Announcer:
Welcome to Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.
Jonna Kim:
This is the Visionary podcast series and about visionary ideas and people. My name is Jonna Kim. I am Collins Retail Analyst. In this episode of our Retail and Luxury Visionary podcast series, we are excited to spend time with Paul Baek, CEO and founder of Fact, which is a disruptive emerging skincare brand. Paul's years of dedicated work and research culminated in the unique technology that is the foundation of Matter of Fact, the breakthrough ability to fully dissolve high concentration of ascorbic acid without compromising stability or cosmetic elegance. Paul created Matter of Fact to bring his work to people in search of better, more effective skincare solutions. Paul, thanks for joining us today.
Paul Baek:
Thank you so much for having me.
Jonna Kim:
Sure. So for those who are less familiar with your brand, could you talk about why and how you founded matter of Fact?
Paul Baek:
Yes. So as you so kindly and warmly mentioned, Matter of Fact is a clinical skincare brand. I founded it in 2018 and we launched product into the market in September of 2021. So it's been about a year and a half since we've launched product. My falling into the rabbit hole that is clinical skincare was a little bit circuitous, but I did grow up around both beauty and the lab. My father ran a small beauty supply store and my mother was a chemist. But really, my interest in skincare developed later when I had skincare issues of my own. And that was exacerbated when I found myself in front of the camera after college when I, for a brief period of time, was a recording artist in South Korea. And it was at that time that I developed an interest in skincare because of my own skincare concerns.
And I met the person who would eventually become my instructor in cosmetic formulation. And so many, many years later I founded this company. And the idea being that skincare should be matter of fact, it should be straightforward and effective and that it should also be pleasant to use, if we're comparing it to food being nutritious and delicious, right? Efficacy depends on consistent usage. It doesn't matter how good a product is unless you're willing to use it, day in and day out, in order to see those results. And so that's a little bit about how came to found the brand and what some of our goals for the brand are and
Jonna Kim:
What are some core competitive advantages of the brand versus other skincare brands. Why do customers choose Matter of Fact as their skincare of choice?
Paul Baek:
The first thing that we want to focus on is creating what we call novel delivery vehicles, meaning how can we take research backed ingredients and, quote, unquote, unleash them. Because many of those ingredients, despite the great research on them, oftentimes have limitations around shelf stability, around unpleasant sensations, whether that's grittiness because they're hard to dissolve or stinging and burning sensations that they create on skin. And so how can we create delivery vehicles that maximize their efficacy while minimizing some of those less pleasant aspects of them?
And then by doing that also, how can we combine them, combine multiple ingredients that may be finicky to use or to formulate with on their own, but through novel delivery vehicles, can be combined in order to maximize results while minimizing irritation and unpleasant user experiences. And so that's, I think, one core competency that we're able to provide our customers.
And then also a dedication to clinical testing. Skincare can feel complicated and overwhelming. We do believe that the more work we can do on the backend on product development and clinical testing, the more confident the user can feel in purchasing and using the product. And part of that is providing clinical testing that demonstrates the final formula's efficacy, not just relying on evidence of in individual ingredients in the formula that have been tested in isolation.
Jonna Kim:
That's great. And maybe we can move on to overall beauty trends that you are seeing. What are some key skincare trends that you see currently and what are some must have items that customers are currently gravitating towards in skincare?
Paul Baek:
Yeah. So I think that for many years, the consumer was very focused on the safety of products. And so we saw the rise of products and product lines that focused on safe formulas. Sometimes they had philosophies on including or excluding certain ingredients, so on and so forth. I think that reached probably a fevered pitch around 2017 or 2018. And now I think there's a renewed focus on efficacy. So right after a decade or so of asking, "Are my products safe?", now it's, "Are my products going to actually help my skin look and feel better?" I think that's one trend that I'm seeing amongst many skincare users. I think another trend is streamlined routines. This is a trend that I think has something that's continuing over the past several years. I think that there's probably less of a romance around very long intricate skincare routines. But of course, to the degree that people are going to find long, intricate, routine, self-soothing and decadent, people will still want indulge in that.
If you think about a routine with an oil cleanse followed by a second cleanse, followed by an essence acid toner, a serum, a treatment, a cream, an oil, and then an eye cream, that's I think already nine or 10 steps in one routine. I think that for many, that sort of routine will probably be more of an occasional spa day sort of treatment than an everyday routine, where I'm observing that many users seem to want to limit their skincare routine to about three to five steps, as opposed to eight to 10.
Another trend that I'm seeing is balancing efficacy with gentleness. We saw for several years around that 2014 to 2018 time period, many consumers having a love affair with chemical exfoliants and retinoids. Many people overdid it. And so we saw the pendulum swing back to barrier repair, focusing on moisturizing and hydrating skin, very gentle products. I think now, we're starting to see users wanting to wisely balance both, especially for skincare concerns that often require more active approach. Things like acne or stubborn discolorations and dark spots in skin, or fine lines and wrinkling. These are things that often require more active approach, but taking an active approach balanced by a gentle approach can be helpful so that you don't sort of overdo it January 1st and then kick your new healthy habit by January 30th, despite your New Year's resolutions.
Jonna Kim:
Thanks for the helpful color. Moving on to your core customers. Obviously, you haven't been around for a long time. But based on what you have, could you just talk about key characteristics of your customers? And have you seen any pullback in terms of how they're spending in the current environment and usually, how often do they shop with you and how often do they come back to replenish your products?
Paul Baek:
Yes. So I think in the short lifetime of our brand since launch, we've seen a few patterns in our customers. The first one is that one of their primary concerns is around visible signs of sun damage. So fine lines and wrinkling, uneven skin tone and dark spots, so on and so forth. And I think in part, that's due to our limited product offering and vitamin C is known for being able to address some of those concerns. And so it is a self-selecting pool. I think we've also seen many of our customers be very busy folks, juggling their career, their family and their self-care. And so wanting to take care of themselves but not wanting to spend too much time researching their product purchases. They want to get the information in a compelling, easy to understand way and get it quickly. Again, limit their skincare routines to three to five steps, not eight to 10.
And then increasing interest in looking at clinical evidence for their products. So really appreciating clinical testing on final products, not just the ingredients themselves and knowing to differentiate between consumer perception studies where one is asked, "Do you see a difference in your skin after using this product for X number of weeks?", as opposed to a dermatologist assessing the quality of skin and measuring changes in skin through equipment and instrumentation. In terms of our customers and their cadence, we're seeing a repurchase rate of probably on average once every three months, which makes sense for the size of our products. And then of course, in the backdrop of what's going on overall with the economy and certain people looking for value.
And I think we're seeing that in two different flavors. I think the first is of course, some people are going to want to look for products at a lower price point because they're tightening their budgets. And I also think that sometimes customers are looking for value, but without cutting their budgets per se, but wanting to feel that their products are, quote, unquote, worth it. And I think that's manifesting in two ways, primarily. The first is again, wanting to understand how their products work, what evidence is behind those products that they can feel good about the product making, good on the promises, and also just a pleasant, wonderful, sometimes luxurious experience of the product itself. And of course, those two things can also be combined into one product as well, but people want you to be thoughtful about how they're spending their money, even if sometimes it doesn't mean that they're spending less, per se.
Jonna Kim:
That's great. And maybe be moving on to distribution strategy, your mostly DTC now. And as you think about your long-term goal, how do you think about your distribution expansion?
Paul Baek:
Yeah. So as you mentioned, we are currently D2C, but skincare is a category in which skincare users really value the opportunity to be able to touch and feel a product before purchasing. And of course, as you're probably very well aware of, we are seeing a resurgence in in-person shopping after a long period of being unable to do so because of the pandemic. And so it is our long-term goal to partner closely with a retailer that's able to understand and appreciate our approach to clinical skincare and to work closely with us to build on those values and our product development philosophy.
Jonna Kim:
Yeah, that's very exciting. And you're also the formulator of your brand. Could you maybe just talk about your innovation pipeline and the process you go through to introduce a new product?
Paul Baek:
Yes, of course. So currently, we have two products in our line, and then thinking about expanding into new product categories. I'd say that on average, it probably takes around 12 to 24 months in total to get a product from concept to launch onto the market. And it depends on lots of different factors. But if you break that down, it's usually four to six months just in those initial steps for me in the lab to formulate a product, depending on how challenging the formula is. And then how quickly I can get to prototype that resonates strongly enough with the team and initial testers in order to justify taking next steps. And those next steps, of course, would be initial testing. So this is testing around stability and preservative efficacy and irritation and allergenicity and other safety tests. And those tests, on average, will take three to six months from start to finish depending on whether they're sometimes extenuating circumstances that put a wrench in that sort of testing.
For example, we saw a lot of that in the first two years of the pandemic. There were many, many delays. Many labs were closed or working at limited capacity. Of course, because everyone wanted to keep their team members safe. But that can take three to six months. And then if all of that comes back in a way that we're happy with, going into clinical trials, which can take five to six months, again, with probably about three months of that being the actual study time and having buffers on each side for preparation of the study, and then of course, data analysis. Simultaneous to all of that, we're also having to work on, of course, packaging, package compatibility testing and copy, what do we call the product, how we talk about the product so that a potential user can understand it quickly and find a product that will address their concerns. And so that's sort of what that process looks like for product formulation.
Jonna Kim:
And you talked about you have two signature products now. And as you think about adjacent categories and perhaps men's is the emerging trend as well, how many products do you think you may have on the skincare side? And just any thoughts that you have on expanding into new categories will be helpful.
Paul Baek:
My teammates are constantly asking me for new products, and we have a lot in the pipeline. And at any given time, I'm probably working on four or five new products at a time. When thinking about those new products, I like to think of them in terms of skincare concerns, sort of umbrella concerns, and creating prototypes of products that would fit underneath each one of those concerns. And those umbrella categories for concerns aren't categories that would surprise anyone. These are things like fine lines and wrinkling, discolorations and dark spots, uneven skin texture, blemishes, redness and sensitivity, so on and so forth. And so of course, some experiments will go more successfully than others, and I would never want to release a new product just for the sake of doing so. But I can say that our goal is to be able to release facial skincare products and all of those umbrella categories of concerns so that eventually we can have a line in which people can mix and match the products in order to fit their needs, and it will be able to do that for the vast majority of skincare users.
Jonna Kim:
Great. And as we close out the session, can you just talk about what has been really fun for you and what has been most challenging, as you embarked on this journey? And where do you see Matter of Fact in the next three to five years?
Paul Baek:
The most fun and gratifying thing about this journey has been being able to make things that delight people. In 2018, when I founded the company, it was really just me. There was no funding, there was no team, other than myself. And at that time, creating products and hoping that one day they would hit the market and someone would be able to use it felt like a dream. And so now to be able to get positive feedback from users, every single time I hear something positive when one of the products works for someone, that's a moment of real joy for me. And it's part of what's so exciting to be in the lab day in and day out, making new products. And so I think that's been the most fun gratifying part of this journey.
In terms of challenges, because it was such a solitary endeavor for the first two and a half years and then quickly bringing on really great people, creating a great team, but having to do so in a world that's remote was something that was challenging because I had never been a part of a new team that came together over Zoom without. I think it was probably over a year before I met any of my teammates in person. And so that was a struggle because there are sometimes things that can be done more efficiently, including developing a feeling of closeness with people in real life as opposed to over Zoom. But of course, we needed to be safe and remote work setup was very conducive to that.
And then in terms of the next few years of Matter of Fact's journey, and of course right now, we're a baby, baby brand, right? A young baby brand. But I hope that we'll be able to continue and to stay in our focus on releasing efficacious products and also sending our dedication to clinical studies. And I hope that in three to five years time, that the brand would've solidified its place and in our supporters' hearts as a brand that's not only dedicated to excellent products, but also to warm, compassionate and helpful communication as well.
Jonna Kim:
Well thanks, Paul, for your time. It was a great getting to know more about your brand. Hope to see you grow with the brand over time as well. Thank you, Paul.
Announcer:
Thanks for joining us. Stay tuned for the next episode of Cowen Insights.
