Sarah Creal Beauty’s Tina Gu On How Smaller Strategics Drive Beauty M&A (Not Big Corps)

Bryan Mahoney

There's no better way for a brand to get to know their customer, to create content alongside of them, to create community, to understand — to use the words — what's important to them today.

Tina Gu

Personally, as a consumer, I hate it when I have to go to Reddit, to Wirecutter, to just, like, reviews, to all these different sources, trying to find what I need to find about a product I'm considering buying.

Bryan Mahoney

I might ask an agent to go buy me toilet paper, but anything I'm going to put on or in my body, absolutely not. When video started to become a thing in direct-to-consumer, it was very aspirational, very campaign-driven.

Tina Gu

That's what people want to see — that's how you make a decision.

Bryan Mahoney

Hi, everyone. Thanks for tuning in to another episode of the Brilliant Commerce Podcast, where I get a chance to sit down with some of the brightest minds in commerce and unpack the secrets behind some of the industry's most iconic, or next-to-be-iconic, brands. Today I'm thrilled to be joined by Tina Gu, who is CFO and Head of Digital Growth at Sarah Creal Beauty. Tina, welcome to the pod.

Tina Gu

Thank you, I'm really excited to be here. This is my first podcast, so hopefully people are interested in what I have to say.

Bryan Mahoney

Well, I for one am very interested in what you have to say, and if our warm-up was any indication, I think we're going to have a really good conversation. Let's start with some easy questions — where am I finding you today? Obviously you're working, looks like a home office, but where's home for you?

Tina Gu

I work remotely — our headquarters are in New York, but I'm able to work remotely. I'm in a suburb called Highlands Ranch, south of Denver — the full suburban experience, huge house, white picket fence, three kids, two dogs. I grew up in New York, never experienced this in my childhood, but this is amazing.

Bryan Mahoney

Yeah, it's hard — I was in New York for six years with a young family, and when I moved, I never thought I'd not live in a city. Then the first time I moved outside a city and had a bit of space, I thought, this is actually quite nice. As your family gets bigger and maybe the number of pets expands, trying to cram that into a New York City or Brooklyn apartment, in my case, is tricky.

Tina Gu

Honestly, I don't know how my parents did it — I grew up in Queens, in a small two-bedroom apartment on the first floor, surrounded by concrete. It's just such a good, different lifestyle. I also thought, for the longest time, I'd never leave New York. But that's just how life changes, and as you grow, the things you value change, and that leads you in different directions.

Bryan Mahoney

Yeah, and the industry we work in evolves a lot too — the thought of not being in an office with colleagues was, ten years ago, also quite foreign. I'd be like, I'm going to work from home this one day, and that felt like a weird exception. Now it's completely flipped — I go to New York once a month, we still have a good-sized team there, and we sort of celebrate getting everyone together in one place, that feels unique. Whereas more often than not, we're working from home or co-working spaces in our respective cities. I find it fascinating how quickly it's changed.

Tina Gu

Yeah, and I really appreciate it. I was at Meta during the pandemic, when Mark Zuckerberg was doing this big push for remote work — that's actually how I ended up in Denver. But now there's almost a pullback from a lot of companies, especially larger ones, toward more in-office. My husband's been looking for a remote job for over a year now, and it's been really hard — he also works in crypto, and, well, crypto tanked, and now it's at an all-time high again with Bitcoin. You really see these ebbs and flows — smaller companies more open to remote work versus larger companies recruiting that might be less flexible.

Tina Gu

For me, I was lucky to have a prior relationship with Sarah from when I worked with her at Estée Lauder — she valued my experience enough to let me be remote. We have another team member who's remote too, so it's nice I'm not the only one. But I think the perfect balance is what you're describing — where people have the flexibility to live the way they need to, and then get together periodically for team events as needed.

Bryan Mahoney

Yep, you hit the nail on the head, that's exactly how I think about team building. I just wrote down here, I want to come back to recruiting and team building and how you and Sarah think about that. But let's start with your background a little — even in that exchange I heard Meta, I heard Estée Lauder, that's a pretty fascinating place. Doing a little LinkedIn stalking, you went from banking to beauty to tech and back to beauty. So in three minutes or less, tell the audience your origin story, because I think it's fascinating.

Tina Gu

Yeah, I think I've worked across more industries than most people, and across different functions, but always anchored toward strategy and product marketing — which has the term marketing in it, but is really more about the strategic approach to how you build products, zero to one, how you scale one to ten, and how you talk about them and bring them to market. So that's been a consistent theme. I started my career in consulting, targeted at financial institutions — insurance companies, big banks. Went to business school because, honestly, I wasn't happy with consulting and had no idea what to do next — thought business school might help. It didn't.

Tina Gu

I ended up going into investment banking because the school I went to was Chicago, and investment banking is the top job people take coming out — so I went with the crowd, into banking, focused on the tech sector, at Barclays. I hit about a year and thought, I cannot do this anymore — it was a grind, and also just wasn't very interesting. Both consulting and banking, you're advising from the outside, but you're not really helping build anything.

Tina Gu

But what was really valuable from those experiences is it developed my foundation of skills around analytics, strategic thinking, the way I approach and problem-solve, breaking complex issues into a clear, executable plan. Those things I learned in the first five years of my career have served me extremely well since. Once I realized banking wasn't it for me, it was, well, what excites me, what should I do — and I've taken that approach at every step since, not looking at the next job as building a 10- or 20-year career, but, okay, right now, what's a good move for me.

Tina Gu

Knowing I'd just done banking, I thought something similar would make sense — and it was very opportunistic. A friend said her friend was recruiting for Estée Lauder's M&A team, and said, well, you love beauty, why not give it a try? And I thought, oh my God, I do love beauty, this would be perfect — a 20-something living in New York, it was all about skincare, all about makeup trends. Happily got the job, spent three or four years on the M&A team.

Tina Gu

That was a really exciting time, because that was when Lauder was actually beginning to be super acquisitive — I think that was the start of its major acquisition era. I worked on quite a few of them — all the niche fragrances, Le Labo, Frédéric Malle, looked at our first investment in Asia, Dr.Jart+, which they then subsequently acquired fully, 100%. We were looking at all the Sephora brands out in the space — we did GlamGlow, for example, and Deciem, which is The Ordinary, came out of that too. It was a really exciting time.

Tina Gu

But after four years doing M&A — looking at these brands, bringing them in-house, but not really doing anything to grow them after — I thought, I want to change and actually help run a brand. So I pivoted internally at Lauder to head of global marketing for Sarah Creal — Sarah was, at the time, leading a small team at Lauder working on buzzy collections. We did an exclusive launch with Sephora for a small collection, we did the Victoria Beckham collection under Estée Lauder, which blew out globally, huge.

Tina Gu

I was able to take all my skills from M&A and consulting and apply them to actually running a brand — that was my first entry into marketing. At the time, I really thought I'd never leave New York — but circumstances change. Sarah decided to leave Lauder to become co-founder and CEO of Victoria Beckham Beauty, and I was also feeling frustrated with big-company politics.

Bryan Mahoney

Too slow, was that the thing? I'm curious — some people thrive in that, but what was it for you, wanting to operate, or a bit too slow, some combination?

Tina Gu

A bit of a combination — I don't know how to say it nicer, but I think it was the quality of talent I was interfacing with. In high-pressure environments like consulting or banking, you expect a certain standard of delivery — you have a deadline, you're driven. But in large corporates, people are kind of just punching their card, coming in, coming out — a lack of urgency. So I felt like a lot was on my shoulders all the time, and that's not a good feeling — you want to be somewhere where other people are also pushing you to excel.

Tina Gu

There was also a lot of cultural turmoil at Lauder at the time — they were looking for a new head of global marketing for the whole Lauder brand, which is where I was sitting. People weren't happy in general, and I felt unclear about where my career would go internally. So I thought, now might be a good time to leave New York too — the dating scene there in your 20s is awful.

Bryan Mahoney

Yeah, yeah.

Tina Gu

So I thought, I want to move to California — I had a lot of friends from business school who'd moved into tech, and tech was super buzzy then, everyone trying to get into tech or startups. I thought, okay, this is really different for me, but let me give it a try. I was really fortunate, because moving from beauty into tech — I've only met one or two other people who made that jump into Meta. But I made the jump, first to Electronic Arts — most people know FIFA, their biggest title.

Tina Gu

That was because I was super passionate about gaming in my teens, and I've been lucky to work in industries I had personal passion for — so I could talk gaming, talk consumer behavior, even without having worked in it professionally, because as a consumer I understood it. I got a role in marketing under the office of the CMO — really exciting. From there I was recruited into Meta, because they were building out their gaming function, so I went in as a product marketer.

Tina Gu

Product marketing here meaning strategic — how you build products and talk about them, versus doing the launches and PR and digital activations — again linking to that strategic thread in my career. Spent four years at Meta — first in gaming, then jumped into a leadership position, product marketing lead for Meta Business Suite, which I actually use now at Sarah Creal Beauty when I need to check my ad stuff. Meta Business Suite is meant to be Meta's martech tool to interact with the whole family of apps.

Tina Gu

You could post, if you're advertising you could really do a lot with your content and manage things there. That was really interesting for understanding digital marketing and how people approach it, because you have to get into the user mindset. That was my first real foray into digital marketing — the metrics people look at, how you'd help businesses and creators grow their ecosystem on Meta. Unfortunately it was impacted by layoffs, but it was still a great experience.

Tina Gu

I loved how fast-paced Meta was, and as I mentioned, during the pandemic it let me move to Denver. I was in Denver when Sarah actually called me — she'd left Victoria Beckham, was exploring a couple of different avenues, and at the time I'd either just had my second child or was already pregnant with my third. I was really excited by what she was building, but couldn't commit to joining something so early-stage and risky with three kids.

Tina Gu

So I kept in touch, was really supportive of what she was doing, offered to help consulting on anything she needed, but couldn't sign on for the riskiness of the startup at the time. I went to a climate tech company for a brief year before joining Sarah full time once the brand was more fleshed out and about to launch. So now I've been full-time with Sarah for — more than six months, like eight, ten months — and it's been a whirlwind. I do finance—

Bryan Mahoney

Eight months in a startup can feel like—

Tina Gu

—five years, it really does. I do finance — all the planning, the books. I'm an ad hoc HR person, benefits policy, travel policy, people issues, payroll — I ad hoc all of our systems, like Adobe. I've just recently taken on growth, so now I own our .com and all of our paid spend, which we work with a great agency on. That's kind of where I am today.

Bryan Mahoney

Wow, that's pretty fascinating — the through line is always that you're operating in a strategic capacity in an industry you're passionate about, whether beauty or gaming, and there was that component at Meta too. It sets you up well for this next chapter at Sarah. Speaking of which, I know a little about the brand, learned more over the last couple weeks — what was Sarah's motivation for starting her own beauty brand? Tell us more about Sarah Creal Beauty.

Tina Gu

Yeah, absolutely. Sarah is one of the preeminent product developers in the industry — she had a long career at Estée Lauder, where she was head of product development at Bobbi Brown, then head of marketing at Bobbi Brown, and did all these amazing luxury brand collaborations — she helped launch Aerin Lauder's line. She's an incredible name in the business, but really not well known to others. Throughout her career, she's found she's been developing products not for herself, but for a younger consumer — most beauty brands target this sweet spot of 25 to 35, that's where you see all the advertising, all the buzz.

Tina Gu

As she's gotten older, she had this realization of, why is nobody talking to me? For her, creating this brand was really a personal passion and a mission — to help create something exclusively developed and marketed to women over 40. I just turned 40 last November, so this is near and dear to my heart too — I feel changes in my skin, I don't feel like the traditional brands I've worked for work for me anymore, because I'm using heavier moisturizers, my skin's changing, I'm doing different prescription treatments too.

Tina Gu

She saw a gap in the market — there are brands women 40-plus buy from, but not formulated exclusively for them. You don't really see models, or the impact on skin, from somebody your age range. It feels a little alien, like you have to fight to find what works for you, because all the reviews are from twenty-somethings. That's where the brand came from — and what I really love is such a distinct and strong point of view.

Tina Gu

There was a time, earlier on, when I said, hey, we have influencers talking about us, they're younger influencers, are we sure we want to keep leaning into 40-plus? We could capture more sales if we don't. Sarah and Jill, our other co-founder and CMO, said absolutely not — we stand for what we stand for, and that's to serve this audience that's been ignored, and give her the best education, the best products, the best tools. I really admire that — I did push, like, okay, from a financial perspective, could we get more sales? But it wouldn't behoove us as a brand and who we are at our core.

Tina Gu

So that's Sarah and the company. We sell on our website, SarahCrealBeauty.com, and we're exclusive with Sephora in the U.S. — about 44 Sephora doors across the country.

Bryan Mahoney

Cool, that's interesting to have that mission and purpose. Given your background at Estée, at a time when Estée was looking at brands created during that first wave of direct-to-consumer, where it was about connecting directly with your customer — it just so happened those brands were marketing to a younger audience. If some of those brands are now 10, 12, 13, 14 years old, their customer, if acquired when they were 30, is now 40 or in their early 40s. Do you have a point of view on why they haven't necessarily evolved with their customers?

Bryan Mahoney

Especially given how expensive it is to acquire or retain customers these days — are some of those brands missing an opportunity to create new evergreen products, or evolve alongside the customers who've been with them since inception?

Tina Gu

Yeah, I think there's still a perception in the industry that people want to be looking at younger models, aspiring to a youthful look. You're seeing brands start to come around, but even Estée Lauder, the mother brand, when I was there — Kendall Jenner was our spokesperson, and our target customer certainly wasn't that, but everyone was trying to capture the millennial audience, which has now aged up, and people are realizing, oh, that's where the buying power is. But there's still a lot of brands chasing Gen Z — there's a lot of social buzz younger consumers create, but not that much brand loyalty.

Tina Gu

Brands get caught up in the buzz, in what's trendy on TikTok, and try to capture a bit of that pie, without understanding, you have to build for your core, and how are you expanding. One of the brands Lauder acquired was GlamGlow, and that brand is no longer around — they weren't able to expand it past this one buzzy face mask, didn't understand how else to capture that consumer.

Tina Gu

That's a perfect example of buying into an expensive trend, and then realizing the customer's already moved on.

Bryan Mahoney

Yeah.

Tina Gu

So it's about developing with more sustainability — not environmental sustainability, but in the sense of repeatable behavior, long-term habits, and really getting into the core of consumer needs.

Bryan Mahoney

I just came back from New York, was there for a two-day, effectively direct-to-consumer symposium — a lot of these brands, some new, some around a long time. It was nice to reflect on what makes direct-to-consumer still such a powerful channel — there's no better way for a brand to get to know their customer, create content alongside them, create community, understand what's important to them today. If you don't understand what's important to them today, and have them be part of the conversation about what's important to them tomorrow, you're ultimately going to lose them.

Bryan Mahoney

As you think about carving out your niche at Sarah Creal, how do you think about using the direct-to-consumer channel, the first-party data you're collecting, to make sure you're building the right experience and the right product? Sephora's an important channel for you — how do you think about that first-party data usage so you're always in lockstep with your customer?

Tina Gu

Yeah, absolutely. I think about our DTC channel as two sides of a coin. First, to the consumer — our brand website should be the definitive place where they can get information on the brand and all the education they need to guide their shopping journey. Personally, as a consumer, I hate having to go to Reddit, to Wirecutter, to reviews, to all these different sources trying to find what I need about a product I'm considering buying. I want our .com to be that hub for consumers — to make shopping easy and seamless, and be the place where all their questions are answered, where they get the education they need, and have a great experience interacting with us.

Tina Gu

That's everything from asking for returns to searching the site for what they need. That's the core experience — whether they buy the product there or not is a personal decision. Obviously, from the brand perspective, please buy from our .com — but we know customers shop from all kinds of places, an affiliate link, their preferred retailer. But for me, DTC as that hub of education is so important. And then, on the data side—

Tina Gu

—it's the only source of true customer data you can get, because Sephora doesn't communicate that data to us, and other retailers don't either. It's using that data to understand who we're designing for, what's working, what's not, and using that insight across all our touchpoints — social, the type of videos we need to create. If we're getting a lot of feedback asking about a product, we need to address that, create a video about it. If we see a customer type really resonating with our brand, we target that in advertising — both for our .com and for Sephora.

Tina Gu

So it's really that hub, the best source of consumer information we can get, and then we extrapolate that to understand our larger pool of consumers.

Bryan Mahoney

I think that's great — it's vital to focus on that, and leverage that currency your customer's trusting you with, in the form of data, to make experiences more impactful and the product as great as it can be. You said easy and seamless — I think one of the great things about commerce today is that's largely become table stakes unless you really screw it up. I remember building my first checkout in the late '90s — took a month to build. You and I could probably do it before the end of this podcast now, and it'd be infinitely better than the one I built 30 years ago.

Bryan Mahoney

But everything else you talked about, creating that really great experience, is not table stakes, and I think it requires someone visionary, who knows what product their customers may want, but is willing to bring them into the conversation to help shape the final product, so you really feel part of something. I wish more people thought that way.

Tina Gu

To touch on that — when you say easy and seamless is table stakes, I think there's been a focus on that with the checkout flow, the actual consumer flow once you already know what product to buy. Every brand makes it as easy as possible to get the customer to purchase. But for me, as a consumer, I really struggle with having an easy and seamless process of picking what product to buy. That's why for Sarah Creal, our focus is so much on education — one of our brand pillars, creating a lot more educational content. It's the part of the customer journey that's often ignored, or just—

Tina Gu

—hard to do, because right now it's a wealth of information, all these different channels people research through, hearing different things. Trying to unlock that piece of the journey, before checkout, the education piece — I think making that easy and seamless is the big unlock for most brands.

Bryan Mahoney

I couldn't agree more. It's interesting through the lens of AI — funny, at this DTC conference, AI didn't come up all that often. Vendors talked about it, brands didn't. Compare that to ShopTalk, where that's all people wanted to talk about. I've been in consumer since '97, in direct-to-consumer since its inception, and I've heard, like every three years, DTC is dead — I don't think it's dead. It used to be dead because of this or that; now it's dead because of AI.

Bryan Mahoney

AI is going to do all the shopping for us — I don't think that's necessarily true. What you just talked about, discovery, education, bringing the customer into the journey and introducing them to the brand, doesn't happen with AI. I'm not going to deploy a series of agents to buy the things I love for myself. I might ask an agent to buy me toilet paper, but anything I'm putting on or in my body, absolutely not. I think the brands that grow the right way, with an audience that sticks with them longest, will be the ones that don't forget that.

Bryan Mahoney

They might use AI internally to be more efficient, but understand the importance of real connection. Thinking about how long shopping's been around — I'm a consumer, I love to shop, love meeting new brands or experiencing new products from brands I already love, because they know what I needed, and that's fun. I didn't mean to go down this AI path, but while we're on it, I'd love your point of view, given your background — how are you thinking about AI broadly for the industry, and more specifically at Sarah Creal? Are you using it?

Bryan Mahoney

How are you thinking about those investments — specifically, how are you thinking about leveraging AI to strengthen the connection you have with your customers today, and the customers you want tomorrow?

Tina Gu

That's a great question — something I find difficult to wrap my head around. AI has all this great promise, and you see it in day-to-day usage — Google something now, the AI description pops up, great, I don't have to do more research. But a lot of companies have been pitching us on AI tools and capabilities — image generation, for example, where a lot of creative companies say, you can now easily do stuff without models. But when you look at it, the quality still isn't at a place where you can use it.

Bryan Mahoney

Right.

Tina Gu

Or even AI for customer service — right now we answer every ticket, either me or my director of e-comm and CS. We're responding to everyone with care, and AI just wouldn't be able to do that for us. We care so much about the customer experience and journey that AI, as it is today, doesn't solve that need. There's really no place I could envision using it that's consumer-facing. But on the back end — finance, where could AI help with projections, better analytics — data is something I do trust, or would trust, AI with. A lot of platforms are putting AI into their capabilities now.

Tina Gu

I think we're just starting to see how that plays out — that's where I'm really excited, on the back end, with numbers.

Bryan Mahoney

I'm with you, that's a great place to start. Even the CX example — I was at a dinner recently, and a technology-team representative from a very well-established beauty brand said their position was they've forbidden their marketing teams from going near AI, because there's no way it'll understand the brand voice. I said, well, have you thought about training the model, giving it guardrails?

Bryan Mahoney

You might get it 80% of the way there, and give marketers a superpower to do more with less, while still having their hands on the wheel. If we think about the self-driving-car analogy, your CX example is interesting — if I were running CX today, I'd be loading all my customer interactions into a model, training it with my brand's voice, and I'd be okay with it helping me draft something, but I'd still want to understand what the customer was asking and do that last mile myself, to make sure I'm treating them the way I'd want the brand to treat me. I don't think we're fully there where it should be autonomous — I don't know if we ever will be.

Bryan Mahoney

That human connection has been there as long as consumers have existed, and I'm not looking forward to a future that's just a bunch of agents talking to each other about the things that matter most.

Tina Gu

I completely agree. When I say I respond to every ticket myself, I do use AI sometimes to draft my responses — there is an AI component. Even with brand copy, I've leveraged AI when I'm thinking, how do I describe this ingredient in a better way. A lot of AI is infused in my workflow, but the end product has to be reviewed by a human. If there were more tools where I could see the training aspect and feed that data in myself, I'd love that.

Tina Gu

But right now, a lot of offerings come prepackaged — here, plug this in, use that — and without feeling like I have a hand in designing that training, it's hard to put trust in it. Maybe some tech companies' approach is a little too blunt.

Bryan Mahoney

Yeah.

Tina Gu

It needs more finesse.

Bryan Mahoney

I completely agree, there's nuance there, and I rail against this idea that it's super easy, takes five minutes, just install it. No — it's never been easy, and shouldn't take five minutes. If it takes five minutes, is it really delivering value? How do I adopt it, train it — over time I might want to completely reimagine my workflows, but how does it add value to my workflow today, so I can get through things better, or pay more attention to the customers who matter most, who'll help me go get other customers? I sell software, so I need to be careful here too.

Bryan Mahoney

But the more intellectually honest we can be about what adoption looks like, and the investment needed to train it to actually extract real value, the better. I wish more companies selling software talked that way — and the smart buyers, and I'd put you in the category of a really smart buyer of software, ask the right questions, understand where the value is, and are realistic. That's where you'll find the right tools that are additive to what you're doing, instead of telling you you're doing it completely wrong, and if you don't plug in these 25 things you'll be left behind. I just don't think that's the case.

Tina Gu

I completely agree.

Bryan Mahoney

Cool. What have we not talked about? I'd love your take — if you had a minute to make a bold prediction, maybe non-AI related, on the future of commerce, what would it be? Where do you see Sarah Creal in three years, and how did you get there differently than you might have ten years ago?

Tina Gu

Some trends I'm seeing that we're trying to lean into, not necessarily new, but companies are still slow to adopt — one is being really video-first with content. Even as a consumer, going to websites, things are still very static image. A couple months ago I was shopping for a new double stroller and needed to see how it works, so I went to YouTube to research. The brand website was still just static images — maybe one or two D2C brands had video, but very lifestyle.

Tina Gu

Video is something consumers are really leaning into — short-form video is just how we consume content now.

Bryan Mahoney

Right.

Tina Gu

On Instagram you're really looking at Reels now, the videos that catch your attention. TikTok — I can't talk about it enough. Video as the primary asset is something brands generally need to lean into more. I see that for our future, hopefully for a lot more brands, because as a shopper that would make things so much easier for me. Another area is live shopping — it's been bubbling out of Asia for a long time, but you're really seeing it here now with how fast TikTok Shop is growing.

Tina Gu

We're not on TikTok Shop, but it's really interesting to see that platform explode — influencer marketing, video marketing, tying directly into sales, that funnel is really interesting and exciting. I wouldn't be surprised if more of that happens across different platforms, and if those became genuinely large retailers at some point — maybe not in three or five years, but you can see it happening. There's just a lot more need for interactive assets that link into shopping.

Bryan Mahoney

There's a common thread there — video-based consumption to help the customer make a decision. When video started becoming a thing in direct-to-consumer, it was very aspirational, very campaign, but not, well, tell me how the stroller actually works. It's frustrating having to go to YouTube or a bunch of other places, watch ads before getting to the content, then go back to the website — to me that's a real miss.

Bryan Mahoney

So instructional video-based content is really interesting, and maybe that's fueling live shopping too. The amount of platforms five years ago that made it simple to plug live shopping into your website — I'm not sure that was the right path, but I see channels like TikTok emerging where that's effectively live shopping, and the content influencers show you is what you're actually looking for — show me how the stroller works, and now, in this moment, let me buy it. It remains to be seen if the economics of that channel work out.

Bryan Mahoney

But that's how customers like to shop, so I think we'll see more investment and more options there.

Tina Gu

It's about making the educational, discovery-like experience — the decision-making part — more easy and seamless. For us, our website, for almost every product, has videos of Sarah explaining why she built it, how to use it, showing it on real skin, the before and after. That's what people want to see — that's how you make a decision.

Bryan Mahoney

Yeah, yeah. I remember people saying no one would ever buy beauty online, you've got to try it on your face — that was wrong, not the right take, beauty's just an asset category in B2C. Maybe we'll end here — speaking of massive categories, it'd be remiss not to ask your take on the news about the Rhode acquisition. A lot of folks in New York were talking about it, and for someone who's been on the M&A side at Estée and is now on the founding team at Sarah Creal Beauty — is this exciting for the industry, is it a good thing?

Bryan Mahoney

Does it impact how you think about building the fundamentals at the brand you're at now? Love to get your take.

Tina Gu

Yeah, absolutely. First, I think it's great news — there's been a dearth of solid M&A in beauty the past couple of years, because the very acquisitive conglomerates are all struggling with their own fundamentals, making it hard for them to be acquisitive. For me this is a great signal of continued willingness and eagerness from strategics to make purchases. It was really interesting it was e.l.f. Beauty, a much smaller, quote-unquote, strategic, making the purchase — but you can see they're probably feeling margin squeeze.

Tina Gu

Their consumers are more trend-driven, younger, with tighter margins, and they needed to add a more luxury brand that appeals to a bit of an older consumer, with a different portfolio. It's really exciting to see money still being spent in the industry. What's really interesting about Rhode — I heard rumors she was expecting like a $2 billion valuation, but clearly $1 billion is still great.

Bryan Mahoney

The way it's structured, five times revenue — that's still nice.

Tina Gu

Yeah, it's still very nice — but the way they structured it, an earn-out, was very smart. At Lauder, when we were doing acquisitions, we also used that — your biggest fear, buying a brand so tied to its founder, she's the face of it, is that she just takes the money and runs, and doesn't actually help you build the brand afterward. So structuring it as an earn-out — it sounded like 800 upfront and 200 potential over the next three years — is really smart. She gets paid for additional growth, and if that growth doesn't come, they don't have to pay her that money.

Tina Gu

But the way she's built the brand, the company, is really great, and the fact it built such a strong connection with its consumers — a brand founded in 2022 exploding and already selling within three years is shocking. Usually you're looking at five-plus years as your time horizon to sale, because as an acquirer you want to see a stronger track record. But if a brand feels like it's got strong consumer fundamentals, you can take that bet earlier. That's definitely something we're trying to do too — build strong consumer fundamentals, a strong connection with our consumers, and products that are highly repeatable, really core, really differentiated.

Bryan Mahoney

Yeah, I love that. If I understand it, their ability to get that 5x multiple, four upfront and five with the earn-out, is because they had those strong business fundamentals — this isn't a brand that just paid for growth and is hemorrhaging money, they're a really good business, and that's how they got what is a really good multiple in the industry. I'm with you — I think it's a positive sign that consumer continues to drive the economy, and that there's interest from strategics in companies with a great connection to their customer, built the right way.

Tina Gu

Yeah, and beauty's always been thought of as a more recession-proof industry — Leonard Lauder's lipstick index, way back when. I think that's still true, but it has to be a differentiated enough offering where people feel they really understand what your brand's all about, and the brand promise. Look at the top beauty brands today — Rhode, Rare Beauty, Fenty Beauty — they all have very strong points of view and a very close connection with their consumer. I think that stands out beyond beauty, but definitely in beauty, because it feels like such a personal, emotional purchase.

Bryan Mahoney

We always talked about that at Glossier — very personal, emotional experience. What I found so fascinating about the community was a willingness to share your personal routine, and the more those routines were shared, the more we were able to leverage that to grow customers the right way. It's a personal experience, but one you're willing to share — definitely an exciting industry. This was a fantastic conversation, as predicted we covered a lot of ground. Thank you so much for joining me — I'd love to have you back on a future episode.

Tina Gu

Yeah, I'd love to come back. Thank you for having me.

Bryan Mahoney

My pleasure. All right, I'll talk to you soon.