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- [00:00]
Guy Raz
Wondery subscribers can listen to How I built this early and ad free right now. Join Wondery plus in the Wondery app or on Apple Podcasts. And now a message from our sponsor Vital Proteins as we age, sometimes we can start to produce less collagen, which is the most abundant protein in our bodies. That can lead to fine lines, saggy skin and your bones and joints not moving like they used to. That's where Vital Proteins comes in. Their Collagen peptides are a supplement that helps support healthy hair, skin, nails, bones and joints. Vital Proteins is the number one brand of collagen peptides in the us. They're the experts. In fact, as I get older I know it's so much more important to take care of my body and I've been using Vital Proteins Collagen peptides because I want to look, feel and move my best try vital proteins get 20% off by going to www.vitalproteins.com and entering promo code built at checkout. These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease. Do you experience excessive bouts of money stress? Do you avoid your bank balance like it's a text from an ex? Do you feel guilt and second guessing about your spending? If you answered yes, you may be suffering from financial funk. Ynab, spelled Y N A B is a life changing app designed to cure financial funk with a simple method that offers total control control of your money. The average YNAB user reports saving close to $600 in their first month and $6,000 in their first year. Side effects may include less financial stress, getting better sleep and eliminating arguments about money. Using YNAB may be habit forming before starting. Ask your wallet if adding more joy to every day and every dollar is right for you. Listeners of How I Built this can claim an exclusive 3 month trial subscription for free with no credit car@ynab.com Bilt Life is short. Spend it well with YNAB. With Amazon one medical pay per visit you can access transparent, upfront and affordable healthcare to treat common concerns like ED and hair loss and prescription solutions for beauty and skincare right from the comfort of your own home. 100% online Amazon One medical pay per visit offers customers a one time flat fee per visit with no insurance necessary. Connect with a provider quickly 24,7 no need to schedule a visit and Amazon Pharmacy will provide fast free delivery if medication is needed. Get care and meds for less with Amazon. Head to Amazon.com bilton that's Amazon.com b u I l t o m to learn more, a provider determines eligibility. Prices may vary.
- [03:12]
Dennis Gross
We were getting close to signing the deal and then the pandemic hit and the deal was off.
- [03:20]
Guy Raz
They pulled the deal.
- [03:21]
Dennis Gross
It was like, oh my God. You know, we thought it was bad enough going through like 9, 11 and then the, you know, 2008 crash. The pandemic was just like, Dennis 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?
- [03:53]
Guy Raz
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 the show today, how Dennis Gross filled a white space in skincare 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 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 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 25 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 peels started to take off, especially among affluent women in New York. 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. And this is where Carrie comes in, because she is Dennis partner in life and in business. And together they came up with a plan to turn Dennis dermatology expertise into a skincare brand. In the early years, they funded the business mainly from Dennis income. And for the first two decades, the brand was entirely bootstrapped and relatively small. For much of that time, but in 2023, the cosmetics giant Shiseido acquired Dr. Dennis Gross Skincare in a monster deal worth around $450 million. As for Dennis and Carrie, they were both born in the late 1950s. Dennis grew up in New York City and Carrie in California. By the early 90s, they were both living in New York. Kerry was working as a fashion buyer for Nordstrom, and Dennis had just started his own dermatology practice. And they were about to find out that they were neighbors.
- [06:39]
Dennis Gross
We were living in the same apartment building on Third Avenue in New York City. I had moved in 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.
- [06:55]
Guy Raz
And that's how you met? Yes, just at the elevator. Right. Okay. But 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 is early 90s, you'd look up at the ceiling. That didn't happen.
- [07:11]
Dennis Gross
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 all need to like, put our cell phones in our pockets when we're in the elevator.
- [07:24]
Guy Raz
Yeah.
- [07:25]
Carrie Gross
The story was, from my point of view is, so here I am, this bachelor, and I was coming up 3rd Avenue, as I always did, on a Friday. I remember it to this day, it was a Friday, and I walk in the lobby and there's Carrie talking to the doorman, talking to Orlando. And I was literally struck by her. First of all, she looked incredible. She was wearing this incredible like 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 has hired help. She was engaged in conversation, they were laughing, they were talking. And in any event, I, yeah, we rode up the elevator and she looked at me and she said, you look tired. And I said, yeah, I'm tired. It was Friday afternoon and that was it. That was the end of the conversation. But I got off my floor, I got up at 6 and I watched to see like what floor she got out of. And she got off at, I think 18 or 19. And this was not me. This was a moment where, you know, something was more powerful than what had led my bachelor of life before I got onto the intercom I called Orlando in the lobby. I said, I just rode up the elevator with this woman. What's her story? And he said, oh, Orlando said, oh, that's Carrie. She's great. She doesn't have a boyfriend. She's really nice. You two should. 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? And she said, let me think about it. And she gave me her work number, which was kind of crazy because, you think about it, I know where you live. I know your name. It's like, okay, fine, let me call you at work.
- [09:31]
Guy Raz
But this is pre cell phones. Yeah, yeah.
- [09:33]
Carrie Gross
So three weeks later, I got to go out with Carrie. So we went out to dinner.
- [09:37]
Guy Raz
Nice.
- [09:38]
Dennis Gross
Well, it's funny that I have slightly different memories of what happened, but I definitely remember looking at him, and he had a doctor's bag in his hand, and his head was leaning against the wall, and he was looking at me. It was a little uncomfortable, but I was just friendly.
- [09:58]
Guy Raz
Yeah. So you guys. So you agreed to go on a date. And obviously, Kerry, you learned that Dennis is a dermatologist. And Dennis, you learn about Kerri's background. And what do you guys remember about. I mean, what did you talk about? Where did you connect?
- [10:14]
Dennis Gross
Over skin? Are you kidding? 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 30s, 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. And then I met Dennis and had a conversation about what was really happening with my skin and what my future was going to 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.
- [11:09]
Guy Raz
Yeah, Dennis. I mean, on that point, I mean, at that time, the early 90s, right. I mean, most people went to dermatologists for rashes or, you know, poison ivy or certain diseases of the skin, Right. They didn't go necessarily for, you know, things that people go to for today, like Botox treatment or, you know, skincare. Right. I mean, it really wasn't about. About that in any way at all, was it?
- [11:34]
Carrie Gross
No, that's right. The whole cosmetic component of dermatology at that time was in its infancy. Very little in the way of active ingredients, but it was growing. You know, there was a little bit of movement there. 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.
- [12:01]
Dennis Gross
The white space, basically.
- [12:04]
Guy Raz
Yeah, tell me about that. I mean, in the early 90s, if you imagine, like, most people who had sort of a skincare regiment would get some creams and, you know, at the department store, they would go to the.
- [12:14]
Dennis Gross
Department store and they would, you know, decide between Estee Lauder and Lancome, and it was moisturizers, basically, 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.
- [12:39]
Guy Raz
Yeah, explain that. I mean, Dennis, when you were looking at the ingredients of what was available over the counter, what would an active ingredient be that you weren't seeing?
- [12:49]
Carrie Gross
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? Is this gonna.
- [12:57]
Dennis Gross
We bring products home, like, every week.
- [13:00]
Carrie Gross
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. But in terms of really delivering 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? And in my practice, again, I was seeing it, too. And the real thing that was going on was it was the beginning of the lunchtime peels in dermatology.
- [13:43]
Guy Raz
What was that? Tell me about that.
- [13:45]
Carrie Gross
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 a peel. And so it was glycolic acid. You were being sold by detailed people coming into the dermatology office, like kits, where you would have the patient come in and then you would do a 30% peel on them, and then they would come back a week later and you do a 40% and then 50% all the way up to 70%.
- [14:13]
Guy Raz
And literally these chemicals would peel your skin by design.
- [14:18]
Carrie Gross
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.
- [14:25]
Guy Raz
Hmm. So wait, you go for these peels to the dermatologist, but then for a couple weeks your face would be blotchy.
- [14:31]
Carrie Gross
Blotchy, exactly. Now, that was considered good.
- [14:34]
Guy Raz
Okay, gotcha. Okay. I seem to remember this. I seem to remember people having blotchy faces in the mid-90s.
- [14:40]
Dennis Gross
Sex in the City guy.
- [14:42]
Guy Raz
Yes.
- [14:43]
Dennis Gross
Samantha.
- [14:44]
Carrie Gross
Right? Yes.
- [14:45]
Dennis Gross
These peels were aggressive. And you had downtime. I mean, you couldn't leave the house, perhaps.
- [14:52]
Carrie Gross
So I felt like it made no sense. There's no organ in the body that you injure to make it come back better and stronger.
- [15:00]
Guy Raz
Yeah.
- [15:01]
Carrie Gross
If you're a runner, you're never gonna hurt your lungs, so that you're gonna be able to 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 a. Not happy with the downtime. Two, they didn't see results, it didn't work. And, yeah, I wanted to introduce and design a treatment that had no downtime. So I designed a peel for my patients in my office. That was an alternative, and it worked better.
- [15:37]
Guy Raz
And just to, like, understand, I mean, you're obviously a medical doctor, so you have a science background. And so what would you do? I mean, like at night when you closed up shop, you would start to mix ingredients and try to get the proportions to your specifications.
- [15:55]
Carrie Gross
So, yes, what I did was I had 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. But no downtime.
- [16:19]
Guy Raz
When you say downtime, there was no, like, period of red splotchy skin.
- [16:23]
Carrie Gross
Precisely. No blotchiness, no inflammation. The most important second thing was 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 have a higher pH versus low pH of acids.
- [16:39]
Guy Raz
That's why you take Pepto Bismol.
- [16:41]
Carrie Gross
Exactly. So acids may be okay and good, but for a limited time only. 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. And that innovation led to my practice really blossoming.
- [17:04]
Guy Raz
All right, let's get back to your relationship for a moment, because you guys meet in the early 90s and how long before. I mean, it sounds like you guys hit it off very quickly and have a lot of common interests. Carrie, how long between the time you meet and the time you get married?
- [17:19]
Dennis Gross
I think we got engaged after nine months of dating.
- [17:23]
Guy Raz
Wow. Yeah, so it was. It was fast.
- [17:26]
Dennis Gross
Yeah.
- [17:27]
Carrie Gross
And then had an engagement that lasted nine months. And my feeling was I needed to go through four seasons with Carrie just to make sure it was right. So we got through three seasons and got married, but the fourth season was okay, too. So we're good.
- [17:42]
Guy Raz
I mean, you guys also. I think both of you really wanted to start a family very quickly, correct?
- [17:50]
Carrie Gross
I was very much a family person, too. Yeah.
- [17:53]
Guy Raz
And of course, you know, both of you guys are in your 30s, and it gets harder to have kids after 40 and later. So was that part of the thinking as well?
- [18:02]
Dennis Gross
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 Nordstrom, and I had twins, which was 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 skin care, and he would say, like, 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-90s at this point. We're married. We have our beautiful twins, Daniel and Allison, and all the while, we're thinking, thinking, thinking about a business.
- [19:13]
Carrie Gross
And I must say that to that point, my practice 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 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. 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. 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. And after the third one didn't work well, they go back to the first one, hoping this one would work. So that's when I said, let me at it.
- [20:18]
Guy Raz
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 would assume they were formulated by people with some background in chemistry, otherwise why would they be making skincare products?
- [20:42]
Carrie Gross
They weren't dermatologists. That's the key. You know, there's a difference between being a chemist in a laboratory and actually having a background, as I did in the chemistry and the science, to actually using ingredients and seeing patients. So my first product was the alpha beta peel and that was really what put us on the map because it was an at home, two step peel treatment. So we brought the clinic into the home of the consumer. And so it was a game changer, it was a disruptor.
- [21:19]
Dennis Gross
So between 1995 and 2000, Dennis had his clinical peel, his doctor's peel, which was the strongest, and then we went to a contract manufacturer and asked them for pads in jars, a 30 day supply, which was sort of a go to market strategy that you go into the clinic, you have a peel, you take home your 30 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 proof of concept. And that's when we moved ahead to start the brand.
- [22:10]
Guy Raz
I got you. So initially the idea was, let's see how this works in the clinic. Right? So because it sounds like Dennis and Carrie, both of you already in 1995, when you started to give this to your patients, Dennis, that in your mind you were thinking, this is a brand, we can turn this into a brand, this is a business, like at the birth of this product that was already fully formed, this idea it was.
- [22:34]
Carrie Gross
But you know what, it was so helpful to have the confidence that that experience that Living lab of the practice 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, saying, my friend bought these peel pads here and the results are incredible. I'd like to buy them too.
- [22:58]
Guy Raz
Yeah.
- [22:59]
Carrie Gross
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 carry. I said, I think we may have a business here.
- [23:10]
Guy Raz
All right, let me. Let me just dig into this a bit. So first of all, the name of the brand. You guys gave it a name, right?
- [23:16]
Dennis Gross
Yes, we did. And you called it Maryland Skincare.
- [23:20]
Guy Raz
Maryland Medical Doctor Skin Care. Okay, good sounds. And it was, I guess, designed to sort of signal that this was made by a doctor, a skin doctor. This was scientifically formulated to differentiate it from what you would find at a department store.
- [23:36]
Carrie Gross
That's true.
- [23:37]
Guy Raz
And this was just in your practice. You were not offering this up to other dermatologists quite yet.
- [23:42]
Carrie Gross
Correct.
- [23:43]
Guy Raz
Okay.
- [23:44]
Dennis Gross
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.
- [23:54]
Guy Raz
And this was just to clarify, this was about five years after just doing this in Dennis Clinic.
- [24:00]
Dennis Gross
We were ready to go in 2000 and our first accounts was the Ritz Carlton Paula Brecht day spa. There were beautiful spas in Connecticut.
- [24:10]
Guy Raz
How did you get those accounts? Is that. Did you already have some media attention by that was there were people aware of this thing that was happening? Absolutely, yeah.
- [24:19]
Dennis Gross
The beauty press were Dennis patients. We never advertised. We just had articles in Elle and Vogue and Harper's. And this was before the Internet. There was no Internet. There were no, as you said, no cell phones and no Botox even. It was super exciting. We went to spas initially and you know, when I had retired from Nordstrom, I indic 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.
- [25:01]
Carrie Gross
And to the press, which was a really important component for us in the early days, 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. So I earned their trust, you know, and then they actually started to come to me privately and you would be.
- [25:33]
Guy Raz
Quoted in newspapers and magazines and so on. Precisely how did you, when you started initially selling to spas, you know, 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.
- [25:48]
Dennis Gross
Absolutely no. 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 I was starting to feel like a little bit of imposter syndrome, like, am I really going to 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.
- [26:23]
Guy Raz
When we come back in just a moment, How a lawsuit forces the brand to totally change its name. Stay with us. I'm Guy Roz and you're listening to How I Built this. What separates the true leaders from the rest? It's not just vision and ambition. It's the courage to take the road less traveled. For those with a palpable passion for life, there's the Range Rover Sport. This isn't your average luxury suv. The Range Rover Sport is a new dimension of sporting prowess. With black hood vents, black brake calipers and 23 inch gloss black wheels, the optional stealth pack engages your dark side. Plus dynamic launch delivers maximal torque for increased straight line acceleration. And with rapid DC charging and an estimated all electric range of 48 miles, the range Rover Sport Plug in electric hybrid delivers thrilling performance with an electric edge. Build your Range Rover Sport Plug plug@land roverusa.com One of the hardest parts about B2B marketing is reaching the right audience. I constantly get aggressive emails from people offering me marketing services I just couldn't possibly need. So when you want to reach the right professionals, use LinkedIn ads. LinkedIn has grown to a network of over 1 billion professionals. And that's where it stands. Apart from other ad buys you can target by job title, industry, company role, seniority, skills, company revenue, whatever you're looking for. Which means you can find all the professionals you need to reach in one place. Stop wasting budget on the wrong audience and start targeting the right professionals only on LinkedIn ads. LinkedIn will even give you a $100 credit on your next campaign. So you can try it yourself. Just go to LinkedIn.com builtthis that's LinkedIn.com built this Terms and conditions apply only on LinkedIn ads. This episode is sponsored by Canva. If you make decks at work, you should make the switch to Canva presentations. Canva presentations might be the most visually impressive presentations you'll ever use. Start with a stunning template. Drag and drop images, graphics, charts and data visualizations from Canva's massive media library. Add animations plus interactive polls and quizzes to really set your slides apart. Built in AI also lets you generate slides and text in seconds from a prompt. And you can share your Canva presentations with anyone and instantly collaborate in real time. Canva is used by 95% of Fortune 500 companies. Whether you work at a small or big company, in a team of two or two thousand, Canva empowers workplaces everywhere to create captivating presentations, save time, and be more productive together. You'll love the presentations you can easily design with Canva. Your audience will too. Love your work with canva presentations@canva.com hey, welcome back to How I Built this. I'm Guy raz. So it's 2002 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 U.S. sephora.
- [29:59]
Dennis Gross
And I remember flying out to San Francisco and, 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. So we had this like, beautiful business model. I just want to 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 resort and see our products. And then they'd go back home 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 had this journey and it had this beautiful kind of halo effect on our brand of really being authoritative in the space.
- [31:05]
Guy Raz
And Carrie, I mean, when you guys decide, okay, 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 because 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?
- [31:31]
Dennis Gross
So we had a business plan. We found a graphic artist. We did a logo. We set up the initial skew assortment. Of course, 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 12 SKUs. And when I needed money, I would have to have Dennis write me a check.
- [31:53]
Guy Raz
Right. Basically, the money from your practice, Dennis was gonna finance this thing, right?
- [31:58]
Carrie Gross
It did. Right. Just went into my savings account, had the guts and did it.
- [32:03]
Dennis Gross
You know, I have to tell you that in those early years, we were so busy. I mean, at this point now I've got four kids. Not me. We have four kids.
- [32:14]
Guy Raz
It's amazing. You guys built this business and raised four kids, but keep going.
- [32:18]
Dennis Gross
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. So, you know, my best friend was helping, and, like, we would be working out of our apartment.
- [32:36]
Guy Raz
And what were you doing? Were you trying to, like, sell? What were they mainly doing?
- [32:40]
Dennis Gross
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 2002, we hired our first full time.
- [33:00]
Guy Raz
And what did that person. What was that person's role? Were they like a Swiss army knife? Did they do everything?
- [33:05]
Dennis Gross
She was in the field. She was in the field. So we had opened our first official office in 2002 on Madison Avenue.
- [33:14]
Carrie Gross
It was an exciting time because the product literally sold itself. You know, once. Once someone tried it consistently, people were taking us as an account.
- [33:25]
Guy Raz
This was the alpha beta peel that you developed. And by the way, how much was it to like to buy the. To do the alpha beta process?
- [33:34]
Dennis Gross
At the time, it was about $75, I think, for a month 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 different. This is a different step in my regimen. And so they really, you know, we had clients that were coming to us with 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. So we packaged the peel in packets, Tandem packettes, step one and step two. And this format gave us the ability to sample. And also, like, back in the day, like, we were doing direct mail. We were mailing these little paquettes in envelopes, and we were doing skincare challenges. And, you know, you could get on an airplane and then pass them out to 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, you know, so it was just the design of our peel packettes, I think, was part of our secret to success.
- [35:05]
Guy Raz
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, because that was critical.
- [35:17]
Carrie Gross
It was both.
- [35:18]
Guy Raz
Yeah.
- [35:18]
Carrie Gross
Crucial. Crucial.
- [35:20]
Guy Raz
How much does it cost, by the way, to get a patent on something like that?
- [35:23]
Carrie Gross
You know, my recollection is it was somewhere in the order of $100,000.
- [35:27]
Guy Raz
God, that's so crazy that it costs that. But you got lawyers and you got. But it is very challenging.
- [35:33]
Carrie Gross
It is very challenging. But I really felt like my motto then was, you know, what? If there's any justice in this business world, this product works so well that we are going to be very successful. And all I wanted was, you know, for it to be a meritocracy.
- [35:48]
Guy Raz
Yeah.
- [35:48]
Carrie Gross
And as we grew, there were times where we were in the early days. Carrie. Right. We were losing money, and that was tough, you know, and actually. Actually we went through our savings, and I took a mortgage on our home to 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 my family through my practice. And now I'm investing in a company, and it's teetering because growth costs money, and before you turn into profit, you have to have the confidence to put more money in at that point.
- [36:29]
Dennis Gross
But I think by the time we got to 2005, Dennis wrote a book, and that was a big deal for us. That gave us a lot of. He did a book tour. We started winning awards, and at that point, we were on the brink of breaking even. Before that, it was kind of like, okay, who are we gonna pay this week? Are we gonna be able to collect $200,000? By Friday. And that was kind of the startup energy. Every single day that I would go into the office and Dennis formulates all of our products himself. He hand selects meticulously every ingredient 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 quite an endeavor, the company.
- [37:20]
Guy Raz
Yeah, I'm curious about. I mean, tell me a little bit more about what cost you money, because what were the other big expenses? Advertising. I mean, what costs so much money?
- [37:29]
Dennis Gross
We never advertised in those days, but I mean, as far as the money, a lot of it really was staffing. It was people.
- [37:37]
Guy Raz
I mean, do you remember, you know, by, you know, five years, in 2005, 2006, I mean, was your revenue, you know, were you bringing in more than $10 million?
- [37:48]
Dennis Gross
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, woo. You know, we all were like celebrating in the conference rooms, but we were definitely breaking even. And then we all of a sudden started to turn a profit.
- [38:14]
Guy Raz
So you hit profitability roughly when do you remember?
- [38:17]
Dennis Gross
I think we hit breakeven around 2006, but we didn't even have an e commerce site until 2007. So that's when we really started to see some profits coming in.
- [38:32]
Guy Raz
I mean, in terms of growing. I mean, it was organic growth. But do you remember just to give me a sense of where you were, do you remember you mentioned that once you hit a million dollars in sales a month, do you remember what year that was?
- [38:47]
Dennis Gross
So we started to grow. Then in 2008, we slowed down a bit. So it was probably around that time, 2008, 2009.
- [38:57]
Guy Raz
Tell me why you started to slow down a bit.
- [39:00]
Dennis Gross
Because of the crash. The crash, okay, that was a disaster.
- [39:03]
Guy Raz
You got spooked by the financial crisis. How did it affect your business?
- [39:07]
Dennis Gross
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 inventory that wasn't moving.
- [39:25]
Carrie Gross
I also want to add one thing to a little more texture, to the crash of 08 and how we navigated that. The way we got through it was literally our employees were so loyal and we had such an incredible culture to our company that they agreed to go for weeks without pay for us to catch our breath financially. And it was one of the greatest highlights of my career. When I saw our employees just say, we believe in you and we want to support you, and we're not going to leave and find a job someplace else. So, you know, being good to your employees was really important for us to survive that little era.
- [40:10]
Guy Raz
Yeah, but right around the same time, I think you guys had another problem on your hands because you got sued, Right. You got sued by, I guess, by a similar company that was called MD Formulations. And basically, they sue you because your name, of course, was MD Skincare, and you're several years in now, and then they're pointing out or they're saying that your names are too similar.
- [40:32]
Dennis Gross
Right. They slapped us with a lawsuit, and then they tried to buy our brand.
- [40:37]
Guy Raz
And so had they been around longer than you guys?
- [40:40]
Dennis Gross
A little bit longer. And 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 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.
- [41:02]
Guy Raz
So you decided not to fight the lawsuit?
- [41:04]
Dennis Gross
Yeah, we settled with them.
- [41:05]
Guy Raz
How long did it take before you got there? Cause I think you decided you were gonna fight the lawsuit.
- [41:10]
Dennis Gross
Well, initially, we started to go through depositions, and it was a total night. It was a distraction. It definitely took a lot of time and energy away from actually building our business. 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 sized settlement payment to MD Formulations and, you know, pay the lawyer's fees. And so that year was really tough for us. And Dennis and I had a lot of back and forth because he didn't want to put his name on our brand. But I convinced him.
- [41:53]
Guy Raz
Tell me, Dennis, why didn't you want to put your name on the brand? Because it was called MD Skincare up until 2010.
- [41:59]
Carrie Gross
Right.
- [41:59]
Guy Raz
And now it's going to be called Dr. Dennis Gross Skincare. Tell me why you were reluctant.
- [42:04]
Carrie Gross
Well, you know, because the last name Gross is sort of a disconnect with beauty, you might say. And maybe I still was, you know, thinking about my being ridiculed in the schoolyard in junior high school. Oh, you're gross. You know, and it was a thing. I did not know how that would be received. It's not actually how you pronounce my last name, to be honest. It's jeros. But that's a different story nonetheless. That was really the reason.
- [42:31]
Dennis Gross
Yeah, he did. 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 a blessing in disguise for sure. But I will tell you, it would be kind of humorous where I'd be like sneaking around like Nordstrom and walking through Sephora and hearing people saying like, oh my God, gross. Are you serious?
- [42:57]
Guy Raz
When we come back in just a moment, Dr. Dennis Gross Skincare does a star turn on on TikTok with a mask that uses LED light. Stay with us. I'm Guy Raz and you're listening to How I Built this. It takes a lot to grow your business. You've got to attract audiences, score leads, manage all the channels. It's a lot of long days and late nights. But with Breeze HubSpot's new AI tools, it's never been easier to be a marketer and crush your goals fast. Which means pretty soon your company will have a lot to celebrate, like 110% more leads in just 12 months. Visit HubSpot.com marketers to learn more. Are you inspired by stories on How I Built this? Take the next step in your entrepreneurial journey by enrolling in a graduate program at Babson College, the alma mater of Jamie Siminoff, founder of Ring, David Heath, co founder of Bombas, and Mike Salguero, founder of Butcherbox, whose unique stories we've told right here on How I Built this. Babson equips you with the skills, network and hands on experience to turn your problem solving ideas into reality. Join a global network of entrepreneurial leaders at the school ranked number one in entrepreneurship for 31 years by US News and World Report and number two best college in the United States by the Wall Street. Learn more about Babson's full time and part time graduate programs at Babson edugradschool. Hey, welcome back to How I Built this. I'm Guy raz. So it's 2010 and Dennis and Keri have a new name for their brand and a new twist on their most important product.
- [45:00]
Dennis Gross
We came back in 2010 as Dr. Dennis Gross and we launched a new version of our Alpha Beta peel. It was that extra strength Alpha Beta 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, this one peel that we've been selling for 10 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.
- [45:39]
Carrie Gross
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, to full, you know, all out believers in what they can see on their skin. So the extra strength peel really was a big hit and still to this day, outperforms.
- [46:02]
Guy Raz
Yeah, tell me about. So basically you're focusing on the brand and it's grow and it's steadily growing every year. I mean, was there any moments where you start to think, okay, maybe we should bring in some outside investors to really supercharge the growth or. Because I know it would happen later. But between 2010 and 2020, was there conversations that you guys had about that?
- [46:28]
Dennis Gross
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 who you're going to meet and what you're going to learn. And so over the years we had quite a few meetings, wouldn't you say, Dennis?
- [46:48]
Carrie Gross
Yes, we did. But I must say we reinvested every dollar back into the business in those years. So we had the cash flow and we had the revenues to support our growth. We, instead of taking an investor and taking money out of the company, we continued to live off the income of my dermatology practice and just believed in the brand and reinvested every day.
- [47:13]
Dennis Gross
And we didn't take a salary. Neither of us took a salary for 20 years.
- [47:17]
Guy Raz
And Dennis, you were still practicing and you were still seeing patients every day?
- [47:21]
Carrie Gross
Absolutely. First of all, I needed to, number two, it's what I love. And number three, it was actually in tandem with the skincare brand. So I maintain my practice to this day because it really is still what we call the living lab.
- [47:38]
Guy Raz
Yeah, it probably became difficult to get an appointment there at a certain point because your name was on the brand shops. And so one thing kind of, whether that was intentional or not, it kind of bolsters the other.
- [47:51]
Dennis Gross
He had some pretty frantic years. Frantic days, long hours.
- [47:57]
Guy Raz
Yeah, I bet. Tell me about moving into like light technology. Right? I mean, basically you developed a plastic mask with LED light to treat skin and this thing went totally viral on TikTok a few years ago. How did that technology even start to emerge.
- [48:14]
Carrie Gross
It was a procedure done in my practice. Right. LED is, you know, something that dermatologists do.
- [48:21]
Guy Raz
What does it do for your skin?
- [48:22]
Carrie Gross
Two major things. Number one, it stimulates collagen.
- [48:26]
Guy Raz
How does LED light do that? It's so crazy.
- [48:29]
Carrie Gross
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, 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 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.
- [49:13]
Dennis Gross
But I want to point out that our very first device was actually a facial steamer. We launched a steamer back in, I think, 2012, 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 when they go out in the field and they do facial events at stores and at spas. We use 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.
- [50:01]
Carrie Gross
But the thing about LED is you have to use it daily in order to see the results. And if you do, the results are spectacular. But to get the consumer to actually stay on the plan, it had to be convenient. Right? So three minutes a day was the game changer. And we got results, and it's FDA cleared because it works. 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, 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 plumping with fillers and injectables. So there was a trend we saw early, and that's where we brought that product to market.
- [50:50]
Guy Raz
All right, so around 2020, either around the time of the pandemic or before you bring in outside Capital, a private equity group buys a minority stake in the brand. Tell me about the decision to do that. What was the thinking was, we'll take this money and we'll do what with it?
- [51:09]
Dennis Gross
So I'm going to back up and just give you a little story leading up to this. So our business is growing, and I wanted to focus on international expansion. And so by 2018, 2019, now I'm starting to feel like, oh, my God, I actually don't need capital. We're successful, we're profitable, we're making money each year. But I need a board of directors. I need some partners to really help me figure out how to really take this brand and turn it into a global force. So we hired an investment banker, and we met with multiple. Multiple private equity groups and strategics, and we kind of fell in love with a group called Main Post Partners, based in San Francisco. And we went through the whole deal process, and we were getting close to signing the deal. And then the pandemic hit, and the deal was off.
- [52:20]
Guy Raz
They pulled the deal.
- [52:22]
Dennis Gross
Stores closed, and it was like, oh, my God. You know, we thought it was bad enough going through, like, 9 11, and then the, you know, 2008 crash. The pandemic was just, like, shocking. It was shocking. And Dennis Practice closed, Sephora's doors closed, Every spa closed. And we were 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. Are we going to lose our company?
- [53:00]
Guy Raz
So what'd you guys do? How did you handle it?
- [53:03]
Dennis Gross
Basically, we just rolled up our sleeves and 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 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 got the deal done in June of 2020.
- [53:36]
Guy Raz
A couple years after that, you got an acquisition offer, which you would then accept from Shiseido to buy you guys out. $450 million. Amazing exit. I mean, I imagine by that point you felt, all right, we've been doing this for 23 years more. It's time to kind of enjoy the fruits of our labor, I guess.
- [54:00]
Dennis Gross
Well, we wanted to find just the right partner with a company that would respect our culture, respect the brand that we built, and that was Shiseido.
- [54:12]
Carrie Gross
And we're still with them, by the way. We're still full time and I still create the products and, and it's been a great journey.
- [54:20]
Guy Raz
Yeah, obviously a huge brand and they have the ability to kind of super scale things like globally.
- [54:26]
Dennis Gross
That was one of the key timing factors. We actually in 2023 launched into Sephora Europe. So I think we opened something like 17 countries in a period of like three months. It was crazy. And having Shiseido support us with talent and with experience has been incredible.
- [54:55]
Guy Raz
And so now you're probably committed for a few years to stay with the brand.
- [54:59]
Dennis Gross
We have a three year contract and I don't know what's gonna happen, but for right now, it's been wonderful.
- [55:07]
Carrie Gross
They're true partners, you know.
- [55:09]
Guy Raz
Yeah.
- [55:10]
Carrie Gross
This is still a changing world in terms of skincare going full circle. Going back to the day where skincare was just a moisturizer, you know. The future, I think, is absolutely incredibly exciting. And our pipeline, I think, is really exciting to me. I still want to create and innovate.
- [55:29]
Guy Raz
When you think about how you know about the journey of building this, I mean, how much do you attribute to the work you put in and the time and how much do you think had to do with. With luck and timing?
- [55:41]
Dennis Gross
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.
- [55:56]
Carrie Gross
You know, if you really are distinctive 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 that is top line for me is the results. Nowadays, the consumer wants to see the difference and we have consistently done that. And that's what I'm most proud of. And I think we earned it.
- [56:28]
Guy Raz
That's Dennis and Cary Gross, co founders of Dr. Dennis Gross Skincare. 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@guyraz.com or on substack. This episode was researched and produced by Alex Chung and edited by Neva Grant, with music composed by Ramtin Arablouei. Our engineers were Patrick Murray and Gilly Moon. Our production staff also includes Chris Masini, J.C. howard, Casey Herman, Iman Maani, Sam Paulson, Kerry Thompson, Kathryn Seifer, John Isabella and Elaine Coates. I'm Guy Raz and you've been listening to How I Built this. If you like How I Built this, you can listen early and ad free right now by joining Wondery plus in the Wondery app or on Apple Podcasts. Prime members can listen ad free on Amazon Music. Before you go, tell us about yourself by filling out a short survey@wondery.com Survey.
- [58:06]
Dennis Gross
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Guy Raz
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Dennis Gross
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Carrie Gross
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Guy Raz
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- [58:31]
Dennis Gross
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