Amy Errett

Guy Kawasaki:
I'm Guy Kawasaki, and this is Remarkable People. This episode's remarkable guest is Amy Errett. She is the founder of Madison Reed, which she started approximately eight years ago.
She's been a mover and a shaker at two venture capital funds, True Ventures and Maveron. Maveron is the venture capital firm of Howard Schultz. You know him from Starbucks.
She's also been the CEO of Olivia, which sold charter cruises for lesbians, and she was the chief asset gathering officer of E-Trade. She has a BA from the University of Connecticut and a Wharton MBA.
If you are a woman, you probably know more about Madison Reed than I do. For those of you who don't know what Madison Reed is, it is a total kick-ass company. It's doing hundreds of millions of dollars selling hair dye products.
In this episode, you'll learn about how she has dealt with the pandemic, how she has created a plethora of business models, and the amazing amount of technology her company uses to sell hair dye; plus, how to raise a daughter and how to raise a son, and, believe it or not, you'll learn that, maybe, I'll become a spokesperson for her men's hair dye products because I have so much gray hair.
This episode of Remarkable People is brought to you by reMarkable - the paper tablet company. Yes, you've got that right. Remarkable is sponsored by reMarkable. I have version two in my hot little hands, and it's so good, a very impressive upgrade. Here's how I use it.
One: taking notes while I'm interviewing a podcast guest. Two: taking notes while being briefed about a speaking gig. Three: drafting the structure of keynote speeches. Four: storing manuals for all the gizmos that I buy. Five: roughing out drawings for things like surfboards, surfboard sheds. Six: wrapping my head around complex ideas with diagrams and flowcharts.
This is a remarkably well-thought-out product. It doesn't try to be all things to all people, but it takes notes better than anything I've used. Check out the recent reviews of the latest version.
I am Guy Kawasaki, and this is the remarkable Amy Errett of Madison Reed. Someday, if Madison Reed is bigger than Procter & Gamble, you can say you heard that here first.

Guy Kawasaki:
I have to tell you that every ... My wife and my wife's friends, everyone I said, "Yeah, I'm going to interview the founder of Madison Reed," are like, "Yeah, we know here. We love her! I bought this, I bought that." Geez. I had no idea.
Amy Errett:
Yeah. Hair color is more essential than most people believe.
Guy Kawasaki:
I would say that many people were more impressed that I'm interviewing you than Jane Goodall or Margaret Atwood.
Amy Errett:
Oh, no. I'm more impressed with Jane and Margaret.
Guy Kawasaki:
Maybe I should tell Jane that you'll send her samples or something.
Amy Errett:
Nope. Yeah, I won't go there.
Guy Kawasaki:
Why not?
Amy Errett:
I think her hair is mostly gray, I'm pretty sure, but that's okay.
Guy Kawasaki:
So is mine, and you sent me samples!
Amy Errett:
Yes, it's true. It's true. It's true.
Guy Kawasaki:
So my first question and the one, actually, I'm most curious about is: did you reach out to Nancy Pelosi?
Amy Errett:
No.
Guy Kawasaki:
Wasn't that a prime opportunity?
Amy Errett:
It was a prime opportunity, but I'm a believer that if that was meant to be, she would have reached out to us so I let that go the way it did.
Guy Kawasaki:
It could have saved her some aggravation.
Amy Errett:
Yes, absolutely. But, Guy, it's a good idea, now that you've mentioned it.
Guy Kawasaki:
Yeah. I wish I could tell you that I knew her and I would make the introduction, but I don't. So okay, I thought for sure that was a golden opportunity for it.
Amy Errett:
It was a golden opportunity.
Guy Kawasaki:
And it's not too late.
Amy Errett:
It's not too late.
Guy Kawasaki:
It's not too late.
Amy Errett:
It's never too late.
Guy Kawasaki:
It's never too late.
Amy Errett:
Exactly.
Guy Kawasaki:
Yes. Yes. So one of the sentiments that I picked up on your website and material is that a beautiful woman is a confident woman. So I would like to know how you define beauty.
Amy Errett:
It is a fantastic question, and it is the thesis for which the company is based on. The thesis is one that says that the traditional media has portrayed women a certain way, and they're supposed to be of a certain age and have a certain body type and look a certain way and it is only youth that's beautiful.
In fact, we at Madison Reed call your ingrowth of gray your wisdom stripe because we are big believers that beauty is really as much internal as external, and we are in a business where our job is to reinforce the empowerment in that inner beauty and letting women make choices to color their hair on their own terms, whether that's at home or whether that's in one of our hair color bars.
I think you know that we have this eight-free formula. We think about beauty in safe ways, in ways that aren't toxic. For us, the definition of beauty is the reason I started the company - named it after my daughter, Madison Reed - is that I wanted to have a metaphor for the fact that all women are beautiful, you don't have to follow the traditional definition that media puts forth, and that we're a company that stands by affirming that beauty and not falling into the other traps.
All of our imagery in the company, meaning all of our photographs, are not retouched. They are not airbrushed. They are how women look. The women have some makeup on, but that's who they are. We think that women are beautiful as they are, and that society, frankly, has created the situation that many of us have walked around feeling less than and that has implications for lots of parts of your life.
Guy Kawasaki:
If I may be a devil's advocate for a second, if you're saying that beauty is like that; internal, it's about efficacy and power and self-image and all of that, then one might argue why does a woman have to dye her hair?
Amy Errett:
It's a very fair point. We don't believe every woman should dye their hair. We have tons of clients that come to me and say, "I want to go gray," and our response to that is "awesome." What our business is predicated on is, if you choose to dye your hair, we would like you to do it with us because of how we approach this business, but we're affirming the fact that if you want to be gray and not dye your hair, amen. In fact, we have a handful of products that are for gray hair. It just technically, as people go more gray, there can be the effect of hair yellowing versus staying white, and so we have some products that help if you have gray hair and you would not like your hair to be yellowed.
If you want your hair to be yellowed, it is beautiful. We do not say that, if you don't color your hair, there's something wrong. We want you to do exactly what you want to do.
Guy Kawasaki:
Are you also saying the converse that, without beauty, a woman cannot be confident?
Amy Errett:
No. What I'm saying is that I think one of the potential blockers to confidence is a woman's relationship to how she thinks she should look versus how she looks. I do this thing which is a little sidebar thing. I don't know why. It started years ago to come talk to seventh and eighth grade girls, and I do this often.
I start the conversation with the following question: "How many of you wanted to be a princess when you were growing up?" If there's forty girls, thirty-three of them raise their hand. I say, "Oh, okay. Did you want to wear a tutu?" Yes. "What was the color of the tutu?" Pink. And I say, "Okay. Well, can anybody tell me why they think that is?" These girls are awesome, and they're smart, and here's what they say: "Because we watched movies where being a princess was the ultimate role that a woman should be in."
Somewhat subservient to the prince, a role that is about being beautiful, then wearing a tutu that's pink, and that has a direct correlation within me asking the following question to seventh and eighth grade. "How many of you think you're good in math and science?" Out of the forty hands, very few go up.
I believe there is a correlation with believing that you're not smart, that you can't do things, that you're supposed to look like a princess, that your life has a predetermined factor about self-worth, and that's what I believe. The Madison Reed is now seventeen, and there's a lot of conversations in this household about a spot that women can do what women and men should be able to do whatever they want in life, without any internal judge, as I call it, that is constantly sitting on one of your shoulders, questioning your decisions in life based on a lens that Disney set forth when you were three.
This is why, up until recently, with all due respect, none of the princesses were of color. Just go down the list, right? It's not personal towards Disney. Disney does a lot of very cool things, but we all get these messages.
When we want to talk about things about why aren't more women funded in Silicon Valley, I personally don't believe that men wake up every morning and think, "Oh, how could I not fund a woman today?" That is not what most men think, but there is a system, and the system comes from, if I didn't come out of finance or I wasn't ... There are certain predictable paths to become a VC like I was a VC, but if you weren't a founder that had a big outcome or you didn't come up through finance in a certain way ... And it's a self-fulfilling prophecy.
I want to be a company that, number one, affirms women's beauty on their terms, number two, sets an example as a female founder with eighty-percent of our team members being women, close to fifty percent of people in the field being of color. I want to set an example that these things are possible, not easy, really hard, but that's how the system changes. If we strive and achieve, the system, over time, will change. Long-winded answer. Sorry.
Guy Kawasaki:
That's what a podcast is for, long-winded answers.
Amy Errett:
Yeah.
Guy Kawasaki:
So if you were to apply this line of thinking to men, much of it would be a waste of time, but would you say that a handsome man is a confident man or men don't care or society doesn't care what a man looks like or whatever? What's the corollary here?
Amy Errett:
I don't know. I'm not a man, so I would only be positing some theory here. I'm a woman, so I have some viewpoints.
If I was a guessing person or maybe have lived long enough to see some path of recognition here, as I call it, my guess is that some men have some confidence issues too. I would be silly to assume that this is only a gender thing, but my guess is that, if we were looking at a percentage of men and confidence and a percentage of women and confidence, my guess is there's a higher percentage of men that are inherently confident versus a percentage of women.
Now, I don't know why that it is because I have a daughter, not a son. My guess is it has a lot to do with how potentially roles get played out in families or roles get played out in relationships or where the what I would consider to be majority of workforce in certain professions have skewed in one gender.
I think that women have this sort of all-encompassing role, right? That all-encompassing role is, with all due respect, the mom and the partner and the worker and the daughter and the friend connector and the ... Just go down the list, right? And the therapist.
I think that just when you look at society, the ability for a man to have more access to their success pattern is there, where a woman has got a lot on her plate that is maybe broader in scope and more just ... If you just look at where do many women have to make a choice, I choose to have a kid, and so I don't go back or I'm out of the workforce for some period of time, right?
These are all things that I don't ... In any way, I don't want anyone listening to this to believe that I am not respectful in any way, but what I want to say is that these are questions that we should at least ask and ponder, and they are somewhat related to why I started the company. They're somewhat related.
Look, I'm also an out-gay person, and am very out in my life, and I get this question all the time, Guy, which is: do you think you've been discriminated against because you're a woman and you're gay and you're an entrepreneur? Here's my answer - Probably, but I don't care, right?
What I care about is participating in the world in a positive way. That's my role in the world. Just be positive. The future belongs to optimists. I'm going to create things out of nothing. I'm going to create jobs for people. I'm going to get up every morning and be the best mom I can be, the best friend, the best daughter I can be. If other people discriminate against me, then it's like, “Oh, that's interesting, because it doesn't affect how I feel about me,” but it took me a lot of years to get there, right?
Guy Kawasaki:
You started your company funded basically on a brick-and-mortar salon business, and then you-
Amy Errett:
No, it was funded by the d-to-c business.
Guy Kawasaki:
Direct-to-consumer in any manner?
Amy Errett:
All of the business up until three years ago was a direct-to-consumer subscription model with boxes of color coming to you, to your doorstep.
Guy Kawasaki:
Oh. So I was mistaken. I thought you started as a salon business.
Amy Errett:
No. No. We've gone into the salon part of the business because, just a little bit about the industry, there's almost a fifty/fifty split between women that color in a salon and color at home. So the basis of our business was a d-to-c business that is very big, and we added the part of using the same color, our color, in our own hair color bars because we always knew that we were missing half the total addressable market.
Guy Kawasaki:
Oh, I stand corrected. Was Drybar an inspiration in this decision?
Amy Errett:
Yeah. I mean, Drybar was an inspiration to the notion that you could disrupt the cottage industry of salons and that you could create a situation that convenience, time, technology through booking, and things like that could create a good sized business with four walls. So yeah, that was the genesis, and there was never anything in the hair color category that emulated what Drybar was doing in the blow dry category.
Guy Kawasaki:
Would you describe what happened in March and how the perfect storm happened?
Amy Errett:
First, I am so humbled that women, primarily women, a lot of men, turned to us during that moment of time where they were in their houses and not doing their normal salon routines. Just to add that, if anything was true in the pandemic, it's how important it was to service people, and we couldn't have done this without our extraordinary team.
When stay-at-home orders began in March, we needed to close the stores we had. So we had twelve stores that were open. Currently we have twenty-five. We've actually opened thirteen during COVID, which has been a fascinating experience.
We took all of those team members, and we moved them to our d-to-c call center, because our call center has always been certified licensed colorists, and they were the same profile as that. So we never had to fire anybody, and we never had to furlough anyone, and we had massive customer demand. We were selling a box of hair color every five seconds, and our business, there were months where our business was up twelve times in increase of new customers. Just as a rule of thumb, in February we were selling a box of color every twenty-five seconds, and all of a sudden it was every five seconds.
We make our hair color in the Lombardy region of Italy, and if you remember, Northern Italy was the hardest hit region compared ... I mean, now it isn't, but it was next to Wuhan. So we had to keep our hair color coming in to meet inventory needs, and the only way we did it was that we convinced the Italian government to allow us to make hand sanitizer at the same time that we were filling tubes of color on lines 24/7. Eight filling machines, 24/7 filling lines of hair color.
Then we had to air freight it all in. We had, when we started, about 14 weeks of inventory, because that's pretty standard, and we were just blowing the doors through that day after day. It was sort of crazy.
Then, where our stores stayed closed, they reopened in July. We reopened our stores just with the thought process initially for the first four weeks of retail only, because we were very concerned about safety. We've since opened every store in what we call level two, which we're allowing two chairs to be opened at once for application of hair color. No one gets shampooed next to each other so there's a lot of safety protocol. Our team members are safe. Everyone's masked. Everyone's in gloves.
Our demand on the online side has continued. It's not every five seconds, but the brand tipped in terms of the virality, and I think the other thing that happened is a lot of people that never would have colored their hair at home started coloring their hair at home, seeing the product was awesome and how easy it was, and they were like, "Okay, why am I spending $200 every six weeks?" Right? We've just held on to a ton of those customers. Then in the midst of all of that, we launched the men's hair color line in late June and one new product in mid-July.
We have been busy at Madison Reed, and, again, I'm very humbled by this because I would much have not preferred a pandemic to be frank with you. We have been one of the businesses that's had a positive outcome from this. I would trade not having had this pandemic for the world versus that.
I think that we had built a lot of brand recognition for many years, and we had a big business before that, and I think it just tipped and, if people were going to color their hair at home, they came to us, and we've earned the right to keep them. For our team members, it has been an exhilarating and exhausting year, and we are a very close-knit community, and our office has been closed, and we're like anybody else, struggling through how to keep that community connected in a hard period of time. We're hiring tons of people we've never met them in person.
These are unprecedented - I know that word is completely overused - these are times right now where every leader is just saying, "There's no playbook. How do I onboard somebody that no one has ever met?" Zoom is Zoom, but it's not the same as the chemistry or the feeling of a cultural fit or the eye contact in a different way.
There'll be a moment when we look back on this, I believe, and we'll say, "Geez, what were the big learnings here?" But I'm seeing depletion across the board, not just in our business but in others. Parents have had kids at home. There's a lot going on for people, no matter how well your business is doing.
Guy Kawasaki:
What do you mean by depletion?
Amy Errett:
I think that if you are a social person or a person that... I'm a culture junkie, and I'm somebody who believes that, yes, you have to have a great product and you have to have great technology and you have to have great service and all those things, check, check, check, but the secret sauce of running a great company, I think, is having great people that care about each other and that buy into values and then those values are lived every day and they are the North Star for how a company operates. Those are hard things to do remotely.
The behaviors that I would have to come into the office and what I call just the Monday morning schmoozing by somebody's desk like, "How was your weekend? How are you? How are your kids?" Right? That is very hard to do. We're using technology a lot to try to emulate that.
I think the combination of the depletion of not getting that kind of energy to refuel the battery, not ... I'm a long-hour worker. I am working more hours than I've ever worked, because here's the thing, right? You have a glass. This is the way life is, and some of us are wired this way, and you fill the glass up. Then, all of a sudden, you decide, “Maybe I just want to... I want a bigger glass.” So you fill that glass up, and then you've got a pitcher, and then you've got a gallon.
The issue here is, if you're not commuting, right, and you're not having what I call the natural break of some rhythm of leaving your office, going to get lunch, everything just gets smooshed together, so you're literally working... I start at like 6:30 in the morning, and at 6:30 at night it's like, “I haven't had ten minutes to myself,” because I think psychologically you feel like, “Oh, it's just easier to be home.” Actually, we've done a lot of things. We've done to half-day Fridays in the company.
I instituted it in the summer. It was a great relief, and I thought, "The productivity hasn't suffered. Why would I change this now?" Anyway, I think depletion comes on an emotional level for people. It's hard to not have the life that you knew. With all due respect, yes, the vaccine will happen, there will be life again, but it's not like we can bank on a date, right?
Guy Kawasaki:
Nope.
Amy Errett:
Then, on top of it, we've had an election that's been emotionally draining for many people, and a lack of leadership, with all due respect. Those of us that are leaders sit and ponder and think, "This is the time when people do need a North Star and hope and strength. This isn't a time where we're going to let ourselves go off and each form another opinion about how we execute something that needs to be delivered in minus eighty-four degrees and two shots in three weeks of each other for 300 million people. Hey, let's go at it. We need a plan."
Guy Kawasaki:
I would say that Joe Biden has shown more leadership in the last week than Donald Trump in the last four years, but, yeah.
Amy Errett:
Yeah. What is astounding being, this just comes back to... Look, I know a good amount about you. I've done my research. You have an extraordinary background, and I mean it, and I have such deep respect for the things you've done. You've invested your time and energy and a voice.
Leadership is not a theory. Hope is not a strategy, right? It's like blocking and tackling. I think that it's like art. You know when it's good when you see it. When it's bad, you're like, "Whoa." So we need to step up-
Guy Kawasaki:
Oh my god. I've had, I don't know, fifty guests so far, and I would say you rank number one in the ability to sidetrack me from what I want to ask.
Amy Errett:
Sorry. Okay. Sorry, I'll shut up.
Guy Kawasaki:
That's high praise! That's high praise!
Okay. So I'm going to get a little bit back on track.
Amy Errett:
Okay. Sorry about that.
Guy Kawasaki:
I want to know... Don't apologize! How do you deal with basically overnight ten times growth? Most companies can't handle something like that. What did you do?
Amy Errett:
You know, I had hired well ahead of a curve, and what I mean by that is I have always been a believer that you could never have too many great people. So we were getting to be a good-sized company through our own growth for the first five years, and I had hired a great senior team, rockstar team, a team that could take this company public, and we were ready.
The truth of it was who knew this was going to happen, but we had had what I would consider to be past life DNA to deal... Never waste a good crisis, so we were ready. We met the opportunity with I think optimism and positive energy, and we just got at it.
Now, having said that, our company, Guy, will grow 128% this year, and now in the aftermath - and we're still growing. The volume is still way up on a daily basis - but we've had to retool...
My example is we went to bed on March 13th, and we were probably a six-year-old with all the six-year-old behaviors, and we woke up somewhere around July 15th and we were eleven. All that natural stuff that happens between six and eleven, it just never happened. It's sort of like, “What do we do in this body?” Right? Systems, infrastructure, bringing some new people - never had anyone that ran global supply chain. I mean, we're shipping half a million units a month, but we're just like, "Yeah, I guess." We've put a lot of stuff in place.
We've had the good fortune of being able to both afford that and have the time to do that. This fourth quarter has been all about catching our breath and building an infrastructure that can support this volume, and we have big aspirations for the company, right? This isn't the end. This is just earning the right to get to this harder place, right?
Guy Kawasaki:
As we say in the venture capital business, this is high-quality problem.
Amy Errett:
Yeah. This is a high-class problem to have.
Guy Kawasaki:
So you mentioned something that caught my interest about ten minutes ago, which is your colorists are certified and licensed. What does it take to be a colorist?
Amy Errett:
So every state has a licensing process that is specific to the state, but you must have a cosmetology degree. So you have to go to school to become a cosmetologist, and it's usually about an eighteen- to twenty-four-month program. Many people do it part time.
Guy Kawasaki:
What?
Amy Errett:
Yeah. There's cosmetology licensing in every single state and schools. You have to be a licensed ... Your barber, your esthetician, your massage therapist, yeah, they're all cosmetologists that have to be licensed by the state.
Guy Kawasaki:
Your industry has a more rigorous examination and certification process than the White House. My god.
Amy Errett:
I won't comment on that.
Guy Kawasaki:
Okay. I was just seeing if I could bait you into that, but okay. You also mentioned that Madison Reed is eight-free, and I think that many people don't know what that means. So can you explain that?
Amy Errett:
Yeah. We've taken out eight ingredients that we think are the harshest chemicals in hair color, and they are ammonia, parabens, resorcinol, PPD, phthalates, gluten, sulfates. These are all things that are in traditional hair color, and we've taken them out because, this is just a little-known fact, I don't expect you to know this, fifteen percent of women would tell you that they have a severe allergic reaction to hair color, and one of those reasons is a reaction to some of those ingredients.
Many women I know say, "Oh yeah, I get my hair colored. It burns. It itches,” and I'm like, "Well, that's not normal." But all in the name of beauty, right? We thought it was a good idea to take those things out, and then we've put some nutrients into the hair color so people experience it as the same great coverage.
No odor. I don't know how much you know, but if you went and bought a box of Clairol today and you looked at the instructions, the first thing it would tell you: Open a window before you start. Can't make it up.
Guy Kawasaki:
Really?
Amy Errett:
Yeah. When I started the company and I thought, "This is a big idea, and nobody has done this, a prestige hair color brand with better ingredients," I went and I bought thirty boxes in Walgreens of just stuff randomly, like crazy entrepreneurs do, and brought them home and my wife was like, "What are you doing?" Every single instruction started with the same thing: “Noxious fumes, open a window before you start,” and I'm like, "What is happening here?" We just took those things out.
It took us about a year to formulate the color. Started with nineteen shades, have close to sixty now. Then the other part is, if you go to a salon, you actually have no idea what product they use, and you have no idea what ingredients are in that product, right?
Guy Kawasaki:
Okay. So, the next step is: how do you test and maintain Leaping Bunny status?
Amy Errett:
We had Leaping Bunny status for the last four years, I believe. It took us two years to get it. We are constantly monitoring every single ingredient that we use and whether any of it is tested on any animals anywhere, and the answer is it's not, and we will never include even a component of our ingredients that's tested on animals.
Guy Kawasaki:
Right there, Jane Goodall will start using your product.
Amy Errett:
Okay.
Guy Kawasaki:
Okay. I learned another interesting tidbit.
Amy Errett:
What's that?
Guy Kawasaki:
You get tons of user-generated photos every day.
Amy Errett:
We do.
Guy Kawasaki:
So how many do you get?
Amy Errett:
My guess is a day probably, three or 400 photos a day of women that primarily have used the color and want to share that with us. It's been a great advertising tool.
We go back and we ask, "Would you like to be in our ads?" and they're thrilled to be doing that, but I think what it says to us more is that they're so proud of how they look in themselves. There's something about a DIY product where you have some level of "I did this myself," and I think that's the best part.
Look, our business, our at-home color kit gets a sixty-five Net Promoter Score. That's way high, right? In a high beta category, as I call it. If somebody doesn't follow our recommendation, which we have a sophisticated algorithm... After you answer these eighteen questions, we could tell you, "Put Bolzano Brown. This is the swatch we recommend." If somebody goes and selects something else, which it's hard for them to do, but you can do it. Sixty-five is a very good Net Promoter Score, but we strive frankly, like the kind of quality and service, 100% money-back guarantee. We mean it. We stick by it.
Look, this is very different than a... If I'm Zappos and I send you a box of shoes and you open them and they don't fit, maybe you're irritated. You're like, "I really loved those shoes. I really wanted to wear them. Now I've got to send them back,” but for the most part, you're like, "Yeah, that was a bummer." If I screw up your hair… that is not, Guy, in the bummer category. That is in the "I would like to kill you" category. So the stakes are very high for us. That is the reason why we are obsessive about quality.
Guy Kawasaki:
You already mentioned raw photography.
Amy Errett:
Yes.
Guy Kawasaki:
But, god, I wish... I hope you're familiar. There's a picture on your website where there are six women, shoulder to shoulder-
Amy Errett:
Yes. Yes, sir.
Guy Kawasaki:
... curly hair, blond hair, red hair, curly hair, black hair, red hair, okay?
Amy Errett:
Yeah.
Guy Kawasaki:
You're telling me that that photo has not been edited?
Amy Errett:
Correct.
Guy Kawasaki:
Wow.
Amy Errett:
Those people are just in makeup. They just have makeup on. There is no airbrushing whatsoever. That photo was a photo that we did at a photoshoot a couple of years ago.
One of those models is now seventy-one years old. Yeah. The age diversity, body type diversity, hair color diversity, ethnic diversity. Everybody is welcome, and our photography has to be inclusive of that.
Guy Kawasaki:
I looked at that, and I said, "Maybe she meant raw photography-"
Amy Errett:
No. No. Nothing is-
Guy Kawasaki:
"... except on our website."
Amy Errett:
No. No. Not one of those things is airbrushed. We won't do it.
Guy Kawasaki:
Wow. Okay. Next question.
Amy Errett:
Yes.
Guy Kawasaki:
Your use of digital technology is very impressive.
Amy Errett:
Thank you.
Guy Kawasaki:
So, I want to talk about your hair color algorithm, your virtual hair color tool, your visualization, your AR, your Zoom house party. Walk me through all of that because that stuff is so cool!
Amy Errett:
So coming from Guy Kawasaki, that's a big statement, so I'm just going to let myself take that in and let my CTO, when he listens to this, do a little chest-pounding. Okay. Now we'll move on.
The way to think about Madison Reed is that we are a product company, we make our own product, but we are a technology-enabled business, and what I mean by that is, our thesis was that the average woman is living with her cellphone. That's the way that she does her life, and so that we needed to create a technology environment that was going to do three things. One was get her color right, and that is the number one vital few of the company.
We have five vital few of the company. Number one is always get her color right, and that is why the eighteen-question quiz, which is the algorithm that you talked about, is incredibly sophisticated. What it does, just to kind of geek out for a second, it is emulating what a stylist would be looking for if they were thinking about what is your natural hair color when I'm looking at you and then what do you want as your desired result, and then the questions that they would be asking themselves to get you to that desired result, if that makes sense.
That algorithm has about seventeen-million hair profiles in it now. It's gotten pretty damn smart. It's got a continuous feedback loop. So we are pretty clear that, when we're saying, "Use one of these three shades," that we're going to be within shooting distance of something that's going to work for you.
Now, it's been very good. We are constantly working on the logic. It's not like build it and then, as you know, technology does not get built and then it's just evergreen. You are constantly updating it, looking at it. So let me give you a real-life example.
When we started, there were nine questions, then there were twelve questions, then there were fourteen questions, and now there's eighteen questions. There's probably two more that are going to get added, right? Because the calculus in our business is your starting color, which, by the way, is the hardest thing for a woman to answer.
If she's been coloring her hair for thirty years, she actually doesn't really know what her natural color is, right? This is where the photo recognition gets to be important, because the photo recognition is looking at her roots rather than her self-diagnosing her roots, if that makes any sense, right? There is this one factor, which is how gray you are actually matters in your desired result, because gray hair is the hardest to cover. We actually need to know how gray you are so that we can give you a desired... We have a separate line of shades that are for anybody that's over fifty percent gray. Yes, you're raising your hand.
What I'm saying is this is not... People think hair color's art. It is science. It is science. You are opening the root follicle of someone's hair at the root, and you are depositing color, and then you are closing the root follicle without damaging a strand of hair.
Just think about this from science. If you have outgrowth, the only thing that changes in your hair when you have hair color is the new hair growing in from the scalp, right? Let's say there's two inches of outgrowth, right, but the rest of your hair's another color, because it's got color on it, what we have to do is get all of the color to look the same, and that seems, “Well, that's simple.” Not so much, because I have to color what's at the two inches, and I have to make it look like what's in the rest of your head.
So this algorithm is very sophisticated. It's very hard. There is personalization that goes with it.
It gives us all this information about a client, which then frankly helps us create a system for them, which is like, you should use this hair color, this gloss, this shampoo and conditioner, this styling product, because color-treated hair can't just use regular products off the shelf. So, having said all of that, that's the algorithm of the color advisor, the color quiz.
We added this AR tool about a year ago. It's been a game-changer, which is the tool that's allowing somebody to take a selfie and then see their natural color on one side of the photo and then all of our shades as they swipe, right? Now, why is that important? That is less important for our diagnosis but more important for the client to see what they would look like in that color, and that is critical to build the efficacy that allows someone to believe, “Okay, that's going to be all right with me. That looks good against my skin tone, or it looks good against my eyes,” or “That's the color that I used to have that I want to emulate again,” or better yet, “That's the color that matches the other side of my head.”
Having said that, we've needed to do that. We've done it well. I will tell you that people that use that virtual try-on tool have a thirty percent increase in conversion.
Guy Kawasaki:
Wow.
Amy Errett:
An astounding number, right? So that's kind of an important factor. Then the last piece of technology that we've used is we have a chat bot that basically does selfie photo recognition. If you took a picture of the top of your hair, actually the photo would analyze all the questions that are emulating the eighteen questions in the color quiz. It's the same algorithm, but the photo is doing all the answers to the questions.
If that color recognition is off, the chat bot then asks you a series of questions that prompt you to answer some things that maybe the photo didn't pick up. Now, it took us seventeen months to train the color recognition. You just need tons of photos to be able to train it.
The long and short of it is, on the surface, we seem like a nice company that is an ecommerce thing, and underneath it we're doing... Remember, Guy, if you go buy Clairol, there are eight shades on a shelf, right? That's it. There's no technology, no advice, nothing.
You come to us, and we're asking you these eighteen questions. We have an algorithm that's giving you a match. You have customer service, a certified, licensed colorist if you want to talk to them. You can FaceTime them. You can actually text them a photo and they'll analyze it for you. We've rolled all this technology for the sheer fact that the quality matters, the convenience matters, and then, on top of all of that, you can hit the text button and get your new box delivered on any date you want and all that other junk.
Guy Kawasaki:
Amy, until ten minutes ago, I was so impressed with Warby Parker where you could see what you look like with different glasses, but now I realize what truly, truly can be done. Oh my god. Now, walk me through the Zoom house party, because-
Amy Errett:
Yeah, it's been-
Guy Kawasaki:
... I love that idea.
Amy Errett:
Look, I suspect most founders will tell you that, out of nowhere, there's a gift, like a eureka moment, and it's usually when somebody else says something, so I have a friend during the pandemic who used to go to a salon who's texting me like, "You're kidding. Okay, I'm going to take the dive. I need to buy something. I look terrible on Zoom,” and she says, "But I don't know between these three shades. Can you get me to FaceTime with one of your colorists?" And the lights went on for me, and I'm like, "Oh my god! How about if we ran education sessions that helped women actually learn how to color their hair?" Because it's not just the color that I choose, but the application process is scary for many people.
What would happen if we had a live model who colored their hair in front of you? Zoom would allow us to have hundreds of people, and then we could have a live chat going on that was a combination of questions and then people asking verbal questions and then two other people - experts.
Within two weeks we ran the first one. I cannot make it up. We have 700 people, and we were like, "Holy moly,” and now we're running them weekly. They have hundreds of people in each one.
Guy, it starts on the hour, and you watch it, and fifty-nine and a half minutes later, they are still on. Women are writing notes. Some women color their hair with us. The issue is what it showed us was the deep, emotional connection to getting this right and learning how to do it.
We also are starting a YouTube channel where all of this content is on there. You'll see in December for the first time you will be able to literally click and be able to get a live consultation face-to-face with one of our colorists, and you will, by the beginning of next year, be able to get an education session one-on-one, and the best way I describe it, and it's not because everybody... Everyone's the Peloton of something, right? That's the new wave, but in some ways, you have to understand that most women's relationship is with their colorist and the trust, and if we can emulate that from a virtual environment, wow, that's a big idea.
Guy Kawasaki:
Is all of this free?
Amy Errett:
That's all free.
Guy Kawasaki:
Wouldn't people pay for that?
Amy Errett:
Yes, but we have to get it right and make it be extraordinary before we do that. We've had tons of salon-goers be like, "Amy, I'll pay you $100. Just get this right. Get the boxes coming to me on time, and I'm good to go,” and my response to that is, "Sure, that sounds great, but I am a quality stickler, and what I won't do is throw something together that isn't world-class to give people the right consultation with the right people."
I have a Peloton Tread and a Peloton bike. If I got on the Peloton today and the person that was teaching me didn't look like they know what they were doing or they weren't fit, I'd be like, "Whoa, this is weird." My colorists that I have in the call center are awesome. They're great, but we now need to rise up and have a concierge level, which is very different. We're going through hiring and training and a new platform, so lots of fun things to come, but we're not a company in this category that's just going to throw things out before we get them right for people.
Guy Kawasaki:
That brings me to the next question, which is, as impressive as your tech is to me, I am equally impressed with the diversity of your business models. Can you tell me all the ways you make money?
Amy Errett:
Yes. Our direct-to-consumer business is a subscription-based business. That's clear. The average customer is ordering every six weeks. They have long-term, high LTV to CAC ratio. The gross margins in the product part of the business are greater than eighty percent. So the product margins-
Guy Kawasaki:
Eight-Zero?!
Amy Errett:
Eight-Zero for the product side.
Guy Kawasaki:
Eight-Zero percent?!
Amy Errett:
Yeah, and on a gross margin basis, sixty percent. We have high margins in the business.
Guy Kawasaki:
You have better margin than Apple!
Amy Errett:
We're not in hardware… So that part's really good. That's the d-to-c stuff, and you know that. That's based on retention, continuity, increasing lifetime value, higher order average value, increasing gross margins. That's the name of that game.
Then we have only one wholesale relationship, which is with Ulta, U-L-T-A, a publicly traded company. We are in all Ulta stores. So we're in 1,218 stores. We're the only permanent hair color in Ulta and in Ulta.com. That is a very good business for us.
We have less shades in there, just based on fourteen linear feet, and we have fifty-eight or fifty-nine shades online, and I think at Ulta we have thirty, but it is a profitable, high-margin business, believe it or not, not as high as the rest of our business, but because our product margins are so high, we can be in a wholesale business. It's great marketing. It's actually accretive. We make money on it.
For efficacy, when you're in 1,200 stores of a big retailer and people walk in and you have a beautiful fourteen-linear-foot kiosk, everyone's like, "Wow, they're for real,” right? So that's great.
Our hair color bars, as I said, we have twenty-five of them now open, twenty-eight by the end of the year. They are four walls. They are not particularly expensive to build out. The highest part of the cost is the plumbing, right, because you need sinks and water and electricity. They look beautiful, but they're not overly expensive to build out.
The average order value there is three times what people will pay more than they will for the actual box. That is a four-wall model that's predicated on good real estate deals. We're getting real estate thirty percent less than we ever got it in this market. We are gobbling up great real estate deals. An efficient labor model. Four walls are all about labor efficiency, real estate efficiency.
We have built all of that technology as well. I didn't get into that, but we have built our own algorithm for appointment stacking and our own algorithm for inventory management for the colorists to have a SLA to get somebody in and out of there in seventy-five minutes. We have built our own system that effectively doesn't segregate retail that happens in the store, information from ecommerce.
For instance, if your wife went into a color bar, we know what we put on her hair, and when she comes back to MadisonReed.com, she's met with, "Hello, what-your-wife's-name-is. Thank you for visiting the Corte Madera color bar. We put Bolzano Brown on your hair. Would you like to purchase it?" Click.
Guy Kawasaki:
Wow.
Amy Errett:
Right?
Guy Kawasaki:
Wow.
Amy Errett:
Then, in SMS, she told us she'd color every six weeks. We have these three appointments open six weeks from now. We've built a technology stack ourselves around that. Those are the three parts of the business. It is really an omni-channel business.
You had mentioned Warby Parker. That's probably the closest analog that we have. Look, we're excited about where we're going. I will tell you that I think this is going to surprise a lot of people how big this is, how much value we're creating, and it's a sleepy category that nobody cared about but us.
Guy Kawasaki:
Do you need a chief evangelist?
Amy Errett:
Absolutely. We need a spokesperson for our men's product, Guy.
Guy Kawasaki:
Here I am.
Amy Errett:
There you go.
Guy Kawasaki:
I've got gray hair.
Amy Errett:
I know. We sent it to you. I'm betting on next time I see you you're a little less gray.
Guy Kawasaki:
I was going to ask you about that. Well, okay. Two more questions, and then...
Amy Errett:
Yeah. Yeah, no problem.
Guy Kawasaki:
Okay? So I bet a lot of people would like to know your advice on raising a daughter.
Amy Errett:
It's a great question. My advice is to reinforce to her that she can be anything she wants to be and to create the possibilities, that she has all of the same opportunities and the same struggles that exist in life as anybody else. I would say that some of what I'm going to say is gender and some of what I'm going to say is just we have a kid that's been raised to realize she has privilege, that she has to give back, and that our job is to make her a happy, productive part of society and that she needs to find her calling. She needs to earn her own way in life. That we as parents are going to give her all of that structure, but at some point, not everything's going to get handed to you.
She worked at Madison Reed a couple of different times, and we appropriately started her in stacking boxes and packing boxes and packing more boxes and counting more inventory, because I grew up in a working-class family. I believe deeply in you earn things in life. That's how you get better. Then the last thing I'll say is, failure is your best friend, and we've tried to teach her that.
Guy Kawasaki:
I bet people would also be interested to know your advice for raising a son-
Amy Errett:
Same.
Guy Kawasaki:
... although you have done it, but how would you like a son raised?
Amy Errett:
Same.
Guy Kawasaki:
Yeah?
Amy Errett:
I think it's the same in terms of the value structure. I think it's one little change, and I have lots of friends that have sons, and they are raising good men, and good men are important in the world. I think there's a lot of them. We need a lot more of them. I think that appreciating their role and the power structure in the world and doing their part to change some of that is an important factor.
Guy Kawasaki:
Now, advice for women entrepreneurs listening to you.
Amy Errett:
Yes. Don't let what everybody tells you about how hard it is be your story. I have a deep and enduring belief that, if you believe in what you're doing and if you find your genius in life, there's lots of capital in different places.
I don't subscribe that every single company should raise venture money. I think there's lots of companies in the world that won't give venture returns. That does not mean that they're not great businesses. I think that, if you walk into situations doubting yourself, then the outcome will not always go in your direction.
If you walk into situations having a sense of who you are and your competency and standing in that space, if you have a great business idea, people will fund it, and they'll get behind you, and then get good mentors around you. I've had the good fortune of great people in my life who paid it forward with me, and I do the same, because I believe that's how the world gets better.
Guy Kawasaki:
Now, getting very personal, you can obviously see what my hair looks like, and I-
Amy Errett:
I do. It's very handsome, by the way.
Guy Kawasaki:
Thank you.
Amy Errett:
I'm being serious. It's very striking.
Guy Kawasaki:
Thank you. I was all set to do this, and I said to my wife, "I got this. Let's do this. This will be a great angle for the podcast," and she said, "But I like your hair the way it is." What would happen if I did it? How would this change?
Amy Errett:
Okay. Okay. So here's the deal. The men's product is a ten-minute process shampoo, okay? It comes out of your hair after you shampoo it. So it is not a permanent hair color. It's what's called a demi-permanent hair color. That means that, when you wash it after you do it, it will come out, and eventually, if you never did it again, your hair would look just like it looks now. If you did it more frequently... what it is is a gray blending product. It is not going to take all of your gray out.
What it's going to do, in your case, is it's going to actually blend the darker part of your hair with the whiter part of your hair so that it looks like you have an equal amount of gray and white, but you're not going to have black hair. You're going to have a blended process. The more you use it, meaning if you said to me, "Well, I want it to be darker," then I would say, "Okay. Every week you should do it,” but if you said, "I like it, just a little bit less white," then you would do it once, and most guys that buy the product do it about every three weeks.
Guy Kawasaki:
Yeah, because I was afraid I'd come out looking like Wayne Newton or something.
Amy Errett:
No, you wouldn't be like Wayne Newton, I promise you. I'd have to get you an aloha shirt. Tiny Bubbles or something like that was that guy? I can't remember. No.
Guy Kawasaki:
Wayne Newton is Danke Schoen.
Amy Errett:
Oh, Danke Schoen. Yeah. Somehow that just wasn't emblazoned in my musical memory.
Guy Kawasaki:
I don't blame you.
Amy Errett:
What I can tell you is it won't be radical. The whole point of this gray blending is that it's not going to be like ... You remember that commercial years ago? "Hey, Guy, lost a little weight? Been on vacation?" You know that, after he washed his hair with some crap Just for Men or something like that? That's not this.
Guy Kawasaki:
Okay. I will have one more ... I'm going to put my hair down here.
Amy Errett:
It looks good.
Guy Kawasaki:
I took a picture like that. I am going to have one more reassuring discussion with my wife, and I say go for it. You never know.
Amy Errett:
Absolutely, and if you don't like it, then you'll wash your hair three or four times and it will be out, right?
Guy Kawasaki:
Okay. Life is good. Life is good.
Amy Errett:
Life is pretty good.
Guy Kawasaki:
All right. Thank you so much. This was just remarkable. It was delightful.
Amy Errett:
I agree. Yeah.
Guy Kawasaki:
One more thing. Obviously my podcast is called Remarkable People. So I am sponsored by the reMarkable tablet company. So if you've ever had a fantasy of replacing all your paper tablets with something that's digital and feels like a pencil, I'm about to fulfill your fantasy. You're going to get one of-
Amy Errett:
I would love that, because I have so much goddamn paper hanging around. You can't believe it, and I'm tired of it. I would love it. Thank you very much.
Hey, Guy, I just want to say I really appreciate you taking an interest in our story, and you are iconic and somebody that I respect very, very much-
Guy Kawasaki:
Thank you.
Amy Errett:
... for your contributions in creating an industry. I really mean that. I think it's been an honor to spend this time with you. It's been super fun.
Guy Kawasaki:
I'm Guy Kawasaki, and this is Remarkable People. Amy Errett is truly a remarkable CEO, and now you know how sophisticated the hair dye business is.
Thank you to Peg Fitzpatrick who has great hair and Jeff Seih, who has a great beard. They make this podcast remarkable.
Until next time, wash your hands, wear a mask, maintain a good social distance, and get vaccinated if you can. Mahalo and aloha.
This episode of Remarkable People is brought to you by reMarkable - the paper tablet company.

This is Remarkable People.