go for Weeks without pay. For us to catch our breath financially. And I was one of the greatest highlights of my career when I saw

33:55 Our employees just say We believe in you and we we want to s we want to support you and we're not going to leave and find a job somewhere place else. So You know, being good to your employees was really important for us to survive that that little era. Yeah. But right around the same time I think you guys had had another problem on your hands because you got sued, right? You got sued by I guess by a similar company uh that was called M D formulations. And basically they sue you because your name

34:25 Of course was M D skin care. And you're several years in now and and then they're pointing out or they're saying that your names are too similar. Right. They slapped us with a lawsuit, and then they tried to buy our brand.

34:39 And so had they been around longer than you guys? A little bit longer and they had they were owned by a company by the name of Allergan. And So in any case The company itself I think was going through some trouble and they were sold and

34:55 They tried to buy us. It was just it was craziness, and we just decided we wanted out. We weren't going to fight the lawsuit. We were just gonna change our name. So you decide not to fight the lawsuit. Yeah, we settled with them. How long did it take before you got there? Because I think you were decided you were gonna fight the lawsuit. Well, initially we started to go through depositions and it was a total nightmare. It was a distraction. It definitely took a lot of time and energy away from actually building our business.

35:25 But we decided that we didn't want to fight the lawsuit, that we were going to change the name and Yeah, it was tough times. We had to make a Decent size settlement payment. Two M D formulations.

35:38 And You know, pay the lawyers fees, and so that year was really tough for us. And Dennis and I had A lot of back and forth.

35:48 Because he didn't want to put his name on our brand. But I convinced him. Tell me, Dennis, why didn't you want to put your name on the brand?'Cause it was called M D skincare up until two thousand ten. Right. And now it's gonna be called Dr. Dennis Gross skin care. Tell me why why you were reluctant. Well, you know, because the last name Gross

36:08 is sort of a disconnect with beauty, you might say. And maybe I still was, you know, thinking about my being ridiculed in the school yard in junior high school. Your gross, you know, and it was a thing. Um I did not know how that that would be received. Um It's not actually how you pronounce my last name, to be honest. It's Charose, but that's a different story.

36:29 Netheless, that was really the reason. I had to pull rank on him. I was CEO of the company. I'm like, sorry, babe. We're going for it. And it was it was a blessing in disguise for sure. But I will tell you it would it would be kind of humorous where I'd be like s you know, sneaking around like Nordstrom and walking through Sephora and hearing people saying like Oh my god.

36:54 Gross? Are you serious? When we come back in just a moment. Dr. Dennis Gros Skincare does a star turn on TikTok. with a mask that uses LED light.

37:07 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 2010, and Dennis and Carrie have a new name for their brand and a new twist on their most important product. We came back in two thousand ten. As Doctor Dennis Gross And we launched

37:45 A new version of our alphabeta peel. It was that extra strength alphabeta peel. And that was also disruptive and risky. And Sephora was a huge, huge, huge help to us at that point because I think they were scared too. I think we were all a little nervous. Are we doing the right thing? We've got this one peel that we've been selling.

38:08 For ten years, and it was our hero skew, and now we're gonna launch an extra strength version of an acid peel to put on your face. But I was just seeing it in my practice, you know, people saying, bring it on. You know, we know what the original version is and if this is gonna be even better and the two steps will save me from getting blotchy and You know, people went from being skeptics and concerned to full all you know, all our believers.

38:34 in what they can see on their skin. So th the extra strength peel really was a big hit and still to this day outperforms. Yeah. Tell me about so basically You're focusing on the brand and it's gro and it's steadily growing.

38:48 Every year. I mean is was there any moment Where you start to think, okay, maybe we should bring in some outside investors to really supercharge the growth or because it I know it would happen later. But Between two thousand ten and two thousand twenty, was there

39:05 Conversations that you guys had about that? You know, one thing that I always tell an entrepreneur or somebody that's starting out a brand like Take every single meeting. Take all the meetings because you never know what who you're gonna meet and what you're gonna learn.

39:21 And so Over the years we had quite a few meetings, wouldn't you say, Dennis? Yes, we did. But I must say. We reinvested every dollar back into the business in those years.

39:33 Yeah. We had the cash flow and we had the revenues to support our growth. um we instead of taking an investor and taking money out of the company we continue to live off the income of my dermatology practice. and just believed in the brand and reinvested every day.

39:52 And we didn't take a salary. Neither of us took a salary for twenty years. And Dennis, you were still practicing and you were still seeing patients every day. Absolutely. First of all I needed to. Number two, it's what I love.

40:04 And number three, it was actually in tandem with the the skincare brand, so I maintain my practice to this day. Because it really is still what we call the living lab. Yeah, and probably became difficult to get an appointment there at a certain point because your your name was on on the brand and in shops. And so

40:25 You know, one thing kind of whether that was intentional or not, it kind of bolsters the other. He had some pretty frantic Years, frantic days. Long long hours. Mm-hmm.

40:36 Yeah, I bet. Um Tell me about Moving into like Light technology, right? I mean Basically you developed a plastic mask.

40:44 And the same went. totally viral on on TikTok a few years ago. How did that technology even start to emerge? It was a procedure done in my practice, right? LED is You know, something that dermatologists do.

40:59 What does it do for your skin? Two major things. Number one, it stimulates collagen. How does LED light do that? It's so crazy. It is crazy, but it is absolutely true. There's receptors in the skin in the cells that produce the collagen, the fibroblast cell. And it turns on the production of collagen. It stimulates them. And as we get older, the amount of collagen we make diminishes. So LED in my practice was a big winner. Number two,

41:28 It works on acne. the two biggest components really of dermatology were addressed by a treatment in my office. So One of the main things we do is bringing what we do in the dermatology clinic to the home of the consumer. There was an opportunity.

41:45 And It was the impetus to say, let's create an at home device and that's what the LED device that's the backstory. But I want to point out That's Our very first device.

41:57 Was actually a facial steamer. Yeah. We launched a steamer back in I think two thousand twelve. And it was very, very popular for many years and it showed us that there was a hunger for devices. And The other piece of it that is so exciting from my perspective is the tools that our teams use.

42:22 when they go out in the field and they do facial events at stores and at spas We use these these devices on the consumer, and it creates theater and excitement and It's really, really fun to be able to offer this to clients to be able to use in their home. But the thing about LED is you have to use it daily in order to see the results. And if you do The results were spectacular.

42:46 But to get the consumer to actually stay on the plan. It has to be convenient. Right. three minutes a day was the game changer and we got results. And it's it's FDA cleared.

42:58 Because it works. Hm. And some people just are concerned about the area around the eyes aging. So that's another device. And now the newest one is the lip. And

43:08 You know, trends as I see in my practice is that lips are just huge in terms of what people want and it's just something that is part of our culture now. Larger lips, people coming in for lip plumpering with fillers and injectables. So there was a trend we saw early and that's where we brought that product to market. Alright, so

43:30 Around twenty twenty Either around the time of the pandemic or before You bring in outside capital. A private equity group. buys a minority stake in the

43:41 in the brand. Tell me about the decision to do that. What was the the thinking was we'll take this money and we'll do what with it? So I'm gonna back up. And just give you a little, you know, little story leading up to this. So

43:56 Our business is growing. and I wanted to focus on international expansion. And so by twenty eighten, twenty nineteen. Now I'm starting to feel like oh my god. I actually don't nід capital.

44:11 В суцісо, ви профітабо, вокінний іч. But I need a board of directors, I need some partners to really help me figure out how to how to really take this brand and turn it into A global Force.

44:28 So we hired an investment banker and we met with You know, multiple, multiple private equity groups and strategics. And

44:39 We kind of fell in love. Ви A group called Main Post Partners based in San Francisco. And we Went through the whole deal process.

44:51 And we were getting close to signing the deal and then the pandemic hit. Hm and The deal was off. They pull the deal. doors closed and it was like oh my God. You know, we thought it was bad enough going through like nine eleven and then the you know two thousand eight crash.

45:11 The pandemic was just like shocking. It was shocking. And Dennis's practice closed. Sephora's doors closed, every spa closed, and we were

45:25 Sitting looking at each other. Thinking Oh my God, I think I was laying on the floor thinking I can't believe this. I can't believe this.

45:36 Are we gonna lose our company? So What'd you guys do? How d how did you handle it? Basically we just rolled up our sleeves and

45:47 Went all in in the digital space. And We put Dennis on Instagram. and we did master classes for our clients so that we could stay in touch with them and make sure that they were okay and About

46:03 Three months into the pandemic, I got a phone call from Main Post and they're like, we want back in. We figured out a way to make the deal happen. And so we we got the deal done in June of twenty twenty. A couple years after that. You got an acquisition offer. Which you would then accept.

46:21 Um from Shiseido. to buy you guys out. four hundred million dollars. amazing exit. I mean, I I imagine by that point you felt, all right, we've been doing this for twenty three years more. It's time to

46:35 Kind of enjoy the Fruits of our labor, I guess. Well, we wanted to find just the right partner. with a company that would Respect our culture, respect the brand that we built.

46:49 And that was Shiseido. And we're still with them, by the way. We're still full time and uh I still create the products and It's been a great journey.

46:59 Yeah, a obviously a huge brand and they've the uh the ability to kind of superscale things, like globally. That was one of the Key you know timing factors we actually in two thousand Twenty. launched into Sephora Europe. So I think we opened something like

47:17 Seventine countries. In a period of like three months it was Crazy And Having Shiseido support

47:28 Us with talent and with experience has been incredible. And so now you're probably committed for a few years to stay with the brand. We have a

47:39 Three year contract. And um I don't know what's gonna happen, but For right now, it's been wonderful. They're true partners, you know.

47:48 Yeah. This is still a changing world in terms of skincare. We going full circle, going back to the day where Skincare was just in moisturizer. You know the future I think is absolutely incredibly exciting.

48:02 And our pipeline. I think is is really exciting to me. I still want to create And innovate. When you think of about how you know th about the journey that of building this, I mean how much do you do attribute to the work you put in and and the time and how much do you think had to do with luck? and timing.

48:20 I don't think it was luck, to be honest with you. I think it was really a lot of discipline. A lot of creativity. Curiosity, just like seeking out the white space and disrupting And results. You know, if you really are

48:37 distincti in your what you're bringing to the consumer and to the industry. Then I think that People will support you people will buy your product And

48:50 That is Top line. For me. is the results. Nowadays the consumer wants to see the difference.

48:59 And we have consistently done that. And That's what I'm most proud of and I think we earned it. That's Dennis and Carrie Gross, co-founders of Dr. Dennis Gross Skincare.

49:12 By the way, that LED face mask that went viral It doesn't just look like it's from outer space, the technology was actually developed by NASA. NASA thought that LED light might help speed up healing of cuts and scrapes when astronauts were in zero gravity. They didn't end up using the technology in space, but they did end up funding research that led to some of the first medical LED light devices back here on Earth. Hey, 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 guyros.com or on Substack. This episode was researched and produced by Alex Chung and edited by Neva Grant, with music composed by Ramteen Arablui. Our engineers were Patrick Murray and Gilly Moon. Our production staff also includes Chris Masini, JC Howard, Casey Herman, Imon Maani, Sam Paulson, Carrie Thomson, Katherine Cyfer,

50:11 John Isabella and Elaine Coates. I'm Guy Raz and you've been listening. to how I built this.

What you see above is a preview of the first minutes. One unlock costs 10 credits and covers this episode forever: full segment and word-level timestamps on this page, plus .txt, .srt, .vtt and word-level JSON downloads, as many times as you like.