Tatcha: Vicky Tsai (July 2020)

Summary

How I Built This with Guy Raz: Tatcha’s Vicki Tsai on Perseverance, Passion, and Purpose

In this compelling episode of How I Built This with Guy Raz, host Guy Raz delves into the inspiring journey of Vicki Tsai, the founder of Tatcha, a renowned skincare brand. Vicki’s story is one of resilience, passion, and unwavering dedication, showcasing how she transformed personal struggles into a globally recognized beauty empire.

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1. Introduction

Guy Raz introduces Vicki Tsai, highlighting her remarkable journey of building Tatcha from her parents’ garage over seven challenging years without a salary. Despite numerous setbacks, Vicki’s perseverance led to Tatcha’s acquisition by Unilever for an impressive half-billion dollars in 2019.

Vicki Tsai [02:39]: "We ran out of money over and over and over again. I couldn't afford a salary, my partner couldn't afford a salary, I couldn't afford rent anymore..."

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2. Early Life and Education

Vicki’s entrepreneurial spirit was nurtured early on while working for her mother’s small cosmetics shop in Houston. Her academic journey took her from UT Austin to Wellesley College, where she faced the challenges of a predominantly female environment. It was at Wellesley that Vicki met her future husband, Eric Tsai.

Vicki Tsai [06:33]: "I loved my experience at Wellesley, but it was very, very small... I wasn't expecting to meet men there."

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3. Early Career and the 9/11 Incident

After graduating, Vicki and Eric moved to New York to work in finance, landing positions at Merrill Lynch. Their careers were abruptly interrupted by the tragic events of September 11, 2001. Vicki recounts the harrowing experience of being separated from Eric during the attacks, leading to profound personal and professional reflections.

Vicki Tsai [08:37]: "We were in one of the world financial centers... I was in a meeting when the first plane hit... I walked out and waited outside, hoping to find him."

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4. Personal Challenges

The aftermath of 9/11 led Vicki and Eric to reassess their lives. Shortly after, Eric was diagnosed with a severe autoimmune disease, plunging the couple into financial and emotional turmoil. Concurrently, Vicki battled acute dermatitis, a debilitating skin condition exacerbated by her hectic lifestyle.

Vicki Tsai [15:00]: "It's very painful... when the barrier function of your skin has become disrupted... everything would start irritating it."

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5. Transition to Business School

Determined to change their paths, Vicki and Eric enrolled in Harvard Business School. While there, Vicki interned with Procter & Gamble, refining her understanding of the beauty industry. This period was marked by relentless dedication, even amidst ongoing personal health struggles.

Vicki Tsai [14:05]: "I was working on SK II... I treated my face like a science experiment and gave myself acute dermatitis."

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6. Discovery in Kyoto

In 2008, amidst financial strain and personal challenges, Vicki embarked on a pivotal trip to Kyoto, Japan. Seeking specialized blotting papers to manage her dermatitis, she encountered traditional geisha beauty practices. This discovery not only healed her skin but also ignited the spark for what would become Tatcha.

Vicki Tsai [27:43]: "I created Tatcha just as a way of sharing these things I was finding when I go there."

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7. Founding of Tatcha

Inspired by the geisha’s skincare rituals, Vicki decided to bring these authentic, food-based ingredients to the U.S. market. Despite skepticism—from both Japanese insiders who deemed the products outdated and American beauty experts who dismissed Asian beauty trends—Vicki persevered. She named her brand Tatcha, embodying the essence of Japanese beauty simplicity.

Vicki Tsai [36:52]: "I saw this vision in my head of sharing these beautiful little treasures... I created Tatcha to share these things I was finding."

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8. Overcoming Early Challenges

Launching Tatcha was fraught with challenges. Operating out of her parents' garage in Millbrae, Vicki struggled with financial constraints, managing inventory, and fulfilling orders while juggling motherhood. Her relentless efforts eventually attracted significant press coverage, including features in Vogue and an appearance on the Today Show.

Vicki Tsai [47:18]: "Pretty much everyone. Vogue did a spread. Oprah. It was on the Today show pretty quickly."

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9. Strategic Decisions and Growth

By 2012, Tatcha began to gain momentum through strategic initiatives like appearing on QVC, which significantly boosted sales. Despite facing constant financial pressures and the temptation to sell the company, Vicki remained steadfast in her vision, ensuring that Tatcha’s growth was aligned with her core values and purpose.

Vicki Tsai [64:09]: "I was on a high wire act where the wire was getting moved higher and higher... forming a partnership with Room to Read helped solidify my commitment."

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10. Private Equity and Leadership Transitions

In seeking stability, Vicki secured a private equity investment, which provided much-needed financial support but also introduced pressures to scale rapidly. This led to a pivotal moment where Vicki recognized the need for a dedicated CEO, allowing her to focus on product development and client relationships.

Vicki Tsai [73:18]: "I didn't have a model of female leadership... I needed to be liked too much. I didn't believe in myself."

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11. Acquisition by Unilever

In 2019, after years of dedication and overcoming numerous obstacles, Vicki made the difficult decision to sell Tatcha to Unilever. This acquisition ensured that Tatcha would continue to thrive under a "forever home," allowing Vicki to focus on her passions while ensuring the brand’s longevity and purpose-driven mission.

Vicki Tsai [78:37]: "I created this thing to share what I was learning because I needed it in my life... I want it to live 100 years."

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12. Reflections and Insights

Reflecting on her journey, Vicki attributes Tatcha’s success to unwavering persistence, the support of a dedicated team, and the pivotal role of luck. She emphasizes the importance of believing in oneself, especially as a female entrepreneur, and the value of aligning business goals with personal purpose.

Vicki Tsai [82:42]: "If I can do it and it's in the cards for you, then anybody can do it."

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Conclusion

Vicki Tsai’s story is a testament to the power of resilience, authenticity, and purpose-driven entrepreneurship. From battling personal and financial hardships to founding and scaling a globally acclaimed beauty brand, Vicki’s journey with Tatcha offers invaluable lessons for aspiring entrepreneurs: never lose sight of your vision, embrace challenges as opportunities, and stay true to your core values.

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Notable Quotes:

• Vicki Tsai [08:15]: "I'm not totally sure. I think I just wore him down. We've been together over 20 years now."

• Vicki Tsai [27:43]: "I created Tatcha just as a way of sharing these things I was finding when I go there."

• Vicki Tsai [73:18]: "I needed to be liked too much. I didn't want to come across as a difficult female leader."

• Vicki Tsai [82:42]: "If I can do it and it's in the cards for you, then anybody can do it."

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Vicki Tsai’s How I Built This episode serves as a profound example of turning adversity into advantage, highlighting the importance of perseverance, cultural appreciation, and maintaining one’s integrity in the pursuit of entrepreneurial success.

Transcript

[Guy Raz]

Wondery subscribers can listen to How I Built this early and ad free right now. Join Wondery in the Wondery app or on Apple Podcasts. Thank you to our sponsor, American Express. Owning a business means you get to chart your own course and create a meaningful life for you and your family. With Amex Business Platinum, you can earn 1.5 times Membership Rewards points on select business purchases, plus stay refreshed on the go with access to more than 1400 lounges globally through the American Express Global Lounge Collection, including the Centurion Lounge. That's the powerful backing of American Express. Terms apply. Learn [e-mail] AmExBusiness thank you to our sponsor, Amazon Prime. You know, I've been thinking a lot about convenience lately and how one service has completely transformed the way we live our daily lives. And of course I'm talking about Amazon Prime. Whenever you need something, whether it's delivered in hours or just a couple of days, prime just makes it happen. Just the other day I realized I needed a refill on my vitamins and I found it within seconds on Amazon. I ordered it and I was back to my routine the next day. It's almost like when you think of it, Amazon does the rest. But here's what's fascinating. Prime isn't just about shipping. It's about having access to an entire ecosystem of services, from award winning shows on Prime Video, to millions of songs and podcasts on Amazon Music, to exclusive deals that honestly make you wonder how they do it. Visit Amazon.comprime to get more out of whatever you're into. When I travel, I almost always stay at an Airbnb. Why? Because I can feel at home instantly wherever I am around the world. Find out how much your place is [e-mail] host hey everyone, it's Guy here. So this week we're bringing you a really great episode from our archive. It's the story of Vicki Tsai and her makeup brand Tatcha. And as you'll hear, the company was pretty slow to launch. In fact, Vicki ran it from the garage at her parents house for seven years and took no salary. But she stuck it out and in 2019 Tatcha was acquired by Unilever for a reported half a billion doll. This episode first ran back in July of 2020 and it's a great one. Hope you enjoy it.

[Vicki Tsai]

We ran out of money over and over and over again. I couldn't afford a salary, my partner couldn't afford a salary, I couldn't afford rent anymore and my parents had Bought a place near the airport at that point, and they let me move into there. And like, we had this really, really incredible high end client and I was working on my mom's garage.

[Guy Raz]

Welcome to How I Built this, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

[Eric Tsai]

I'm Guy Raz.

[Guy Raz]

And on today's show, how a trip to Japan and a meeting with a geisha inspired Vicky Tsai to launch Tatcha, a line of skin care products that.

[Eric Tsai]

Almost nobody thought was a good idea until everybody did.

[Guy Raz]

So, as you've heard on this show.

[Eric Tsai]

Really good ideas often come from solving a problem that you and other people have.

[Guy Raz]

And of course, you can spend years solving that particular problem in just the right way, obsessing over countless designs, mountains of research to find the perfect fit between what you made and what the market wants. But sometimes ideas just sort of reveal themselves even when you're not looking.

[Eric Tsai]

And that can often happen when you're.

[Guy Raz]

Visiting a different country. Like Gordon and Carol Siegel, who came across Scandinavian furniture on their honeymoon and went on to build Crate and Barrel. Or Susan Griffin Black, who encountered lavender oil on a visit to Covent Garden in London and came up with the bottle body care company EO Products. Or Blake Mycosky, whose trip to Argentina exposed him to a type of espadrille shoe that he'd recreate as Tom's. And for Vicky Tsai, our guest today, the pivotal trip for her was to kyoto, Japan, in 2008.

[Eric Tsai]

She went there to kind of decompress.

[Guy Raz]

After leaving a job that left her.

[Eric Tsai]

Feeling pretty bad about herself.

[Guy Raz]

And it was on that trip that Vicky came across the nearly impenetrable world of the geisha, and in particular, the natural beauty products that the geisha used on their skin to make it look smooth and flawless. And when Vicky started to research the idea of maybe introducing some of these products to American consumers, she heard no from almost everyone. People in Japan told her that the skincare products used by the geisha were old fashioned, the kind of stuff your grandma might use. And in the us, beauty experts told Vicki something even more disappointing, that Americans weren't even interested in beauty products from Asia. But it turns out they were.

[Eric Tsai]

Though it would definitely take years for.

[Guy Raz]

Vicky's brand, Tatcha, to gain traction.

[Eric Tsai]

And much of that time, she worked.

[Guy Raz]

Out of her mom's garage, scrambling to pay her team and pitching her skincare products on QVC. But by 2018, Tatcha was doing $70 million in sales. And a year later, it was Acquired by Unilever for a reported half a billion dollars. Now, Vicky actually got her start in the beauty industry working for her mom, who ran a small cosmetics shop in Houston. Both her mom and dad came to the US From Taiwan.

[Eric Tsai]

And after high school, Vicky went to.

[Guy Raz]

UT Austin before transferring to Wellesley, the women's liberal arts college in Massachusetts.

[Vicki Tsai]

I loved my experience at Wellesley, but it was very, very small. UT Austin was a huge school, and I was used to my independence and used to big classes and lots of different kinds of people. So when I went to Wellesley, it's a very small boutique experience, tiny liberal arts college, and it's women only, which I understood from theoretically. But it wasn't till I got there where I was like, where are the guys?

[Eric Tsai]

But I guess while you were there, you met this guy who would eventually become your husband, named Eric, that you. The story I read is that you actually really kind of pursued him. That actually, at the beginning, he was sort of not the kind of person who would ask someone out, I guess.

[Guy Raz]

Is that the story?

[Vicki Tsai]

Yeah. And it was the weekend before school started at Wellesley, and it had hit me that there really were no men there. And they had this dance called Tower Court Mixer, and men from surrounding schools would come in for the dance. And I saw him, and he wasn't at all interested in me. And, you know, I kind of kept on doing laps around the dance floor with my. With my new girlfriends, and they kept on getting plucked off one by one. And then every few months, I would try to get his attention and email him and call him, but he just wasn't interested.

[Eric Tsai]

So what got him interested? How did you eventually, you know, get him to agree to go out with you?

[Vicki Tsai]

I'm not totally sure. I think I just wore him down. We've been together over 20 years now, and I just kept asking, wow.

[Eric Tsai]

So I guess after. After graduation, both of you moved to New York to work in finance, and both of you wind up, I think, at Merrill lynch, right?

[Vicki Tsai]

Yeah.

[Eric Tsai]

Okay, so both of you are working in lower Manhattan?

[Vicki Tsai]

Yes, we were.

[Eric Tsai]

And you guys were there on September 11, 2001, right?

[Vicki Tsai]

Yeah, we were in one of the world financial centers that's actually connected to the trade centers via a land bridge. And so I was on the trading floor, which was the seventh floor of that building, and my husband was on the 26th floor, which is where he worked, of the financial centers. And I was in a meeting when the first plane hit. And there was no windows in the meeting room. So we felt the rumble, and we heard it but we didn't know what it was. But my husband, when he heard the first plane hit, he went straight to the windows to see what was happening. And he actually watched the second plane come in and bank, and he watched it go into the tower. At that point, I was back on the trading floor. We had gotten out of our meeting, and when we heard the second plane hit, we didn't know what was going on. And nothing came on over the loudspeakers yet. But I remember getting up and walking seven flights down and actually being one of the first ones to leave the building. And I'm ashamed to say that it didn't even occur to me to call up to my husband to tell him what was going on. I just split. And then I waited outside for him.

[Eric Tsai]

You were on the sidewalk?

[Vicki Tsai]

On the sidewalk. And I realized we were never gonna find each other because as people started flowing out, out of all the buildings, it got pretty chaotic down there. And then. And then the people were jumping, and I couldn't. I couldn't watch it any longer. So I walked back to our apartment, which was in the West Village, and I thought, he's going to know that we can't find each other here, and he'll come find me, and he'll probably beat me there because I have heels on and he's fast. He was a marathon runner at that point. So then when I got home and he still wasn't there, that's when I realized, like, shoot, he was looking for me. And then I had no way of getting a hold of him because the mobile phones weren't working.

[Eric Tsai]

Wow.

[Vicki Tsai]

Both. Both the towers fell before he got home. So there was a moment. There was a moment in there where I thought he was gone.

[Eric Tsai]

Wow. How long before you saw him, before he got home?

[Vicki Tsai]

It must have been minutes, not too long. But it was enough for me to be watching on the TV and see the towers fall. I couldn't even quantify how long. But then he came up after, and he was okay.

[Eric Tsai]

When that happened. I guess both of you decided you needed to kind of rethink what you wanted to do with your life, that maybe being a trader on Wall street wasn't what you wanted to do.

[Vicki Tsai]

Yeah, I don't know if I came up with that immediately, but I knew I didn't want to be there anymore. He got sick with an autoimmune disease.

[Eric Tsai]

Pretty soon after, almost immediately after. And it was not related, unrelated to.

[Vicki Tsai]

Well, you know, we'll never really know. He never had any symptoms before that. He had Run, I think, five marathons in two years. Prior to that, super healthy captain of the crew team. And then all of a sudden, he couldn't move. He couldn't keep food down. He lost 40 pounds.

[Eric Tsai]

Oh, wow. How long was he getting treated for it?

[Vicki Tsai]

About three years. So we would spend the weekends in the emergency room. Eventually, we did go to the Mayo Clinic. He had some procedures. They didn't know what it was. Towards the end, they were thinking about Remicade, which is a pretty strong treatment that the side effects included things like infections of the nervous system. I mean, pretty horrifying stuff. And we decided to just pull the plug on all the treatments, stop with all the medicine and the steroids, and just quit it and see what happens. And thank goodness he got his health back.

[Eric Tsai]

Wow. So for three years, he was struggling with this autoimmune disease. You were spending your weekends at emergency rooms. It must have just been totally, like, debilitating and scary.

[Vicki Tsai]

Yeah, it should have been. But I think what I did at that time, and I only realized it recently, is I started to almost disassociate. I didn't want to be in Manhattan anymore. I didn't want to be in ground Zero. I didn't want to have to go there every day, especially because when the temporary trading floor in New Jersey was moved back to ground zero right before Christmas time, the only thing that I could see was out the window, which looks straight at the hole that was left. And you could always tell when they found a body or body parts because it would be covered with an American flag. And that was my only view for months. I couldn't see anything but that. And then I would go home and my husband would be sick. And so I actually just went really numb. And I just went on complete autopilot. And I started planning. How do we get out of Wall Street? I just went into planning mode.

[Eric Tsai]

And I guess eventually you did get out of New York. You guys both moved up to Boston, where you went to business school, to Harvard Business School, Right?

[Vicki Tsai]

Yes.

[Eric Tsai]

And right. That while you were there, I guess.

[Guy Raz]

You kind of got your first experience.

[Eric Tsai]

Working in the beauty industry. Like, you got an internship with Procter and Gamble.

[Vicki Tsai]

Yeah, so I was actually working on SK ii, which is a Japanese skincare brand that they own. And I treated my face like a science experiment and gave myself acute dermatitis.

[Eric Tsai]

Wait, you treat. When you say you treated your face like a science experiment, you meant you. You were trying all the products that you were working with, the products that.

[Vicki Tsai]

We were working with. But Then also to do competitive benchmarking, I would go to the other luxury brands. So La Mer and La Prairie doesn't matter across the board. I just got a chance to buy a lot of them, to use a lot of them, to try to craft SK2 strategy. And it was at that point that I ruined my face.

[Eric Tsai]

You got acute dermatitis. What is acute dermatitis?

[Vicki Tsai]

It's when the barrier function of your skin has become disrupted, and so things that would typically not irritate the skin suddenly start irritating it because it's getting into the skin itself. So it looks like bleeding, blistering, scaling on my entire face, including my lips and my eyelids. It was very painful.

[Guy Raz]

Wow.

[Eric Tsai]

And you had never had that before?

[Vicki Tsai]

Never. And once you have disrupted the barrier function of your skin, after that, it's not able to effectively keep things out. And so anything after that can start irritating your sk. So detergents in my pillowcases or fragrances or my shampoos that had traditional ingredients in was everything. When the spring came, pollution, whatever, it would freak out.

[Eric Tsai]

It's like the plagues in ancient Egypt.

[Guy Raz]

First it was 9, 11, and then.

[Eric Tsai]

Your husband's autoimmune disease and then your dermatitis.

[Guy Raz]

We're only into 2004 here.

[Vicki Tsai]

Oh, yeah. We didn't even get to the fun stuff yet. That's right.

[Guy Raz]

Wow.

[Eric Tsai]

So you guys were dealing with a lot of stuff. How were you. How did you eventually. Did it just go away on its own or how did you eventually bring it under control?

[Vicki Tsai]

I had it from the summer of business school. So between those two years, so I had my entire second year of business school. And then I had it two years after that when I graduated and I worked for Starbucks. So after business school, we moved to Seattle. My job was to launch Starbucks consumer products business in China, and I was flying all the time through Japan. There were not direct flights between Seattle and Beijing at that time. And the only thing I could put on my face that didn't irritate it was aquaphor, which you put on baby's butts when they have diaper rashes. Aquaphor? Well, yeah, but it leaves you looking kind of greasy. So when I would go to China via Japan, I would pick up these blotting papers that I found in Japan that I couldn't find in the us.

[Eric Tsai]

What are blotting papers for people?

[Vicki Tsai]

Oh, I'm sorry. Yeah, that's a great question. It's a piece of paper that is made out of. There's various kind of materials. The Ones in the US Are made out of cotton. The ones in Japan are made out of a certain type of leaf. And you press it to your skin when it's oily, and it lifts off the oil, but it won't disrupt your makeup or take any moisture from the skin.

[Eric Tsai]

And that helped?

[Vicki Tsai]

It helped.

[Eric Tsai]

All right, cool. So you got the blotting paper. You go into China, you're working for Starbucks, which sounds like a pretty amazing job. And was there, like, a Starbucks craze in China already at that point? Like, were people waiting in line to get their Starbucks and stuff?

[Vicki Tsai]

I don't know if there's lines, but it was already a very popular and admired brand.

[Eric Tsai]

Got it. Okay. And your job is to launch what at Starbucks?

[Vicki Tsai]

Essentially, Frappuccino. Frappuccino.

[Eric Tsai]

Frappuccino. Bottle Frappuccino. So I read a story, and I don't know if it's entirely accurate that, you know, you were grinding away at Starbucks. You were just working really, really hard and going back and forth, and you're really proud of this initiative. And then I guess it was time for you to get your annual review, and it was like, meets expectations. That was what. What it said.

[Vicki Tsai]

You did do your research and found that, and.

[Eric Tsai]

And that that really hurt your feelings. Like, you were really upset by that.

[Vicki Tsai]

I was offended, honestly. I. I would go 40 days straight without taking a day off. I would fly over the weekend so that I would miss any time and be back in the office by 8am Monday morning. The timeline for the project was extremely compressed. I was a team of one with no manager. And in the middle of all of that, I broke my arm, and I had a cast that went all the way up to almost my shoulder that I had to wear for months, and I missed zero days of work. And it ended up being a very successful launch. Howard was super happy with it and had me present to his board of directors. And I had a VP in my group who I had very little mentorship or guidance from. And at the end of the year, he gave me my performance review, and it was meets expectations. And I just thought, this is not a place where I'll be successful, even though I have so much admiration for Howard and the company and the brand. So I left.

[Eric Tsai]

Wow. Meets expectations.

[Vicki Tsai]

Yeah.

[Eric Tsai]

So you. You left Starbucks?

[Vicki Tsai]

Yeah. And then I was recruited out to the Bay Area to head up marketing for a sustainability startup. And then Howard Schultz found out, and he called me on my mobile phone and asked me to come in and meet with him. So I went back to his office. And it was the week that my furniture was already on a truck to San Francisco.

[Eric Tsai]

Wow.

[Vicki Tsai]

And he kept on being like, why? Why would you go and tell me what you want to do and tell me what job you're interested in? But I had a weird loyalty to the. To the VP who gave me a Meets Expectations review. So all I said to Howard was, oh, I just don't fit in here. So if I could do it all over again, Howard, I left because I got a crappy review that I did not deserve.

[Eric Tsai]

No, I mean, of course. And when you're like, wait a minute, I worked so hard and somebody else is recruiting me now, it makes sense. So you got recruited by this other company. And what was the company it was called?

[Vicki Tsai]

Well, it eventually became called Good Guide. It's very hard to say. Good Guide, Good Guide. And it brought me to Berkeley. It was a few scientists out of Berkeley, and they wanted to create sustainability ratings for consumers by scraping the Internet so that a consumer could plug in their values. You know, I care about gay rights. I care about, you know, animal testing. I care about carcinogens. But I. I also want a shampoo for curly hair and be able to check all these things off and how have it pop out a recommendation. They were really ahead of their time. I give them so much credit for.

[Eric Tsai]

That, because that was 2008. That's still just as the iPhone's coming out, so it's still pre app. Really?

[Vicki Tsai]

And yeah, it was.

[Eric Tsai]

I should mention you were married at this point. You guys, in between, you did get married?

[Vicki Tsai]

Yes, we were married. We still had a house in Seattle. And so I picked up, and I left so quickly that I moved here. I moved to the Bay Area alone.

[Eric Tsai]

Got it. Okay. And what was your job at that Internet startup? What were you tasked to do?

[Vicki Tsai]

I was their first business hire. And so my job was effectively to come up with a launch plan for them as well as, you know, a marketing strategy. And so I was with them for only, I think, maybe four months.

[Eric Tsai]

So did you. I mean, so you. Four months in, and did you have a plan when you quit, or did you just say, I'm. I'm gonna lock. I'm gonna step aside?

[Vicki Tsai]

You know, I think it dates back to 9, 11 and the experiences there. But I was becoming increasingly impatient with spending the hours of my waking life doing things that I didn't believe in or if I believed in. But it just didn't feel like the right fit or the right people. So I typed up a letter, a resignation letter. And I drove into the office, and I handed it to them, and I told them that I very much respected what they were doing, but it wasn't the right fit for me. And I tried to leave rather elegantly, but one, I was crying because I was so lost. And then two, I had brought this big, clunky chair with me, and I was trying to take the chair out.

[Eric Tsai]

You brought to the office like, a chair that you wanted to sit on.

[Vicki Tsai]

Like an ergonomic chair?

[Eric Tsai]

Oh, yeah.

[Vicki Tsai]

And then. So when I left, I had to take the chair with me, and. And I couldn't fit it in my car on the way out. And so I had to actually call up to someone in the office and have them help me compress the chair so I can close the trunk and drive away. It was the messiest resignation. It was humiliating.

[Eric Tsai]

So you're like, four months in and you're out of work. Did a part of you kind of regret leaving Starbucks at that point? Or did a part of you think, like, God, what am I doing with my life?

[Vicki Tsai]

Oh, yeah. I thought to myself, howard Schultz called me my cell phone and offered me any job that I wanted at Starbucks. And now I am unemployed, standing in the street crying with my chair in a different city than my husband because.

[Eric Tsai]

He was up in Seattle.

[Vicki Tsai]

Yeah. And I definitely was thinking about all the debt that we had because we had two business school debts, plus a mortgage in Seattle, plus a lease for an apartment in San Francisco, and my husband had undergrad debt on top of that. And I just remember thinking, I've really made a mess for myself.

[Guy Raz]

Yeah.

[Eric Tsai]

I mean, you probably had hundreds of thousands of dollars in debt.

[Vicki Tsai]

It's probably about 600,000 at that point. And then now this is 2008.

[Eric Tsai]

Yeah. Which is just the beginning of the Great Recession. What was your. What did you. What did you want to do immediately? Did you want to, like, hide in bed and put the covers over your head? Like, what. What was your plan?

[Vicki Tsai]

Well, I told my. My landlord that I was not working, and she let me help be the. Almost like the super for my building and rent out apartments for her and her other buildings for 400 bucks a pop.

[Eric Tsai]

And was that pretty good? Was that enough to kind of keep you going?

[Vicki Tsai]

I worked about four jobs at that point. That was one of them. I think the only thing that was interesting about that was oftentimes the business school types, when they move to San Francisco, will live in the Marina. So when I was out there renting out apartments, it was not uncommon for me to see My business school classmates. And they would be like, is this your apartment? I was like, no. Why are you renting it out? I'm like, for the money. They would give me this look of pity and confusion, but it didn't matter.

[Eric Tsai]

So you left the job at the startup, and you're kind of doing a bunch of different things to make money. And then I guess you at some point took a trip to Kyoto, to Japan, just to go visit. Was there a reason why you went to Kyoto in 2008?

[Vicki Tsai]

So I was unemployed. I still have dermatitis. I'm still using Aquaphor on my face. And I ran out of my blotting papers. I tried to find those blotting papers around in the US and they're not available. There's different kinds here, but not that kind. And so I called up my friend from Starbucks Japan, and I asked her where to find these blotting papers. And she said, they're actually from around Kyoto and they come from gold leaf artisans.

[Eric Tsai]

From gold gold leaf artisans.

[Vicki Tsai]

Mm. She said, they're hammering papers, they're beating papers. And I was like, what are you talking about, Tomoko? And I didn't really understand what she was saying, but I thought the whole thing was so fascinating, and I felt drawn to travel. I think I was trying to find myself. So I just picked up and I went to Japan.

[Eric Tsai]

All right, so most people wouldn't just go to Japan to get a fresh batch of blotting papers. I have to imagine that you were thinking, these work really well for me. I want to go check them out and see if they're. Maybe I can, I don't know, do something with them. In the US I did not have.

[Vicki Tsai]

A commercial idea yet. At that point, I felt broken. We had had a pretty rough first 10 years of our adult life, and pretty rough is relative. I wouldn't say that it was nose rough.

[Eric Tsai]

No, no. You own that.

[Vicki Tsai]

You have.

[Guy Raz]

You get to say that.

[Vicki Tsai]

You know, I just. I felt like I didn't believe in anything anymore. And I questioned my value system and I questioned what I had been chasing my whole life, because my parents, as first generation Asian immigrants, you know, it's a very clear equation for success. You go to an Ivy League school, become a doctor or a lawyer, and then make your parents super proud and make their sacrifices worth it. And I had sort of veered off every one of these paths, and I just started traveling. And I think, like a lot of people, I was traveling to find myself. And when she said Kyoto, there was something about it that drew me. Even though I had never really spent significant time in Japan before, I knew nothing about Japanese culture because I'm not Japanese, but I just felt drawn. So I went there.

[Eric Tsai]

And what happens when you get there? Did you get your blotting papers?

[Vicki Tsai]

When I got to Kyoto, I went to the artisans who are a couple hours outside of Kyoto, and when I went to the workshop there, all they make there is gold and there's gold everywhere. There's gold on their eyelashes, there's gold in their clothes, just like. It's like a mess of gold.

[Eric Tsai]

And this is gold leaf for art, for paintings and decorative works.

[Vicki Tsai]

In Japan, things that are precious are often leafed in gold, including the Golden Temple in Japan or in Japan.

[Eric Tsai]

So basically, for centuries, like, blotting paper in Japan came from these gold leaf artisans who were using it to hammer gold into thin sheets of paper.

[Vicki Tsai]

Exactly. So gold is soft. And what they would do is they take gold paper, gold paper, gold paper, gold paper, and then these massive hammers made out of stones. And it. It protects the gold during the hammering process because gold leaf is only a few micrometers in thickness, so it really has to get hammered down to almost nothing. And so this paper would get hammered with the gold, and it would protect the gold. And then when they were done hammering, the hammering paper would get thrown away.

[Eric Tsai]

So how did they figure out that this paper that they were using to hammer gold into leaf would be useful on human skin?

[Vicki Tsai]

That was my question, because that's such a weird leap. And so they actually said you would have to ask a geisha or a kabuki actor, because they're the ones who've been coming around getting them at the end of the day. And I was like, can I meet one? And they said, yeah. And so they introduced me to one, which is crazy, because.

[Eric Tsai]

Well, they got you in touch with a geisha.

[Vicki Tsai]

Mm. They introduced me to a geisha that they knew, and they helped arrange for me to meet her in a tea house either later that day or the next day.

[Guy Raz]

Wow.

[Vicki Tsai]

And I had a translator with me named Yuko, who's wonderful, and a beautiful, unreal geisha walked in, and I was just completely beside myself. It was the summertime. I was pregnant. I was trying to sit on my knees, which I'm not very good at, and I was sweating, and I kept sliding off of my legs because of the sweat. And yet she was just the picture of perfection. Wrapped in kimono, no sweat. Never had to budge, never broke character. I just remember thinking, I'm A hot mess, but you're amazing.

[Eric Tsai]

Was she in her uniform, in her sort of costume with makeup on and the.

[Vicki Tsai]

She was in full performance, makeup and kimono.

[Eric Tsai]

All right, so you meet this woman and you start asking her, hey, tell me the story about this blotting paper.

[Vicki Tsai]

Yeah. And honestly, she didn't have a great answer. She just said, I don't know. We always knew that if we went and we used it before we put on our makeup, it would help create the nice canvas for makeup, and if we use it after, it would keep our makeup fresh. But she didn't have a lot to tell me about how that leap happened from one industry to the next. But at the same time, I was so enchanted by her look, especially the makeup. And they told me that geisha had been around three to 400 years. And I knew a lot of the things that scared me about ingredients in personal care were largely from the petrochemical industry. And so I knew whatever they're using largely predated the petrochemical industry. And so I started asking her questions about her makeup. Not because I wanted that look, but I was looking for anything at that point that I felt safe putting on my skin, because I still had my skin issue too. And now I'm pregnant, so I'm super careful about what I'm putting on my skin.

[Eric Tsai]

Right. And what was her advice? What did she tell you to buy?

[Vicki Tsai]

She just told me some basic stuff. We used oil to take off our makeup. We use a lot of rice powder and camellia oil and sake. And then Yuko took me to go find some of those things afterwards. And that's when I started seeing geisha flitting in and out of the store while we were there without any makeup on.

[Eric Tsai]

Wow.

[Vicki Tsai]

And their skin looks like a child's skin. And so if they reached for a bottle of oil, I would reach for that bottle of oil. And then if they reached for a powder, I would reach for a powder.

[Eric Tsai]

And what were the materials that were so different that you hadn't seen anywhere else? What was the source of the cosmetics? What were they making it out of?

[Vicki Tsai]

Largely food ingredients. When I took them home, Yuko had to write down on post it notes saying, this is rice powder. Add water, create a foam massage onto the skin, or leave on as a.

[Eric Tsai]

Mask, because everything was in Japanese, Right? Okay. Yeah.

[Vicki Tsai]

And so I just came home with this box of things like that, and I used half of them wrong. But about eight weeks later, my skin had pretty much healed. And that was after three years of dermatitis and steroids and antibiotics. And at the same time I was so enchanted with the story of the blotting papers, the gold leaf artisans, the geisha and the history. And to me it, it embodied so much of what I was looking for as a woman. It was authentic, it was beautiful, it was steeped in true history. And so I guess if I take one step back is when I was still in Kyoto, after I met the geisha, I went back to the Goldie Fartisons and I did ask if I could bring the blotting papers, the US.

[Eric Tsai]

If you could buy some from them.

[Vicki Tsai]

And they said, no, we're not interested in distribution.

[Eric Tsai]

And by the way, were they selling the blotting papers to the geisha or were they just like. It was just refuse and the geisha were just picking it up.

[Vicki Tsai]

Originally it was refuse and now they sell it to them.

[Eric Tsai]

All right, so originally it was refuse and clearly they were being sold in Japan because you had already used these blotting papers before.

[Vicki Tsai]

Exactly. And I was just asking if I could bring them to the US because they weren't available in the US and.

[Eric Tsai]

They said, we're not interested.

[Vicki Tsai]

They said they weren't interested. So then I said, how many would I have to buy to get you interested? And they said, 10,000. And I was like, I'll buy it.

[Eric Tsai]

Do you say I'll buy 10,000 piece of paper?

[Vicki Tsai]

I'll buy 10,000 booklets.

[Eric Tsai]

Right, and how much did that cost you? But like a couple thousand bucks?

[Vicki Tsai]

No, like 30,000. More than 30,000.

[Guy Raz]

Wow.

[Eric Tsai]

So you. So alright, so they said, you have to buy 10,000 of these booklets. And you said, all right, I'll do it. But first of all, how did you, how are you going to do that?

[Vicki Tsai]

Well, first I said, I'll buy it. Then I went back to my hotel room and called my husband that night, so it's maybe 6am his time. And I said, good morning, I hope you're doing great. I just, I just bought 10,000 blotting.

[Eric Tsai]

Papers to bring back with me to the U.S. yeah.

[Vicki Tsai]

And he said, how are you gonna pay for them?

[Eric Tsai]

And you said.

[Vicki Tsai]

I looked around the room and the only thing of value that I had left at that point was my engagement ring in my hand. So I said, I'll just sell my engagement ring.

[Eric Tsai]

Wow, you said you'll sell your engagement ring. Did you pawn it at a pawn shop?

[Vicki Tsai]

I called the place in New York where I bought my engagement ring because I had proposed to my husband and bought my ring. And so I Just called them and said, I need to sell it back to you. Would you buy it? So they took it on consignment. It took a few months for them to find a buyer.

[Eric Tsai]

Okay, and what were you going to do with a blotting paper? With 10,000 booklets of blotting paper in.

[Vicki Tsai]

The US I had not really thought it that far out, honestly.

[Eric Tsai]

But you just thought, these work really well for me. There's something here.

[Vicki Tsai]

There's something here. Maybe I'll keep like a thousand for myself, and then I'll figure out, I'll give everybody, I'll sell the other 9,000, and then I'll have a steady supply for myself.

[Eric Tsai]

Got it? All right. So you come back to San Francisco and did you ship the blotting papers or.

[Vicki Tsai]

It took them about a month to actually make them and send them to me, or maybe a couple months. And so they showed up in big crates a few months later.

[Eric Tsai]

So did you have an apartment just full of blotting papers?

[Vicki Tsai]

Yes.

[Eric Tsai]

But, like, how are you then? What? Like, do you start calling friends? Do you have, like a. A blotting paper party at your apartment?

[Guy Raz]

Invite people over?

[Eric Tsai]

Like, what do you do with them?

[Vicki Tsai]

I still can't explain it, but I saw this vision in my head of sharing these beautiful little treasures that I found in Japan with other women like me who were looking for something that was real and beautiful and safe. And so I thought, maybe I can create a way to keep sharing these things that I'm finding, because there was these ingredients that heal my skin. There's this paper with this beautiful history that's fantastic and simple. And so I actually created Tatcha just as a way of sharing these things I was finding when I go there.

[Eric Tsai]

And how did you come up with the name Tatcha?

[Vicki Tsai]

I had been helping out my friend Stanley, who had been the global head of creative for Starbucks and had left to start his own creative agency. And I had asked him for his advice on creating a brand because I didn't know how to do that. And when I was telling him what I wanted it to feel like, I just said, I want it to feel like an exhale, like a breath of fresh air. And so he actually came up with the name Tatcha. And then shortly thereafter, he introduced me to this incredible woman, Nami Onodera, who's still with us, who's our director of culture. And she said, when I saw the name Tatcha, I assumed that it was short for Tatehana, which is one of the classical Japanese arts of flowering arrangement. And it speaks to the beauty of simplicity in nature. And so we said, you know what? That's far more beautiful than just being an exhaler and a breath of fresh air. So let's imbue it with meaning.

[Eric Tsai]

And did you start to talk to people about it? I mean, you had gone to business school, so you knew a little bit about like, what it takes to fundraise and did you build a deck and start, like pitching the idea?

[Vicki Tsai]

I knew enough about fundraising that I didn't want to do it because I wanted to create something really, really pure and really, really true. And a lot of people from business school end up in the private equity world and in the VC world. And the ROI is very straightforward there. It's about money.

[Eric Tsai]

Yeah, they want 10x.

[Vicki Tsai]

It's money and it's growth and it's money and it's growth. And I wasn't interested in creating something for money or for growth. I was interested in creating something worth loving and that I would want to spend the waking hours of my life doing. So I just wanted to self finance it and just see what it could become. But the only thing I wanted was to make sure it stayed really true.

[Eric Tsai]

But here's a question, right? And I get this question a lot from people. Listen, they say, guy, you know, I keep hearing these stories about people who self finance, but how, how do they do it? I mean, I don't have any money. You sold your engagement ring and presumably you had some savings from your Starbucks days and stuff like that, but I.

[Vicki Tsai]

Mean, no savings, it was gone.

[Eric Tsai]

But how did you do that? How did you finance it without any. I mean, because to do a. Create a company, a cosmetics company, presumably requires a lot of capital, right?

[Vicki Tsai]

Indeed. Indeed. Yeah. Well, I started before I even started the idea. There was maybe half a million in debt. So we've immediately went to credit cards, which I don't recommend, but it is what we did. I worked four jobs. I begged my landlord for a discount in rent in exchange for renting out the apartments and being the super for the building. I sold anything that I had that was of any worth, including my car, my furniture. My husband is very good at poker and so when he moved to San Francisco, every Tuesday night he would go play poker.

[Eric Tsai]

Wow.

[Vicki Tsai]

And it would be just enough. I would wake up Wednesday morning, there'd be a little stack of cash and we'd use that to buy food. And then I just, I was just a team of one.

[Eric Tsai]

Working out of your apartment?

[Vicki Tsai]

Working out of my apartment. But I mean to be, to be completely honest, financially things were dire. We would, when we maxed out one credit card, we would roll it all over to another credit card to buy ourselves some time. And I have a distinct memory of being nine months pregnant. I couldn't afford maternity clothes so I just sort of pulled the drawstring out of my sweatpants. But then I'm like Humpty Dumpty without the suspenders. So like I have to hold onto the pants when I walk or else they're on the ground. And I went to the grocery store, I was checking out and my credit card got declined and, and the people behind me and the cashier looked at me with a great deal of pity because I was super pregnant and I couldn't afford my groceries and I left them there and I walked out without them.

[Eric Tsai]

Wow.

[Guy Raz]

When we come back in just a moment, how Vicky finally got tatcha off the ground and into her parents garage.

[Eric Tsai]

Where she would begin an an eight year long struggle to keep the company from sinking. Stay with us. I'm Guy Raz and you're listening to.

[Guy Raz]

How I Built this. I've stayed at some amazing Airbnbs, someone's cabin in the middle of a vineyard in California, in a 17th century stone barn on an old olive farm in Tuscany, and in an apartment in Paris where I watched people dance in the streets below. Whether you could use a little extra money to cover some bills or for something a little more fun, your home or spare room might be worth more than you think. Find out how [e-mail] host and now a quick vital break. A little more from our sponsor, Vital Proteins. Have you heard of Vital proteins? Collagen Peptides. It's a supplement that has four benefits all in one. Helping support health, healthy hair, skin, nails, bones and joints. Because of aging, after 30, our body's natural collagen production can start to decline by 1% a year, which may lead to the appearance of fine lines, saggy skin and your bones and joints not moving like they used to. By taking collagen peptides daily, you can help support your hair, skin, nail, bone and joint health. Consistency is key. Take a serving of collagen peptides daily to help look, feel and move your best. 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. If you're pregnant, nursing or have a medical Condition. Consult your physician before use. Last year, 1.3% of the global GDP flowed through Stripe. That's over $1.4 trillion. And driving that huge number are the millions of businesses growing more rapidly with Stripe. For industry leaders like Forbes, Atlassian, OpenAI, and Toyota, stripe isn't just financial software. It's a powerful partner that simplifies how they move money, making it as seamless and borderless as the Internet itself. For example, Hertz boosted its online payment authorization rates by 4% after migrating to Stripe. And imagine seeing a 23% uplift in revenue like Forbes did in just six months after switching to Stripe for subscription management. Stripe has been leveraging AI for the last decade to make its products better at growing revenue for all businesses, from smarter checkouts to fraud prevention and beyond. Join the ranks of over half of the Fortune 100 that trust Stripe to drive change. Learn [e-mail] hey, welcome back to How I Built this. I'm Guy raz. So it's 2009, and Vicky and her.

[Eric Tsai]

Husband Eric are about to become new parents with a bank account that's almost empty and an apartment that's pretty much.

[Guy Raz]

Full of Japanese blotting papers. And Vicki needs to come up with a plan to launch her brand new business, Tatcha.

[Vicki Tsai]

I was completely mistaken about how I would bring it to life. I thought, if they're beautifully designed and I tell, you know, this, this beautiful and true story about where they're from, I'll be able to find partners to work with. So retailers who would want to carry it, PR agencies who want to work with us. And we were turned down everywhere.

[Eric Tsai]

You pitched everybody, you said, hey, I've got this great product.

[Vicki Tsai]

You name it. Yeah, PR agents even I couldn't even give people money to take me as a client. And then retailers were not interested at all. So. And everybody also told me at the time, too, that there is no demand or interest in Asian beauty in the US because it's not aspirational.

[Eric Tsai]

Wow.

[Vicki Tsai]

And they had pointed out that, you know, Shiseido had been in the US for over two decades and had not been able to really make it beyond Chinatown. Sk2, Procter and Gamble was behind them. They weren't having, you know, any meaningful success yet. Shuyu Amura, which was owned by l' Oreal, had been pulled out of the market and shut down. And there was no other Asian brands. And, you know, people told me very, very plainly that skincare is not really a thing in the US People care about, they care about makeup. And then Asian beauty in totality is not aspirational here, so don't do it.

[Eric Tsai]

But you. You did do it.

[Guy Raz]

I mean, you.

[Eric Tsai]

You started putting the blotting papers out into the world. So, like, how. Like, how did you. How did you get the word out?

[Vicki Tsai]

Well, I went to the library, and I couldn't afford the magazines, but I flipped through them and I wrote down the names of the editors and their mailing addresses and the makeup artists that I admired. And I started sending out care packages with handwritten letters to them just with the blotting papers. And all I did was tell the truth of their story. And I said, I hope you enjoy them. And that was where the press coverage started coming from. And so you just.

[Eric Tsai]

And these are just blind. I mean, you were doing your own pr. This was you literally mailing it to somebody at one of those places.

[Vicki Tsai]

Mm.

[Eric Tsai]

And the makeup artists.

[Vicki Tsai]

The makeup artists. I saw the names in the credits on the side of the picture, and then I looked them up online, and I found their agencies, and I would send them to their agencies.

[Eric Tsai]

Where was the coverage? Like, what magazines?

[Vicki Tsai]

Pretty much everyone. Vogue did a spread. Oprah. It was on the Today show pretty quickly. We got a ton of press. It was amazing.

[Eric Tsai]

So in your first year, you're doing great?

[Vicki Tsai]

I mean, it was difficult. I had the labels made from a wine label maker in Marin. And then when I got the labels home, I realized that the adhesive wasn't sticking the way that I needed it to. And so I got, like, a purple cow paper cutter and had to cut down 10,000 tops off of these stickers. But I was pregnant, so, like, I was. It was hard to even reach the table. So I did those 10,000. Then I bundled it all up, and my husband helped me. And a lot of the. I would say half that order I actually shipped to the uk Space Nk was my first retailer.

[Eric Tsai]

Space Nk? That's the beauty retailer in Britain?

[Vicki Tsai]

Yeah.

[Eric Tsai]

How did they even find out about you?

[Vicki Tsai]

The magazines.

[Eric Tsai]

And you're still running this out of your apartment?

[Vicki Tsai]

Out of my apartment.

[Eric Tsai]

So they weren't buying huge amounts. They were buying manageable amounts. They.

[Vicki Tsai]

A few thousand. Yeah. And then I had merchandising units made, so it was pretty much every single dollar I could scrape together turned into either merchandising units or these blotting papers. And they ended up hitting stores the day that I was in labor with my daughter. So we officially launched the day that my daughter was born.

[Eric Tsai]

What was Eric doing? What was his job at the time?

[Vicki Tsai]

Eric had found a Job at that point, I think he was with Cisco. We were fortunate. We had one income.

[Eric Tsai]

So you're a brand new mom. How were you guys dealing with childcare?

[Vicki Tsai]

I was taking care of her myself. But I also was really lucky. My mom had visited and she helped me find a nanny, Mrs. Liu, who didn't speak English. She's originally from China, and she took care of my daughter in my one bedroom apartment while I worked. And then when my daughter napped, she would help me pack out orders. Oh, and then she became our first employee.

[Eric Tsai]

Was it clear to you that you could make a go of it just by selling blotting paper, that that could be a sustainable business?

[Vicki Tsai]

No, it was not. I was making far less revenue doing that than. Than my lowest paid salary job I'd ever had. It was not a business. It was a hobby business at that point.

[Eric Tsai]

And did you have huge ambitions for it or did you think it was gonna kind of be a side hustle? Cause it sounds like, in a way.

[Vicki Tsai]

It was definitely not a side hustle in the sense that I worked 70 hours a week doing it. I took one day off in the hospital when I gave birth, and then I went back to work. So about two weeks after that, I.

[Eric Tsai]

After the birth of your.

[Vicki Tsai]

After the birth of my daughter. Maybe it was more like three. I was flying again, either consulting or going to Japan and continuing to research this. And it was horrible to leave a newborn.

[Eric Tsai]

Yeah. Wait, you were doing part time consulting gigs, like to make ends meet in addition to running the company?

[Vicki Tsai]

Yes.

[Eric Tsai]

And how long did you do that? How long was it before you were able to stop doing outside work and just focus on the company? Was it like two years, three years?

[Vicki Tsai]

In three to four years.

[Guy Raz]

Wow.

[Vicki Tsai]

And then about a year into it, I had exhausted my search for those other ingredients that I had found in Japan and used the rice powder, the mineral powders, the camellia oil, the things that had healed my skin were not available in the U.S. even in San.

[Eric Tsai]

Francisco, with an incredible. Japantown.

[Vicki Tsai]

Japantown. No, Japan. I went to Japantown, Chinatown, Koreatown. I went to traditional Chinese medicine places because there's a lot of herbal treatments there. I went to ebay. I mean, I went everywhere. It's just not here.

[Eric Tsai]

You were looking for that, like rice bran, whatever, like foaming powder that you were using and the camellia oil you could not find. I'm surprised you could not find that.

[Vicki Tsai]

Could not find it. And then, even. Even then, I did not realize how unique it was. And so on one of my trips back to Japan. I actually flew to Tokyo and I just went to the department stores and I went straight to the cosmetics counters for the Japanese brands. And they, they all sort of looked at me like I was crazy too. And Yuko was like, yeah, they don't sell that kind of stuff. The people don't use that kind of stuff here in Japan anymore.

[Eric Tsai]

It's for like old. It's like, what, for like old fashioned people or like.

[Vicki Tsai]

Yeah, it was things that like their great grandmothers or grandmothers had used.

[Eric Tsai]

And you're like, no, no, this is actually really great stuff.

[Guy Raz]

Yeah.

[Vicki Tsai]

And I'm like, no, this is super legit. I have no idea why it's super legit, but it is.

[Eric Tsai]

So it seems like at this point, Vicki, you were thinking of selling these products because you knew you couldn't make a go of it just doing the blotting papers.

[Vicki Tsai]

That's exactly right. And then I started working with scientists to develop these formulas.

[Eric Tsai]

Yeah. So you found a lab in Tokyo.

[Vicki Tsai]

Yes, and I got really lucky because it turns out that they are some of the most famous skincare scientists in Japan.

[Eric Tsai]

By the way, from what I understand, like, the three main ingredients in a lot of these products are green tea, rice and algae. Seaweed.

[Vicki Tsai]

Yeah, that's exactly right. Those were the ingredients that I had first used that healed my skin. And then we went really deep. So we interviewed a dozen geisha, we went to old texts, including the oldest beauty book ever written in Japan, which was written in 1813. And the more that we dug, the more that we realized that the Japanese traditional approach to beautiful skin was not some sort of exotic flower that only grows on the dark side of the moon. Like many other cultures hundreds of years ago, when women found that their skin was dry or patchy or breaking out, they go to what's within reach. And what's within reach is in the kitchen. And so the basis of the Japanese diet is the basis of their beauty. And that's it.

[Guy Raz]

It's amazing.

[Vicki Tsai]

It is.

[Eric Tsai]

It's amazing.

[Vicki Tsai]

It's straightforward.

[Eric Tsai]

So they started tinkering with different products. And what did you say? You said, I want to do a lotion, I want to do a face cream, I want to do like, was it that specific?

[Vicki Tsai]

I brought them things that I had been using that the geisha had shown me.

[Eric Tsai]

And this was to wash your face or to clean your face or to do what?

[Vicki Tsai]

Yeah, there's a camellia oil that you use to melt off your makeup. There is a rice powder that you use to enzymatically exfoliate your skin and then a moisturizer that was made out of silk extracts. And when I showed them the things that I was hoping to create, I remember that they laughed a little bit because they said, why do you like these old fashioned things? Nobody will like this. Nobody uses these anymore. And I was like, because they work, I don't really care what's sexy, it works for me.

[Eric Tsai]

But it's interesting because they were old fashioned. Right? But you understood that if you just updated the design, it could appeal to people in the US because so much of, so much of these things is about design. Right. You have great product and the design sucks. No one's gonna notice it.

[Vicki Tsai]

That's exactly right. You know, the way that most beauty brands come to life these days is, you know, if you've ever wondered, how does this model or this actress suddenly come out with a 80 piece skincare collection? What does she know about skincare? It's pretty easy. If you want to do it it the fast way. You go to a contract manufacturer, they have stock formulas and stock packaging. You pick it, you put in 0.01% of a marketing level ingredient, you put your name on it, you pick a fragrance and it's out the door. And that is how the vast majority of skincare is made in the world. And I will be completely honest, I did go to labs in Japan and say, do you, do you have formulas like this? Because no brands are making anything like this. And they said, no, we don't make formulas like this.

[Eric Tsai]

You were looking for like a potential white label product because that's the way.

[Vicki Tsai]

You make things in the beauty world. Yeah. And so they would take me to their glass cases where they would say, we used to make something like that 120 years ago, but no, we don't make that anymore. And so that's why I had to find my own scientists.

[Eric Tsai]

How were you able to, I mean, at this point did you get some outside money? Because how are you able to pay that lab and the scientists?

[Vicki Tsai]

At that point I had gone and started doing a friends and family round. And by friends and family, it was mostly my family.

[Eric Tsai]

This is like 2010, 2011.

[Vicki Tsai]

And so I went to my mom and my dad, Stanley, my co founder, and then some people who eventually started working for Tatcha, they invested as well. And so it really was, it was just us.

[Eric Tsai]

Were you able to raise more than a million dollars?

[Vicki Tsai]

I think it was over the course of a few rounds, it added up to a million.

[Eric Tsai]

And that was certainly going to be enough. To get the lab to come up with the formulas. The formulas, yeah.

[Vicki Tsai]

We also did custom packaging, which is unusual as well. So building our own molds from scratch.

[Eric Tsai]

Molds for bottles and tubes.

[Vicki Tsai]

And the molds are expensive because they're huge and they're made out of steel. And so having custom molds made and the engineering and the design that goes into that, that's quite expensive as well.

[Eric Tsai]

So in those first, like, you know, while you were developing the product line, like what was. Were you burning through cash?

[Vicki Tsai]

Yes. And you know, you asked me about the fundraising and I mentioned that over the course of a few rounds it came to maybe a million dollars, eventually. 2. But it was not an organized affair in any way. Yeah, it wasn't like we had a thoughtful business plan. Despite having Multiple Ivy League MBAs on the team. We were all finance people. We should have known better and been able to stick to a budget and a forecast and a business plan. And that didn't happen at all. And we ran out of money over and over and over again. I couldn't afford a salary. My partner couldn't afford a salary. I couldn't afford rent anymore. My parents had bought a house, place in, near the airport at that point.

[Eric Tsai]

In San Francisco.

[Vicki Tsai]

In San Francisco Millbrae. And they let me move into there.

[Eric Tsai]

Wait, where was your husband?

[Vicki Tsai]

My husband moved with me, but we couldn't afford the apartment in the marina anymore.

[Eric Tsai]

But he had a job.

[Vicki Tsai]

He did. But every single dollar that he had I took and I put into the company.

[Eric Tsai]

Right, so you moved into their apartment for how long?

[Vicki Tsai]

Into their house. For seven years.

[Guy Raz]

For seven years.

[Vicki Tsai]

And worked out of their garage with no salary.

[Eric Tsai]

So I'm just curious. You were making essentially a high end brand, Right. You were making a beauty product that was gonna appeal to people who had money to spend and you could not live that kind of life, certainly at the beginning, but I guess at the same time, didn't you kind of to.

[Guy Raz]

Present yourself that way a little bit.

[Eric Tsai]

Like kind of as glamorous and you know, just at least to people you were talking about the product to.

[Vicki Tsai]

I tried to hide and not meet them in person and only speak with them or send them letters. And you're right. One of our first customers, and I don't normally mention our customers, but one of our first customers was Donatella Versace. And we had this really, really incredible high end clientele. And I was working on my mom's garage.

[Eric Tsai]

Wow. All right, so you launched the product line and you already had a customer base. Were people buying the product in 2012 when it started?

[Vicki Tsai]

No, when we launched the skincare, this little four piece collection with just a cleanser and exfoliant, a serum and a moisturizer. I was so fortunate in that I had sort of the holy grail of press hit the same week or weekend that the products launched online. And so that was. It was like a two page spread in Vogue, it was a feature in Oprah, it was the Today show again. And we had this website set up and it was beautiful. And I remember we sold exactly one serum. And then that was maybe on a Friday. And then that weekend I was trying to figure out how to create a promotion code and I made a mistake and I zeroed out all the pricing on the website and I didn't know it for two days. Finally, a woman that I knew from Starbucks who had seen a Facebook plea that I had put up like, please come check out my website. She went through the website and saw that everything was $0 purchased, made an order and then forwarded the order to me and was like, hey girl, you shouldn't give your stuff away. And. And I realized, gosh, even when, wait.

[Eric Tsai]

Sorry, there was like a glitch on your website?

[Vicki Tsai]

Yes. And so the weekend after we got the holy grail of press, the only order that I got for $0 because I had zeroed out all the pricing was from someone I know got it, okay. And no retailers wanted to carry us. And they said, I don't think this is interesting or compelling. I don't think that anybody will think that Asian beauty is compelling.

[Eric Tsai]

And you needed retailers. You needed to be in Sephora and IT and the department stores for it to work. You couldn't just do direct to consumer.

[Vicki Tsai]

I had hoped that I could do a combination of direct to consumer and retail, but there was no traffic to our website. Even when I made the prices zero, nobody came. Even when I had great press, nobody came. And then all of the retailers said that they weren't interested.

[Guy Raz]

When we come back after a quick break, Biggie faces a difficult decision about her role at Tatcha. Just at the moment, she feels like the company is finally stable. Stay with us. I'm Guy Raz and you're listening to How I built this. Did you know that 2 in 5 homeowners experience water leak damage? That means nearly half of us are at risk of experiencing catastrophic water damage, whether it's a slow hidden leak or a sudden pipe burst. And the worst part, most people don't realize they have a water leak until it's too late. That's why I have the Moen Flow Smart Water Monitor and Shutoff, a smart device that helps you better your odds against water damage before it happens. MoenFlow has FlowSense technology and uses AI to analyze your water usage patterns and runs daily microleak tests to detect any irregular activity, including leaks as small as a drop per minute. Moen Flow sends real time alerts straight to your phone if it detects any abnormal activity and automatically shuts off your water if it senses a catastrophic leak is about to occur. And the app is super simple and super easy to use. Visit moen.com flow to learn how to protect your home and help stop leaks before they start. That's M-O-E-N.com Flo because when it comes to water damage, Moen knows it's not about luck, it's about being prepared. Automatic shutoff and real time alert capabilities will operate when the device is configured with the proper settings. Lately you may have been hearing about a serious but rare heart condition called attr, Cardiac Amyloidosis or attrcm. Because symptoms can be similar to other heart conditions, it may take time to be diagnosed, but learning more about ATTRCM and a treatment called Atrube, also known as Acharamidus, could be important for you or a loved one. Atrubi is a prescription medicine used to treat adults with ATTRCM to reduce death and hospitalization due to heart issues. In a study, people taking Atruvy saw an impact on their health related quality of life and 50% fewer hospitalizations due to heart issues than people who didn't take Atruvy, giving you more chances to do what you love with who you love, Tell your doctor if you are pregnant, plan to become pregnant or are breastfeeding and about the medications you take. The most common side of side effects were mild and included diarrhea and abdominal pain. If you have attrcm, talk to your cardiologist about atruby or visit attruby.com that's a T T R U B Y.com to learn more. Hey welcome back to How I Built this. I'm Guy Raz. So it's around the end of 2012 and Vicky Tsai has been grinding away at Tatcha for years without a salary, living and working out of her parents house.

[Eric Tsai]

And by the way, at this point how many people are working for you like in your mom's garage in Millbrae?

[Vicki Tsai]

Up to 15 every day. Every day? Yeah. And the orders because then around that point I started going on QVC and QVC volume is significant.

[Eric Tsai]

How did you get onto qvc?

[Vicki Tsai]

I begged and begged and begged and begged for an introduction and I was turned down swiftly, at least four times to even get a meeting. And then finally this one merchant was kind enough to take a meeting with me. And then they gave me a chance to go up there and we sold out.

[Eric Tsai]

You went on to QVC as like the pitch. The pitch person?

[Vicki Tsai]

Mm. Yep.

[Eric Tsai]

What was that like? Were you nervous because it's live tv, right? Were you or were you just like, yep, I'm here, I'm ready to go?

[Vicki Tsai]

I wasn't nervous about the TV part of it because I just, when I get too stressed out, I just sort of leave my body. But I was nervous about whether I would hit my sales because if I didn't hit my sales goal, I didn't know how I was going to make salary. And I had already called my mom probably by that point four times for an emergency loan to pay salaries, because 15 people means 15 salaries or 14 salaries because I didn't take. And then I would come home and my house would be full of half packed boxes and they would go from floor to about 5ft up. In every single room of my house, there was inventory coming in from Japan and then there was orders going out through tatcha.com and then for QVC. And so it was just boxes halfway up the wall. At one point, we lost the baby in the box.

[Eric Tsai]

Wow. All right. When you went on QVC and you talking about the product and the story, how much of a turning point was that? Did the QVC sales lead to online sales from your website?

[Vicki Tsai]

It was symbiotic. But what happened in between, which I think I jumped over, is that after we launched the blotting paper, we had two acquisition offers within a few weeks.

[Eric Tsai]

Of starting the company in 2009.

[Vicki Tsai]

2009, 2010.

[Eric Tsai]

Wow. And what was the story? I mean, that's pretty great.

[Vicki Tsai]

One was a retail partner and the other one was a large strategic acquirer. And I had no intention of selling the company, but the strategic acquirer said, and it was a mentor of mine who I really, really respect, he's a beauty veteran and said, you have lucked into a brand that has the potential to be one of the greats. And if you love it like you love your child, then you'll give it to a mother who knows how to raise it because you do not have what it takes. You don't have the money, you don't have the know how. You don't have a team. And I had a newborn child at home. When he said that to me.

[Eric Tsai]

Wow. And I mean, I mean, if it was me, I would have taken the deal. I would have said, yes, please throw me a lifeline. And I mean, I think it would have been crazy of you not to have considered it at that point.

[Vicki Tsai]

I did consider it, and it would have been just enough to pay down the debt. And that was crushing me at that point was that I had been. I had taken my parents retirement. I had taken money from my friends and family who were not rich. We were probably 800,000 in debt at that point and maxed out all of our credit cards. And then when he said, you don't have what it takes, I felt terrified that I had bitten off more than I can chew and that I would lose people's money and disrespect a culture that's not my own. And so I was going to do it for no personal profit, but just.

[Eric Tsai]

To get out, just to pay everybody.

[Vicki Tsai]

Back and to let the brand live on.

[Eric Tsai]

And you would have no equity in it?

[Vicki Tsai]

No.

[Eric Tsai]

So you were gonna do it and.

[Vicki Tsai]

Why didn't it happen right when we thought we were going to do the deal? I wake up one day and I turn on the news and there had been a tsunami and then a radioactive incident with nuclear.

[Eric Tsai]

This is after the earthquake in Japan.

[Vicki Tsai]

This is the earthquake in Japan. And then the acquirer pulled out.

[Eric Tsai]

They pulled out. They pulled out because of the earthquake in Japan.

[Vicki Tsai]

You know, they didn't really give me a reason at that time. They just. Within 24, 48 hours, they were out.

[Guy Raz]

Wow.

[Vicki Tsai]

Yeah.

[Eric Tsai]

And so you would have taken that deal had they not pulled out?

[Vicki Tsai]

I would have taken the deal and.

[Eric Tsai]

We would not be talking about Tatcha today.

[Vicki Tsai]

Mm. Mm. Not with me. With them. Yeah.

[Guy Raz]

Yeah.

[Eric Tsai]

Wow.

[Vicki Tsai]

And so I think the reason I told you this story is because you asked if I was ever scared or did I know that it was going to work out. And no, at no point did I think it was going to work out. I just. At some point I realized that the fear finally went away when about three years into it, we formed a partnership with an organization called Room to Read. And they are one of the leading nonprofits globally for children's education. And they have a special fund for girls and fund girls education, including second skills life skills training throughout Southeast Asia and Africa. And I always knew that I wanted anything that we created to give back. And so we created a one to one model where every single purchase funded a Day of school. And before we started that partnership, I wanted to make sure that what we were going to tell our clients we were doing was actually happening. So I flew to Cambodia and I spent a few days with the girls in their schools, with their teachers in their houses, seeing what roomtreed was doing firsthand. And when I saw that, that's when my fear evaporated. Because I was surrounded by children who had no electricity, no running water, maybe no parents, not a lot of personal safety over their bodies, and yet they showed up every day with hope and with courage about the fact that their past wasn't going to define their future. And they look like my daughter, they look like me. And so that completely reframed for me what risk is and what sacrifice is and what's dangerous.

[Eric Tsai]

And how did the brand. Because I think by 2014, I think your revenue was like $12 million that year. I don't know. Once people start to buy the product, was it just kind of like a self generating process where it just grew and grew just organically?

[Vicki Tsai]

No, we were not profitable for the first eight years, so we had to personally finance the losses. And then when we ran out of money, we would have to go to friends and family and ask for help. But no, every step of the way was like figuring out from scratch again, how to make sure that people knew that we existed.

[Eric Tsai]

If you started the business in 2009, it took you like eight years to get to profitability. So you weren't really profitable until like 2016. Right. Or 17. I mean, like, at what point did you start to kind of breathe a sigh of relief a bit? I mean, at what point were you able to say okay, because you had been through periods where you almost accepted a deal, right. To basically take care of your debt and you had to borrow money and you were constantly worrying about paying your team and nobody was making a whole lot of money. They were all promised equity. At what point did you start to feel like, okay, this is going to be okay. Was there a point.

[Vicki Tsai]

Every year it felt like a high wire act where the wire was getting moved higher and higher and higher. And it was probably only when our private equity company came in and it was the only institutional round of capital that we did, that I started feeling less alone.

[Eric Tsai]

And it was probably easier to transfer at that point because you had proven the concept.

[Vicki Tsai]

Exactly, exactly. And they were wonderful partners. And so that was the first time I started to breathe a sigh of relief. But it came with its own different pressures because private equity doesn't invest for Very long. And so I knew that the second that they invested, the clock started and there would have to be another capital event to buy them out. And it was at that time that one of the options operating partners told me that he thought I should hire a real CEO. And it was a gut punch.

[Eric Tsai]

This is in 2017.

[Vicki Tsai]

This was in 2017 or 18. I have to double check the timeline.

[Eric Tsai]

And it was a gut punch because you were like, I'm the CEO.

[Vicki Tsai]

Yeah. I had founded this company and been the CEO for, at that point, nine years and had led it to, you know, pretty meaningful growth and meaningful in our industry and meaningful to our customers.

[Eric Tsai]

I mean, I think 2017, you're probably doing like, 30, $40 million in sales a year, probably.

[Vicki Tsai]

I would have to go look at the numbers.

[Eric Tsai]

So, I mean, you had a degree from Harvard Business School. I mean, you clearly were qualified. So what? And I'm not trying to disparage this person, maybe they were really genuinely trying to give you advice in your best interest. But what was it that they felt you didn't have?

[Vicki Tsai]

I asked that question, and the only answer that he gave me was, if you are willing to hurt the company for your own ego, then we can have that conversation.

[Eric Tsai]

But why would you be hurting the company?

[Vicki Tsai]

And that's what I said. I said I would never hurt the company. I love the company like, I love my family. It is my family. It's in my house. I mean, what are you talking about? So I never actually got an answer, but it took the wind out of my sails.

[Eric Tsai]

But what do you think? I mean, if you could step out of your own body and get on the balcony and look down, what would you have said about your leadership if you were being critical of it?

[Vicki Tsai]

I was definitely learning on the fly. But I would say that most founder CEOs do learn on the fly because the job changes every day.

[Eric Tsai]

Yes.

[Vicki Tsai]

I was trying to negotiate between being Vicki and Victoria. Victoria is what a lot of people see on QVC and in magazines. And Victoria is always zen, and Victoria is always grateful. But Vicky is an executive leader who needs to manage an agile and demanding business. And I didn't have a model of female leadership that I had seen before that I could look up to. And so I never really felt comfortable asking my team to do things if they didn't want to do it. I think I needed to be liked too much. I didn't want to come across as a difficult female leader, so I hadn't grown into my own skin. I think as a leader, the Results were there, but the confidence was not. And so when he suggested that I go and find a real CEO, I did.

[Eric Tsai]

I mean, that must have been really hard. It's your baby and your company, but at the same time, you want what's the best for your company in the future. And all these people who invested some money into it and hadn't seen a return yet. And not just the, forget about the private equity guys, but the, you know, the employees and your parents and the friends. Right? I mean.

[Vicki Tsai]

Yep.

[Eric Tsai]

And I'm sure that was a lot of pressure on you.

[Vicki Tsai]

It was. It was a ton of pressure. I was burning out. I was on the road 250 days out of the year, missing my child's childhood. I miss Thanksgiving. I've left my husband and daughter in line at Disney World to catch a flight to go on qvc. And I would have never told this story. You're the only person I would ever tell this story to. And it's because your listeners are thinking about starting their own company or they're running their own companies right now. And if I could do anything over again, I would have told myself at that time that you're actually doing a great job. And if you want to hire a new leader of the company for all sorts of different reasons, that's okay. But you shouldn't doubt yourself, especially just because you're a woman, and especially just because this is your first time at the rodeo. So if I have one regret at the company, it's that I didn't believe in myself. And the good news is it did lead me to hire a new CEO who is the light of my life, the best partner I could ever ask for for this stage of growth of the company. And it gives me the freedom to focus on what I love most, which is taking care of our clients and creating formulas. So it all ended up great. But it gutted me at that time.

[Eric Tsai]

Yeah. In 2019, you get acquired. I'm assuming that this was a long, drawn out process. Unilever bought Tatcha. It's been reported for about half a billion dollars. How did that happen? Did they approach you? Were you guys. Did you at this point feel like, look, the investors are all in. We should shop our brand around and see if we can partner with a bigger brand at this point.

[Vicki Tsai]

We were not intending on selling the company at that point. We had gotten acquisition offers or interest almost annually from our first year, and every time we said no, outside of the one time where it just fell apart. And after we did a private equity Deal. We assumed that we would be independent with a private equity company for five to seven years. But then I had to sit back with myself and, you know, really have one of those heart to heart conversations with yourself about why did you really start this?

[Eric Tsai]

Yeah.

[Vicki Tsai]

What was, what was this all about? It was. We know it wasn't for the money. And what I realized was that I created it because at that point in my life, I very much felt empty. And when I went to Japan, I had experienced a beauty and a kindness and a humanity and a craft that I had never seen in my life. And it healed my skin, but it healed my soul. And I created this thing to share what I was learning because I needed it in my life, I needed in my heart. And I have always believed that a brand is a promise. And it's a promise that I can't break. And I want it to live 100 years. I want it to outlive me. And so while I love running it and I wish it could be independent forever, I have no intention on living forever. Like, dying is definitely on my bucket list. And so I know that eventually I have to find it a home. And then I met Unilever. And I knew nothing about Unilever and had certainly never thought about them as a strategic partner. But there was this woman, Vasiliki, who was creating a group within Unilever. And the rule was that they had to be purpose driven brands and they had to have a purpose above commercial. And we had a conversation and she brought me to tears. And she's a mother and she's a female leader that I admire. And one of the things that she loved most about the brand was the giving model. And so that's when I decided while I would love to run this myself independently forever, I know that's not possible. So I would, I would rather than get it into a forever home where it can be protected and I stay with it. But then it's a forever home.

[Guy Raz]

When you think about all the things.

[Eric Tsai]

That have happened to you and the success of the brand, the business, do you attribute most of that to your intelligence and your work ethic, or do you think a lot of that had to do with luck?

[Vicki Tsai]

For sure, not intelligence. I am no smarter than anybody else. I think when you start any company, the most important thing is to show up every day. You just have to keep showing up for the game. I did get very, very, very blessed with amazing people who believed in us when there was nothing to believe in and who stayed with us. So our scientists from Day one are still our scientists today. Our packaging partners from day one are still our packaging partners today. Our retail partner Sephora, who did believe in us in day one. I just couldn't afford to be with them until year five because it requires more investment. They are our best partners today. So I've been really blessed. But I'm definitely not smarter. I'm definitely not more strategic. And that's why I love what you do. And that's why I love this podcast. And I wish it was around when I first started because it would have been my lifeline to believe in myself and it would have felt less lonely to do this. And so I'm so grateful for this opportunity to tell you the story because the other hundreds of times that people have asked me over the last 10 years about building this company, they've only asked about the highlights. And so I think about the entrepreneurs and hopeful entrepreneurs out there who read stories like the ones like mine and think that it was sort of leaping from one gilded lily pad to the next that just kept getting better and better and easier and easier and that I'm at home meditating and it's all been very Zen and beautiful. And it has been very Zen and beautiful, but it has also been death defyingly difficult and treacherous. And it has broken me down to my very core and caused me to question who I am as a person and what I'm made of. So I'm just a really big believer that if I can do it and it's in the cards for you, then anybody can do it.

[Guy Raz]

That's Vicki Tsai, founder of Tatcha. We first interviewed Vicki back in the summer of 2020. And by the way, two years after Vicki stepped down as CEO, Unilever asked her to come back because things were kind of heading in the wrong direction. Atacha and just like her full former boss at Starbucks, Howard Schultz, Vicki came back to the company she founded and quickly turned things around. In fact, she talked with me about this last fall when she came back as a guest on the How I Built this advice line. And you should check out that episode as well. Vicki gives some great advice to three up and coming entrepreneurs. Anyway, 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 [e-mail] or on substack. This episode was originally produced by Jed Anderson and updated by Casey Herman, with music composed by Ramtin Arablouei. It was edited by Neva Grant. Our production staff also includes Alex Chung, JC Howard, Carla Estevez, Chris Messini, Sam Paulson, John Isabella, Kerry Thompson, 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 [e-mail] survey packages by Expedia.

[Vicki Tsai]

You were made to be rechargeable. We were made to package flights, hotels and hammocks for less. Expedia made to travel.