(MALIN + GOETZ) - WWD Beauty Biz - Growing pains: two guys go for broke

WWD Beauty Biz - Growing pains: two guys go for broke

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A dollar and a dream may be all it takes to win the lottery, but striking it rich as a successful beauty entrepreneur takes vision, commitment and a considerably larger cash investment. In October of 2002, Matthew Malin, 36, a former retail and beauty industry executive, and Andrew Goetz, 41, a marketing director for the furniture and design company Vitra, came up with an idea they hope is a winning formula. The two, partners in life as well as business, decided to create Malin + Goetz, a skin, hair and body care brand with a sophisticated, minimalist design ethos and a unisex positioning. Within weeks they had a business plan (calling for both a product line and flagship boutique) and their first big decision under their belt (to work with a formulator, and own their own formulas, rather than with a manufacturer). By January, the duo had hired a graphic design company, 2x4, and were fleshing out the infrastructure of their new brand. All systems were go, with estimated start-up costs of $125,000 covered by the couple and investments from their families. A store location was found-177 Seventh Ave. in New York's Chelsea neighborhood-and an 11-item product lineup created. The launch was set for early October 2003. Of course, even the best-laid plans go awry. Construction delays plagued the store and costs rose, totaling about $200,000 overall. Still, though the launch was pushed back to February, the duo remains optimistic of hitting their first-year goal of 30 doors and a wholesale volume of $1.5 million. Here, their day-by-day account of what it takes to get a new beauty business off the ground.

MONDAY, JUNE 2? Working with formulator on Face Moisturizer. We've been playing around with the amount of fatty acids and fatty alcohols. We want it to be moisturizing yet quickly absorbent and with a luxurious viscosity between lotion and cream.

TUESDAY, JUNE 3? First meeting with architect Craig Konyk. Craig forwarded an amazing proposal with drawings and seems excited about our project.

MONDAY, JUNE 9? Received tubes from our supplier in California. To tube or not to tube, that is the question. Almost every industry professional recommends that a small start-up not do tubes, unless you're willing to produce very large quantities with a tube "specialist." Without the right equipment, filling and sealing the tubes is labor intensive, detail oriented and expensive. We love the look and convenience of tubes for our customer and decide to go for it after months of deliberation.

MONDAY, JUNE 16? Met with a manufacturer in Connecticut. The facilities are so clean and well organized. Unfortunately, I don't think that we'll be able to meet the minimum run requirements. It would cost two-thirds of our entire budget for the project. Reviewed the guidelines for the European Union regulations. We had previously interviewed a consultant to work with us on this matter, but decided we should do it ourselves.

MONDAY, JUNE 23? Met with Jackie, a writer and friend who has done some brochure editing for us. We've reduced the amount of copy from two full pages to three paragraphs, but we can't agree on the exact wording. Hopefully Jackie can solve the problem.

TUESDAY, JUNE 24? Reviewed with 2x4 the graphic printing area of the tubes. Must allow for the crimped area at the end of tube, which includes an eye-mark for sealing. Consequently, we may need to remove some text from the Shave Cream and Lip Moisturizer-after months spent getting it perfect.

THURSDAY, JUNE 26? Had conference call with manufacturer in Connecticut, who gave us insight into the silk-screening process versus the printing and application of labels. There is a variance for label printing and application at top and bottom that must be considered. Since our labels are text-intensive, must consider both aesthetics and practicality.

TUESDAY, JULY 1? Meeting with Craig's potential contractor. Having him buy into the idea will solidify the deal and make it financially feasible for Craig. Keeping our fingers crossed that it works out.

FRIDAY, JULY 11? Junior, our French bulldog, is having a back problem. Could be very serious. Dr. Kantor suggests considering back surgery, but, in the meantime, he will get steroids.

MONDAY, JULY 14? Friend and former boss, Maria LoBello (oversees the Co-Ops at Barneys), sees the product. Practice pitch on her. She offers product and merchandising advice. Very helpful.

MONDAY, JULY 21? First meeting with Barneys. Bettina O'Neill is very interested, thinks it looks fantastic. Gave us product feedback and suggests we start working on an eye cream. Meeting went well.

WEDNESDAY, AUG. 6? Second meeting with Barneys. Positive, but still discussing the possibilities, details and timing. Refinanced mortgage. Since rates are so low, we figured we should put the extra $200 a month back into the business.

TUESDAY, AUG. 12? It's final. We are working with Craig and his contractor, Simon! We have to apply for a work permit to begin construction on the store.

FRIDAY, SEPT. 5? Still haven't confirmed a manufacturer. We've spoken with five different companies. This search has become one of the most difficult aspects of the business.

WEDNESDAY, SEPT. 10? Met with 2x4 to finalize stickers, pharmacy bag and custom shopping bag. Still deciding on stock shopping bags, ribbon and boxes (mostly due to cost). Will most likely use a stock company-much less expensive. Reviewed initial Web site design. Looks fab! Need to integrate info and hire IT to develop all computer/phone related for office/store/POS/Internet.

Met with the co-op board in the evening. Board has agreed (yes!) to our requests to change the storefront. Very stressful since it will make a major difference to the aesthetic of the store. Our proposal, which they agreed to, was to upgrade the storefront. This is under the condition that the facade be maintained or upgraded as well.

FRIDAY, SEPT. 12? Review construction pricing with Craig's contractor-$20K over budget! Discussed options to bring down price, but biggest expense and most important design concept is the interior of the store. We plan to fabricate it entirely from white Corian. So cool! Need to set up meeting with Dupont Corian about possible partnership.

THURSDAY, SEPT. 18? Need to finalize the electrical for the store. Our neighbor, who also rented our space, had pumped in electricity from his current store next door. Consequently, there's no electricity hooked up for our store. This will be an additional expense and time, since Con Ed needs to install a meter. The contractor is estimating $2,000!

MONDAY, SEPT. 22? Our architect spoke to the expeditor for our building permit. After waiting over one month, there is another delay. Because there is a subway underground, the Transit Authority must sign off on our foundation. This comes after two weeks of waiting for the building department and then two more weeks for an unexpected asbestos inspection. Could take two more weeks.

WEDNESDAY, SEPT. 24? 2x4 to release the custom stock bag to the printer today! Need to decide on minimums-the more we produce the less cost per bag (but the start-up costs rise). Can start working on a sticker, which we've decided to do with custom gift boxes. They are so beautiful, we love them!

THURSDAY, SEPT. 25?Met with Chung the contractor and his electrician, who said it would cost us an additional $4,000 to get electricity in the store so that we can begin demolition. Is he crazy?

FRIDAY, SEPT. 26? Barry, our electrician, confirms that Chung's electrician is, in fact, insane. Barry can do the job for $400.

MONDAY, SEPT. 29? Decided on a manufacturer in California! Since it's almost OCT. we really have to get moving.

TUESDAY, OCT. 6? Heading to the 'office" (Starbucks, 177 Eighth Ave.), when the bookkeeper recommended by 2x4 calls to cancel due to a dental emergency. She left a message and requested rescheduling. I returned her message, wishing her well and agreeing to reschedule. Never heard from her again... In the afternoon, met with Dave, a bookkeeper recommended by friends at Red Flower. When he heard that we were looking for a bookkeeper, he immediately called and scheduled an appointment. Dave also lives in the neighborhood and frequents my Starbucks. We even recognized each other! We hire Dave.

TUESDAY, OCT. 7? Major meeting with Barneys. They are now interested in pursuing our originally suggested strategy of putting the products both in the men's and women's departments in all stores. This would be fantastic.

FRIDAY, OCT. 10? Morning dentist appointment. Another huge issue in starting our business was my devoting 100 percent of my time to M+G, giving up a full-time position, income AND benefits. Luckily, we were able to work something out through Andrew's employer's insurance (medical and dental). Otherwise, it would be an awful expense for insurance! Maintenance and prevention is our motto.

SATURDAY & SUNDAY, OCT. 11 & 12? Cold Spring, N.Y. Thank God we got away for some rest. I found three ticks on Junior, eight ticks on Bob (our English bulldog) and one on myself! Will need to get a Lyme disease test. Should have stayed in the city and worked.

MONDAY, OCT. 13? Discussion with 2x4 about Web site development. This includes integrating the site with all other technical aspects: telephones, computer software and hardware, accounting software, inventory software, etc. Worth it to go for a large host or small one? Definitely need a separate IT consultant and Web consultant to customize and integrate 2x4's Web design. Need to hire these people and meet as group.

TUESDAY, OCT. 14? Demolition began on Friday! Finally. It's amazing how much they did in two days. Walls look good, but will have to be cleaned up to leave exposed (another unbudgeted expense of $2,000). Trying to set up meeting with Dupont Corian to consider partnership. Have prepared a huge and beautiful presentation.

Tim, an IT consultant, came by to discuss our needs. Most important issue is determining the least expensive options that can be easily integrated and upgraded as we grow and can afford more.

MONDAY, OCT. 20? Confirmed Liberty in London. They are completely on board for a February launch.

TUESDAY, OCT. 21? Since the contractor found a problem with the foundation, we will have to rip up the existing floor and pour a new cement floor at an unexpected cost of $4,000. Also, our contractor received a visit from a neighbor who happens to be a sanitation policeman. We were ticketed $200 for carting trash from the store to a car on the street without a permit. Twice! The contractor will now have to go to the expense of renting a dumpster.

WEDNESDAY, OCT. 29? Great meeting with the regional sales manager and architectural manager from Dupont Corian. They will consider partnering with us on the project. Seems likely and would be a huge help. Very exciting, but so late in the game!

THURSDAY, OCT. 30? Southern California is still on fire. The fires are just across the freeway from our factory in the valley. Luckily, everyone we know is fine. They think it may be under control after a week of burning in the area. All of our packaging is there and raw materials are on their way for delivery (if deliveries are being made) for Monday and then the following Friday.

Meanwhile, in New York we took the car from the garage to reserve a space on the street for the delivery of the dumpster. After two parking tickets, we still couldn't get a space close enough with clearance for the dumpster. Then a space opened up and the delivery truck was able to wedge the one-ton dumpster into an open parking space between two cars. Aside from my $110 in fines, the dumpster was also fined $200 at the dump site because ceramic tiles were mixed in with the concrete (not allowed).

FRIDAY, OCT. 31? Before we pour the new store concrete floor, the electrician must run electrical wiring and plugs down the center of the floor. This will delay the floor pouring until Monday. We will also need a licensed plumber to move the water meter, which was originally installed on the floor. This will be positioned on the wall. Can't wait to see how much this will cost-it's not a planned expense.

Another unexpected cost was for cleaning of the brick walls, which we exposed from under Sheetrock. Our contractor told me that his guys would only wire-brush the brick at $600 for the two large walls. Originally, he had quoted $2,500 for more detailed cleaning. While I approved the $600, he told me today that they did the work for $2,500 by accident (no wonder it looks so nice) and wanted me to consider the difference in cost. (Ha!)

TUESDAY, NOV. 4? Tim updated IT proposal with detailed suppliers of integrated software and hardware. It looks like we can narrow it down to four (of 10) possible systems.

WEDNESDAY, NOV. 5? Got additional pricing today from our printer for gift boxes and stock bags with our logo printed on them. So expensive. We'll have to focus only on large gift boxes for now. Still waiting for pricing on the sticker. 2x4 feels strongly that the sticker is much nicer than printing directly on the boxes.

FRIDAY, NOV. 7? Small birthday party with eight friends. Like always, we use them as a focus group. Show off final packaging and some lab samples. No negative feedback, except that one person thinks the text on the bottles is overwhelming

MONDAY, NOV. 10? The worst Monday ever! Got the first production batch samples overnight from manufacturer. Only two of six are fine as they are! Goal to have finished (filled) products in New York by Dec. 5. Problem: It appears that the manufacturer is missing an important ingredient for the face moisturizer, face cleanser and body scrub. And, of course, our formulator is away and the manufacturer needs to wait for her return next Tuesday to place the order.

To make matters worse, construction in the store has stopped. We won't be able to proceed until we have the Corian to build the store walls. Because of our agreement with Dupont, we have to wait to receive the Corian materials from them. This will be at least another week, possibly two.

We also received our pharmacy" bags printed off center and too dark. All 25,000 pieces will have to be returned and reprinted. Could this week get any worse? I have a headache and need a drink, and it's only 2 p.m.

WEDNESDAY, NOV. 12? Andrew accepts design award for Vitra at Brooklyn Museum of Art and gives speech. Have to miss due to the co-op board meeting to review the storefront glass details.

SUNDAY, NOV. 16? Clark of Independence Bank made a stop to see us on his day off. It's so nice when someone makes our little business a priority! Rates are competitive and there is a branch directly across the street.

TUESDAY, NOV. 18? Got the second round of final production samples from the manufacturer. Shampoo is good. Face Moisturizer and Body Scrub still need more adjustments and the Face Cleanser definitely needs more adjusting. Our manufacturer sent some samples in our final packaging as a dress rehearsal. The seal under the cap, which we paid extra to have, is not adhering to the bottle opening. Our packaging company has mistakenly sent heat seals rather than the pressure seals that we wanted, and they're not sticking (because we are not using heat). Of course we have only just discovered this mistake today! It may take two weeks to get the right seals from the packaging company.

SUNDAY, NOV. 20? Lyme test at noon because of the tick bite last month. Negative, thank God. One less thing to worry about.

FRIDAY, NOV. 21? Dad's birthday. 66. I got so busy during the day that I missed my opportunity to call and didn't speak with him! I am a bad son.

TUESDAY, NOV. 25? Corian able to setup meeting for fabrication and installation next week. We can finally get construction going again?it has been dead for three weeks while we've been waiting for confirmation. Now we can schedule all final details to complete and open!

WEDNESDAY, NOV. 26? The associate architect overseeing our project has to return to Japan this weekend to renew her visa and will be gone for the next two weeks-the last two and most important weeks of construction. Purchased all of the computer hardware today from HP for the store and office.

FRIDAY, NOV. 28? Received e-mail that was sent late on Wednesday. Several of the items ordered from HP are out of stock and delivery times cannot be confirmed. I was VERY specific with my salesperson that I would place this order and PAY EXTRA for second-day delivery to have the equipment by next week. Now I am VERY upset but no one is available from HP as they are closed for the Thanksgiving weekend. Need hardware so that Tim can begin configuring our systems.

TUESDAY, DEC 2? Send salesman at HP a curt e-mail-and get immediate reply: "Out of office, please contact Ben..." I am so mad that I call for an HP supervisor, who is finally helpful and is able to locate my parts for configuration and then get them mailed (within a couple of days) to us.

THURSDAY, DEC 4? Our manufacturer is having delays with our tubes, as it is very labor intensive (everyone warned us, but we were adamant about doing them). All else fine and on track to be finished and filled within the next week.

FRIDAY, DEC 5? Got HP notebook and printer overnight today. At least it's something. Close on business line of credit, just in case.

FRIDAY, DEC 12? Gift boxes arrived. They look fabulous. We can send out press kits and product holiday gifts as soon as we have all the products.

MONDAY, DEC 15? All final products have now been OK'd for the manufacturer to fill and ship, with the exception of two that need minor adjustments. Will have all product by Jan. 1 if not sooner. Perfect for a February ship to retail accounts.

FRIDAY, DEC 19? Tim begins installing software and integrating all equipment. We had originally planned to do this in the store, but since it's still in full construction, we're using our dining room table as our computer lab. Our foyer and office are piled with computer boxes, brochures, shopping bags, tissue paper, etc. Can't wait for the store to open.

MONDAY, DEC 26? The old Seventies ugly aluminum and glass storefront was removed, replaced with a sleek, elegant, modern glass that's a perfect contrast to the original Art Deco facade of the building. We also removed an unsightly security roll gate that will be replaced with an alarm system. This gate occupied a space that is now a beautiful glass transom, increasing the height of the storefront from 9 feet to 12 feet. It looks really elegant.

MONDAY, DEC 29? Our warehouse shelves for our stock are delivered to the store. Barely got them in the store since the front part of the cement floor was laid today. We built a cardboard bridge over the new cement work and lugged each piece of shelving in there one by one. Shelves cannot be installed until electrical wiring is finished. Need to check on timing with electrician and contractor, maybe next week? Five huge skids of product delivered to the sidewalk in front of the building. While this is great news, we had to lug them into the basement, stack and inventory. It took two hours. a

THURSDAY, JAN. 8? As of today, all product is complete and is here or will be here by early next week. All marketing material is here, as is all computer equipment. We're finalizing several magazine editorials and retail accounts. And we are completely on schedule to open our store Feb. 1. It's just a matter of installing the Corian and bathroom walls, among other small details. Finally.

MONDAY, JAN. 12? Corian is finally being installed, along with a beautiful new toilet and sink! Homestretch! Met with Barneys. Confirmed 18th Street Co-Op, SoHo Co-Op and the Beverly Hills store. VERY exciting. Will start shipping for the second week in February.

TUESDAY, JAN. 13? Got FedEx from formulator for new Eye Moisturizer. Love it. May have to wait to finish electrical until next week when there is more room for electrician to work (Corian is everywhere). Confirmed distribution with Louis Boston for February launch!

THURSDAY, JAN. 15? Momentum! Amazing distribution so far; we're ready to go! Press is rolling in and 2x4 is finally having our business cards printed. (How did we forget this?) So much has been accomplished. We're proud and excited and anxious. More products to develop. So much to do...

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