How this first-time founder landed a $630 million exit

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JU RHYU: I tried to launch it. I had a name, I had sourced the manufacturer, I had the packaging, and then I just chickened out.

JEFF BERMAN: You got scared.

RHYU: Yeah. It’s a lot of commitment. I shelved the idea.

BERMAN: It took years for Ju Rhyu to work up the courage to launch Hero Cosmetics, and its signature acne-fighting product, the Mighty Patch. Soon after, she faced another big decision: Should the company take on outside investors? They were already profitable, but, what could they unlock with even more resources? The answer: a whole new level of scale.

RHYU: We went from, just like nickeling and diming everything. We had to do it on the cheap, but once we put a little money into the company, we were like, “This is now an investment.”

BERMAN: This week on the show, Hero Cosmetics co-founder, Ju Rhyu, takes us inside each critical inflection point along her extraordinary scale journey. From the first product sold on Amazon, to getting on Target shelves, to exiting the company after it hit $100 million in sales.

[THEME MUSIC]

I’m Jeff Berman, your host. After a rapid rise in the skincare space, Ju Rhyu sold Hero Cosmetics in 2022 for $630 million. Before we get her insights about scaling and selling a business, let’s hear how she finally found the courage to leave her steady corporate job and become an entrepreneur. Ju, welcome to Masters of Scale.

RHYU: Thanks for having me.

Copy LinkJu’s journey to becoming an entrepreneur

BERMAN: I’ve been really excited to have this conversation because I have three teenagers, so I’m deeply familiar with your products. But before we get to Hero Cosmetics and pimple patches and all sorts of other interesting things, I’m curious about your entrepreneurial roots. You come from an immigrant family. Talk about what it was like growing up and where your entrepreneurial spirit came from.

RHYU: I think it comes from my dad. My dad is an entrepreneur. We moved from Korea when I was three. This was in the ’80s, and he actually moved to Seattle as an expat. He was working for a big Korean company, and then he moved the family to Seattle as an expat, and then, just saw the writing on the wall for himself as a salary man at this big Korean company, and then he decided to leave and start his own business. He’s in the logging industry, he’s a log broker. And just growing up with that influence in my life and seeing how he worked from home and he was able to control his schedule and he was able to fit work into his life, I think those were all things that I grew up with.

BERMAN: A lot of kids who grew up in families like that will go in another direction because there’s a lot of uncertainty with an entrepreneur parent, and some lean really into it. It almost feels like you went in both directions. You didn’t become an entrepreneur right away.

RHYU: Right.

BERMAN: It’s not like you dropped out of college to start a company. Will you take us through a bit of your journey leading up to becoming an entrepreneur?

RHYU: I had an internship at Kraft Foods Mondelez, worked on the Planters brand and Back to Nature, and then, went to American Express. I worked for these big companies, getting the experience, getting established, but inside, I always had the entrepreneurial drive. A lot of times these big companies, I would just get frustrated because they would move slow, where I had all these ideas that just I couldn’t get anywhere. And so, the drive was always there, even though I had more of a classic corporate career.

BERMAN: Did you think about: Could I become an intrepreneur? Could I work at one of these big companies and—

RHYU: Yeah, that’s what I called myself. I called myself an intrepreneur because, Kraft Foods, for example, I loved working on the Back to Nature brand. It was smaller, a lot more entrepreneurial. I loved new product innovation. I loved ideating and finding the white space and really learning about consumer needs so that we can meet them with new products. I always gravitated towards new businesses, new products, the new thing, sort of.

BERMAN: Many big companies struggle with innovation, whether it’s because they’re disrupting their own business or you have to do 47 turns of a budget deck before anyone will be willing to approve your budget. What did you learn about what works in moving innovation forward in big companies while you were working at places like Kraft and Amex?

RHYU: You know what? It takes a lot of support from the top, actually. And I’m sure we’ll get to this, but my company Hero Cosmetics, we got acquired by a company called Church & Dwight. And they are a big company, not unlike the Procter & Gamble or the Unilever’s of the world, but I’ve seen them move really fast. I’ve seen them move really fast, especially with our international expansion. But I think the reason why they were able to move so fast is, it was a priority at the top. This is the number one priority. We have to get this into 50 countries in two years or whatever. It really does have to be embraced, I think, at high levels.

Copy LinkLessons from Korea

BERMAN: It’s sort of a trope, but for a reason that you get what you measure and you get what you incentivize. Let’s go back. You go from Kraft, you’re at Amex, I think you then went back to Korea?

RHYU: I went to Korea for two years.

BERMAN: What led you back to Korea?

RHYU: I worked as an expat at Samsung. Samsung in Korea, I think we all know it as an electronics company, but in Korea they have many, many different branches of this ginormous conglomerate. I worked for the financial services arm. It was a big move. The most amount of time I spent in Korea was probably a month, every summer. It was not without risk. The big question actually was, if I go, how do I come back? Would I be stuck there forever? I don’t really know.

BERMAN: Just because your relationships and your—

RHYU: Yeah. And is that experience going to be desirable for American companies? And at the end of the day, it was like, why not? I was pretty confident that it would give me good experience, and I could somehow figure out if I wanted to come back, a way to come back.

BERMAN: What did you learn in Korea?

RHYU: Oh, gosh. I learned a lot about corporate culture there. Just, societal culture. I learned a lot about myself too. I am Korean-American. I moved to the U.S. when I was three, but when I’m in Korea, I feel so American. The cultural gap is really big.

BERMAN: How does that show up?

RHYU: Even in communication, I have an accent. I have an American accent when I speak Korean. I think, the American society and American culture is a lot more about the individual, and in Korea it’s more about the family unit or the community. You’re part of a bigger community that you need to worry about. The role of women is different too. It’s changing in Korea, but I think traditional roles for women in Korea tend to be a lot more common still. A lot of big differences.

Copy LinkLearning about the acne patch

BERMAN: Gotcha. And so you’re at Samsung, again, you’re on this trajectory with these bigger companies. Is there an a-ha moment? Is there an epiphany where you say, “I’m now at a place where I really want to go do my own thing?” What happens that leads you to launch Hero?

RHYU: I actually tried to launch it before. I lived in Korea from 2012 to 2014, and, after six to eight months of living there, I did notice the acne patches back then. People were wearing them in public to the office, and you go out to a cafe and you just see them on people.

BERMAN: And this is a good moment just to explain what the acne patches are for our audience who don’t know.

RHYU: The acne patch, it’s a patch made out of something called Hydrocolloid. Hydrocolloid is technically a wound dressing. And so the way that it works is, it creates more of a moist environment, because when the skin is dry, it doesn’t heal as well. The Hydrocolloid, it pulls moisture out. Someone along in this journey realized that, oh, the Hydrocolloid, this wound dressing, you could actually apply it to a pimple. And when you do, it absorbs out the inflammatory pus, and it creates that seal over so you’re not touching and picking. And it just really became popularized in Korea.

BERMAN: And so what you were seeing in Korea back in 2012-2014 range, was, oh, here’s an acne solution, but people are not embarrassed to have something on their face covering up acne and curing it.

RHYU: Yes.

BERMAN: And that was where the coin dropped for you, that there’s an opportunity here?

RHYU: Well, I used it myself, and that was my transformative moment where, when I peeled the patch off and it just got all that gunk from my pimple, and my pimple literally was flattened overnight, and it just worked better than anything I had used before. I kept asking myself, “Why is this not available in the U.S.? It should be available in the U.S.”

BERMAN: Why wasn’t available in the U.S.?

RHYU: Sometimes ideas take an entrepreneur to see the opportunity and bring it over. On Reddit, I saw a lot of people saying, “My sister is going to Korea, so I’m asking her to buy me all these boxes of these acne patches.” And so, I saw the demand, but there was no one that really owned the category.

Copy LinkShelving and returning to the idea

BERMAN: Right. And so, what happens? Because you don’t launch the company until 2017.

RHYU: ’17, yes.

BERMAN: What happens between 2015 and 2017? What took that time?

RHYU: I tried to launch it. I had a name, I had sourced the manufacturer, I had the packaging. And so this was probably 2014-2015. And then, it came time to place that first P.O., which was like 10,000 units, and however many tens of thousands of dollars. And then I chickened out.

BERMAN: You got scared.

RHYU: Yeah. It’s a lot. It’s a of commitment, I was by myself, and I remember I had some co-workers and friends in Korea at the time, and I kept talking it up to them like, “Oh, we could do this. And I really think this is a big opportunity.” And, I don’t know, I just couldn’t really get anyone else on board. And then I moved back to the U.S., and I shelved the idea

BERMAN: More with Ju Rhyu about how she got her idea off the shelf and onto the faces of millions of customers, in just a minute.

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Welcome back to Masters of Scale. You can find this conversation and more, on our YouTube channel.

What happens where you’re able to restart the entrepreneurial process?

RHYU: For me, it was finding co-founders. And there are a lot of solo founders out there, and I respect them a lot. Because, having been through the whole process, it can be a very lonely, difficult journey. And I realize, I think, for me, I’d rather have co-founders because it’s actually more fun. Especially the first time you don’t know what you’re doing, and it’s nice to have other people to talk to and bounce ideas off of. Really, I mean, the idea was still there. I had shelved it, let’s say 2015, two years passed, 2017, and one of my co-founders, we have dinner, and I tell him like, “Oh my gosh, someone needs to do this. I think it’s such a great idea.” He was like, “I’ll do it with you.”

BERMAN: How did you know him?

RHYU: He was a colleague, turned into a friend. Him and his brother, who is also a co-founder, it was the three of us. They had a digital agency, and, that digital agency, I had hired. They were a digital agency where they did ads, they built Shopify websites, they built apps, anything digital, they really did. I was a client, and in that capacity, we had experience working together. And then we became friends. And they had been running this agency for seven years, and I think they were also ready for a new challenge.

And then, so Dwight, who I had dinner with, he was really interested in the Amazon Marketplace and being an Amazon seller, and I had this idea, and I thought it would be really great on Amazon. And so that’s what kicked it off.

BERMAN: It’s a big decision to start a company with one person, much less, two people who happen to be related to each other. Was it just instinct? How did you get to a point of saying, “Great, this is the right partnership, this is what I want to do, these are the people with whom I want to do it?”

RHYU: This is where I feel very lucky because I did not consider any of that, but it ended up working out. I know there are a lot of founder divorces, I’ve seen them, and they’re very difficult.

BERMAN: They can be super messy.

RHYU: And thank God we never went through that. But in hindsight, actually, the reasons why it worked out, I actually think a co-founding team of three, it’s actually great. I remember someone told me, “Oh, three is one too many.” But I think it’s great because, there’s always a tiebreaker. If two people don’t agree on something, I think there’s always a third person who can tip it over to one side. And in retrospect, I think we had really complimentary skill sets. I knew this category, I had more of a marketing background, I had that corporate experience, I had some finance experience. And then, one co-founder, he’s a technical engineer, so anything related to DTC, Amazon, operations, it was great for him. And then the third, Andy, he’s a creative guy. Anything design, packaging, all that was his responsibility. And so, we didn’t always agree, but I think we always had a willingness to talk things out. And then there was always a tiebreaker to help make the decision.

Copy LinkLaunching the Mighty Patch on Amazon

BERMAN: And so, the three of you decide you’re going to do this together. What’s the vision for the company?

RHYU: In the beginning, we did not have grand visions of like, “Oh my gosh, we’re going to build this huge company, and it’s going to be this big, and we’re going to conquer the world.” We’re very practical. There’s this product out there. It does really well in Korea. There’s early demand in the U.S. We think it’s going to do well in the U.S., so let’s just start with one product, and let’s test it out. We tested it out on Amazon.

BERMAN: What was the first product?

RHYU: It was the Mighty Patch. 36 count. We priced it at 12.99. It’s still the OG, the classic, the original. And put it on Amazon. We were like, “Let’s see what happens.” And really, it took off.

BERMAN: What does taking off look like at that time?

RHYU: One of the things that we did that I tell people to do, and I would do again, is, you have to define what is success. We came out with different scenarios. We said, “What is ‘You hit it out of the ballpark, and it’s a home run?’ What is that? Is it $1 million in a year? Is it more? Do you have to be profitable? And what is failing? When do you say, ‘Okay. This is not working out. We had a theory, a thesis, but it’s not turning out as we thought.'” And then what’s the middle ground and when you’re in that middle ground, then what do you do? Because it’s not a home run, but you’re not really failing.

And I can’t remember the exact metrics, but, I think success for us was something, like, $500,000 in the first year, and we’re making money, that would be success. And then failing was, this is just going to take way too much more money. We’re doing maybe $100,000 and unprofitable, and it’s just going to be a slog. That idea was: test, put it out there, and fail fast.

BERMAN: Yep. Did you quit your job to go do this full-time or was this a side hustle first?

RHYU: It was a side hustle first.

BERMAN: And so to get that first order, how much did you put into the business among the three of you at that point?

RHYU: I think it was $50,000 initially. That’s what got us up and running. And then we were growing really fast, so we had to make loans to the company just for cashflow. But we bootstrapped for the first three years.

BERMAN: As you’re watching the sales climb there, what’s working for you? How are people finding the product? You don’t have a big marketing budget.

RHYU: No.

BERMAN: How were people discovering the product? What were you doing to get it out there?

RHYU: We did earned media. We seeded a lot of micro-influencers, asked them to post, asked them to talk about it.

BERMAN: Just send them free product and say—

RHYU: Gifting, gifting, gifting, as much as possible. And then, where we saw a lot of success also was with press. Buzzfeed had a lot of, like, the 50 top products you need to buy today, or I think the New York Times Wirecutter is also a good example.

Copy LinkInside the decision to raise capital

BERMAN: Sure. Ju, you’re on this three-year initial part of the journey where the business is growing. You and your co-founders are making loans to the business, to be able to stay ahead with your purchase orders and what have you. At what point did you say, “Gosh, we really need more capital, and we should take on an outside investor?”

RHYU: It was always a question like, “Do we raise money? Should we raise money? Do we do it now?” We seriously started to think about it, that was in year three. So that was in 2020.

BERMAN: Great year to be.

RHYU: Oh, yeah. Well, our term sheets were due the week in March, when the lockdown started.

BERMAN: Wow.

RHYU: That was a disaster. The raise didn’t happen. But fortunately we didn’t need the money, so we were okay.

BERMAN: Why had you decided that was the time? Setting COVID aside and what the craziness that happened that year, as a profitable company that’s growing, why did you say now’s the time to raise capital?

RHYU: It was more about needing the strategic guidance. We were on this rocketship trajectory, and we were first time entrepreneurs in this category, and so we’re like, “We don’t know what we’re doing. We should get some smart money around us so they can help guide us and make sure that we have a successful outcome.” It was really about the partner, and less about the money. It really transformed our business.

Because when you’re growing really fast, that cash flow chase is always tricky. You get paid, but then you need to buy more inventory. And just the timing of it all can be really tricky. And then it can impede you from making investments like hiring investments, because good people, they’re expensive. And so, when we put the money into the company, I remember our mind shift changed because we went from just nickeling and diming everything. So, photo shoot, everything, we had to do it on the cheap. But once we put a little money into the company, we were like, “You know what? This is now an investment.” And so, instead of nickeling and diming and try to find affordable talent, I was like, “I want the best VP of marketing. I want the best VP of sales.” And so we were able to invest in areas like people. So that was really nice.

Copy LinkHow Hero Cosmetics diversified their channels

BERMAN: Gotcha. What was the inflection point where you went beyond Amazon?

RHYU: Yeah. We’re weird because we launched on Amazon. At one point, it was like 100% of our revenue, then it became like 90, and then maybe became 80. But I remember I went to a conference and these bankers were talking about channel diversification, and they were saying, “The ideal channel diversification is a third retail, a third Amazon, a third DTC.” I was like, “Oh, they’re probably right.” Because, of course, relying on one channel for most of your business is always risky.

BERMAN: Right. This is the PayPal problem back in the eBay days.

RHYU: I remember we tried really hard to make DTC work. We’re like, “We have to grow DTC to be more than whatever percent of the business.” It was a small percentage of the business. And then, we have to get into retail. Those are going to be the three pillars of this business. Early on, we tried to diversify and got into Target. We were exclusive at Target, grew very deeply with them.

BERMAN: With the exception of Amazon, because you’re already selling there.

RHYU: Yes.

BERMAN: For retail, you are exclusive to Target?

RHYU: Correct.

BERMAN: There are other retailers who matter. There’s one really big one that matters.

RHYU: Of course.

BERMAN: How do you make the decision that, we’re willing to go exclusive with you in the retail category?

RHYU: I always thought Target had a really great brand image. I thought they had really smart merchandisers who were merchandising cool, new, hip indie brands, these challenger brands. I knew this was going to be a mass market brand and what better elevated mass market retail partner than Target?

Copy LinkThe journey to surpassing $100 million in sales

BERMAN: What does the scale journey then look like? You got to north of 100 million in sales, before you exited the company. What were the next set of inflection points where that up to the right hockey stick curve is happening for you?

RHYU: Building out the team was a big one. I had touched upon it before, but, because when you’re a small company and you’re bootstrapping, you can’t afford expensive talent. And so, what you tend to do is you hire the interns, you hire the 22 or 23-year-old who just graduated. And they’re great, because they’re hungry, but they don’t have a lot of experience so you tend to have to coach them and train them and work really closely with them to help develop them. But when we took on the growth round, we knew we needed to level up talent. And so, some of the first hires were these VP level-experienced people, and it changed my life.

It changed my life as a founder because, I didn’t have to have 10 one-on-ones with people anymore. It was now, the VP of sales or the VP of marketing. It was their responsibility and their team. And I always say, “I hired people who would tell me what to do. I didn’t want to tell them what to do.” I wanted people who had the experience, who were experts in their fields, and I just let them go.

Copy LinkDeciding to sell the company

BERMAN: We’re now into 2022. The company’s continuing to grow. You’re still profitable, you’re growing north of $100 million in revenue. The future is bright. There is all sorts of opportunity ahead. You all decide to sell the company. Why?

RHYU: Part of it was we took on growth money. We had outside investors who want their money back with return. And actually, even before that, earlier on, again, I have two co-founders, just thinking long-term. A lot of times, unless it’s a family business, it’s hard to have that continued legacy because, like, who do you pass it down to and things like that? Early on with the three of us, we knew ultimately we did want to go for an exit. We always had that $100 million revenue mark as the threshold. The idea was, once we get here, we’re going to start a process and see where that takes us.

Now I know why that’s a threshold is because, there is something called, too big to buy. We were growing really fast and so the worry is, once you get to 200, 250, in terms of revenue, then people might want $1 billion for evaluation, and there just aren’t that many people who can write that kind of check. It’s better to have a larger pool, I think, of potential buyers.

BERMAN: This is a really important point that I’m not sure a lot of founders think about. Two companies ago for me, we were on the verge of taking a pretty sizable private equity investment. And we mapped the last decade of exits in category and saw a concentration in a certain range. And above that range, boy, they were really outliers. And if we were going to take that size of investment, we knew we were going to have to return in that upper range. And that’s a pretty scary place to be, right? Because to your point, if there are only four prospective buyers and three are not for us, tough. In a single party negotiation, you don’t have a lot of leverage there.

RHYU: For any entrepreneurs out there, it’s something to consider. And sometimes bigger isn’t always better, is what I’ve learned. And I feel like the press, it can be misleading because they always lead with, “The valuation, oh, it was great.”

BERMAN: You ended up selling to Church & Dwight for a reported $630 million. Why did you sell to Church & Dwight?

RHYU: You’re talking to all sorts of people, trying to find the best fit. All the puzzle pieces have to come together. And so Church & Dwight was the buyer where everything came together. We were happy with the valuation, we’re really happy with their culture and their team. This is a company where people stay decades. Their capabilities also were important to us because we knew this brand had the potential to be a global brand, but we didn’t have the capability to take it to different markets. But they did. And they do. In two years, they’ve taken us to 50 countries.

BERMAN: How did your work life change? Going from being an entrepreneur, scrapping every day, doing all the hard things, even the company that’s doing great, it’s now being back inside a big company, but leading a brand that you founded.

RHYU: You have to emotionally detach. Because I’ve heard there’s founder depression.

BERMAN: Sure.

RHYU: You work so hard at building this business, it takes up your whole life, it is your life, and then, boom, you sell and you’re not the boss anymore. And I’ve heard people can really struggle with it, actually. It’s like a loss of identity, because your identity was your business. And so I tell people like, a breakup, you just have to emotionally detach early on. And I recognize I’m not the owner anymore, they are. And we don’t always agree with everything they do, but I have to tell myself, they’re the owner, they’re the steward. I’m here just to help in any way that I can. And so, it’s a process.

Copy LinkFinding her next big idea

BERMAN: We’re sitting here in the second quarter of 2025. It’s a few years post acquisition. Not many founders stick around long-term at the company that acquired them. Are you thinking about what’s next? Is there another entrepreneurial act for you?

RHYU: Yes, definitely. You know what? You can’t turn it off. Sometimes people always talk about like, “Oh, what’s your superpower?” And for me I think it is innovation. I love looking at white space and just thinking of ideas that can fill these opportunities. And so, sometimes I just go to Target, and I’ll walk the shelves, walk the aisles, and see what I think they need. And so, yeah, I would like to do it again, and I would also like to do it again because I’m interested to see what it’s like to be a second-time founder. I think some things will be easier, and I think you can short circuit a lot of things.

BERMAN: What do you imagine will be easier?

RHYU: Hiring. Because now I know people. I could even hire some of the Hero people who left. Potentially, we could work together again. Funding, I think won’t be as much of an issue. Now, I have relationships with these retailers where before I was just going cold.

BERMAN: I had a meeting with Jeff Kearl from Stance Socks years ago where he talked about, part of what he does is he walks up and down the aisles at Target, much like you just described, looking for, what categories all the products basically look the same. And he sees that as an option for white space. When you’re walking through a retail location, what are you looking for to identify white space for you?

RHYU: Obviously, I walk mostly the beauty section. I look at a lot at packaging, because your packaging is your billboard in retail. And so, I’ll look at the dermatological section and I look at, what are the colors that they’re using? What’s going to stand out? What are the claims that they’re making on pack? I study the pricing and all that. Every time they do a shelf reset, I always like to go to see what’s new.

BERMAN: If you’re looking at that dermatology section, you see, in my mind’s eye I see a lot of white and blue. Are you assuming those are all really well tested and there’s a reason for this? Or are you looking at, “Oh, the homogenous nature of this just stunning. There’s an opportunity to really break through and stand out with something that zigs when everyone else is zagging?”

RHYU: I’m a big proponent of zigging when everyone else is zagging. It’s all about differentiation. You want to be different from your competitive set. How will you stand out? How is your formula going to be different? How is your price going to be different? What is the value for the guest or the consumer? And so, if everyone looks the same, it’s your opportunity to be different.

BERMAN: Well, we hope you’ll come back and tell us about the new product when the time comes.

RHYU: Yes.

BERMAN: Thank you so much for being with us.

RHYU: Yes, thanks for having me.

BERMAN: There is so much to take away from Ju Rhyu’s story, but two lessons really stand out. First, the importance of thinking about the Goldilocks moment, that right moment, that just right moment to exit your startup. Try to exit too soon, and you might not have enough buyers interested, but wait until you’ve scaled too big, and you might’ve priced yourself out for most potential buyers and lose leverage as a result.

Second, it pays to be observant. Ju saw people wearing makeshift pimple patches, followed her curiosity, and found a lucrative gap in the market. I love that she’s back to scouring for opportunities and itching to get back into the founder seat again, and I can’t wait to see what she comes up with next.

We look forward to having her back when she’s ready to tell us all about it.

I’m Jeff Berman. Thank you for listening.