In Silicon Valley, where everyone thinks they’re going to change the world, Jessica Herrin is supremely confident she will actually do it—and she has reason to bank on her own powers. Della & James, the online gift registry she cofounded, merged with WeddingChannel.com in 1999; in 2003, she founded Luxe Jewels, the direct-selling accessories brand that would go on to become Stella & Dot and record $220 million in annual sales last year.
Spend some time with serial entrepreneur Herrin and it becomes apparent that she doesn’t let doubt temper her aspirations. “I look at something and think how I could do it differently or better. I’ve always wanted to go my own way,” she asserts. “I love creation—the fun, art and adventure of building something.”
Of the direct-selling channel, an idea that she stumbled upon during a business trip in her Della & James days, she says, “I wanted to reinvent it. I researched it and saw an industry largely being led by men who didn’t seem to understand the modern female. I was somewhat put off. All the reasons why I didn’t want to do it were the reasons I had to go and do it. Somebody had to modernize it and fix it.”
Now Herrin has set her sights on beauty, with Ever, a skin-care line to be sold via direct selling that launches in late February. “Ever is a billion-dollar global brand in the making,” Herrin declares. “I believe that with every bone in my body.”
If Stella & Dot is any indication, Herrin’s faith is well placed. Her strategy is to build the direct-selling (or social-selling in Herrin parlance) company of the future, injecting a shot of technological know-how and keen insight into the Millennial mind-set to bring the channel up to start-up speed—regardless of the product category.
For Herrin, the expansion into beauty is a natural fit, enabling Stella & Dot to attract women to be sales consultants—or “specialists” in Stella & Dot terms—who might be indifferent to accessories. “People need to be a brand ambassador recommending something that they love that’s right for their lifestyle, their life stage and the community that they live in. The best way to do that is with different brands,” says Herrin.
The income opportunity and trendy products aren’t Stella & Dot’s only attraction. Herrin herself is a magnet. Leslie Blodgett, executive chairman of Bare Escentuals, is a Stella & Dot board member and investor; she first met Herrin in 2011. “There can be a difference between a founder and a ceo and a leader. Jessica is everything,” says Blodgett. “She’s the ceo I want to be in my next life. She is very disciplined. She’s strategic. She’s a motivational speaker. She’s authentic. She has everything, and she is so young.”
Herrin’s strategy to put herself out front at Stella & Dot is paying off. “This brand is about real women, real results. I’m a real woman, and I’m very authentic and honest with customers. I have the same skin-care concerns, and I talk about it openly,” says Herrin. “When I’ve gotten feedback from our stylist force and our specialists with Ever, what they have said that really touched me is that understanding me as a mom and a real person and not just a business leader helps inspire them and helps them succeed. If I can do something to make a mark on people’s lives, that’s what I’m here to do.”
Sticking to an uplifting message, Herrin won’t deride her competitors. Her pitch to potential Stella & Dot recruits from the Millennial and Generation X cohorts, though, is clear. Mary Kay consultants and Avon ladies are your mothers and grandmothers. You are a Stella & Dot woman. Herrin is 42 years old, but she speaks the language of younger women. With its technology-driven, person-to-person organization, Stella & Dot seems tailor-made for Millennials, the great swath of roughly 87 million 19- to 34-year-olds in the U.S. with $200 billion in annual spending power. As a general rule, they tend to look for meaning, not simply a paycheck, in their jobs; they assiduously avoid being tied to a desk from 9 to 5; they tend to distrust brands; they actively seek out healthy lifestyles, and are digital natives who more often than not sleep with their cell phones.
In its fourth annual Millennial Survey released in January, Deloitte Global reported that six out of 10 Millennials agree that a “sense of purpose” is part of the reason they chose to work for their employers. Mili Dutt Reddy, senior director of marketing and merchandising at Stella & Dot and a Millennial who is pregnant with her second child, says, “I’ve worked at L’Oréal and Louis Vuitton, and I came here because of Jessica. She’s inspiring. Her commitment to improving women’s lives and the core mission of Stella & Dot is such a draw.”
Herrin created Ever products and the communication around the brand with Millennial tastes in mind. Ever sales associates don’t stick to the script about skin-care products alone. They stress fitness, diet and mental health, too. “We really wanted to create a brand and a community that addressed the whole well-being of a person because what they are after isn’t buying skin care. What they are after is a glow,” she says.
That glow has to be naturally derived. Herrin insists she wouldn’t have released Ever without a natural active ingredient—it uses a magnolia-fueled bioactive complex dubbed LSR10—that delivers visible results quickly. The products’ natural positioning and their promise of effectiveness are appropriate for a customer in her Twenties and Thirties that Herrin details is often waking up to the realities of aging and thinking harder about the ingredients she puts on and in her body, possibly because she’s become a mother.
“I never bought organic blueberries before I had a baby. Then, all of a sudden, I started looking at everything,” says Herrin, whose daughters, Charlie and Tatum, are 11 and 8 years old, respectively. “In doing test events with women all over the country, it is a question that everybody is asking. People know they should be asking about it, but they don’t know what ingredients to look for and screen for. One of the benefits is that an Ever specialist gets to be that voice of safe, clean and conscious beauty.”
Ever products are free from parabens, sulfates, phthalates, propylene glycol, synthetic fragrances and colors, chemical sunscreens and hydroquinone. For launch, there are 12 products, $26 to $88, including a cleansing balm, peel, peptide serum, night cream and moisturizers with SPF 20 and SPF 30.
A personal voice is of the utmost importance to sell Ever. It’s the peer-to-peer connection often missing from retail that distinguishes social selling. “Millennials more and more want trust-based product referrals,” says Herrin. “We don’t expect people to trust some glossy big brand. We expect them to trust a friend…What matters is that someone they trust is telling them look at my [before-and-after] picture and, by the way, it is money-back guaranteed, so why wouldn’t you try it? While you are doing this, let me give you some education about ingredients that aren’t great for you and are banned in other countries. Check the labels under your sink and see if you want to swap out your cleanser, your moisturizer, your night cream.”
Ever’s specialists are armed with product knowledge, but it’s technology that allows them to be efficient sales engines. A private equity investor in the direct-sales space who requested anonymity says, “In today’s world, technology is everything in direct selling. It is one of the hardest IT implementations there is because it has to be so customized to make it work properly. You have to have a really sophisticated backbone in IT and a good front-end system in e-commerce and make it easy for consultants to cash out their customers.”
At Stella & Dot, almost every transaction is touched by technology. About 50 percent of first-time purchases are made digitally and the percentage tilts more heavily toward digital for repeat buys, according to Herrin. Sales that aren’t made digitally are still influenced by technology. Ever specialists, for example, have product guides on their iPads, a mobile point-of-sale device that they can access to show before-and-after photos, share digital videos of skin-care experts and process orders. With Ever, Stella & Dot is introducing a technology platform developed from scratch that Meera Bhatia, the company’s vice president of product management, says “allows us to move really quickly in getting new features [and] enhancements out to our specialist base” on a weekly basis. Already, Stella & Dot’s proprietary back-end system provides real-time data to its specialists so they can track down to the hour what they need to do to reach their next milestones.
Herrin emphasizes Stella & Dot will engage new technologies as they arise. “I don’t believe 10 years from now that social selling is going to look like what it does today,” she says. “It’s going to be very different with consumers relying increasingly on mobile and social, and it won’t be Facebook. It will be Instagram, WhatsApp and other emerging technologies driving how people communicate.” Leveraging Instagram, Stella & Dot has made pictures featuring its products shop-able by pulling them to its site and tying them to available products.
Herrin’s ability to capitalize on and quickly implement emerging technologies has served the company well. In Silicon Valley, where profitability is a rare start-up commodity, Alfred Lin, a Stella & Dot board member and partner at Sequoia Capital, an investor in the company, says Stella & Dot is “one of the few companies that is growing as well as generating positive cash flow.” In 2013, the last year for which Stella & Dot provided financial figures, it generated $24 million in profits on its $220 million in retail sales. The two years prior, it generated $200 million and $175 million in retail sales. Going forward, Lin anticipates Stella & Dot’s growth will accelerate. “I am very optimistic in our ability to continue to grow the business,” he says.
To achieve that growth, Stella & Dot must make Ever a win—not necessarily a given. A private equity executive with investment in direct-sales firms contends that problems could plague Stella & Dot. “I don’t think of Stella & Dot beauty products as consistent with the brand. I don’t think that’s what the proposition is,” he says. “There are adjacencies you can be comfortable with. [The question is] how far out does the Stella & Dot name lend itself to other things?”
Moreover, direct selling has seen its fair share of failures in beauty; among the companies that have recently discarded the model or shuttered entirely are Votre Vu, Bona Clara and Verefina. “You grow and die with how many people you have as consultants. You need people to host the party. There has been some proliferation [of direct-selling brands,] so getting hostesses to host parties has gotten more difficult,” says the private equity investor.
Stella & Dot will have to enlist plenty of people to make Ever take off. “Ever is a brand-new opportunity launching day one from scratch with completely separate specialists [from Stella & Dot]. We know people will look at Ever as a tremendous ground-floor opportunity with a brand-new business,” says Herrin. Stella & Dot has 30,000-plus members in its social-selling network, and Herrin’s goal is to hit 100,000 around the globe.
For her part, Blodgett has no doubts. Herrin, she says, “will succeed in beauty, and she will go into any area that she wants because she knows it’s all about building teams and creating loyalty. She has the strategic vision to go there. The industry will see she is going to do this and do this well. She will compete with a lot of the large brands.”
Characteristically, Herrin is eager to tackle the challenges ahead. “I see them as fun adventures, not obstacles, because I’m so used to climbing over them,” she says.
That level of energy will certainly come in handy as Herrin works on her vision of making Stella & Dot into an umbrella company for a family of brands across a wide range of categories, of which Ever is just the beginning. “When we do something,” she declares, “we do it well and we do it big.”