← Coffee N° 5 with Lara Schmoisman
Coffee N° 5 with Lara Schmoisman
Bootstrapped to Beauty Powerhouse: Scaling SUGARED + BRONZED with Courtney Claghorn
00:26:28
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- [00:00]
A
Foreign. This is Coffee Number Five. I'm your host, Lara Schmoizman. Hi, everyone. Welcome back to Coffee Number Five. And we talk a lot of times about unicorns. We talk a lot of times. Everyone who starts a company dreams about being a unicorn and that that happened to you. And then a lot of entrepreneurs make dreams and doesn't happen and you need to fall and, and then try again because I'm a firm believer. I've never given up. Today, I want to bring you a story that is one of those unicorns. I mean, I'm sure there was a lot of work behind the scenes and a lot of nights not sleeping and worrying. And I know that it's not that simple. So I think it's important to share those stories too, of success and how we got there. So we know that I love to work in beauty and wellness. And I want to bring you a story today that it goes a little bit in both. Welcome, Courtney. Thank you so much for being here for you. That you might know who Courtney is. She is a co founder of Sugared and Bronze. So what's welcome first and tell us what's sugar and bronze and why do you come up with the idea? I want to hear a little more about your journey because you, you had a job back then when you came up with.
- [01:28]
B
Yeah, well, thank you for having me. Really excited to be here. Jugurt and Bronze, for anyone who doesn't know, is basically two beauty services. It's all natural sugaring, which is a form of hair removal. It's removing hair in the natural direction of the growth instead of against it. So it's a lot less abrasive. A lot of people find it less painful. It's actually an ancient Egyptian technique. So that's the sugaring portion, and then the bronzing portion is airbrushed tanning. So it's all done by hand. It's done by a technician. It's not a booth or a mach gene. And so it just has the most natural results. And obviously it's much, much safer than being in the sun or in a tanning bed. It doesn't even compare. It's recommended by dermatologists, you know, everywhere.
- [02:08]
A
Okay, so how do you come up with this idea?
- [02:11]
B
Yeah. So this is.
- [02:13]
A
How was your life back then?
- [02:15]
B
Well, I was 23 when the business started. So, like two years ago. No, I'm kidding. Almost 15 years ago. Which is so crazy, but hopefully my Botox says otherwise. But I was just, I was getting spray tans in Los Angeles and I, I was Right out of school. So this is probably like a year out of college. And, you know, it was 2010 at this point, so the economy wasn't great. I didn't love my job, but I also needed to make money, and there weren't a lot of other jobs available. But I was also very much like a broke recent college grad. You know, even though I had a job at a fintech company, you know, it was like I didn't have any money saved when I graduated college. Like, I was fortunate enough not to graduate with debt, but I also, you know, needed to pay all my insurance for the first time or my cell phone bills and all these things. So the idea that these spray tans in Santa Monica were $75, $115, or I had to go to a machine that does that, did it. And it was like, not the results I was looking for. I didn't like the options that were available. You know, one time I went to a tanning bed place where they did it by hand, and it was like a very straight man that wanted to spray me. And I. Most women, like, I like to get sprayed naked. I was like, this is awkward. And, like, there were, like, posters in the window and, like, neon lights. And I was like, this is the only somewhat affordable, like, airbrush tan I can find. It just felt like there was a hole in the marketplace. So I started basically complaining to my then boyfriend, now husband and also co founder about this sort of problem I had. And one thing led to another, and it was like, what if. What if we could start this? And I took a lot of convincing, but we ended up figuring out that we could sort of launch it out of our apartment for about a thousand dollars of startup capital. But I really thought long and hard that, like, I was like, I just saved my first thousand dollars. Like, that's crazy. Sam, my husband, was like, what if we each put in $500? Like, we'll all have some skin in the game too. Like, I'll build a website, you know, things like that. And I was like, okay, if I have a partner, it feels a little bit better. We. We did it. We launched it, and we started it out of our apartment.
- [04:18]
A
You were the one spray tanning people?
- [04:21]
B
Basically, Yeah, I was in the apartment for, like, the first. We were there for probably about six months in the apartment before the first store opened. And then I sprayed in the first location probably at least another nine to 12 months after that. So, yeah, I was. I was in it. Yeah, very in it.
- [04:36]
A
Very cool. So, because this Is a journey. And when I said about the unicorn, you are in unicorn, but you. It's been 15 years. And how was the transition for you to start from working from home and say, well, now I'm ready to go and put the store and then I'm ready to open another store and another store. You are everywhere now. So how was your transition of growth? Because a lot of do you have to ask for money? How do you do the financing? How did you figure out also who was your team at the time? Because you started just this. You say your husband did a website, you were spray tanning. Then realize when. Because this is one thing that I see a lot of founders that they are really having hard time letting go.
- [05:22]
B
Yeah, I mean, it was. It was definitely a progression of things. I mean, so when we launched it out of the apartment, I kept my job in fintech and my husband kept his job for probably three to four years. It didn't make sense and it couldn't support us both financially. So, you know, it was. It was very much me trying to figure out, you know, everything. Um, and I left my job probably three months in. I was like, I was turning down clients to be at work and I was like, well, this is silly for a new business. You should never be turning down clients. Yeah. So I kind of had to make that tough decision of like, am I leaving my job? So let's say we start this business November 1, 2010. By the end of January 2011, I leave my job. At that point, it was like, okay, we need to get this out of the apartment. Because, you know, this is. This is not meant to be in an apartment forever. It was just sort of a test run. So we start looking for our first real brick and mortar store. We find a location on Montana Ave. In Santa Monica, where I lived and worked in Santa Monica. So it was really where I wanted to be. That being said, it was upstairs behind a tree because Montana Ave. Has expensive rents. But I really wanted to be on that street. And so I was like, oh, if people could find us in the apartment, they can probably find us upstairs behind a tree. So that's what we ended up doing. And I still. Our Santa Monica location is still on that street. It's been, you know, relocated to a ground floor, much larger space, you know, several years ago. But I still really stand by that real estate decision. So, you know, then we sort of do a very minimal build out on our first space and we open that first store at Memorial Day 2011. And I'm, you know, still in there, spray tanning, doing all the things. And I think probably a year or so after that, we had like a family, a couple of family members a year and two years in, like, want to open sort of loose family franchises. And we. We didn't know what we were doing. We kind of just said yes. We didn't collect a franchise fee. Everything that we had created from our store, we just kept reinvesting every dollar. So we still had not, you know, even thought about any outside funding. And then from there, we started to open more of our own stores and again, just reinvesting every dollar. You know, I started to manage the stores and manage the construction, and at some point it made sense for my husband then to leave his job as we really started to keep opening stores and we really needed, you know, more on the back end team. But for a long time it was largely me. And then I kind of picked my husband's brains at night, nights and weekends, maybe if he wasn't too tired from his own job. And then he kind of came on, you know, full time, like three or four years after that. And then we continued to open stores and bootstrap. We bootstrapped for nine years without any outside funding, except for a couple of SBA loans. And then we. We raised money for the first time when we had 10 stores in late 2019. But at that point, the loose family franchises had been wrapped into the corporate structure, and we didn't have any sort of, like, disjointment like that.
- [08:04]
A
How do you go about creating a corporate structure and then how did you go about fundraising?
- [08:10]
B
Yeah, I mean, it's so funny. Like, it all felt very, I don't know, organic in the early days, because, again, it was like me, my then boyfriend, you know, then we had these two family members who sort of came on board and sort of had quote, unquote, corporate roles. But we were all, you know, just working from home. We were visiting locations, we were visiting construction sites. It was a very informal sort of corporate team. I think as, you know, the years went on, we hired a couple of people, both internally and externally to, you know, oversee customer service, oversee recruiting. Just as we grew, we needed more help, but it wasn't a very formalized corporate team by any means. We didn't have a formal corporate office or anything like that. Then when we raised money, only 2019, you know, we had sort of contemplated the topic for many years of like, do we want to sell some of our equity and take on a partner? Because it's such a big Decision. Ultimately we did decide at 10 stores that we wanted to grow pretty quickly and that we needed to raise capital. So we were lucky enough to work with an amazing investment bank at the time was Piper Jaffrey. Now it's called Piper Sandler. And their team was amazing. They just sort of held our hand through the process, did, oh my gosh, so much, so much analytics, so much analytics data. Like all these things that the private equity firms could then look at without us, you know, basically having to quit our day jobs to put that all together. And we ended up doing 12 management meetings with different PE firms and all 12 of them were interested and put in an LOI. And so we sort of just took it from there and ended up deciding to work with Main Post Partners out of San Francisco. And also Howard Schultz is an investor as well, a founder of Starbucks.
- [09:43]
A
Very cool. So people talk about location, location, location and how important it is. You mentioned it as well. So how did you decide about. We heard the story about the Montana Avenue, but the other locations, how did they are and how was your plan of expound Expansion?
- [10:01]
B
Yeah, I mean, so the ones in Los Angeles were a bit easier than a lot of the others. Just given that we lived in Los Angeles and we had such a deep understanding of the city. Like I'm a big intuition person and you can look at data all you want, but if your intuition doesn't match up with it, it probably doesn't make sense. And so just knowing the city and knowing what our our clients need was a big factor. Like I know it's a 20 minute appointment for most people if you're getting a Brazilian or a spray tan and you want parking to be easy. So in Los Angeles that's a big factor. You know, we want safety. Our locations are open late, we have all female employees, we have 95% female clients. So we want it to feel safe. But we also don't need to be on Rodeo Drive because you know, you're kind of walking out with a bra without a bra on a lot of times and something loose and you just got a spray tan. Like you're not looking to walk by Chanel, but you want a very still a high end street, just not like extremely bougie. So we knew a lot of these neighborhoods in pockets and so those, you know, we didn't have access to things like Buxton or these things that we have now, these demographic tools. So a lot of that was just sort of led by what we knew in the city as we expanded beyond, you know, thankfully One of our earlier new markets was New York City. And, you know, I don't know if I thought so deeply about where to be in the city. I kind of just had a feeling that if, you know, if we could make it in the city, we could make it anywhere. And it was like, really about where we could afford rent. And again, deep intuition. And to this day, our Union Square store that we opened, our first store there is just. It's such a beast. It's on an avenue, which in retrospect, was such a great decision over being on a street in New York, because avenues just have so much more drive by and walk by traffic. And again, it was just such an intuitive decision. But now I look at all the things why that, why that, you know, it made that decision so great, and I'm like, oh, I. Those. There's so many factors, but I don't know if I thought through all of them. Like, for me, it was like I walked in, I was like, I know this space will work, and I know we can afford it.
- [11:58]
A
The same way in my house that I came in to see my house. This is the house even it was at the time. You just feel it. I feel like the energy calls you.
- [12:09]
B
Yeah, exactly. Yeah. So. And now. And now it's different. Now we use Buxton and all these demographic tools as we go into new cities and I go out and visit the sites, and it's. There's a lot more cooks in the kitchen, too, making the decision, which makes it sort of harder and easier at the same time.
- [12:23]
A
Yeah. How do you feel about that? That now you're not the only decision maker in your business?
- [12:28]
B
Well, I love control, so I don't always like that. Sometimes it's a relief, honestly. I think for so long we felt like, oh, God, are we making the right decision? We never know what we're doing, and we still feel like that a lot. We were just figuring it out every day. But it is nice to have more people to sort of bounce ideas off of, you know, because there was a lot of times, I think, up until when we ra money, honestly, we were like, we think we have a business that's great. You know, on paper we think it looks good. But, like, does anyone else agree with us? We didn't really know until we went into that formal fundraise and did our horse and pony show and got all this interest from all these PE firms. Then we were like, oh, wow. Like, what we're doing is actually working. Because for a while it's. It's Kind of easy to second guess yourself. You're like, I started this out of my apartment. Is this, is this a real thing? Like, does anyone else value this?
- [13:12]
A
When did you start? Because this is other thing I see on a lot of founders that they don't pay themselves.
- [13:18]
B
Yeah, we didn't pay ourselves very much for a long time. I think, you know, I started to pay myself when I left my job, just, just enough for me to pay my own personal rent and things like that. Fortunately, you know, being 23, our lifestyles were very different. We didn't have a child. Like, most of our friends were like down to go to just like a dive bar. We weren't going out to fancy dinners. You know, life at that age is just different. So we were really lucky in that aspect. But yeah, we didn't pay ourselves for a very long time. I think when we went to Europe, you know, when I say didn't, we paid ourselves a salary, but it was low. And when we went to Europe on vacation, we were using our AMEX points. Like we were figuring out ways to live life and have fun. But yeah, we were bootstrapping. Like, for us it was all about growth and ebitda and we, you know, we just paid ourselves what we could get by on. And I don't think it was until, I don't know, eight, nine, ten stores that we really started to take home, you know, a paycheck that was. Felt comparable to what any of our friends were making at the time.
- [14:14]
A
So. And then I see that you are, you created your products line. Why you think that you went from being a service provider basically to sell products. And how was the transition? Because I know how hard is to create products.
- [14:30]
B
Yeah, it's such a. It feels like a whole new venture for me. I'm still learning so much. But it kind of was one of those things where early on, you know, we have recommendations for both tanning and sugaring of what you should do at home, both to prepare and to maintain your services. And oddly, they're very similar. You know, it's, it's exfoliating, it's moisturizing with some less tanning. Obviously, there's the added element of these sunless tanning products that can help extend the life of your tan, which is a little different than sugaring, but so many things are similar. And so it felt weird with clients coming in being like, what moisturizer should I use or what sunscreen or what this and that, and we're like, oh, you can go buy this at Target or Amazon, like, it felt like we should just have it here at our stores. But also we didn't want to take our eye off the ball. You know, like, I kind of refer to our history as like, we were in bootstrapping mode. We go to raise money and we're like, oh, we're going to open a bunch more stores and expand our product line. But then we went into pandemic mode and then we were in recovery mode. And it was a long time until we were actually able to get back into growth mode. So, like, we were always hyper focused on the core business and taking our eye off the ball to start a product line wasn't really in the cards, but we wanted to have a product offering. So for a very long time we had private label products and just a handful, nothing super serious, just something where it was a product that we stood by, you know, that we could say, if you're looking for X, Y and Z to support your service, you can buy it here. You know, it's right in our lobby. But we always really wanted to have our own formulations, our own, you know, our own custom packaging, all these things. So that really started only a few years ago. It only started once we felt like we had really recovered from the pandemic. And we were able to then say, we can focus on opening 12 stores a year, not compromise the client experience, and also focus on creating a product line without, you know, any. Without feeling like we were pulling resources from something else and not giving something our all. So that was really a newer venture a few years ago. And we're still, you know, every time new research comes out, we reformulate. Like, we're always looking to go the cleanest route, the safest route. You know, when a lot of the microplastic information started to come out, we were unaware of that. Now we're like in a transition to all glass bottles or like, how can we always constantly improve not only our brick and mortar stores, but our product line too?
- [16:41]
A
That's amazing and super important. But let's start talking. Let's move the conversation a little bit. One of my favorite topics that it's marketing. So talking about marketing, how was the evolution of your brand and the marketing? Because I see that today you have memberships. They just start with, when did you want to sit? Right time to include memberships. When is the right time to offer a sale? I realized that you have a promotion offer that people can come and get their first time for little money. How was your. Who tell you to do that? Those were your Initiatives you were trying, you did it. What marketing strategies work for you to create brand awareness?
- [17:24]
B
Yeah, I mean, so from early on we, we always offered a referral discount like $10 off just. And we still do because it's just such a huge driver of new clients and we're always wanting to thank people for referring someone to us. So that was just, I don't know again, I think my favorite yoga studio did it and I was like, we should do that too. I love, you know, when I get credit for referring my friends to my yoga studio. So a lot of these were just kind of born organically. We did bogo for a long time where new clients got buy one got, you know, the second one free. And we did that for a really long time and it was great. But as we started to grow, we just realized, you know, our wait lists for too long and we weren't really able to offer that all the time. But we still wanted to incentivize new clients coming in. So depending on the market and the time of year, sometimes we will offer a new client incentive. I'm going to be honest with you, if it's July in Los Angeles and you're a new client, you're probably not going to be able to find any sort of promotion to come in because it's just our peak season. Our, our books are so busy. It's not, it doesn't make sense.
- [18:25]
A
And this is, it's great because you understand your marketing cycle. Not every month for every space is the same.
- [18:33]
B
Right, right, totally. And if we open in a new market, especially maybe in the winter, you know, we, you will be able to find, you know, on, on Facebook, Instagram, these things, these ads. TikTok will get served to you offering, you know, $10 off or $20 off your first service, just depending on what our books look like. So if our books are really full, it doesn't make sense to, you know, offer a huge discount. But if we're in a new market, and certainly the off peak season, which is often the dead of winter, unless maybe you're in South Florida, you know, it does make sense to offer something. And to answer your question about memberships, we didn't start with memberships. It's not really something I thought about in terms of our business. And then it was actually Sam, my co founder and husband, that brought it up many years ago and probably nine years ago it's been. And he was like, what about memberships? And I was so worried about launching it from a customer service perspective because we have Often had wait lists in peak times, in times where we're just, you know, we always say we rather be understaffed and hire people that we don't love. And so often we have wait lists. And I was like, what if these members can't get in and they've already paid for the month and we don't have an appointment available? And he's like, let's cross that bridge when we come to it. And, and it ended up. Memberships have been one of the best decisions we've ever made. I think 60% of our revenue comes from memberships. People use them truly very much. Not like a gym.
- [19:53]
A
Loyalty by having a. Yeah, we give.
- [19:56]
B
A very steep discount a membership for the single memberships, $49 a month and an a la carte service is 69. I, I have to tell you, when we opened our very first store in early 2011, we upped our prices by a couple dollars since we moved out of the apartment. And an express Tan was 49. So you essentially can be a member and get a tan every month for the same price that it was 15 years ago. And that is like huge to us. Like, we want to reward people, you know, for their loyalty by, you know, not, you know, keeping prices as low as possible. And we, and we really do, we really, you know, feel like it's a win win for both of us.
- [20:29]
A
And this is so interesting, something you mentioned before because you're still a service provider. I mean, customer service. It's something so important that we, when you are a service provider, how do you handle customer service? Because it's very different customer service. When you send us a product that you go to a store, here's your product. You like the product, you don't like the product. There's so many more things involved in services. Handled that aspect, having so many stores.
- [20:58]
B
You know, we have a really great director of client experience and team that supports her. It's still small but mighty team. And we've always said, you know, we want to have fantastic customer service. Like early days, you know, everyone would always talk about Nordstrom, like how amazing the customer service was there. And I was like, we want to have Nordstrom. Like customer service. Like that was always a standard to us. And it's so funny that we always talked about that because now our CEO, but who's been with us for a few years, came from 13 and a half years at Nordstrom and he really understands that. And so it's just always been a pillar of our business of like going above and beyond for a client, because there are a lot of situations, quite honestly, that are a little in the gray area. It's. It's not easy, but it's also not impossible to mess up your own tan. And it's very clear as a service provider, if we've made the mistake or you've made the mistake. But let me tell you, a client is never gonna tell you it's their business mistake. They're never going to say, you know, all this happened, or I spilled to myself. They're always gonna be like, yeah, no, I followed all the rules. And so we have to, you know, tread lightly on things like that because we don't want to shame anyone for messing up their own tan. Like, there are a few rules you're supposed to follow, especially until your first shower. So, you know, we. We really have to make sure we're approaching that with the right language and still, if they feel like we've done them wrong to try to, you know, you know, make amends and even if perhaps it was their mistake, which. Which, you know, it's just part of the business.
- [22:21]
A
You just mentioned that you have a new CEO. You have a director of customer service. So how was your team growing? Because at the beginning, I assume it was you, and then you hired someone that was just doing tanning and you were supervising. I always tell every founder that I talk to is the most important thing is to have a trusted team that you can trust. It's not about only delegators, someone who's going to take responsibility from that role. And hell, I'm a founder and I have my team, and I know how hard is to let go and to let. Because I'm a control freak too, and to let them their own work and.
- [23:04]
B
Just to step back, yeah, it's really challenging. But when you grow, you really have no choice. It's like, I can't have my hands and everything anymore. And so it was like, the only option is to let go and trust sometimes. And then sometimes you trust too much and you regret it. You have to take the reins back. But it's always, always sort of that dance. And so, you know, once we. We had a handful of people on our corporate team by the time we raised money, but when we. When we raised capital, we went to make a handful of hires. In planning on growing, we didn't obviously know a pandemic was coming. And then it was sort of like we were always kind of hiring and trying to build up that infrastructure even as the pandemic was happening, because we Kept expecting it to be over, and we kept wanting to just put the pedal to the metal and put all that capital to work. And so there were, you know, times where we made mistakes. We made some hires early, I think after we initially raised money where we just felt, like, the pressure to, like, get through the pandemic and grow. And, you know, these were people from sexy brands that had more experience than us, and they were like, oh, no, no, I know what I'm talking about. You don't. And I think on some level, after, you know, a decade plus of feeling like we didn't know what we were doing, we were like, oh, you know what? You're doing great. And then at the end of the day, you know, a lot of times you realize, I know my business better than anybody. And just because they have certain experience or whatever, like, if this back to intuition, if it doesn't sit right with you, it probably isn't right. And so those were big learnings. And, you know, we had to really structure our corporate team and put a lot of things back in place that they had taken out. And it was a great lesson, you know, and now we have this really amazing team that we've built over the past several years, and it is so fun to go to our office. It is. We are so all playing at the craps table. We are all on the same team. We're in it to win it. And a lot of us are just real friends outside of work and at work. So we. I mean, I think it was. It was a really hard time to go through in 2020 and 2021 for a multitude of reasons for us, but we really came out of it on the other side. And we have, honestly, like, every member of our corporate team is just such a key team player, and I don't know what I would do without a single one of them.
- [25:14]
A
That's amazing. Thank you so much for sharing all that. And before we go, I have the last, last question for you. How do you drink your coffee?
- [25:22]
B
I drink my coffee with a splash of nut milk or coconut milk, and that's about it. Very cool. No sugar.
- [25:32]
A
Very, very cool. Thank you so much for being with us today, Courtney, and for sharing all these insights. I'm sure our listeners will really appreciate you learn about your journey and those setbacks, and you keep going because like you said in the other side, you. You learn from those mistakes 100%.
- [25:55]
B
Like, there's no mistakes in the universe. Everything is meant to be an opportunity to learn and grow from. So I think if you look at things that way, it becomes a huge advantage.
- [26:04]
A
Thank you so much. And to you guys, thank you for being here today with us. And we will see you next week with more coffee. Number five.
- [26:12]
B
Thank you.
- [26:13]
A
Find everything you need@larashmoisman.com or in the episode notes right below. Don't forget to subscribe. Was so good to have you here today. See you next time. Catch you on the flip side. Ciao, ciao.