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North Star Leaders Podcast

Tarang Amin

Season 1 Episode 11 19 Dec 2023

Transcript

Tarang Amin:

We don't need perfection. In fact, I'd rather fail a bunch and keep moving forward and learning than try to study something to such a degree that you're not moving. What I find is, particularly with brands, they're living beings that are constantly evolving. Brands get old when you stop trying new things or stop listening to your community. That's one of the things I love about our team the most.

Lindsay Pedersen:

The world needs what only your business can bring. As a leader, it's your job to deliver. But where do you focus? Where do you direct your time, your team, your budget, and your emotional energy? We are learning this together on the North Star Leaders podcast. I'll be talking to purpose-driven leaders about the choices they make to create audacious economic value while also realizing their distinctive purpose. I'm Lindsay Pedersen, brand strategist, author of Forging an Ironclad Brand, and host of the North Star Leaders podcast. Let's get to it.

Today I am so delighted to be joined by my guest, Tarang Amin. Tarang is chairman and CEO of e.l.f. Cosmetics, which he took public in 2016. Previously, he was CEO of Schiff Nutrition, maker of Airborne. On a personal note, Tarang is also my friend. He was my boss at Clorox about 20 years ago, and he's been a mentor since. Tarang, welcome to the show.

Tarang Amin:

Thank you so much. It's so great to be here.

Lindsay Pedersen:

I am really thrilled to see you. So, Tarang, to start us off, what is your favorite thing about what you do?

Tarang Amin:

My favorite thing is to build a passionate team and create this culture of high performance by which everyone thrives. That's what keeps me in this business for this long, and it's something I absolutely love.

Lindsay Pedersen:

I know firsthand that this is a forte for you. When I was interviewing you a number of years ago while I was doing research for my book, I asked you why brand is important, and I'll never forget what you said in reply. You said, "Because brand is the largest driver of economic value that there is." Can you elaborate on that? What did you mean?

Tarang Amin:

Sure. In multiple dimensions, just financially, a lot of times when you look at a balance sheet of a company, you have this thing called goodwill, which often is also synonymous with brand. It's by far the biggest economic factor. A lot of times, when we look at acquisitions and targets, the first question we ask is, is there a real brand there? Because brand drives sustainable economic value. So out of all the different factors, and people will often talk about technology or the profitability, they are highly correlated to the strength of what does a brand stand for in a consumer's mind. I've seen this over 32 years now in this space. It's been the biggest differentiator in terms of what really drives value.

Lindsay Pedersen:

I love that contrarian element of this because a lot of times people think of brand as a feel-good concept, and it is that too, or it can be, but when I'm working with CFOs and we can talk about how brand elevates pricing power, on the balance sheet, you literally can see it. It's like, oh, I can get a believer even for something that people associate with marketing. So specifically, everybody who's an owner in the business cares about that economic value.

Tarang Amin:

Absolutely.

Lindsay Pedersen:

Do you think that, outside of consumer packaged goods, that this goodwill economic value creation is as relevant as salient?

Tarang Amin:

Oh, absolutely. Maybe even more so. Consumer packaged goods companies often talk about brands. It's how we're raised grown up. That was a central feature of what we did. But even in my career, if I take a look at some of the most valuable brands that are out there, they're outside of traditional consumer packaged goods. I look at Google. I look at Apple. Really, in any industry I look at, you can see the power of a brand, even in financial services.

My last two companies were backed by TPG Growth, the private equity company in San Francisco. I could tell you, at Schiff Nutrition, when we first started, it was quite small as a company, and TPG Growth had a brand. It was one of the ways we recruited. We're like, we're backed by TPG Growth. This is what their track record is. This is what they stand for in the industry. So I haven't found an area yet that brand was not relevant. You tell me any industry, any core sector, I'll show you the power of a brand, and you can instantly see it in all the things you talked about: pricing power in terms of the economic profit that flows to the best brands in an industry, leadership, you name it, brand matters across the spectrum.

Lindsay Pedersen:

It struck me when you said, maybe even more so outside of CPG, outside of consumer goods, that it might be even more valuable. It makes me think of how, in consumer goods, most of us are really good at brand, so you have to be good at brand just to be even with the competitors. But I love it when I am working in an industry where most of the players don't believe in brand because it's an automatic competitive advantage for whoever it is that says, "Oh yeah, that is an asset that can be our source of differentiation."

Tarang Amin:

Absolutely. I see that all the time.

Lindsay Pedersen:

So let's talk about e.l.f. What drew you to e.l.f. a number of years ago? What sparked your desire to go lead this fledgling cosmetics company?

Tarang Amin:

I was introduced to e.l.f. almost 10 years ago. The founders, Alan and Joey Shama, were looking to sell the company. They had gotten it to about $100 million, $15 million in EBITDA. The next phase of the company to professionalize, build up functions, scale it to the next level. They were unbelievable entrepreneurs, and they loved that stage of going from 0 to had taken it all the way to 100 and were looking for someone to take it to the next level. I instantly fell in love with the company. I fell in love with the business model. Alan and Joey Shama created this company almost 20 years ago with this crazy idea of selling cosmetics over the internet for $1, and this was 2004, pre-iPhone. People thought they were crazy. You couldn't sell cosmetics over the internet, and you certainly couldn't make money at $1.

But that bold idea, really, in many respects, is still with us today. That spirit of disruption, that spirit of trying something that nobody had ever done before, so I loved both the digitally native roots, the test and learn mentality philosophy they had, but I also loved the value orientation. By the time I got to the brand, it had average unit retails was still only $2, a fraction of what most cosmetics brands were selling at. Probably the most important thing was this cult-like following the level of passion e.l.f. consumers had in the brand in the company. This was the time when there actually wasn't any money to do marketing. It was built up almost exclusively through word of mouth and different viral waves that happened on the internet, and you could see the passion people had in the brand and just saw a ton of potential in terms of where we could take it.

Lindsay Pedersen:

The North Star, for e.l.f., was that already articulated when you came on board, or was that part of your leadership?

Tarang Amin:

No, that was part of what we did. The core business model was fantastic, as I mentioned, in terms of a digitally native brand that offered great quality at these extraordinary prices. We articulated the North Star, our mission, at the time, as making the best of beauty accessible to every eye, lip, face, and skin concern. We added skin concern a few years ago when we entered the skincare category, but the fundamental mission and that articulation ended up being really important to help really guide what we wanted this brand to be.

Lindsay Pedersen:

What prompted the exercise of putting words to that? Was there an inflection point, or was there a pain that you were in for not having had that so explicit?

Tarang Amin:

We had acquired this company back in 2014. One of the first exercises, I think, that's healthy for once you get into acquiring a company is, "What are you buying, and where is it you want to take it?" That's an exercise of going back in the history and saying, "Why were consumers so passionate about this brand?" Articulating it as a way of guiding our future actions to make sure we stayed focused as we scaled the brand in terms of what we wanted to go do. It was this combination of this best of beauty made accessible and then a very strong point of view of democratizing beauty. It was for every eye, lip, face, and skin concern. So all the three elements were quite important, and they worked together.

Lindsay Pedersen:

Yeah, it's really for a very functional, rational purpose that you define this, that you make it an overt statement so that you can guide the decisions that you're making all the time. Again, it's not just because it feels good. It's because it's good for the business to do that. As the leader, tell me about a time or two that North Star prevented you from having to litigate some other decision or just made it easy when you're at a decision point, "Oh, we definitely need to do this. Why do I know? Because of that North Star, because of that mission."

Tarang Amin:

I'd say on that we have about 400 employees, and the mission makes it really clear what we're all aiming for. Any juncture. There's not even a question. Is it the best of beauty? Have we made it accessible? Do we take inspiration from our community or the best in prestige and have real joy in bringing it and making it at this extraordinary value for everyone? And we see case after case in any of our products of how they help expand the entire category because we've now given access to the best of beauty to everyone. So I'd say it's so ingrained in everything, all 400 of our employees, each of us do. It also allowed us to do is, over time, we're able to build upon that mission. If I look at our vision as a company, that North Star actually also helped us articulate our vision of creating a different kind of beauty company by building brands that disrupt norms, shape culture, and connect communities through positivity, inclusivity, and accessibility.

Now, that's a mouthful, but every one of those words is important, and you could see how they branch up from the mission but also in our purpose. Our purpose of what we stand for, we've also articulated as e.l.f. stands with every eye, lip, face, and PAW. We're a cruelty-free brand. So PAW is also important in there, and the pillars under that of encouraging self-expression, empowering others, embodying our ethics, these all work together. It's not just enough to have the mission. The mission is good, but being able to really say, "Okay, as a company, what's our point of view in terms of how is e.l.f. Beauty, which is a collection of different brands, different in what we're trying to do, and then what do we really stand for from a purpose standpoint for our community?"

So I think over time, that's actually been a lot of fun to be able to start with a mission, which is very clear, but then to further articulate who we are, what do we do, why do we do it, and what are our values. I'd say all of those go hand in hand. We onboard, train every single person in the company, all of our partners, and this is what we stand for, and it helps guide behavior. It helps make it crystal clear to people what is it we're trying to accomplish so people don't have to guess.

Lindsay Pedersen:

Yes, and it actually hearkens back to what you started with, which is, what you really love to do is build a high-performing team, and a high-performing team needs the latitude to make decisions without the CEO in the room all the time to make sure that it's an on-brand decision. By making it overt as an artifact, here's our mission statement, here's our purpose, here are our values, here are our pillars. In a way, it's democratizing leadership because pushing out those decision-making filters to everybody who is going to touch the customer in some way.

Tarang Amin:

That's right. It makes a real difference. To this day, we still track even on hard measures like net sales and profitability. E.l.f., relative to any of our publicly traded beauty peers, an e.l.f. employee generates anywhere from around five times more sales and profit per employee than any of our peers. So this aspect of making and empowering our team to be able to, one, be clear of what we're trying to accomplish, but then be able to run with that and help meet that mission, vision, and purpose, I feel is a real area of advantage for us.

Lindsay Pedersen:

Wow. So yet another way that brand accrues economic value for the company that people produce more sales per human as a result of that.

Tarang Amin:

That's right.

Lindsay Pedersen:

It strikes me that the e.l.f. purpose and actually all of the elements that we've talked about is this intersection, use the word between two things that don't usually live together, so it's mass/accessible. It's also fine/luxury, you might even say. So there's a unique intersection that only e.l.f. brings with that. It seems like, and this is part of how brave it was for the founders to start with something that was so contrarian. Give me an example of when you have looked to that intersection to say no to something that might've been really appealing if you were only a mass brand or if you were only a luxury brand, but since you're both, you can't pursue X, Y, or Z.

Tarang Amin:

It shows up in a number of different ways. When we look at acquisition targets, one of the lenses we look at is, does it help us propel, making the best of beauty accessible? There are a lot of really great assets out there that are super high price that you sit there and go like, "How does this really meet our mission?" It helps screen out almost from starting point of what are the collection of brands that we want. The other thing is, it holds a high bar in our innovation and what we do. We take great joy in coming out with what we call these holy grails. A holy grail innovation for us is something that we could take inspiration from our community or the best of prestige and bring it at this extraordinary value. I will ask in our product reviews, "Okay, tell me why this is a holy grail."

I'm listening for the aspects of best of beauty made accessible for every eye, lip, face, and skin concern. An example is, there's a prestige brand a few years ago that came out with a putty primer. That was a great success in the prestige space, but they priced it at $56, and we looked at that and we said, "Okay, it's a great product, but $56 is out of reach for a lot of people." So we introduced our Poreless Putty primer at $9. We felt the product was just as good, if not better, than the prestige item.

We tracked it over time, and we saw that the prestige item continued to do well. It was growing double digits over the last few years, but we sell nine times the number of units as that prestige item because, the fact is, a lot of people can't afford $56 for a putty primer, but you can afford $9 or $10 for it. We use it in almost every dimension of our business. When we are launching products, is it meeting this mission? When we're looking at brands to bring into the portfolio, does it meet the mission? When we're looking at what we are trying to accomplish in our marketing and in building our community, there is that aspect of we have very broad appeal, and we want that broad appeal because that's our fundamental mission of making that accessible.

Lindsay Pedersen:

I love that. What are you most looking forward to with e.l.f.? You've accomplished a lot in these 10 years. What are you psyched about?

Tarang Amin:

To answer that question, I always tell new candidates, when they're coming to e.l.f., you're joining us at the exact right time because we're just getting started, and I fundamentally believe that. I also tell any candidate that we're hiring, "It doesn't really matter what we hire you for." Nobody actually does what we hired them for. It's a growth company, so there's always going to be more opportunities than there are people for. So as much growth as we've seen, I think in that almost 10-year period, we've gone from $100 million to over $900 million in sales. From that $15 million in EBITDA, closer to $200 million in EBITDA, we've, even in the last few years, more than doubled our market share.

The thing that makes me most excited is, I very much feel we're still just getting started. I feel we can double our market share in color cosmetics over the next few years. We have two of the fastest-growing brands in skincare and really be able to grow that business internationally. We're just still only now expanding, so we have so much white space ahead of us, that makes it really exciting in terms of what we can do in terms of growing both team, but more importantly, the brands that we have.

Lindsay Pedersen:

So what is the thing that keeps you the most interested on a hard day? What is the thing that keeps you coming back to this enthusiasm that you just talked about?

Tarang Amin:

I'd say first and foremost is the team. As I started, that's what keeps me in this. That's what energizes me and gives me the greatest confidence. We're in a very competitive space, I think, in Nielsen, and the mass sector tracks 1,800 cosmetics and skincare brands. So an incredibly fragmented space. Now, having said that, only 50 of them have scaled above $50 million in retail sales. So it's a competitive space, but you're in this space that it's going to be dynamic. The thing that I feel gives me the greatest confidence is, we've got an incredible high-performance team, and that team is constantly evolving, is curious. It's always looking at, what can we do better, what comes next, and how can we evolve this? And so are our brands. Our brands are constantly evolving and totally based on what our community wants to see from them. That is quite exciting when you see, for as much growth as we had, just so much more white space ahead of us and so much more that we can do.

Lindsay Pedersen:

I love it. Let's talk about you outside of work for a little bit because I know that being a leader, especially the leader of a company, doing what e.l.f. is doing is exhausting and can be both mentally, spiritually, emotionally draining, physically draining. So what do you do to manage your energy and to show up as the person you want to show up as every day?

Tarang Amin:

I'd say there's a few things. One is, it really helps to love what you do, and I start with I love what I do and I get a lot of energy out of it. In terms of work, over time, I've created rituals where that give me space and time. So I talked about our product review every other Friday, is our product review where we decide product. We have an executive team that runs the company. We have a ritual for that of every Wednesday we meet for a little while. We have rituals on some of these other things. So what it does is it frees up pockets of time for me to be able to connect with the team, to think, to reflect that. So I think that just creating your own rituals and work that actually create that space so you're not just nonstop where you can't think. You're going from one meeting to another or one event to another. It is being very quite intentional about how you want to spend your time and where you go.

I'd say the second thing is power of team. You're going to hear me say that over and over again. I've got an incredible exec team, an incredible team of leaders underneath that, and every single person at our company is a leader. So it frees me up where I don't have to actually get into the marketing. I trust Kory Marchisotto, our CMO. He's a phenomenal CMO. So I can spend my time coaching her, talking to the business, talking about what we're going to go do, and entrusting her to run the marketing. Or our Chief People Officer and GC, Scott Milsten, is incredible. Best GC I've ever worked with. Best on that people front. So having a really good team that you surround yourself with also gives you that space and the energy, and that both the collaboration, the healthy tension that comes from it.

Then I'd say the rituals of, also, where else do you find energy? Personally, my Myers-Briggs type gets a lot of energy out of people in our team. So making sure I have enough time to interact with each person, do plenty of one-on-ones, be able to go to our various offices and see people. That gives me a lot of energy. My wife Hirni and I, we love to travel. We love to explore new places. We're foodies, we love to entertain. Then even things like simple as we're in the Bay Area, a beautiful area, we love hiking and getting outdoors. So I've got a wonderful life in which I'm able to seamlessly integrate all those different areas that kind of bring me energy and inspiration. I never really feel exhausted or tired that way because being able to make sure, and again, it comes back to intentionality of how do you spend your time, who do you spend your time with, what do you want to spend your time on. Constantly reviewing that and reflecting on, am I spending time with the people I need to or where I should be?

I always say, in a mid-market growth company like e.l.f., everyone does real work, including me, but what we want you to do is the work that you're best suited for. There's some things I can do better than anyone else in the company, so I stay focused on that. Then another big enabler, and I'm going on pretty long here, is going back to the team. We were quite intentional in the diversity of that team too. When we came in, one of the things I wanted to make sure was that our team reflected the community we're serving. So I'm very proud of the fact that our workforce is 80% women, over 60% Gen Z and millennial, over 45% diverse. They represent the community that we serve, and it's a huge area of competitive advantage.

I talked about those product reviews when I asked, "Is this a holy grail?" I will look at the chat box, and it's the hottest ticket in town. I'll see it light up, and I'll call out, "Carly, why is that?" Because Carly will be way better and closer to our community, our consumer, than I will ever be. So getting energy from the team in that way as well. But also, it's quite enabling because I have a team that works that way, and it's not just a team. It goes all the way up to our board of 4,200 public companies in the US. We're one of only four that have two-thirds women and one-third diverse representation. It's quite appalling, but it also reflects, it's not just up to a certain level what we believe, as we believe that we should reflect the community we're serving, and I feel it gives us a real advantage and also helps enable me in terms of surrounding myself with great people that also represent our community and can help guide them.

Lindsay Pedersen:

I absolutely love that. I want to stand up and clap right now. There's such a recurring theme of this conversation around being intentional, being intentional about your brand, about your North Star, being intentional about your team, being intentional about rituals, and coming back to rituals, being intentional about what you do to fill your tank, honoring and being intentional about how you're uniquely wired. Your Myers-Briggs profile is going to gain energy rather than lose energy. It all is from a stance of, we're going to take a pause, think first, and then act, as opposed to wait until we're in the heat of the moment and act reflexively. That doesn't allow us to show up as how we want to show up. I really love how universal that stance is and everything that you do as a leader.

Tarang Amin:

Thank you. But I think the other healthy tension part is, we also are big believers in forward motion. I take this from being a digitally native brand where you're constantly testing and learning new things. And if you ask the Shamas in the early days, "Hey, how did you decide what product to launch?" And it's like, "Somebody thought this was a great idea, so we'd throw it online and see if it worked." And I loved the simplicity of that. It wasn't like overthinking it. I feel it's one of the things that we continue to do. We don't need perfection. In fact, I'd rather fail a bunch and keep moving forward and learning than try to study something to such a degree that you're not moving.

What I find is, particularly with brands, they're living beings that are constantly evolving. Brands get old when you stop trying new things or stop listening to your community. That's one of the things I love about our team the most. I remember our CMO a few years ago was like, "We have to be on TikTok. That's where Gen Z is." And I'm like, "If that's where Gen Z is, we definitely have to be on TikTok. Now, what's TikTok?"

But it didn't stop us from, "All right, let's go try it out." We approached it with great humility and hunger. So we knew nothing about TikTok at the time. We studied it. We're like, "Gosh, people seem to be doing a lot of music videos. They seem to be dancing to a lot of things." So we commissioned our own song and we put it out there, and nobody had done that in our space. 10 billion views later, we're like, "Oh, the people are responding to this. So now what's the next chapter? Where else do we go? Oh, a lot of our consumers are gamers. Let's create our own channel on Twitch and partner with Loserfruit, Lufu, one of the world's top female gamers on a platform of female empowerment." So yes, having the rituals where you actually have some space to think, to recharge, and that makes a difference.

But also then empowering and enabling your team to constantly try new things. What are we learning from it? What worked? What didn't work? And it doesn't bother us if we did something and it didn't work. We actually celebrate, "Yeah, boy, that really didn't work. But look at what did." And I think there's a good rhythm there between having both the time to think, but also not overthinking things. We're always putting things out there and looking for the signals from our community. Are they responding to it? Are they reacting to it? Are they liking it? Let's double down on that. If they're not, let's keep moving. That's actually been one of the keys to our success as well.

Lindsay Pedersen:

I absolutely love this. That you can have intentionality and a bias for action at the same time. That being really deliberate in the way that you approach decisions does not mean saying no to things that are not yet proven. When you accompany that intentionality with curiosity and a willingness to give air cover to your team to take risks, you take risks, your team takes risks. That's what creates a vibrancy. So all intentional and all pausing without the willingness to also be brave can become staid and not very human feeling. All-risk tolerance without intentionality cannot feel very empathetic to the customer and can erode your brand. So it's that magic dance of the two.

Tarang Amin:

That's right. We talk a lot about our healthy conflict, healthy conflict in terms of are we giving each other enough feedback to get better, this tension point between best of beauty and accessible, this whole aspect of rituals and intentionality, but definite forward motion and keep testing and learning and keep trying. I feel it's those intersections that are the place where magic happens versus the extremes sometimes that people find themselves in.

Lindsay Pedersen:

Totally. This has been awesome. I have five rapid-fire questions for you. So one word answers. Are you ready?

Tarang Amin:

I'm ready.

Lindsay Pedersen:

Okay. Favorite snack?

Tarang Amin:

Pizza.

Lindsay Pedersen:

Last splurge purchase?

Tarang Amin:

I don't think I've done one.

Lindsay Pedersen:

You must.

Tarang Amin:

I travel well, so I would say that I put that in that category. My wife considers me a real baby when it comes to travel, so I'll put that on.

Lindsay Pedersen:

Splurge on good travel. Good. Favorite guilty pleasure TV show?

Tarang Amin:

Any of the comedies. I don't know if it's a guilty pleasure, but Seinfeld, Curb Your Enthusiasm. Anything that makes me laugh, I love.

Lindsay Pedersen:

What book is on your bedside table?

Tarang Amin:

Right now I'm reading a book, Creativity, Inc., from the co-founder of Pixar, and talks about how they created this incredible culture and environment of creativity, how they were quite intentional, how they went about that, their rituals, and how they were able to do that. So I'm just a little bit into it, but already loving it.

Lindsay Pedersen:

Okay. Creativity, Inc. We'll put it in the show notes. What is your favorite brand other than e.l.f.?

Tarang Amin:

Yeah, I'd probably say Apple. I'm a big Apple user. I seem to snatch up their products regardless of knowing that much about or not.

Lindsay Pedersen:

You're not alone. This has been such a joy, Tarang. Thank you so much for joining me. How would you point people who want to learn more about you online to e.l.f.'s website, your LinkedIn profile? How would you like people to stay in touch with you?

Tarang Amin:

Either. Any of those work.

Lindsay Pedersen:

Okay.

Tarang Amin:

You can log on to elfbeauty.com. You'll get a better view of what we stand for as a company, our leaders. Certainly, anyone can always reach out to me on LinkedIn. This has been a lot of fun, so thank you, Lindsay.

Lindsay Pedersen:

Thank you.

Thanks for listening to this episode of North Star Leaders. Make sure you don't miss an episode by subscribing on your favorite podcast app. For show notes, transcripts, and newsletter signup, visit ironcladbrandstrategy.com. Please join us again for another episode of North Star Leaders.

Lindsay speaking

About Lindsay

Lindsay Pedersen is a bestselling author and brand strategist with a scientific, growth-oriented approach to brand building. She has advised companies from burgeoning startups to national corporations, including Zulily, Starbucks, T-Mobile, Coinstar, and IMDb.

Her background as a P&L owner at Clorox fostered in Lindsay a deep appreciation for the executive’s charge: increasing the company’s value. There, she led mature, billion-dollar businesses and newly-launched categories, from Clorox Bleach to Armor All to Brita. In each case, she was solely responsible for increasing the business’s value.

Thanks to this executive perspective, Lindsay demands that brands be hard-working, disciplined and rigorous in growing a business. Her brand strategies are tested in the crucible of her proprietary Ironclad Method. Lindsay arms leaders with an empowering understanding of brand, and an ironclad brand strategy to guide choices as they grow.