Neil Agarwal, UCLA Anderson MBA class of 2012
Instead of starting a new company and brand from scratch, American-Indian Neil Agarwal, MBA 2012 from Anderson School of Management, University of California at Los Angeles (UCLA) instead decided to work with his brother-in-law to establish the North America franchise operations of an established men’s skincare company (recipeformenusa.com) of Swedish origin. But not having to develop his own product didn’t make his entrepreneurship effort any easier, getting his hands dirty with personally packaging and delivering products as he was during his initial days. Read his interview with PaGaLGuY.
Let me begin by asking you, why a men’s skincare product?
Recipe For Men products themselves can be used by anyone. Let me be clear. I’m not one of the three friends who developed the product. The founders are very close friends and they are all based in Sweden. One of the guys was actually on the Swedish Olympic team in 1998. The idea for the brand came about in the early 2000s in response to skiers whose skins get dried out and damaged, especially if they’re skiing throughout the day or for long hours. There was nothing available specifically for men at that time, except over the counter stuff originally made for women. Many brands available for men were simply repackaged women’s products or were made with different fragrances to cater to men while keeping the underlying chemical formulations the same. Our product has been built specifically for men’s skin which has different properties than that of women. From a marketing angle, it’s great in terms of targeting very active guys. The only limiting factors are awareness and price: one is not knowing how to take good care of your skin or having a proper skin care regimen. Some guys just use soap and water and think it’s enough. The second is the price. We do fall in the prestige side of the market. Our products range from $22 to $48.
How was the company founded and at what stage did you get involved?
It was founded by three skiers – one of the guys was on the Swedish Olympics team– who used to go skiing almost every day back in college in the late 90s. They realised that their skin was completely damaged and parched. So it didn’t have that kind of flexibility and it was very painful to shave to the point that they started talking about what they use on their skin. There wasn’t anything great that was truly effective for their skin care needs.
In 2003, they decided to leave their jobs to found Recipe for Men. They launched the brand in 2005, developing every product from the ground-up to cater to men’s skin. Men do have different skin – it’s oily, has thicker pores and the skin gets irritated as well because of shaving. So all of our products are really good at hydrating the skin. If a guy is going to use such products, they want simplicity and don’t want to spend too much of time having to figure it out. So our tag line is ‘Logical skincare’. What that means is the understanding that most guys use soap and water or generic big bottles of body moisturisers on their faces which isn’t very good. If a guy is going to switch from a big $8 bottle of moisturiser to a $40 bottle of 75 ml, they want to see and feel that difference. So a lot of time is taken to choose the best ingredients for men.
My business partner here and I have always had been talking about getting into the skincare business since four years and had thought of developing a line because we believed that the men’s skincare market was going to expand in North America, specifically the US, Canada and Mexico. But developing a new line is very tricky and expensive. There’s a lot that needs to come into play in terms of branding the product, making sure it is tested properly. It would take us at least two years, if not longer, to come up with a good line of products. So we shied away from the idea since neither of us had any experience in the skincare area outside of our own personal passion for being well-groomed men. So when my business partner was travelling to London, he tried out the under-eye patches sold by Recipe For Men. He absolutely loved them and when he returned to the US, he was trying to see if he could purchase the product here. But he couldn’t find it anywhere. So he thought, let me just reach out to the company in Sweden and see if I can buy some products from them. Honestly, he was just looking to get the products for personal use. He offered to pay for shipping and anything else they needed.
The Swedish team just loved the idea and they shipped the whole line to him even though he didn’t ask for it. When it arrived, he tried it out and found it to be very good. He sent the products my way and asked what I thought of them. I loved them too and we felt that they were the best products we had ever used for men’s skin. So the light bulb clicked and we thought, why not try bringing these products to North America.
So we spent most of 2011 working on finalising the arrangement with the Swedish team and officially locked an agreement in December 2011. The first six months of 2012 were spent in tweaking the packaging and testing with focus groups. We eventually launched the line in the US in June 2012. For marketing, we’ve basically worked on a lot of Press coverage and distribution. We’ve been featured in magazines like Men’s Health, Esquire, Details, etc. We are going to be in Maxim soon. In terms of distribution, we’ve got our products at some highly coveted boutiques at Los Angeles, New York and a couple of other cities.
Were you still at business school while you were working on starting up the company in North America?
Yes, I was actually at b-school when we decided to go down this path. I went to Georgetown University for undergraduation where I majored in finance and accounting. I went into Investment banking at Citigroup for three years where I did Mergers and Acquisitions for two years and for one year, I was part of their principal investing group.
Then I moved to California because my wife, who is a physician, was doing her residency out here. I worked at Live Nation (a music concert ticketing company) in the strategy group while they won the merger with Ticketmaster (another ticketing company). Then I went to b-school for the two-year MBA at UCLA Anderson, joining with a work experience of four years.
When you joined Anderson, what did you have in mind? How did this idea come across? What was the time like at b-school?
My goal, going into b-school, was to go the entrepreneurial way. It is something that I’ve always wanted to pursue. My father has owned his own business and I knew it was my goal ultimately to go down an entrepreneurial path. A lot of the jobs I took before b-school were to get prepared and get some experience on the analytical side. At b-school I took entrepreneurship and marketing oriented courses. I already knew accounting and finance so I tried out the areas I didn’t have much experience in. The idea for Recipe For Men came about in the third quarter of my first year. Those were very initial stages. I would say that things started to materialise more in my second year when I became sure that this was the path I wanted to go down on.
In the second year, I took classes that were helpful in this area. For example, I took a class on Sales and Channel Management which was very helpful. I took a course on Entrepreneurial Finance which is a very popular course taught by a legendary professor at Anderson. That class was great in terms of understanding finance for very small companies. I tried to go to many entrepreneurial and networking events to meet people. Entrepreneurship is tough because you need a support system as you’re not going into an established environment that a large or even a growing company offers. So it’s very tough when you’re doing something completely on your own, especially when youre business partner is out there in New York and you are here at LA.
I was doing a lot of work on the company while at b-school. The one thing I didn’t do was to enter business plan competitions, partly because I didn’t have the time. We had finalised everything by the middle of my second year. But I leveraged a lot of things I was learning while at school.
How did you raise capital for your venture?
We have been funding this business ourselves so far, based out of LA and New York. But starting next year, we’re thinking about raising capital. One thing that’s interesting is that when you raise capital, you have to be aware of what kind of business you are and therefore, what kind of capital partners you can target. Right now, we haven’t got any funding. It’s still the two of us and hopefully, we’re looking to get a third person in very soon. A lot of what we have done has been about bootstrapping the business and doing everything ourselves. The only thing we have outsourced is our public relations (PR). Given that we’re a consumer brand that is not doing any advertising, PR is something that is very important and we have outsourced that to experts.
My business partner has a daytime job in New York, while I function out of a co-working space. It is very similar to the concept of business centers in India, where you rent some space in a large office containing all sorts of companies who share common resources such as the kitchen and meeting rooms.
What is a typical day for you at work like? What different types of jobs do you do in a single day and what is most exciting about it?
It’s literally everything. In the beginning, given that we were both trying to learn different aspects of the business, we were involved in doing everything, from accounting to sales and marketing. In many cases, sales meant cold calling to try and get our product in the stores and try to set up meetings with the buyers at these stores. If a customer filled out the information form on our website or someone called our company number, we were responding to that. It involved dealing with the whole supply chain.
We had to change the whole packaging of the product to comply with US regulations controlled by the FDA. In the beginning, we worked with package designers to get that done. We would then send the packaging boxes to Sweden where they would print the labels and fill the product into the bottles. Those bottles would get shipped to North America. We were literally splitting up the inventory between New York and LA. We were actually fulfilling packaging orders ourselves – putting the products into boxes, taping them and shipping them out to stores. The number of trips we made to the UPS (freight service) store was crazy but it was exciting and fun because you have a hand in every aspect of the business and you can see it all coming together. But it’s also tricky because you don’t have enough time to be a hundred percent in every part of the business. At a certain point, it’s a matter of getting things done as opposed to making sure that you’re really optimising that part. Besides selling to stores, we were also handling sales through our website, which is almost like a separate part of our business.
Are you still doing the deliveries?
We have a fulfilment centre on-board now so we don’t have to pack the orders ourselves anymore and quite honestly, it’s not too expensive. They got us better pricing on shipping rates than we did. The difference between how much we saved and how much they charged to fill our orders was pretty minimal. That was quite an interesting learning.
Where do you go from here and how do you plan to expand?
We are hoping to bring someone on board in the next week or two to help run the wholesale side of our business and I will hopefully shift to the online side. Right now, our online side is not optimised. It’s a fully functional website where people can buy our products and we will fulfil it and ship it to them in a couple of business days. But, we’ve done literally next to zero search engine marketing or optimisation for the website. Then we want to see where else we can expand and grow in North America. We want to work together with the Swedish team and see whether else there are any other opportunities for expansion; maybe we can expand to India, for example. I think there’s a great market for this product in India and I’ve got great feedback from people there. Maybe we will take other brands on under us. It’s very tough to build a consumer brand because you’re fighting the competition from all the other brands. We’ve been very happy with the progress on this brand and we hope we can do it with others.
What part of your entrepreneurship experience could you not have prepared for without an MBA degree?
A great chunk of it actually. B-school allowed me to understand different aspects of the business. It helped to understand the operations side of the business, sales and marketing side of the business. These are things I didn’t really know. Sure, I could’ve learnt it along the way but it would’ve taken me longer to learn those things than having that experience from business school. I think it provided great framework for managing the business as a whole. That’s something that is important when you’re managing something with just two people in the beginning.
There is an ongoing narrative in the US that the relevance of higher education for entrepreneurs has diminished. Comments?
To be 100% honest, if you have an idea that is pretty fleshed out, has market value and is viable, and you’re comfortable running with it, there’s no harm in giving it a try without going to b-school. The amount that you can learn by launching a business is priceless, win or fail. But if you have an idea that you want to flesh out a little more, b-school is a great platform to do it at. If I had an idea I wanted to run with coming into business school, I could’ve done so much more to flesh it out during b-school and it would only have increased the chances of success.