Lesson #66: When Others Are Struggling and Cutting Back, Move Forward

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In 2010, IT’S A 10 Leave-In Conditioner was a big seller, and Tony Cuccio worked with a factory that could knock it off for me (kind of like Costco does with the Kirkland’s brand). I thought about it and knew being a manufacturer was the key to long-term success. I’ve done well with ForPro, why not try hair care? So, what does an entrepreneur do? Launch Black 15-in-1. If I was going to compete, I had to have a better product and I came up with fifteen benefits. It was a 3.3 oz spray leave-in conditioner treatment, and it retailed for $20. Packaging was black and magical, and it was boxed as a premium item. I put the same manager as FPO in charge to sell to distributors.

I quickly learned that launching a premium hair care product was expensive, time-consuming, and risky (all the favorite buzzwords entrepreneurs love). The manufacturer came through as Tony said they would and the product performed. I hired a private testing company to test for the fifteen claims. They did a test with a hundred users over a thirty-day period. The test results came back perfect, and we were ready to launch.

But first, I needed a marketing campaign. I researched the best PR agencies in NYC that specialized in beauty products. I hired Shadow PR and put them on a $10K monthly retainer. They recommended that I hire a professional photographer and use professional models so they could use the photos to create magazine ads and use for their beauty editors. I hired one of the best and spent $25K on the photo shoot.

Then I thought that I needed another hook for consumers to buy the product. Competition was fierce and Black 15-in-1 was a new brand and a new product in a crowded field. I came up with the idea of contacting Good Housekeeping and getting the Good Housekeeping seal on the product. It was an extensive process, but what I later learned is that you had to advertise in their magazine to get approved. I thought that if the scheme worked for giant companies like P&G, why shouldn’t it work for Black 15-in-1? I signed up with them. The product was approved for the seal, and my PR firm loved the idea. However, spending $85K for a quarter-page ad was painful.

The product launched at the BBSI show. I spent more than $50K for an elaborate booth and it was all decked out in purple and black, the colors for the product. My manager and I were ready for action. My lead designer at The Pavilion, Leslie McGwire, was friends with Jonathan Antin.

He was the celebrity hairdresser on Bravo’s show, Blowout. I loved the show; there was no cooler hairdresser than Jonathan. He launched his signature product “Dirt” on the show, and it became a bestseller. There he was at my booth and it was the first time I ever met a TV celebrity. It was kind of cool, and his persona was the same as on the show.

He checked out the product and told me that together we could make lots of money. His pitch was that he knew the producer at Shop NBC, which was a competitor to QVC. With Jonathan as the lead stylist for black 15-in-1 and going live on TV, what could have been better? So what does an entrepreneur do? Sign Jonathan up.

Now here is yet another life lesson for entrepreneurs: There is nothing worse than dealing with celebrities. Jonathan had an agent, complex contracts, and I needed my Dykema attorney to review everything. Jonathan’s fees were $50,000 and a piece of the action. But hey, I was hooked and Jonathan was convincing.

I distinctly recall flying to Minneapolis and meeting Jonathan at Shop NBC. It was the first time I saw a live TV production set and we met with the producers. He arranged for a model call, he picked two, and went to work in the dressing room. He was impressive to watch styling the models and they were gorgeous. We had a five-minute live segment. The set producer came into the dressing room and said we were going live in ten minutes.

We were hoping to sell a thousand units or more (I would need to sell more than five thousand units to break even). I sat behind the set and watched Jonathan put the finishing touches on the model’s hair. It was electrifying. But alas, we didn’t even sell five hundred units. Although I knew Shop NBC was a distant third to the QVC and the Home Shopping Network, I didn’t know how distant it was until that day. If we were on QVC, it would have been a smash success. But Jonathan thought Shop NBC was best. In the end, he got paid and I lost my ass.

If you thought this was enough for one entrepreneur in one year, you would be wrong. Damn the housing bust and falling stock market. Here is yet another life lesson: When others are struggling and cutting back, move forward. It has always been this way in the stock market. Once all the retail investors sold their stocks, the pros came in and made a quick 20–30 percent.

I got a call from EV. EV worked at Ready Care Industries, and they were sort of a competitor. They specialized in locker room products and sold some accessories. EV wanted out and to come work for TNG. I flew him out and we had lunch at J. Alexander’s (EV’s name is Ed Verbeke, but I always called him EV). He wanted to start a hospitality division at TNG. We were already selling treatment room products to spas but not locker room supplies. His argument was that if we offered both treatment and locker room products, spas could buy everything from TNG. His argument was compelling.

EV was a talker and to tell you the truth, a real pain in the ass. But in-between bites of his cheeseburger, I could tell he was passionate about the hospitality business. Now mind you, if you asked me what business segment was my favorite at TNG, I would have told you spas. I love spas. I love getting massages. I love relaxing in the spa lounge with a comfy robe and cup of hot chamomile tea. I love spa locker rooms with their hot tubs, steam rooms, and saunas. I love the fresh fruit and nuts and ambient music. I love the amenities in the sink area from mouthwash, to ready-to-use toothbrushes, and all the personal care products. Resort spas were the best (and still are), especially five-star properties such as the Four Seasons, Ritz Carlton, Canyon Ranch, and Rosewood. Vegas’s claim to fame when it moved from being kid-friendly to adult-only was in part their investment in spas. Best of all, they were all TNG customers, and I thought EV might be right.

So what does an entrepreneur do? Hire EV and launch the hospitality division. This was really big news and so much in fact, I have to write an entire chapter on it. 2010 sales were $57M, and there were two hundred employees.

Life Lesson Tip: Chickens can’t fly and retreat when things get tough. Entrepreneurs are soaring eagles and move forward when things get tough. Amazing opportunities always arise after a crisis.