Hero Cosmetics, a business built with the three founders’ pocket money, has been valued at up to $630 after 5 years. After conquering the US market, this brand is expanding its market worldwide.
I. Existing product categories
When first launched in 2017, this brand only sold Mighty Patch acne patches. This is what has defined their identity and success until now.
After growing strong, they began to produce other products, fully meeting the skin care needs of customers.
At first, the founders were very nervous when introducing new products, but it was wonderful that they were well received by consumers, and a lot of new customers came to them.
I would like to briefly introduce the product list according to needs:
- Pimple Care + Aftercare
- Sensitive Skin
- Blackheads + Pores
- Dark Spots + Post-Blemish Care
- Fine Lines + Texture
- Under Eye Care
At the same time, product types also meet most consumer needs:
- Cleansers
- Patches
- Toners
- Targeted Solutions:
- Moisturizers
- Sunscreens
- Bundles + Kits
- Swag: This category includes accessories; the company does not focus much on these products. Personally, I think this category should be completely abandoned.
Through the above categories, we realize that the strength of this brand is its skincare products. The ingredients and design of the products are in the style of cosmeceuticals, focusing on treating very specific problems.
In the next parts, I will introduce more stories surrounding Hero. There are many reputable articles that clearly portray the founders of this brand, as well as the process of them going from zero to 630 million dollars. I do not repeat those stories, but just review some memorable milestones, along with my personal comments on their success.
II. Hero Cosmetic brand history
1. A little about the founders
Hero was created by three co-founders, including Mrs. Ju Rhyu, Mr. Dwight Lee, and Mr. Andy S. Lee. When we search for information about this brand, we will only see mostly information about Ju Rhyu and the journey she took to achieve success. The remaining two co-founders seem to be very secretive, rarely appearing in the media. According to information on LinkedIn, these two men studied at Boston College (Ju Rhyu studied at Columbia Business School). I personally don’t remember where I learned that Hero has three co-founders.
From the early stages, Ju Rhyu admitted that having co-founders is something you should think about to be able to handle the huge and complex workload. This is also advice that she repeats many times when sharing experiences with startups.
They are of Korean descent; they deserve to be typical representatives of the generation of global citizens. All of them have skills and expertise related to information technology, marketing, e-commerce, etc. Before building Hero, they had all experienced many companies, many positions, and created a number of projects. previous startup company.
2. The Hero’s development process
2.1 The strategic edge achieved through product selection
The idea of building a brand like herocosmetics, or more precisely, creating her own company, has been cherished by Ju Rhyu since 2013.
Until 2017, Ju Rhyu decided to get out of her “safe zone” and start implementing her plan. At that time, she was still working for Samsung Korea.
At that time, they only sold one product, the Mighty Patch – acne treatment patch. This is not a new product at all; it is very popular in Korea. However, through market research, they discovered that no American brand sells this type of patch in the US market, and Americans themselves do not know much about it.
Thus, they have identified a key product. So the founders decided to start the machine. They contact factories in Korea to produce sample products, build brand recognition, and register to open a company in the US.
2.2 Capital sources and distribution channels
The capital to build the company in the early years came entirely from the pockets of the three founders, so the financial pressure on them was huge. It is also the motivation that makes them focus on their work and create profits as soon as possible.
Because they don’t have much capital, they chose Amazon as the place to launch the product on September 27, 2017. Amazon’s comprehensive ecosystem has helped them save a lot of operating costs as well as product promotion. In addition, it helps them quickly survey consumer reactions.
In the first three months they sold 10,000 products. After this milestone, the founders began to deploy other sales channels: Building their own website, retailing for distributors, that is, developing according to a multi-channel model.
With those initial successes, this brand has strongly developed its product portfolio as I introduced in the first part.
On Amazon at that time, there were still similar products but sold by Korean companies, so customers in the US did not have many choices. And the appearance of Mighty Patch – a product created by a US brand for the US market – has stimulated American consumers, while also attracting the attention of retailers.
2.3 Hero is valued at $630 million
At the end of 2021, the founders decided to sell the business. The reason is:
- The founding team achieved its previously established goal of generating $100 million in revenue.
- Since their founding, they have raised an additional $16.2 million. The founders wanted to find a way to bring liquidity to themselves and their investors.
- The market is increasingly more competitive. There are many big brands also launching similar products.
- The company wants to develop into a global brand.
On September 6, 2002, The founders sold Hero Cosmectics to Church and Dwight for $630 million. Although they no longer own the company, they are still part of the team that runs this brand. This is quite a normal thing. You can read the book “Barbarians at the Gate: Bryan Burrough and John Helyar” to understand more about mergers and acquisitions of companies.
Less than a year after cooperating with Church and Dwight, Hero Cosmetics has expanded beyond the United States, entering the markets of Canada, England, France, Germany, and Australia. Their growth is crazy!
III. Creativity in building a loyal customer community
I have a lot of experience with Korean brands, so when I visited herocosmetics.us, I noticed an unmistakable feature. That is Skin Squad, a forum—a place for customers to give product reviews and discuss skin care issues. At the same time, they implement a membership registration program with annual incentives, occasionally organize mini games, and give gratitude gifts to customers.
This is a common format for brands in Korea but is rarely seen in the United States. It may be due to differences in culture and consumption habits between the two markets. But the founders successfully integrated into the very demanding US market.
Member Tiers:
The Skin Ace: Spend under $75 in a year. Earn 1 point for every $1 spent. Yearly birthday regular gift. Redeem points for rewards. Exclusive deals for members.
The Glow Pro: Spend $75 or more in a year. Earn 1,5 point for every $1 spent. Extra birthday large gift. Free shipping on all orders. Redeem points for rewards. Exclusive deals for members.
Ways to earn points:
- Shopping: 1 point per $1 spent.
- Write a review: 25 points per product review.
- Create account: 100 points.
- Follow the brand on social networks: 25 points per channel (Instagram, TikTok, Youtube, Facebook).
- Start product registration: 50 points.
- Complete the Skin Test: 25 points.
- Complete the Skin Squad mission: Points vary depending on the mission.
IV. Personal opinion
I think the success of Hero Cosmetics is largely determined by its way of thinking. There are many people in the world who are good at their profession, but they lack many soft skills, as well as quick thinking, so they cannot build their own careers.
Through the profiles of the founders and the journey they took to build the company, I would like to list the core factors that created their success:
- Different thinking and perseverance: They do well in market research and choose the right key products.
- Choose a development model suitable for financial capacity at each stage.
- Attach personal responsibility to the survival of the company by using your own capital to build the company. Good cash flow management. Find the fastest way to generate profits to maintain the company.
- The founders have expertise and skills related to management and marketing.
- Successfully copied the method of building a loyal customer community from the Korean market.
