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Ecommerce on Tap is a world where Supply Chain meets storytelling. Join Nathan Resnick and Aaron Alpeter each week as they offer insights into the backend of successful businesses. Brought to you by Sourcify and Izba Consulting!
Nathan [00:00:06]:
Hey, welcome back to E Commerce on Tap brought to you by Sourcify and Izba. I'm your host Nathan Resnick, joined by my co host, Aaron Alpeter. Aaron, how you doing today?
Aaron [00:00:16]:
I'm doing good. I'm calling in from the offices of Goodr in la. So that's like I got a cool background here, but yeah, I'm doing great. I'm in the middle of a long travel stint.
Nathan [00:00:27]:
There you go. I love it. And you were just at Beanstalk as well, right?
Aaron [00:00:31]:
Yeah. That was a fantastic conference. Two of my friends were some of the organizers, Ben and Jesse. Just a fantastic conference. If you weren't able to go this year, I highly recommend going next year.
Nathan [00:00:43]:
That's awesome. I love to hear it. Well, this season on E Commerce on Tap, we're covering skincare. Today we're covering the brand vacation, which I'd actually seen in Target before. I think it's one of the top sellers of sunscreen and Target, so pretty cool to be diving into their story. But for those that are tuning in for the first time, do you want to give a quick overview of what E Commerce on Tap is?
Aaron [00:01:06]:
Absolutely. So basically what we do is we take a well known company, usually they have a D2C element, we tell their founding story, reverse engineer their supply chain and talk about their exit potential and.
Nathan [00:01:18]:
We have a lot of fun doing it. And you know, I think this season of skincare has been pretty, you know, interesting for Aaron and I as we don't, you know, use these skincare products firsthand, but we really enjoy the stories and just I've been amazed by the growth of some of these brands. I mean, it's really been inspiring to see and just I didn't realize how big this category was.
Aaron [00:01:39]:
Yeah, I have, I have definitely improved my skincare routine. I've learned a lot more and so I'm using stuff that I wasn't using maybe six months ago.
Nathan [00:01:48]:
I can tell you're glowing today. Well, before we dive into the vacation story, was there anything that caught your eye this past week in terms of newsworthy stories?
Aaron [00:01:59]:
Yeah, I think the biggest thing was a conversation I had with Ryan Peterson of Flexport and he has been talking a lot about the non resident importer record loophole that exists. And basically there are no requirements for foreign entities to have any legal presence in the US to import things into the country and to sell them on Amazon or whatever. And as a result, there's a very sizable minority of bad actors out there who will come in, cheat with customs Customs will find them, they'll shut down and they'll just kind of create a whole new entity or Amazon listing or things like that. And so we talked about how there is a lobbying effort going on in Congress and there is a bill and draft status that will basically close this loophole. And you know, we look at closing de minimis as something that was very, very difficult for a lot of brands out there. I actually think this may be a really good thing because what this bill is going to do is it's going to require that any foreign company has a U.S. lLC and a U.S. employee.
Aaron [00:03:03]:
And so there'll be lots of companies that pop up where, you know, maybe, maybe I work for 500 companies thinking like, you know, a big office with a bunch of headquarters. But that little bit of friction is going to dissuade people from cheating and customs and tariffs and things like that. And so I think that'll actually help level playing field quite a bit. The other thing that he mentioned was that the Justice Department has named their top two areas of focus from an enforcement point of view being number one health care fraud and number two customs fraud. And so they have already this year 20x the headcount they have working on this. And so I think it's really interesting as the tariffs definitely appear to be here to stay, how the government is posturing to protect U.S. companies and entities as well as making sure they're going after people who are not doing the things that they should be doing.
Nathan [00:03:58]:
Wow, it's pretty, pretty interesting. We'll see how that plays out. And yeah, I think this one hopefully should benefit E Commerce founders and operators rather than making them scramble with all the tariffs and everything going on. I saw, you know, for me I've been keeping tabs on just creator commerce and just this conversions that excites me. And you know, I've been following Bloom Nutrition and Nutribull expanded their stake in it. So they put in another $160 million acquiring a majority of the brand. And it's a lot, I think it's a lot bigger than most people think. I mean Bloom Nutrition last year they reported they did about 200 million in revenue and this year they're on track for about like 3 to 3:50 which I mean when it comes to an influencer driven brand, I mean that's, that's almost as big as they get really.
Nathan [00:04:52]:
So pretty, just incredible outcome and I think a lot of people just didn't realize the size of some of these, you know, creator driven brands like Bloom.
Aaron [00:05:03]:
Yeah. Does nutribullt own the whole thing yet or is there still some equity?
Nathan [00:05:07]:
They own the vast majority. So this was their second time investing. So the total investment now is about 210 million. But originally it was a minority stake, and now they went and acquired the majority. So just incredible growth. And I'm sure the brand's gonna continue to grow.
Aaron [00:05:25]:
That's fantastic. Well, before we dive into vacation, I think it's helpful for us to zoom out a little bit. You know, we've. You said we're wrapping up an entire season on skin care. We talked about glow recipe and robe and Medicaid and topicals and curology. And I think one of the big takeaways that I had was that skincare really isn't a one size fits all type of business. It's really very fragmented. You've got groups of values driven brands, you've got celebrity driven brands.
Aaron [00:05:53]:
You get science first brands. And so there's a lot of just interesting nuance. And I think it gets more and more fractured as time goes on, which means there's a lot of opportunity for would be founders in this space.
Nathan [00:06:04]:
Yeah, I mean, it's crazy how big skincare is, right? It's $180 billion industry. And I mean, in vacation's case, you know, I think there's this key difference of skincare is usually aspirational or transformational. It promises kind of this improvement lens. But sunscreen is really kind of different. Right. Because it's seen as preventative. Right. To prevent yourself from getting sunburnt.
Nathan [00:06:31]:
And it's a typically, essentially a harder sell because you're buying into something to stop damage that you can't necessarily see at the time. And, you know, it doesn't necessarily give you that instant result. But I mean, sunscreen definitely matters. I mean, this stat really stood out to me that one in five Americans will develop skin cancer by age 70. And daily SPF reduces the risk of melanoma by 40 to 50%. So, I mean, I don't apply enough sunscreen. And reading this, I'm like, wow, you know, I really probably should apply sunscreen more.
Aaron [00:07:08]:
Yeah, I started to use lotion more. It has a little bit of SPF in it, but you're right, it's amazing. I think as we. Before we dive into the vacation story itself, I think it was. It would be helpful for us to talk a little bit about what sunscreen actually is and some of the science behind it. So I want to kind of go through Sunscreen 101, you know, growing up I knew that, you know, the sun gave off UV rays and that UV rays were bad. Right? That's kind of what people were taught. But there are basically three types of UV rays out there.
Aaron [00:07:38]:
You've got uva, think of a for aging. And these are the long wavelength UV rays. And this is what causes wrinkles, aging and some cancers. You've got uvb, which is what gives you the burns. These are medium sized UV rays and this is where you can get surface burns, DNA damage. It's the main cause of sunburns and cancers. Then you've got uvc. This is the shortwave, extremely dangerous.
Aaron [00:08:08]:
You know, this is like gamma radiation. Things that will really, really mess you up if it is there. Luckily, the ozone is a good job at attracting these, these UVC rays. And so most of those don't come down. But when, you know, a couple years, a couple decades ago, they were talking about the hole in the ozone. This is why that was so important was because these UVC rays were coming in. So most sunscreens, they try to protect you from the UVA and the UVB rays because, you know, the environment does the uvcs. And typically with sunscreens you've got two types, two camps, and you've got a chemical filter which really absorbs the UV and helps turn it into heat.
Aaron [00:08:49]:
So that's why sometimes if you've got a chemical sunscreen on your, your skin will feel hot. It's not just because of the sun, it's because the sun is, the sunscreen is absorbing that stuff and then, you know, making it much, much warmer. It can be a little bit irritating for some people, can cause some, some harm, but it's invisible and smooth. And so it's very popular. The kind of newer piece, it's not new, but it's becoming more popular, is mineral based sunscreen. This is where you have like zinc oxide, titanium dioxide, things like that. And what this does is rather than absorbing the UV rays, it reflects them, it scatters them away. And so these are historically kind of chalky and thick and weren't very popular until recently with the technology improving.
Aaron [00:09:31]:
But they are gentler on the environment, they're better for coral reefs and things like that. And so, you know, historically most sunscreen has been this chemical filter type. And that was very, very popular in the 60s and 70s. And there, there's been a lot of ingredients that have been phased out over time. And you know, if you think about the zinc oxide paste, which is a mineral base that's where the lifeguards, you probably see the old pictures in like sandlot or something. The lifeguards have the white chalky thing that's zinc oxide. That's kind of what's there. But starting in the 80s and up to the 2000s, there was this explosion of new development in the chemical space.
Aaron [00:10:10]:
You had a lot of brands becoming more lightweight, more invisible. Sunscreen. The SPF ratings rocketed from SPF 15 all the way up to 30, 50 and even 100. And typically these mineral sunscreens stayed very niche. They were more for kids, they were more for sensitive skin. But fast forward to the 2000 and tens and there's been a big push from a regulatory perspective to move toward mineral based sunscreens. There's, you know, Hawaii passed a law in 2018 which was effective in 2021, which basically banned a lot of the core chemicals in chemical sunscreens due to coral reef bleaching. And so places in Thailand and other tropical places pass this along as well.
Aaron [00:10:53]:
So it's actually illegal to, to buy that sunscreen or to bring that sunscreen to those places. And so now with the rise of clean beauty and things like that, it feels like things are being pushed more toward the mineral space.
Nathan [00:11:05]:
Yeah, I mean, I kind of remember that shift, right. I remember as a kid you used to just kind of spray sunscreen on all over the place, right. Whether it be SPS 50 or 100. And you know, generally the chemical driven filters are the higher SPFs, right. And they're great for water resistance. So I remember as a kid just, you know, spraying myself down with this chemical based sunscreen. And now I've definitely seen this rise of mineral based sunscreen that I think is really, you know, kind of better for the environment, better for you, especially better for, you know, kids and babies. And it's reef safe as well, which I think is really important.
Nathan [00:11:44]:
And so, you know, the downsides of course, like you discusses is discussed is a bit thicker. It's kind of a bit, you know, harder to put on in some sense, but in general it is a lot better. And you know, vacation itself is actually both. Right. So vacation has their mineral lotion that you know, is mineral sunscreen that use zinc oxide as its active ingredients. But they also offer their Vacation classic sunscreen, which is a chemical sunscreen formulated that is Hawaiian reef compliant, which I think has kind of become a bit of a standard when it comes to chemical sunscreen. So I mean, it's kind of interesting how this industry has evolved from very chemical kind of oriented to now, you know, going back to something that I think is, you know, better for everyone in general.
Aaron [00:12:37]:
Yeah. We should clarify. I mean, the chemical sunscreens are still the most popular out there. That's what most people probably have in their beach bag. And it's not that chemical sunscreens are bad, it's just there are certain chemicals that have been recognized to cause damage to coral reefs. And so that's what's being phased out. So I think it's there. One of the things that is very interesting about the sun market in particular is the differences in sun around the world.
Aaron [00:13:04]:
Do you kind of want to walk through what we found in the research in terms of how sunscreen is portrayed, regulated, looked at in different continents?
Nathan [00:13:13]:
Yeah, I mean, so Australia, I've never been there, but definitely on my bucket list. It has very, very high UV radiation levels, you know, and some of the highest skin cancer rates worldwide. So around 2000 Aussies die annually. Two out of three Australians are diagnosed with skin cancer in a lifetime, which is just crazy high. And so, you know, sunscreens with SPF over 4 are regulated as therapeutic goods by the TGA there. And so it really has the most rigorous standards. And I think that is kind of reflected just in terms of their high uv. Europe and Brazil has kind of broad ingredient access, access, but cosmetic regulation.
Nathan [00:13:54]:
So sunscreens are regulated as cosmetics that make it easier for new UV filters to be approved. There's currently 34 filters allowed in the EU versus only 16 in the US which is kind of interesting because, you know, usually the EU is a bit, a bit tighter when it comes to their regulation around food and drugs. But, you know, despite the looser regulations there, studies show that EU sunscreens allow a third the UVA penetration compared to US products at similar SPF levels, reflecting around their stricter testing and ingredient availability. And you know, here in America, we obviously have a slow FDA process with limited approved ingredients. So the FDA classifies sunscreens as over the counter drugs, not cosmetics. And so the approval process is much slower, limiting ingredients to only those really that are extensively researched, like zinc oxide, titanium dioxide, are the only graze approved filters as of 2021. And what's crazy to me is that the FDA hasn't approved any filters since 1996, despite a lot of them being used internationally. So, you know, I think there's a question there that comes to mind for sure.
Nathan [00:15:12]:
But you know, it's just really interesting how different parts of the world are treating sunscreen in different ways. But Generally speaking, you know, it sounds like you almost need a different formulation for each of these regions, which would make it, you know, number one, extremely hard for a player to expand internationally. But. But inherently it could be better to start somewhere specifically and expand elsewhere, just based on the regulatory environment.
Aaron [00:15:38]:
Yeah, I think you're right. And, you know, we kind of went through this what if scenarios, like, if I was going to start a sunscreen brand, where would I want to start of those three? And, you know, you're looking at Australia, they have the highest regulatory bar because these are very serious implications. And so their government cares quite a bit about it. So from the one perspective is if you can pass the regulatory hurdles in Australia, you build credit globally because it's like a stamp of approval. And so it's very easy that way. You also kind of get this point where these consumers in Australia are very used to using sunscreen. It's part of just daily life, given how high the consumer awareness is. And being Australia certified can be a bit of a halo effect.
Aaron [00:16:24]:
And so there are some brands that have that and say, hey, we've got the harshest sun some, so we can protect ourselves and, you know, why don't we protect you? The US on the other side has the lowest common denominator in terms of ingredient availability. Again, only those 16 approved filters, which are considered safe. And if you launch in the US it's highly likely that you're gonna need a new formulation to expand elsewhere. But the US is a huge market and so you can build a huge business just by doing that. And so, you know, I think too, from a consumer perspective, given the relatively lax regulation or the lax ingredient filters, US formulations could be seen as being somewhat inferior compared to EU or Australian products. And then you look at Europe, on the other side, they have the broadest palette ingredients. So it's really easy to create something that is innovative and elegant and high performing. And so it's much more like a cosmetic.
Aaron [00:17:20]:
And so if you are able to get through from a cosmetic perspective, you. You've got a really strong passport into Latin America and Africa. So I think that, you know, realistically, to sum it up, you can build a successful brand from any of these markets as a home, as a home base. I mean, there's some great Australia first brands like Ultraviolet out there that are exporting. They're really leaning on this golden standard piece they're doing. And then, you know us first, it's very much brand strategy and scale. We'll talk about vacation and EU is very much about innovation and elegance. And so there's a sunscreen brand, I think, out of Italy called Darling, which has very advanced formulations and, you know, will then move down market into some more US compliant versions.
Aaron [00:18:00]:
And so I just find this whole sector very interesting to me.
Nathan [00:18:04]:
Yeah. And I mean, it's pretty crazy, you know, how big the market is. I think pretty much everyone in America at some point during the summer has used sunscreen. And the global sunscreen market last year was about 12.6 billion, expected to grow to about 19.9 billion by 2023. So about 5% growth rate. And, you know, the United States sunscreen market is about $2 billion. And mineral sunscreen is actually a minority of those sales, but is the fastest growing category at about 834 million and so growing at about 11.8%. So it's, I mean, mineral sunscreen, I think, is really having a breakout moment as I looked into this category.
Nathan [00:18:49]:
And I think there's a few reasons for this accelerated growth rate lately. I think, number one, it's kind of shifting from this, you know, seasonal only wear during the summer to more of a daily skincare routine and ritual. Like a lot of these different skincare brands are now including, you know, SPF products as part of their lines, as well as, you know, legacy brands that are kind of more, you know, boring, functional and just a bit outdated are now, you know, kind of being reframed. And actually, you know, there's a lot of competition now with those. With those, you know, legacy brands. And so I think there's a. This kind of setup of a big market that's growing quite a bit that is, you know, ripe for disruption because incumbents, you know, never really made sunscreen desirable. And I think that's really where vacation has.
Nathan [00:19:42]:
Has come in. Right. Because their founding story, you know, really actually dates back to 2017, where the two co founders met on a beach in Playa de Colombian in Mexico. Right.
Aaron [00:19:57]:
Yeah. I think this is a great story. It kind of reminds me of a couple of the other episodes that we've done, specifically Pura Vida, where they're just kind of out at the beach and hanging out. Do you want to walk us through that overall story?
Nathan [00:20:10]:
Yeah, totally. So Lock hall and Dakota Green, they were on the beach in 2017 in Mexico. And, you know, I guess kind of we're looking at different categories and we're wondering, like, why is sunscreen so boring and clinical? And, you know, Dakota and Laak have known each other since 2013. They were both working in the advertising world in New York City. And Locke, Australian born, you know, began his career in the music industry doing viral marketing for bands on a tight budget. And you know, they spent their days on the beach during this vacation. Just kind of, I think, thinking about this market and kind of trace this shift from sunscreen being, you know, fun in a tearing area era to clinical around fear based messaging and wondered, you know, could sunscreen be fun again? And I think Locke credits a lot of, you know, the insight to growing up in Australia where the, you know, skin care cancer rate is extremely high. And there's just this kind of iconic slip, slop, slap sunscreen awareness campaign that was a, I guess, foundational influence on a desire to make sunscreen, sunscreen both fun and safe.
Nathan [00:21:26]:
So, I mean, definitely has some mirrors to the pura vita story of Paul and Griffin on the beach in Costa Rica, you know, stumbling across bracelets. But I mean, it's a little bit different and a lot trickier to develop sunscreen versus bracelets.
Aaron [00:21:48]:
Yeah, you're right. I think the insight that was really interesting was, you know, when you're at the beach or you're at the pool, you're having fun, you know, and so why are these brands so boring? And that was really the key insight. And you know, for the first two years they kind of workshopped their ideas. This is kind of 2017, 2018, 2019. And they were really fleshing out the brand concept and the vision and the overall aesthetic direction. But they didn't launch anything and they didn't bring anything to market. So I don't know how serious it was at the time. They probably had other things going on.
Aaron [00:22:18]:
So maybe this is something they were coming back to every couple of weeks. But they, they, looking back now, they call this their creative incubation period. They would work on something, let it sit for a while, come back, make adjustments and really just make sure they had the right tone, the right, right piece there. And where they centered in on where they wanted the brand to be was this leisure enhancing sunscreen. And so all of the imagery, all the language was really about leisure and nostalgia and, you know, going back to an era that, you know, they maybe hadn't really experienced themselves. But people kind of talk about in the speech culture. And so they were going through this process and despite their best efforts, they couldn't quite get comfortable enough putting all the pieces together to launch. But in 2019, late 2019, they found the missing piece.
Aaron [00:23:05]:
And that was their third co founder, Marty Bell, who is the creator of a retro styled Internet radio station called Poolsuite FM through a Slack founder group. And I don't know. Did you know about Pull Suite before we did this episode?
Nathan [00:23:21]:
I did not. But I love how Marty describes what it is. I mean, I feel like we've just got to share this because it's pretty amazing. He basically says that it started as this side project to channel this goal of bottling the feeling of being on a permanent vacation. And his insight was that people crave leisure as a lifestyle, not just a holiday. And so he kind of developed Poolsuite FM into this retro styled web app, like just vacation style, hippie, 1980s Miami Vice style, beach vibes, streaming. And it's just. It's funky.
Nathan [00:24:04]:
I mean, it's pretty cool, but it's definitely very unique.
Aaron [00:24:09]:
Yeah, I kind of went down the rabbit hole and I was like, okay, this is cute. And then I ended up listening to it, watching it for like an hour as I'm doing research. And it's just a cool thing. So if you want to pause the podcast to go check out pulsesuite fm, it's interesting. I think when I was on, there were videos of people in swimsuits putting honey on their body and then rolling around the pit of money as a game show thing. And so that's just the vibe that's there. And originally there was no business model for Poolside. That's what it was.
Aaron [00:24:39]:
It was completely free. It was just kind of there. But it really developed this really dedicated cult following where it was drawing millions of sessions a year on the web player, especially during COVID And it got picked up and was shown in magazines like Vice and GQ and Vanity Fair. And it really cemented its cultural cachet more than just its overall raw scale. So even though it wasn't a huge amount of people, it was punching well above its weight. And if you even today, if you look on Twitter or Instagram, their community is highly engaged, and they're always sharing honorary roles, playlists, band drops. And it's become a bit of a cultural institution. And the thing that was striking to me is that when you look at Pulse Suite, it feels exactly like Vacation, and Vacation feels exactly like Pulse Suite.
Aaron [00:25:28]:
And it's kind of hard to know by looking at them which one came first if you didn't know the history. And Lack and Dakota thought the exact same way. And so they found Pulse Suite, they got connected with Marty, and since it was already embodying this 1980s leisure world vibe that they were building toward, they said, hey, we've got to bring this guy on as a co founder and let's really do this brand the right way. And so Marty joined as a co founder, really responsible for the creative platform and the cultural momentum. And, and within weeks they really started to crystallize and start aligning on the brand strategy. And Marty helped them think about how to be nostalgia rich and to really hone their pitch deck as they went into fundraising.
Nathan [00:26:12]:
Yeah, I mean, I think Marty was kind of like the missing piece when it came to the brand strategy in that field because I mean, I feel like so much of Vacation and what Vacation has become kind of gets its roots from Pool Suite. So I mean, I can only imagine what that kind of conversation and pitch went like with, you know, lock and, and just them getting Marty to come on board. But I mean, I don't know if Vacation, you know, really would be what it is today without Pool Suite. It might have just been another sunscreen brand. Right. But it really kind of encompassed now this ready made world of like escapism and nostalgia. And you know, they could really now market through culture instead of just, you know, ads really. And they tapped into Pool Suite's kind of cult status that they developed.
Nathan [00:27:04]:
Right. And so by the time vacation launched in 2021, Poolsuite was already this online culture institution really with a reputation for leisure aesthetics. And I think it's just kind of pretty cool. But one thing that stood out is they bring Marty on in 2019, but they don't launch until 2021. And so what did they do during those two years?
Aaron [00:27:30]:
Right, yeah, well, they needed to get funding to build the product. And so when Marty joined, it really kind of crystallized their direction. And so they put together a very interesting 42 page novella, Pitch Deck. And it was styled like a 1980s Xerox corporate doc with bold visuals and tongue in cheek calls to action. And it really attracted their early investors including Roth Martin, who's the Rothy's co founder and others. And they brought on people like Cat Cole and Peter Rahel and just people were drawn by this world vision of this 1980s nostalgia. And by early 2020 they secured enough angel investment to start working on it full time. And so Locke and Dakota said, all right, we're going to, we're actually going to do this.
Aaron [00:28:17]:
This is not a side hustle anymore. And they focused on developing what they eventually became their clean, classic formulations. And they worked with well known dermatologist by the name of Dr. Elizabeth Hale who helped, you know, helped them develop what they, what they later called the world's best smelling sunscreen. I think it was really interesting because it wasn't just about the protection and the qualities of it, but smell was going to be such a huge part of the nostalgia and the vibe they were going for. And so in addition to working with a well respected dermatologist, they worked with a luxury fragrance designer, Carlos Huber, Rodrigo Flores Rue. And they really wanted to nail the scent and the packaging concepts and the overall sensoral experience. And so then they did all this.
Aaron [00:28:58]:
They were able to launch their first product, the classic lotion SPF 30 in the spring of 2021. And they did it exclusively on Pulse Suite. And the tagline was the official sunscreen of leisure, which I thought was just brilliant.
Nathan [00:29:13]:
Yeah, and I mean it's pretty amazing because, you know, they launched their product in 2021 on Poolsuite FM and it kind of launches with this unique ad that if you watch the ad, we'll include it in the show notes. It's kind of this like very grainy 1980s vibe and I think it stands out because of that. And as you watch it or as I kind of watched it, I wasn't even sure like is this real? Is it actually like film? Like, you know, was this made with like AI or something? It's just like kind of crazy to watch. Honestly. It's, it's really. I recommend just just checking it out. It's kind of, it's just very unique. But I think what was the most interesting part is if you think about Vacation's customer base and fan base, most of these people are like Gen Z who are obviously not living in the 80s, but they're kind of buying into this fantasy of retro leisure.
Nathan [00:30:14]:
And it turns out people really, really like that because within 48 hours they had 10,000 signups. They went viral on Twitter and LinkedIn. Chris Sacca was, was one of the participants. And this ad generated, you know, over $50,000 in sales with no paid ads in just a few days. And so, I mean, I think it just kind of showcases how if you're going to launch a, you know, brand in any market, it's best to do it with a community. And vacation, you know, really tapped into pool suites community and leaned in to that, that brand and that aesthetic. And so obviously this is a great start. But it's, you know, then this challenging point to go from a gimmick where people are not really quite sure about it to an actual business.
Nathan [00:31:09]:
And I think, you know, that's what's interesting about Vacation is they went kind of from this joke to mainstream really in just under two years, which is, I mean, amazing to see and look at and dive into as we're about to do.
Aaron [00:31:28]:
Yeah. And Pullsuite was front and central to this strategy. And I think one of the things I thought that they did very well was they involved that community in the early launch. And so one of my favorite kind of Easter egg things that they did was they gave away titles at the company to the first handful of people who signed up. And so these were titles like, you know, shrimp cocktail designer or Jacuzzi temperature analyst or backgammon experts or things like that, which were kind of fun. And so people would buy the sunscreen, they'd be, hey, guess what? You're the official shrimp cocktail designer. And so, you know, people are putting that on their LinkedIn and, you know, it's just driving all of this interesting stuff that's going through there. But, you know, in the, in the spring of 21, they have their classic lotion.
Aaron [00:32:12]:
And it's just the inaugural product. It's an easy use lotion. It's the, it's all about the nostalgic scent. And it really serves as the foundational formula for not only the product portfolio they're going to build out, but the brand identity and the sensory experience they want to have. Fast forward to summer of 22, they launch a classic whip SPF 30 and later on did an SPF 50. And this was pretty cool. I actually had one of these. It was a whipped cream style mousse sunscreen.
Aaron [00:32:43]:
So like, you think of the old, like Barbasol shaving cream. You know, you tilt it over and you make the Styrofoam thing. And I remember putting this on my kids, like, what are you doing, dad? This is so weird. But obviously it's a highly Instagramable, highly tactile, immediately viral product. And they leaned in and started to mail 1500 products per week to different event organizers and influencers and to really supercharge the conversation and the brand here. And they did a great job with IRL activations, whether it be summer cookouts, hotel partnerships, they started producing a bunch of merch. So hats, towels, apparel, all those sorts of things which was reinforcing this leisure lifestyle, which they wanted to be the champions of. And in 24, they launched a whole slew of new products like instant vacation SPF 30 vacation eau de Toilette fragrance, a Shimmer Oil, a Super Stick, a Studio Tone Shake Shake Mineral milk.
Aaron [00:33:39]:
And so there's all these different things that they were doing to kind of explode as they were. You know, getting people to buy into these different gimmicks and quirks and really just start to fall in love with the brand even more.
Nathan [00:33:53]:
I mean, it's kind of crazy how much they did in 2024, because from a product perspective, they launched so much. But then they also doubled down on this nostalgia element by taking advantage of a competitor's decision to discontinue a well loved product. What was the story behind that?
Aaron [00:34:12]:
Yeah, so the, the brand is Orange Galet and it was originally started in the 1920s. So it's a hundred year old brand. And it was started in Paris, kind of started by Coco Chanel's sunkissed aesthetic. And it was one of the earliest tanning formulas. You've probably seen this before. It was celebrated for its very silky orange gel texture and evocative fragrance. It was similar to, you know, Baines de Soleil or the Sun Bath, you know, here in the US and it was really at its peak cultural relevance in the 70s and 80s. So again, that same period they're trying to harken back to and people wanted to have a certain vibe.
Aaron [00:34:49]:
And so, you know, it was, it was beloved by style icons like Tom Ford or Michael Kors. And there was just really memorable ads that kind of built in the psyche here. And people loved it because it was unique and iconic and very different than what other brands were doing. It had this really unique texture and finish. It was like a balm to oil formula that really left your skin glistening. It was moisturized and you felt very luxurious putting it on, despite having, you know, almost no SPF. It was like SPF 4 or something like that. But the big thing was like the fragrance and it was this blend of citrus, clove and sandalwood.
Aaron [00:35:26]:
And it was, you know, if you smell it even now, it's deeply nostalgic and something that's there. And the last thing is they had this like metal tube. So it was like different than what you would see with other sunscreens or tan lotions. And so just very, very different.
Nathan [00:35:39]:
Yeah. And I mean, it's so interesting because you have this 100-year-old brand that is discontinued despite there being ongoing demand. And then you have this up and coming brand that's really based on this nostalgia element that is, you know, really perfectly lined up to take care of it. And so they took a really unique strategy to bring it back. Right. So they bought the trademark, not the formulation, but in order to really deliver this Nostalgia. They, you know, needed to modernize it and really kind of mimic the elements that loyalists will be looking for. And so they started off by actually purchasing expired or nearly expired tubes on ebay for lab reference to understand the scent, color and texture.
Nathan [00:36:23]:
And this helped them reverse engineer kind of the original formula. They created a advisory board. This is. They basically assembled a panel of 11 lifelong fans and beauty experts who kind of really guided them on what this should be. And then they kind of retain the sensory hallmarks of the fragrance and gel texture, but replaced, you know, outdated ingredients like mineral oil and paraffin for better, you know, for you skin and clean alternatives. And then they upgraded the SPF to SPF 30 with broad spectrum protection that kind of align with this modern day safety standard. So, I mean, I'm just, I'm just kind of blown away by their process to kind of bring this product back. I mean, I think they just went above and beyond here.
Nathan [00:37:17]:
And that's really, you know, speaks just to how strong the vacation team is to be able to go above and beyond like this, to bring this product back. I mean, they really went deep in terms of, you know, going, going kind of forward to go backwards in some sense. But they relaunched in late 2023. There was a 15,000 person wait list by launch time and the product sold out in three days when they launched. And I mean, I think it's just a testament to this cult appeal and just this incredible execution by the team. I mean, we've talked about a lot of kind of relaunches before and I don't think we've covered a team that has gone this in depth.
Aaron [00:38:00]:
No. And I think, you know, it was started in the 1920s. It was discontinued in 20, 20, 19, and this, this almost feels like it was purpose built for this vacation team that was trying to do nostalgia. And so, you know, they're looking at this, they're seeing this outcry, they're seeing that these tubes that were, you know, produced in 2019, they were selling for hundreds of dollars on ebay because there was still this very dedicated fan base. And they just kind of came to this conclusion that, hey, somebody should bring it back and that should probably be us because that's our whole thing. And I think that, you know, there's a lot that we can learn here. And I think there's probably a very interesting playbook for other founders, other startups in terms of bringing back legacy brands with all of this cultural affinity. And, you know, the big thing here, I think in terms of a masterclass that the vacation team did was that they involved these super friends in the creative process.
Aaron [00:38:57]:
So they wanted to make sure that it wasn't just a mimic of what was there. They wanted to make sure it was as authentic as it possibly could be. And then, you know, they also wanted to make sure that they modernized it. They made it better, they made it safer, more sustainable, all those sorts of things. And so they, they decided to revive this brand and to tap into the, the equity, but to keep the sentimental pieces, specifically the scent and the texture, while making it much more helpful that way. And then obviously, like when they launched it, they did it with a pre launch. They, they took a massive waiting list that got people excited about it as opposed to, you know, trying to sell this in Target or just launching one day. And so I think that there's, there's a lot there that people can look to.
Aaron [00:39:42]:
And obviously we talked about how they started with Whole Street. It was DTC first. You know, are they still only DTC today?
Nathan [00:39:50]:
You know, I mean, so much of what they do is driving virality on TikTok and Instagram, you know, and through Poolsuite. But their first foray into retail was actually in 2022 through Ulta Beauty. And after that, a lot of doors began to open for them. So, you know, Target, they were promoted heavily placed on ILNs, which of course meant, you know, high visibility and sales bumps. They're in cvs, Costco, Nordstrom's, Bloomingdale's. And so retail credibility really amplified the brand's legitimacy and accessibility. And I mean, it's pretty incredible because right now, today they're over 1% of US sunscreen market. So they're about like 1.1% of the total market, which is actually enough to make them the 13th largest kind of sunscreen company in the category.
Nathan [00:40:42]:
And, and they're the number one selling sunscreen product in Target, which I thought to be pretty, pretty fascinating. So, I mean, this is just a fantastic story. You know, it makes me wonder how much capital have they raised, you know, what's their kind of financial milestones look like? And so we talked a bit about their kind of seed angel round in 2021. They then raised a $6 million Series A in May of 2023, led by C List Capital, with participation from Beauty, from True Beauty, BFG Partners and Sonoma Brands. And they raised a series B in mid 2024 from avocation that also, you know, put in an additional $10 million and, you know, was. Was led by True Beauty Ventures. And there's celebrity investors in this round like Emma Stone. And so at this time, revenue was approximately about $40 million in 2024 and it's expected to actually double in 25 and you know, turn a profit for the first time this year as well.
Nathan [00:41:46]:
So, I mean, just incredible growth, incredible storytelling. I love the kind of nostalgia aspect of this. And I think they're going to continue to grow. I mean, you know, there's definitely a lot of exit potential here, if you ask me.
Aaron [00:42:02]:
Yeah, I think you're right. And you know, there's a couple fundamentals that if they can stick to, they're going to have lots of options. And that's of course being profitable and continue to grow. And with, you know, $80 million in projected revenue and lots of brand equity, they're really well positioned even today for a 200 to $300 million acquisition or even more if a strategic company sees that, you know, there's a lot of value here in bringing in a Gen Z tech customer, those sorts of things. And so, so I would be paying attention to companies like Estee Lauder, l', Oreal Coty Shiseido who, they have a good track record of acquiring high growth niche brands. And these businesses are really in a race to try to diversify and rejuvenate their portfolios, especially when it comes to Gen Z and digital first audiences. And so this is a really attractive asset to those types of buyers. And, and I think that you point to l' Oreal's acquisition of Youth to the People and Aesop and this is really something that expanded their clean beauty shops and premium offerings.
Aaron [00:43:08]:
And I think that this could play well in those sorts of portfolios. You could also see something where there's a fast fashion or another roll up like elf, which you know, we talked about recently acquired road for a billion dollars. They're ideal candidates there too. So there's a lot of potential here for this brand if they just keep it going. But I think they're certainly approaching that exit window certainly in the next 18 to 24 months.
Nathan [00:43:32]:
Yeah, I agree with you. I mean, I think there's, I think, I think the brand is just off to a really strong foundation right now and going to continue to grow. And I mean, let's say they are to prepare for an exit window. I mean, what are some things you'd recommend that they should do to prepare?
Aaron [00:43:49]:
You know, a lot of it is the same. So you know, from a growth and profitability perspective, they need to continue to grow, you know, 50% 100% year over year, need to make sure they've got good, clean, you know, economics. Typically you're looking at at least 7/4 of consistent profitable growth for a strategic company to look at that. So they're probably, you know, if they're turning profitable this year, they probably got the rest of 20, 25 and then all 26, and then maybe they can do something in 27. But they also need to kind of make some decisions around international reach or distribution. And so can they maintain the retailer momentum that they have? They've got really good presence in their top tier accounts and the targets, the cvs, the Nordstrom's of the world. But can they continue to grow in emerging markets and brands? Does this nostalgia aesthetic translate to Europe, to South Africa, to Asia, to China, to, you know, those places? They're doing a job from a brand asset point of view. They've got really unique formulations, they've got, you know, a cult following with their brand.
Aaron [00:44:55]:
But I think that the big thing here is they've got to make sure that they continue to harden their supply chain. And so, you know, I usually tell founders that, you know, your marketing and your profitability, your finance will get you an LOI which says, hey, we think your business could be worth this much. That's the maximum that a buyer is going to pay. Everything else gets discounted from there. And so making sure that they've got really strong quality processes, good succession planning, they've got the right contract, the right redundancies in place is really what they need to do to make sure that they don't have any discounts off of those. Otherwise.
Nathan [00:45:31]:
Yeah, it makes a lot of sense. I mean, I think they're going to, I have a feeling they're going to exit in the next, I don't know, 18 months, we'll call it, and then we'll do another episode reflecting on how accurate we were. But I mean, let's say, you know, you were to acquire Vacation, you know, are you acquiring the revenue, the formulation, the culture engine? I mean, to me, I think this is one of the few brands that we've covered that really has kind of, kind of encompassed this feeling of nostalgia and really kind of leaned into that, that feeling as a brand and as a company. And, you know, I just kind of reflect back on the, the dichotomy of traditional sunscreen, you know, what's mostly used today still. Right. I mean, you go to the beach and parents are spraying, you know, bottles of SPF 50 on their kids and who knows what Chemicals are in there. And you know, I think now you have kind of this newer, you know, well being, you know, really environmentally friendly and sustainably formulated sunscreen that is gonna really take over more of the market. Right.
Nathan [00:46:43]:
I mean, we mentioned that, you know, the, this, you know, category is only like $900 million in sales per year right now. And I mean, it's small, right? I mean the category itself is still small and in my opinion it's going to become the majority in the next decade.
Aaron [00:47:04]:
Yeah, certainly with the mineral based sunscreens, I could, I could see that happening. You know, it's, you kind of pose an interesting question because one, I think the most interesting thing about vacation is that they sell nostalgia or a period of nostalgia to people who didn't actually live in that period. So, you know, there are very few other customers that grew up going to pools in the 1980s, but that's the vibe everybody's going for. But you know, like you're saying the, the revenue market is relatively small when you look at skin care in general. And so, you know, the fact that they're able to be, you know, 1% of the market in just over a year and a half is pretty remarkable. But the revenue itself, like, yes, it needs to be profit. I don't think that's the, the main thing that people will be buying for. What they've been able to do is they've kind of start to create a new category where it's not necessarily about sunscreen as the event of being at the pool or being at the beach, but they're starting to move it into that everyday use.
Aaron [00:48:03]:
And so that's something that I think is really interesting to people, you know, because you can imagine if I'm an acquirer and I'm looking at a couple of brands and yeah, maybe I sell one tube at the beginning of the summer, you know, per year. That's, that's a tough business to have long term. But if I have somebody who's like, yeah, I just like the way it smells, you know, and I'm going to wear it all the time and I get to sell, you know, three or four bottles a year, like that's a much, much better consumer. And they're kind of, they're not necessarily taking market share, they're expanding market share by changing the customer behavior. And so I think that there's something really special about this brand. It's its connection with Gen Z. And I could see an acquirer getting very, very excited about just bringing additional people into that product. Family and then potentially being able to cross sell other products down the road.
Nathan [00:48:54]:
I think you hit the nail on the head when you said really making this an expansion of a category. And really, I think like we mentioned, more people are becoming aware of skin cancer and how likely they are to get skin cancer. And I think vacation is actually becoming a kind of daily necessity or option for people that are aware of the potential of them getting skincare and they're using it year round, not just in the summer. I think that's a major, you know, key that you just mentioned. So I mean, I love this story of vacation. I think we're gonna reflect on this in 18 months when they get acquired. And I'm curious for those listening, you know, have you heard of vacation? What do you think of this story? Let us know. Aaron and I are always interested in hearing people's feedback and comments and we really appreciate you tuning in.
Nathan [00:49:47]:
This episode of E. Commerce on Tap brought to you by Sourcify and Izba and leave a review, share it with a friend. And thanks again for tuning in.