💄 “Makeup King” — Elf Beauty CEO Tarang Amin’s Interview with TBOY

Yeti's get ready to get gooey because today's interview is a glow-up masterclass for your life, your career, maybe even your lashes. Because we're hanging out with Terang Amin, the iconic 12-year CEO of Elf Beauty. Elf Beauty. Elf stands for Eyes, Lips, and Face and it's sold enough blush to make you blush. Elf, it's Gen Z's favorite beauty brand. It's Gen Alfa's top selling beauty brand. Gen made hasn't even born yet, but they're probably prepping their Elf mascara. Because Elf Beauty basically invented the Duke, 80% of the value for 20% of the price. Because as Terang will tell you, duping is actually the moral thing to do. Oh, by the way, Elf also bought Haley Bieber's road beauty for 1 billion bucks last year. Because Terang can spot what's hot faster than a Kardashian kid. No company has democratized an industry like Elf Has for your face. Terang here has figured out how to sell a $3 lipstick profitably, even during peak inflation. Jack would have sprinkled on some context for two and a half years, Elf grew at least 30% every quarter for 10 straight quarters. Even Costco got jealous through what according to Terang, Elf Beauty isn't in the beauty industry. No, no, no, no, no. Elf is actually in the entertainment industry. Besties, please welcome the maestro of makeup, the Baron of Bronzer, the lord of the lip liner. Terang, a mean, is the CEO of Elf Beauty. And today's interview with Terang is the best one yet. Hey, Sephora, you're going to want to put down the mirror for this one. Terang, welcome to the show, man. Thank you so much for coming on TV. Well, thank you for the most gracious introduction I think I've ever had. At least the most hyped up one, I'm digging it. You're glowing, Jack's glowing, we're feeling it. We are so excited to be here with you. So Terang, we did a bunch of research on you. And we saw that you have a career that really has expanded the consumer package goods world. At one point, you sold kitty litter, laundry detergent, panting pro V. I have a quick question about panting pro V. Oh, this has been pent up. Jack has been waiting to ask you as an executive this year. I'm going to say years after you're done cleansing your hair and rinsing it off. Do you really need to rinse and repeat with a shampoo? Or was that a brilliant scheme to double sales overnight? Well, you know, I work for someone at PNG, who claimed his claim to fame was he says, you know how the shampoo bottle says, lather and rinse. Right. I'm like, yeah, he says, I'm the one who came up with repeat and he says, it doubled the volume. I think it got him promoted. He had a very successful career. And if I only knew business was that simple, I just have to come up with repeat. McDonald should say, enjoy your big Mac. Repeat. Elf lip liner, apply three times for maximum doing this. Oh, that's perfect. Now a quick word from our sponsor. Well, it's herring as Jack and I are researching you. We know you were born in Kenya to Indian parents. You came to this child as an immigrant and you actually joined Elf Beauty at a really interesting point 12 years ago, shortly after it was founded. You had the role of taking over from the founders and yet you don't really wear makeup. I think you're a beautiful man, but you don't wear makeup as far as we're aware. Do you need to use the product? No, I do. I actually on this interview right now, I've got our, I've got our porolis putty primer, our matte. I do a little tea here. I've got our camo concealer for these black eyes and our well people press powder. That's why it looks so fabulous. Can you tell us how important is it to use the product if you're going to be a CEO of a company? Oh, I think it's essential and you know, particularly with our skincare range, absolute favorites for me, as I said, I just use our primers, our concealers, our powders for interviews like this when I want to look my best. But I think more important even than using the products yourself is having a team that reflects the community you serve. So I'm really proud that our workforce is 74% women, 66% Gen Z and Millennial, 44% diverse. They absolutely represent the community we serve. And frankly, one of the best sources of insights I have, I do a product review every couple of weeks. All I'm doing on that product review is looking the chat field. I'll throw out open-ended questions like, "Hey, tell me why is this thing so great?" And our team, they're so passionate, so into these categories and our consumers and making sure that we're delighting them and that really makes my job a lot easier. The Elfs have Riznik, I believe that's the business school term jack. Well, yeah, he's whether you wear makeup or don't wear makeup. This is why we were so excited to bring Terang and Elf on to the show. We've been studying this business for years. Just over one year ago, after President Trump got elected, we said Elf Beauty explained the economy. This was the days after the November 2024 election. In the election year of 2024, Elf Beauty sales rose by 46%. Because you offered what every voter apparently badly wanted affordability. Terang, Jack and I have been keeping track on a whiteboard over here. There's the $1.50 Costco Hot Dog Soda Combo, the 99-cent Arizona iced tea. And as we've always said, the $3 Elf Beauty lip liner. As prices has everything rose over the last few years, Elf Beauty has had a lipstick that remained three bucks. Inflation peaked from 2022 to 2024. And yet during that two-year period, everybody flocked to Elf and the stock price grew by 8x. Which leads to our question, how do you keep a top-selling product just three bucks in the face of inflation? How, frankly, is that physically possible? Well, you know, it goes all the way back to our roots. The founders of this company introduced the brand in 2004, selling cosmetics over the internet for $1. Everyone thought they were crazy. This is pre-iPhone. You couldn't sell cosmetics over the internet. And you certainly could make money at a dollar, but they figured it out. And we've kept that spirit of disruption ever since. We take nothing more than joy of making the best of beauty, accessible for every eye, lip and face. We have a unique supply chain innovation model that allows us to really look at inspiration from the best products in prestige, as well as our community, put our Elf twist on it, and introduce that incredible value. And that's what we're really all about and have been for 21 years. Tyrent, can we talk about that creative supply chain, though? Because that's what we're really curious about is, like, how do you physically do it? Like, when we're in a world where there are tariffs, where there is inflation, you know, are you switching what factories you're working with? Are you moving from Chinese production to Malaysian production? Like what is it that allows you to keep a product price super low? But on the other hand, are you just losing money on the product? Like Jack and I have said, sometimes you need a sacred cow product to protect your profit puppy. Do you lose money on something like a $3 lip liner to make money elsewhere? No, you know, we make money on every one of our items. And the key is we have a unique supply chain. It's a hybrid model. We use like-minded suppliers who believe in Elf, believe in our standards on quality, on lean manufacturing, and then a high degree of control. It's our quality people in those facilities. It's our lean manufacturing techniques. And we work very closely to really make sure we have that best combination of cost quality and speed. And again, it's an advantage. We've honed particularly over the last 12 years and has allowed us to weather the storm, whether it be the pandemic, the post-pandemic inflation, right now even tariffs. And we're committed to our suppliers, we believe in long-term partnership. And so we have done some diversification, but our favorite form of diversification is take one of our strategic suppliers and have them set up the exact same facility outside of China as well. So it gives us a great model. And I'd say it has less to do with tariffs. And more to do, we have a rapidly growing global business and making sure we have a robust, global supply chain to meet the challenge. That's a really cool concept. I mean, getting someone to basically duplicate the factory, but in a place where it makes sense for you economically. Nonetheless, in May, you had to make what appeared to be an emotional Instagram post announcing to your community that you had to raise the price of all the products across the board by $1 starting in August, because 3/4 of your products at the time were made in China. Hopefully, Elf has gotten stuck in the trade war, like others have, and your stock has fallen 35% in the last year, mainly because of that. Can you explain to our audience exactly why tariffs forced you to raise prices? Like, was there a new bill that your procurement team was looking at, and it's like, "Wow, we're paying for these tariffs. What happens at the border? Can you just walk us through?" Like, how did this go down? Yeah, sure. So if you take a look at tariffs on China goods, are the fiscal year at one point, there is high as 170%. For the year, we're going to average about 60% tariffs on our goods. I mean, that's a real cost, and it actually really means. Now our approach is we're always transparent with our community. So well before, three months before we took pricing, we announced the community, like, "Hey, look, we're facing these pressures, we're going to raise our prices a dollar. We don't like doing it, but this is what's going on." And the overwhelming response was really positive. People are like, "You know, we love that you're always up front with us, you're always clear, and letting us know what's going on." And our consumers have stopped with this. We continue. This last quarter marked our 27th consecutive quarter of net sales market share gains. We've ravaged over 20% sales growth every quarter for the last 27 quarters. And it's because consumers really trust us for the quality of the products we have and the value that we deliver. And we take that responsibility seriously. After all, two-thirds of Americans live paycheck to paycheck. And we see it as our responsibility to make sure they have the best of beauty, but at great prices. So you're kind of saying on the communication side, when you got bad news like this, it's. You got a few different routes. You could just go on display and see if people react, or you could do, like, an honesty is the best policy. We're just going to come out and tell you what's happening ahead of time. Which seems to be what they did. And that's how I, for you and me to operate, Nick, when we're not sure what to say to our audience, I think, let honesty be your God. Yeah. And that's our approach. We've built trust with our community, because we're always up front with them. We have a two-way dialogue, and they know that we're there to let them know what's going on, but also to listen and continue to drive superior value. Oh, right. And we've got some questions about the comment section. We'll get to that in a bit, because that's an exciting area. But first, Jack, I think there was, like, some tariff math we were curious about, right? You mentioned 60% was the effective tariff rate you dealt with in 2025. Does that mean that $10 items have to become $16 items? Yeah. We're trying to understand the tariff math like the audience is. No, we took everything up a dollar. So a $10 item went to $11, a $3 item went to $4, and we were known for the transparency of our pricing. You know, we have an everyday low price. We don't play games with a consumer. We don't have a high price, and then put it on sale. Even when people display our products, we tell them to do it at full retail, because it's such a great value. And so taking a dollar, as far as we want, on any item, regardless of what the tariff was. So Wall Street seems to think that the trade war ultimately cut the value of half and half based on the stock price. So how can you overcome the cost of tariffs and prove Wall Street while? Well, I think our pricing actions cover a good portion of the tariffs. We continue to have a great program in cost savings. We continue to deliver great value. You know, what I tell you on Wall Street is we're in it for the long run. So we don't let any short-term volatility bother us. When I continue to deliver, we've delivered superior financial returns. The best and beauty of these last 27 quarters. And we're going to keep doing that. And over time, people will see, and they'll continue to see how what we're able to deliver. We've more than tripled our market share just in the last few years. We're now the number one unit share brand in the US, the number two dollar share brand, with clear line of sight of overall market leadership. So we feel good about what progress we're making and what we're delivering. What is that market share? So our market share, nationally, is about a 13 percent share. Beauty is very fragmented, so there are a lot of brands, so that actually is a leading share. But at Target, which is our first national retail customer, our market share, where there are number one brand, our market share is over 20 percent of their entire category. And the reason why that's meaningful is Target was our first national retailer and has like a five or six year head start on everyone else. The great news is we're seeing share gains every single customer, every single segment we have, and we're going to continue to pick up share. I think Elf Beauty's arrival at Target is one of the reasons we started saying Target. I remember, I mean, you talked about how fragmented the beauty industry. I think you shared this wild stab with us in our prep call with you, our tyranny, about how like there are only 26 beauty brands with over a hundred million dollars in business, despite all the beauty brands you see at Sephora. That's it. Yeah, no, that's right. I mean, there's 1,900 brands in cosmetics and skincare, tracked by Nielsen. That's just what's scanning every week. One of that only 26 have 100 million in retail sales, not even net sales, just retail sales. So I'm really proud that we have four brands that have over a hundred million in retail sales, Elf Color Cosmetics, Elf Skin, Nitorium and Road, we're doing pretty well when it comes to our portfolio. You're going to have to watch out, or we could partner on this, but Jack and I are coming out with an ear cream because these microphones and these headsets really shape our ears. I should point out. And by the way, you just mentioned the topic where you were so excited to also talk to you about Road, the same month that you announced you were raising prices by a dollar across the board at Elf. You then made the coolest acquisition of the year, 1 billion bucks for Road Beauty, Haley Bieber's skincare company. What was it about Road and Haley Bieber? What are they doing that no one else was doing that you wanted to piece out? Well, you know, there are a lot of parallels between what Road was doing and what Elf was doing. There's a lot of mutual admiration in terms of how we disrupt how we engage our community. But the way we look at acquisitions is we use our vision as a lens. Our vision is to build a different kind of beauty company and we're going to do that by building brands that disrupt norms, shape, culture and connect communities, suit positivity, inclusivity, and accessibility. And Road did all of those things. I mean, Haley and her team have built a brand like I've never seen in less than three years. They went from zero to two hundred and twelve million net sales, DTC only with just ten products. How uncommon is that? I've seen it. And beyond never seeing it, the thing I particularly loved about what Road has done is a love of consumer fervor the brand has. I've never seen a brand where people will be willing to wait out overnight for 14 hours for an event. Haley's not even at. They're buying into the entire product, the entire lifestyle, and it's just a phenomenal brand. You know, since we bought the brand, we closed in August. We've launched Road into all North American Sephora doors, Sephora in the UK. And in both cases, it was the biggest launch Sephora ever saw in their history. Something like three or four times bigger than their next biggest launch ever. So it tells you the specialness of the brand and how much it's resonating. Well, that's an interesting tension point too, right? Trying because Elf Beauty is not carried at Sephora, largest beauty retailer in the world, or premium beauty retail in the world, but Road is, and is that a conflict? That create confusion, frustration, or is that a test by you guys? What's the thought process on two different strategies? Well, I'd say it is a consistent strategy. So Elf is carried. We just entered last year, Sephora, Mexico. It was one of the best launches Sephora, Mexico had ever seen. We just entered last month, the Sephora and the GCC, the six countries in the GCC. So Elf is in Sephora. What Road does is gives us a whole other platform to really go much broader with Sephora. And so I'd say Sephora is a key customer, but all of our customers are important to us, and they all have different roles. Road's only been there for five months, but I was going to ask, what is there you've learned from the road business that you can apply it to the rest of Elf? So what we love about Road is how well they engage consumers and how well curated their product line is. And so we're learning things both ways all the time. I mean, I think one of the things we're able to do, and our acquisition approach is different. We don't do any synergy math. We don't think about over-integration. When we buy a brand, we want the entire team. So Hayley Bieber, her co-founders, Nick Laho, the CEO, the entire team came on board. And our approach is you guys are killing it. Keep doing what you're doing, and let us know how we can help. And right away, you know, they were about to enter Sephora. They didn't have a field sales support. We could hire an entire field sales team for them. We obviously have strength and marketing that we can share learnings back and forth. Our innovation. We have a real power house innovation engine. So all those areas we can help with without changing who they are, really supporting the founders' vision and making sure they're realizing it. We do the same thing with a notorious brand, a clinically effective biocompatible skincare brand. We bought two years ago. We bought the entire team came on board, Susan Yara, the founder, and our approach is always, how can we help you? What can we do to accelerate your vision and what you want to do? And that approach works great. We're able to benefit from the best of what that team does, let them continue to thrive, enhance the team, and put our capabilities in. It's been a winning formula for us. There's a challenge there that's going to be interesting, which is, and this is what Jack and I find fascinating about road. You mentioned 10 products. They started with just 10 products. Jack and I called this the Elvis Presley Strategy, because just like Elvis was the first to have a greatest hits album of just his top 10 hits, road just led with their top 10 products. Every product is a greatest hit. So how do you find that balance if you're road? How do you expand and continue to grow and add products, but not dilute the very clear limitations that have made you successful? Well, you know, it comes back to Haley. I give her a lot of credit. Her vision from the very beginning is, I want one of everything really good. And that's the approach she's taken, a very curated approach. She's absolutely involved in every aspect of developing product, making sure it fits her high standards. And, you know, the brand continues to innovate. They continue to deliver new products, but they're very careful and very curated how they do that. And of course, that's really resulted in phenomenal sales for every one of their products. Did Haley still seem motivated and does she have skin in the game? She has never been more motivated. She is loving. She's not only the chief creative officer and the chief product officer of road, but she's a strategic advisor to health beauty as well. And I think that's one of the things that's really made this work is she's part of the health beauty family very engaged. I don't know how she does it. The week we launched in Sephora for North America did a massive event at Times Square. I think she should buy it here and make up at 3 a.m. or 4 a.m. was there for the opening. The next day we rang the bell on the New York Stock Exchange and it wasn't just Haley. All of our founders came out, Susan Yaro was there, Alicia Keys, who we developed, key soul care with was there, the founders, the well people. It was a great celebration of our female powerhouse, female founders and team. And it was just a terrific time. Do you always wonder these celebrity brands like are they just shown up for the bell ring and at the New York Stock Exchange versus like how much time are they spending, you know, doing the white boarding with the road team, the R&D, the meeting with the laboratory. Like what do you see with road when it comes to like how involved she is like on a week-to-week basis? You know what I tell people is Haley is a celebrity for sure, but she's way more than a celebrity. She's one of the most thoughtful founders ever met. And that I mean, she is absolutely involved in every aspect of the business. From product to the marketing to how much she posts, the level of passion she has. This is her baby. And she's all in. The same is true with Susan Yaro and Eitorium. Susan Yaro is a skincare influencer, has real vision for the quality of those products. She continues to educate people on why they need the skin regimens they do. And so that's one of the things we love. One of the founders of well people, plant-powered, pioneering, clean, beauty brand, Shirley Pinkson actually runs education for all of health beauty. Dr. Renee Snyder, a certified dermatologist, actually helps us on health skin and the rest of our skincare portfolio. So having them fully involved and more importantly, being able to pursue their passion is something that we're all about. Where your next stage drank is facing the Cody Curse. Her rival, Cody, acquired 51% of Kylie Cosmetics, 20% of Kim Kardashian's beauty brand, but those deals with celebrity beauty brands have not been successful. Both Kim and Kylie are trying to make moves to buy back their beauty brands now. According to reports. And in general, Jack and I have noticed, we've sold a company before and we've studied acquisitions. Two out of three acquisitions tend to fail. So how do you ensure to Haley and the shareholders that Elf won't mess up road? How do you keep the brand cool, even though it's kind of gone corporate through an M&A deal? Well, I think it's our approach. Our vision is to support a founder's vision and to really support a founder and help them realize what they want. Haley would be the first one, Susan Yar would be the first one to tell you, Elf is that everything we said we'd do, which is continue to support their vision, continue to support with whatever they need to be able to realize their vision, and that was the whole beauty of it. Haley actually had a lot of admiration for Elf. How we engage consumers, how we develop community, what we stand for, and those things really mattered. I mean, I think the first dinner we had during the courtship, I remember she loves saying, you know, I kind of want to hang out with these guys. I really like them. And I think that's important. I think that chemistry and making sure that you're truly supporting them is, I think, the key versus buying something that's a celebrity and having celebrity lend their name, who may or may not be there, our approach is very different. And we're also really choice in our 21 year history. We've only made three acquisitions in that entire life. And part of it is we've got the great luxury of very strong organic growth with our existing portfolio brand. So we never have to do another deal if we don't want. So they have to be quite special. We look at hundreds of brands and only, I'd say in the last two years, only Nitorium and Road Pass at Bar. So it's a pretty high bar that we have, and we really make sure. And I'd say the biggest thing that a lot of people miss, it's all about the culture and it's about the team. And making sure that there's a shared ethos, a shared belief system, a high engaged consumers, how do you really nurture a brand? Those things we spend a lot of time, I'd say we spend most of amount of time on, hey, do we see the team as part of health beauty? Do we see them live in the same values that we believe in? And I think that's actually been the real secret to why our acquisitions, every one of them's worked. Paying out test is underappreciated, like the classic one your dad tells you, like would you grab a beer with them? Like when we met with the Robin Hood co-founder, it's before we sold our previous media company to them, we hung out and it made a difference, we were like, yeah, we see ourselves hang out with these guys. So I had to go all page six on you, but what restaurant was that initial meet up? I was funky in Beverly Hills. It was a fabulous dinner, by the way. We jumped into you boys out to your latest earnings direct. You know, we love reading a good earnings transcript. And we noticed you mentioned roads 62 times that earnings, but you mentioned Haley Bieber zero times in the earnings report. Oh, well, that's a miss on my part. I should. Thanks. You know, we have earnings coming up in February. I'll make sure I mention her 62 times the road zero time. Well, it's interesting. You don't want a brand to be too dependent on the celebrity founder. Well, put you so at a certain point, you want there to be, unless Haley is going to be involved for the rest of her life, you want to eventually, you know, separate the brand from the founder at some point, what do you see as the future of celebrity driven beauty brands? Well, I think it's a combination. Haley's all in, as I mentioned. This is her baby. So we want Haley absolutely, fully engaged. But there are three things we agreed with Haley when we did the acquisition. We said, Hey, we think we can help you build up a field sale support for so far. She loved that. So we love the fact that this is your baby and the brand so well associated with you, but we want to build a brand for the long term. And we're known for our marketing engine. So we actually want to invest more in marketing and really make sure road stands by itself as well. And she loved that too. And the third thing we said is, we have incredible innovation capability, particularly on our D side. And I think she was the first one to say, Oh, my God, I'd love that. She goes, I'm not a scientist. Sometimes I think I am. But I'm not. And if you guys give me that help. So we went in before we even did the acquisition fully aligned on where areas that we could help. We could leverage the incredible capabilities we have. And where could we let them continue to run and continue to nurture their vision? And that's the approach is you want to do both. We're building this brand for the long term. It's already an incredible brand. I haven't seen another brand like this. And we couldn't be more excited to help or continue to realize that vision. One of the big moves you made, relatively early in your tenure as CEO of Elf, was closing the physical stores. This was one of the biggest things we've ever seen as CO2. This is incredible. I mean, I didn't know until I was researching this story that Elf used to have physical stores. But you shut them down. I mean, first of all, when I think of cosmetics, I picture going into Macy's and being mobbed by those people who are, you know, trying to paint your face. Jack's hanging out at the Mac counter. He's got 42 steps in there routine. I should point out. How certain were you that you could sell cosmetics and skincare online? Well, I mean, that was the roots of the company. The first few years of the company, we were a DTC only. And so we absolutely, a digitally native brand. We absolutely knew. And even today, digital is such an important part of our entire model. It's how we engage consumers, what we'd are strength with our own site, our B Squad loyalty program as over six million members. The momentum we have at Amazon on TikTok shop, it's always going to be a key part. But the thing we realized back in 2018, the founders had a real passion for their own boutiques. And we had 27 boutiques. And as we looked at our strategy, we were like, wait a minute, we're all about digital and powering digital. We now are with big national retailers, 1,800 target doors, 5,000 Walmart doors, 1,400 alt-dores, we're a drug, et cetera. So we really made us look and say, what's the role for 27 boutiques? Because we're never going to hit as many consumers as we can versus our national retailers or digitally. And so it was both one of the most difficult and easiest decisions we made. The difficult part of that decision is we had about 250 associates associated with the stores. And so when we made the decision, the day we had earnings, February of 2019, I remember it like it's yesterday, we sent out 27 out of our leaders to every one of our stores. Because we wanted to do in person, tell them why these stores weren't working. No silverware and malls that we're never going to see a better day. We paid three time severance to each of the associates, but that was a painful part. The easy part was it was the right strategic decision to kind of say, all right, what are we really going to focus on? And we're really going to focus on our national retailers and our digital business. And we took the $16 million we were spending on our stores. And we doubled down on marketing and digital. And we saw an immediate improvement of the entire business everywhere we were going. So it was one of those, I mean, I think every once in a while, you got to take a look and say, all right, what are you doing? What's working? What's not? And then have the conviction to say, hey, we got to make the tough right choice here and make sure we treat people with dignity and respect, but keep moving the business and keep pivoting to what consumers want. Well, Tyrone, Jack and I have been curious, would you ever reverse that decision? Because when we look at the digital world today, it's gone so far digital in one direction. It's almost like the pendulum swinging the other direction now. Like all the direct to consumer, mattress and eyeglasses companies that we grew up with now are physical stores, Netflix, totally digital company, now has Netflix like many theme parks that they launched at the end of last year. So would Elf Beauty ever get back into the physical game was almost even a marketing move? I'd say we are in the physical game. It's a question of do you want to do it yourself or do you want leading partners? Our strategy, as I mentioned, is the best to beauty made accessible. As we look at that, we want to be wherever consumers want to buy beauty and I feel great about our retail or portfolio. I mentioned Target, Walmart, Altabuty, CVS, Walgreens, Amazon, TikTok Shop, we are where consumers want to buy it, ElfCosmetics.com and so that's the strategic choice we made is we would rather partner with people who have amazing presence and reach. There's over 100 million Walmart shoppers every week and so if we want to give them the best of beauty, let's make sure it's accessible to where they want to shop. And for us, that means it's not necessary to have our own stores. We'd rather partner with leading retailers and be strong digitally to be able to meet their needs. Outdoor is the bricks in the mortars. You want to talk about the do you word, Jack? I want to talk about the doops. Drop the dees. Because core to the Elf strategy is to find a prestige product that's wonderful but simply overpriced and then you make your own Elf version of the product often at one third of the price. And you give us the best example of when this strategy has worked because in our opinion, you're the pioneer of the doop. Yeah. So, you know, it's consistently worked. We don't actually use the word doop because we don't do the doop thing. What we do is we take inspiration from prestige as well as our community and we put an Elf twist on it and you just say, "I'll give you a great example. Christian Dior has these lip oils. They've been in the market more than a decade. They've been around for a long time. But for some reason in the last couple of years, they took off virally. Our community will come to us and say, "Hey, Elf, they're these lips oils out there. We love them, but we can't afford 38 bucks or whatever they cost. Help us out." And we'll do it. We'll take a look at it and we'll say, "Okay, what do they like about this product?" In this particular case, they love the glossy finish, they love the pigmentation. But then we'll also look and say, "What don't they like?" And we found is for some consumers, those lip oils were drying out their lips. Others didn't like the fact. The applicator was really small and lip oil, something you got to reapply throughout the day. So when we introduced ours, it was a completely different hydrating formula. Same glossy finish, same pigmentation, a much bigger applicator called a doe foot. But the key difference was, not only was the product we thought even better, but instead of the 38 bucks, we introduced ours at $8. And then the next eight, $8. And we never make direct comparisons. We don't have to. I got to tell you the next day, there are a thousand TikTok videos that said, "I actually like the elf lip oils, even better, it's probably the biggest loss we ever had." To rank those people who knocked on Christian Dior by commenting and asking you to make the product. When they saw that you came out with a comparable product for $8, that's less than 1/4 the price. I mean, you could have come in at $28 and they still probably would have had that. Well, that's our entire model. We have a concept where we call it zero distance. Zero distance between the C-suite and our community. I'll tell you a story. My CMO terrorizes me every few months. She comes and drags me on to TikTok live. And she doesn't get up there. She's not even very nice. She doesn't say, "All right, you got the big boss. Tell him what you want." And the chat field will just light up. It'll just go crazy. There was one last year where I got on and a bunch of people said, "Hey, there is this prestige product. They make these bronze in drops. We love them." But I think they're 39 bucks. We can't afford 39 bucks. Help us out. And I'm reading the chat field. I'm like, "Yeah, okay. You want some bronze in drops." And then there's another 20 chats right after that. And they're like, "No, no. Boss, man. We want them now. I will literally leave that call a bit terrorized or traumatized." And the first thing I'll just call it my head innovation. We have a three-year product pipeline. I'll say, "Oh, my God, please, for the love of God, tell me we have some bronze in drops." And she's like, "Yeah, we do. I'm like, great. Great. When are they coming out?" And she's like, "Oh, we got them slated for 18 months of now." And I'm like, "Oh, no, no, no, no. I cannot have our community yell at me. Move it up." And we launch them within six months. And that's our entire model. It's like we look at our community. What do they want? Where can we bring the best of beauty, put our health twist on, and bring it in an incredible value. And that's fuel the entire model, particularly this day and age. Our strength with our community, particularly on social, really makes that model work, where we're not dependent on some celebrity or advertising or something else to be able to get the word out. Our community is our absolute best advocates. They must have freaked out when you launched that product for eight bucks. Oh, my God. They did. We'll drink two questions about that. Christian, New York, Duke, product. Jack and I have a dime ask on Dupes in general with you. The first is any moral hesitation on copying someone's idea. I see how you're saying you're influencing, but was there any moral hesitation there? I'd say it was a moral responsibility. I actually think it's immoral to charge a consumer 40, 50 bucks or something that we can clearly show you can make for less and actually have just as good or better quality. And I mentioned earlier, two thirds of Americans live paycheck to paycheck. We think it's immoral to charge a lot of money to those people who are barely making it. So we take great pride in being able to put our health twist on and be able to have the best of prestige at a fraction of the price. Lululemon, if you're listening to rang a mean, just made the moral case for the Duke as the right thing to do. The second question, by the way, Jack is, is just why, by the way, is Christian to your so expensive in the first place? Jack's got that 42-step skincare routine I just mentioned. We launched a second podcast just to pay for his skincare routine. Why is cosmetics so expensive in the first place? Or beauty in general? Well, I think that was the insight the founders had. They couldn't figure it out. They couldn't figure out why are these products so expensive? And they looked at it and they're like, a lot of these brands have very high gross margins that they spend back in associates and marketing and a bunch of other things. Terrain, very high gross margins, meaning huge markups. So yeah, they have bigger markups and they use that money on other areas. And so the insight the founders had where their original model is, if I'm going to sell something for a dollar, somebody's going to buy it for me for 50 cents. I got to figure out how to make it for 35 cents. And they figured that out. And then we've basically been able to hone that model that says, hey, why just do a dollar or two dollars, three dollars? Why don't we actually go after the best products in the marketplace? You'll have a little bit higher price umbrella and you can engineer an even greater quality. And that was really the insight 12 years ago when I took over was really no. Let's make the best of beauty accessible. Let's not just have low prices. Let's really make the best of beauty accessible. And so look, I have a lot of respect for our competitors, including our prestige competitors, their consumers who love, there's a real blurring of the lines. Like, you could find an elf consumer and they're make it back. They might have a Chanel product. Consumers in this space, particularly the consumers we appeal to, number one amongst Gen Z, Gen Alpha Millennials, they're incredibly savvy digitally. So they know, and including through word of mouth, what might work for them. And so there's a broad range of brands that are acceptable. And so I'd say there's enough room for people. The part I love is much market share as we built. The real secret for Elf is we can give millions more consumers access to something they couldn't have before. I'll give you another example. A few years ago, there was a prestige brand had a silk canvas. It was a primer. I think they charge 56 bucks for it. We introduced our putty primer for $9, right? And I'd say the quality is just as good if not better. And what we did is we tracked that prestige item. And we said over the next few years, that prestige item continued to grow because there's some people that equated 56 bucks with quality, the image, everything else that came with it. And there's a market for it. And they did great. The only difference is, we sold nine times number of primers they did. So because the fact is, most people can't afford 56 dollars for a putty primer. But a lot of people can't afford nine. And so again, there are plenty of business models in our space, there's some incredible and credible brands. They have a different model and I respect them for their model. But I prefer ours. This reminds me of a takeaway, did one of my favorites. The beauty industry really captures it. But where there's mystery, there's margin, there's a lot of mystery in the cosmetics industry. So Trent, you're also like literally in the comment section. Like Jack's saying, there's R&D research and development and then we say there's S&D scrolling and development. Like can you give us an example of when you guys may have like noticed comments and then innovated a product from there and how does that compare the hit rate of that kind of a product to one you developed on your own in house? Yeah. I'd say the hit rates are both good, but the ones that we're actually getting inspiration of the community is even better because you already know there's pen up to man. I mean, our innovation teams do a phenomenal job and it's both the art and the science. I mean, they're analyzing data and seeing like, hey, what's really selling, what's really working? What are people socially really engaging on that they really want? And then the art of how do you bring that elf twist to it? How do you actually bring it out at even a better value? And so that's our entire approach and overall our hit rates are way higher than the industry average. I think new item hit rates and consumer are less than 50%. Cars are closer to 100 because the insights are coming from what people want. So are there any particular examples of like a product that comes to mind for you where you're like, wow, we wouldn't have thought of that unless people started mentioning it on Instagram? Well, you know, I'd say the power grip primer, one of our main products. In fact, power grip primer is the number one cosmetic SKU across all of mass and prestige by far the biggest item, which is really surprising because primers aren't a huge category overall. Power grips number one to clarify power grip primer is the most sold cosmetic product in the United States. You buy a wide margin. Wow. No way. What we find is that came from an insight. We'd done a collaboration with Alta where we did this jelly pop collection as a swarmel and flavor collection. We saw a lot of the comments coming off of that. We had a primer. So some people couldn't get enough of it. And we were at first like, wow, it's so sticky and they're like, we love the stickiness. So we said, all right, let's go have some fun with this. Let's go introduce power grip when we introduce power grip. I mean, it's just, it's just a phenomenal blockbuster success and again, it comes directly from listening to your community and giving them what they want. Well, when it comes to making decisions as a CEO to rank, Jack and I are always curious how a top executive does this. So the balance, metrics versus magic, information versus intuition, graphs versus guts, how you make decisions. Let's use one of Halei's products as an example. And she says, I want to launch a glazing milk face serum, which by the way, I need to have a whole vacation where I try to have product out. Do you look at a spreadsheet and do the diligence there or do you trust her? Yeah. We trust her instincts and we trust her passion and that's what we rely on. Across the board. I'll ask questions in my product every couple of weeks. So like, why is this thing so great? And the level of insights the team has in terms of this is what the inspiration was. This is why it's going to work. This is why we got conviction is really all I need to kind of say, all right, let's go. You mentioned the innovation teams a few times. Is that the name of the department? I've never heard of an innovation team. Yeah, we have, I mean, the innovation, they have multiple departments within it. You have product development, you have R&D, you have product marketing. But it's a collective. But you know, I tell people, everyone at L phones innovation, it's, I mentioned my product review. That's why I approve products every two weeks. I actually make it an open ticket. My CMO who came from prestigious first is horrified, she was like, oh my God, these are the nuclear codes. You're letting anyone in? I'm like, yeah, anyone in the company can join anyone in the company can join. I'm looking at the chat field and we get the best insights from anyone in the company, not just the people whose job is innovation. But you know, somebody who does inventory planning had such incredible insights on a recent product. I can't talk about it because we haven't launched yet. But where she had, you know, a contrarian point of view, it was really great. I'm looking at the point and I'll say, all right, tell me a little bit more. And so I think our, this approach of zero distance goes well beyond zero distance between the C suite and our community. It's zero distance to our employees. It's zero distance to equity. We're one of the few companies that grants equity to every single employee every year. Not just Haley. Not just everyone, every, every single person. Fine Drang will take some elf style. Yeah. Yes. After the interview. But I got to tell you. It means something. It's the environment to the past where it's like, you know, we want you to want you to be an owner. But I'm like, but, but, but we're not owners and like, oh, we want you to act like an owner. What am I playing pretend? This is a lot more effective of give them a piece of it. And they're, they're passionate owners in a high performance team culture. And I'd say by far that's our biggest advantage. Are they granted as like a bonus at the end of the year? And the way it works is our comp models are different. We call it one team one dream. And so the way it works is every single person in the company's bonus eligible. You have a target percent of bonus, but we all get the same payout. It's zero to 200% and it's based on the justity, it's the board sets with some compensation consultants that came in and said, hey, wait, don't you want to compensate your product supply or ops people differently than your salespeople? Different than like, no, I want our operations people to know if we have one quality issue. We could piss away more EBITDA than if they saved half an RMB on something. And so we're all in it together. We say we rise or fall together. And by the way, I think last year is our six consecutive year of paying out 200% of target bonus, which makes people feel like winners, like we're in it together. And then on top of that, we give equity to every single employee. And you know, if you exclude the named executive officers like me, since our IPO in 2016, we've granted over $220 million dollars of equity in a stock that's gone up eightfold. So and I'm explicit, I want meaningful wealth creation for every single person because they are the people who are driving our results. Again, if you insist, Terang, we will take you out stock. By the way, yeah, if you're listening on Jack's question, by the way, that actually is a really important point. You know, we talk about so many companies that innovate in a lab or keep research developments secluded. They want it to be secret. Alpha saying, hey, we're opening up to everybody. Even if you know the nuclear codes, the secrets of the company, we just want to hit. We just want to get products out there. Terang, we've been talking to you for 40 minutes and you've obviously done really good by your customers $8 instead of $38. That blew my mind. Have you ever failed by your customers and recognize that was a mistake and can you share a story about it? Yeah. Look, we're a digitally native brand. So we're inherently test and learn. We fail all the time, the key to me is making sure people don't get scared or get afraid of taking risks. We want people to be able to continue to push and continue to learn. You know, we had one a few months ago. We did a, we probably do a hundred marketing campaigns a year. We had a one time post, we featured, had the comedian Matt Reif in there and we got a lot of blowback on that. We got people like, hey, he made some comments on domestic violence and we clearly missed a mark. We apologize for it and we said, all right, let's keep, let's keep delighting our community. But that's not going to stop us from trying and being disruptive and doing different things. So we're known for our brand on brand collaborations, you know, our collaboration with liquid death. I think had some like 9 billion views with Chipotle, had one with Duncan. You name an American Eagle. So we're going to continue to partner with like-minded disruptors and we're going to continue to find ways of delighting and entertaining our community, but that doesn't mean we don't fail. We fail and that's okay. We got to, we got to learn from it. We got to own it and you got to keep moving. Well, yeah, he's a little backstage behind the scenes info we should share with you. Before this interview, we spoke with Terang because we wanted to get to know him a bit more. And in our chat, Terang, you mentioned that you're not in the makeup industry. You're not in the beauty industry. You're not in the cosmetics industry. You said we're actually in the entertainment industry. And Jack and I didn't ask any more questions because we wanted to ask you more during the interview. So how is this beauty company actually in the entertainment industry? Well, it's a completely community driven. And the way you connect to the community is, there's so many companies that do a one-way street. We're going to project things of what we want you to buy. We're going to tell you what, what you need to know, what you need to go to. Artists is a two-way street, back to that zero-distance concept. And so for us, the way we engage with people is not to try to sell them more makeup or skincare products. We sell plenty of those. It's really to actually make sure that we're getting to know what motivates them. What do they love? Where do they go? That's dictates where we go. Why do we have a channel on Twitch? Why do we have an entire experience on Roblox? It's because that's what our community wants. So that ability engaged. And you know, the great thing we have this concept a lot of times, we call it like a minimal viable control to enable maximum achievable freedom. And what we mean by that is we really look at what little can we control as a senior team and really put that empowerment in our team's hands. Most of the time, I'm finding out about our marketing the same time everyone else is. I'll be texting my CMO and going like, I was a few months ago. But did we just drop some guy in the middle of a Pacific Ocean, a care package? And she's like, yeah, someone on our team in LA saw this guy blow up on the internet. He hated his job, he quit it. And now he's sailing around the world with his cat. And they thought it'd be a great idea to send him a care package. Well, you know, I'm classically trained. I started a proctor in gamble and brand marketing and I was like, but we didn't even brand it. Doesn't say elf. It doesn't say anything. But again, it's okay. These guys know the word will get out. I forget how many tens of millions of views we had on that, but that's really the concept. Let the people close to our community that represent our community really drive the direction we take the brand in and how does it delight them. And you know, people would say like, what the heck is a beauty company and then you know, the care package had like food had, you know, cat toys, snacks. What are you, my Nana? And I'm going to college. If you had some sunscreen, you definitely needed some sunscreen. So we did put some of our sun touchables in there, but, but the whole genesis isn't the traditional. I'm trying to get you to buy something. So here's how I'm going to engage with you. I'm going to, it's less transactional and more of, let's build a real relationship. And if you're doing that, it's really about how do you delight our community and that a lot of times is how you entertain them, how, how do you make fun of yourself and have some fun with them? And that's how people engage with us. Speaking of having fun, before we get to our final question, Tyrent, can you just repeat that line again, that ethos, maximum minimum, it sounded like a rocket ship term, SpaceX style. I call it minimum viable control to enable maximum achievable freedom, right? And so a lot of times the management looks at their job as we got a control and, and don't get me wrong, we're a public company, we got plenty of controls. But really taking a look at and saying, how do you put power in the people that are closest to your community and give them the authority to run with it? Like, I would never come up with, I wasn't even watching the guy blow up on the internet. But letting them have that freedom and that ability to do that, dictating, you know, we're the number one brand by far amongst Gen Z. I remember asking our team, hey, who else is killing it with Gen Z? That's where the Chipotle collaboration came from. Our team of guys, hey, Chipotle, Gen Z loves Chipotle too. Let's do something together. When they went to see them, they said, you know, they call their food area, they call it their palate. We said, what? The black beans and the rice and all that's a palate, we're like, hey, let's make a eyeshadow palate on that. You know, we had guacamole and black bean and chicken and, you know, the thing's sold out, I think less than three minutes because it hit a nerve with people of where they look. And so I think that's, that's a key for us, is, is give the power to the people that are closest to our community, give the power to the community and, and it's their brand. That works for us. Nick and I were entertained by your so many Dix campaign to be clear. This was research by Elf Beauty on how many corporate board members were named Richard, Rick or Rich. Yeah. Jack, I believe it was specifically men named Dick on corporate boards, outnumber all Hispanic women and outnumber all black women and all Hispanic women. Yeah. Now, not enough diversity on corporate boards. And in the last year as, as the conversation of DEI has shifted, it seems like Elf Beauty has doubled down and we wanted to ask you, how is it all working out? I mean, for us it works because it, it's all about our community. I mentioned inclusiveness we have as a team of making sure the team reflects the community. That goes all the way to the board. We're one of only five public companies in the US out of 4,000 that have a board that's over 2/3 women, 44% diverse. But the fact is, we don't want to be one of only five public companies in the US with that little diversity. So we believe business has a role for societal good. So we started this initiative of increasing diversity in America's corporate boards by partner with Billie Jean King, serving our basic facts of just how homogenous the boards, America's boards were. We took it a step further, that campaign, that provocative campaign. We ran on like Wall Street and the Oculus, you know, featured a bunch of pictures, a bunch of white dudes and the line was, and the inside is, there is more, there are more men named Richard Rickard Dick on America's corporate boards, the entire groups of underrepresented populations. And by the way, by the way, there's nothing wrong with being Richard Rickard Dick. I want to make sure people know that for the record. We just want to make room for others. And then, you know, we take it a step further. We partner with the National Association of Corporate Directors. We've sponsored 40 women and diverse members to their accelerate program to qualify for board service. We partner with NCA and T University on research to show the direct correlation to diversity and better corporate board performance, including, I think the latest research they published showed that boards with above average gender diversity outperform boards with below average gender diversity by a whopping 270% return on equity. And they did this over a six or seven year period. And so, I think it's an important time where there's so much rhetoric out there to let the facts be out there and we feel we have a role. It's something we deeply believe in. After all, we're for every eye-lippin' face. And, you know, we do have an advantage. We're not a federal contractor, we're not a bigger company that might be subject to different rules. And the reality is, we've actually never had a DEI program. We've never had quotas. We've never had anything like that because it's more fundamental to us. We're big believers if you represent the community you serve. You get better results and I think we're living proof of that. Was there any discussion? Oh, there was discussion. I remember there was, you know, we share everything like any responsible public company with their board. And I remember one of the board members said, "Hey, we get this. We're really supportive of what you're trying to do." But, how does your community react? I'm like, you know, that's a great question. Let's run it. The next day, we ran out every one of our social channels from Instagram on down. We ran so many dicks and everything. We got 98% positive sentiment, considers like, "Hey, this is why I buy health." You actually care. You care about a broader net of giving people a chance and empowering others. And this is why, yeah, we did get 2% that said, "Hey, there's nothing wrong with being rigid, rick, or dick, but the vast majority of our community." And that's actually the lens we use. And we were known for doing a lot of provocative things. We always use the lens we use as number one, is this tie to our ethos? And for us, best of beauty made accessible, and absolutely, diversity, absolute tie is reason. Number two, do we have any authority on the topic? Being one of only five public companies with the board stats we do, we absolutely have authority. And number three, how are our community respond? And so that's a great example of kind of how we view the world as it has to tie to our ethos. We have to have authority on this topic. And it's all got to be about the community and how we're serving our community. Yet, if you want to know how ELF became the biggest mainstream beauty brand in America, because they check the comments section. Nick and I usually wrap up episodes of our show by whipping up the takeaway. But as our esteemed guest, we're going to let you, so, to rang a mean, what is the takeaway on ELF Beauty? Well, the takeaway on ELF Beauty is making the best accessible to every eyelid in face has been the cornerstone of our success for 21 years. And we do that by basically reflecting the communities we serve and listening to communities we serve. And it's really that simple. And if you do that and have a passionate team of owners in a high performance team setting, anything's possible. Well, like we say, we like to say anything's ELFing possible. Well, to rang before you wipe off the hair and makeup, as we almost do in the dressing room after this, we have a few rapid fire questions for you before you go. First, the best brand that is not ELF or road. What is it? And it can't be any of your other subsidiaries. Okay. I won't name anybody. One of the brands I really like is Arterax. I love their gear, Frouder. We love hiking and doing a lot of things outdoors. And so, I love that brand. What's the best business book you've ever read? The best one is "Jourous Currents Goodwins" team of rivals, the political genius of Abraham Lincoln. Interesting you call that a business book. It is. And absolutely, it's one of the best leadership books I've read. And the mastery of his leadership. I think it's particularly important in these polarized times. And so, I think I'm going to have to go back and reread it. Speaking of which, best business leader whom you admire? Oh my God, there's so many. I would say Jensen Wong, if I think about it, he's all this celebrity now with the success of NVIDIA. But people forget. He's been slogging it out for 20 years when a lot of his competitors are trying to put him out of business with real vision and then more important than vision. Being able to lead and get it done. What's the best beauty hack for men and/or women? You absolutely have to try our poreless putty primer. I mean, look at this. I'm 60 years old, and I don't know, could you tell with my skin? Well, no, actually, can I ask you a serious question? I do have, like, previewing forehead. I'm saying it, not you guys. I also have these big lights on me, and they're pretty shiny. Do you recommend a product that I want to reduce the shine a little bit? Try our well-people, plant-powered product, press powder. You'll do wonders for the shine. They'll make you feel great, too. Thank you. Press powder. I don't even notice it, check. I just want to throw that out there. All right. Durang, best dream collab that you have not done yet. Oh, my God. We actually have, this one you're going to have to stay tuned for. So we have two coming up in the next two weeks that I'm absolutely excited about. So your listeners are going to have to just stay true to the collabs. We just actually previewed what of them in our town hall every two weeks. We get the entire company together. And we just said, "Hey, don't spill the tea just yet." But by the reaction, it's going to kill it, and it's literally coming out in two weeks. Okay. What is the best restaurant in the Bay Area? I love Cacari, elevated Greek, can't go wrong with Cacari. Down the street from our studio, we'll see you there soon, Durang. And if you, Durang, I mean, we're a stock. What would be your own three or four-letter stock ticker symbol? Can't be health. It'd be one of two things. It'd either be HPT, which stands for High Performance Teamwork. We didn't talk about it too much today, but I live by it. Or it'd be O-T-O-D. One team, one dream. Do you have both of those tattoos on your biceps right now because you were very prepared for that answer? Durang, you also look, you mentioned your age 60 years, you look phenomenal. What is your morning skincare routine? Well, I think, you know, the importance of cleansing and hydration. Our holy hydration is my go to every morning. Well, hydrated skin does wonders. And then our sun touchables SPF product, everybody needs SPF and it's our invisible sunscreen. You got to try that as well. Well, Durang, we cannot wait to collab with you and Haley on an ear-chafing skin cream for these headphones that Jack and I deal with every day. So we'll keep that in the books for Q2. Durang, you're a consummate professional and we admire your leadership. Thank you for coming on the show. Well, thanks for having me. Great to have you.