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Beauty Inc issue 04/12/2013

Aurelian Lis studied physics at Oxford, but for him, success in the beauty business isn’t rocket science. “As a brand, you need a reason to exist,” says Lis, general manager, Americas, of Benefit. “Ours is to make our customers laugh.” The success of that strategy is no joke: Industry sources report the brand, owned by LVMH Moët Hennessy Louis Vuitton, ended the year with global retail sales of $760 million, with North America posting 30 percent year-over- year growth to reach sales of $250 million.

This story first appeared in the April 12, 2013 issue of WWD. Subscribe Today.

Lis has an unusual background for a beauty executive: Post graduation, he worked on an offshore oil rig in Bombay, before heading to Unilever, where he worked in the foods division. He’s also an entrepreneur, having started and sold Prescribed Solutions Customized Skincare, a brand sold in doctor’s offices. A self-professed nerd who relishes combining the scale of an established business with the energy of an emerging one, Lis’ experience instilled in him a true affinity for beauty. “We all work in the cosmetics industry, which is inherently frivolous by nature, but it makes a big impact on people’s lives,” says Lis. “It is an awesome job.”

What is your assessment of the current beauty environment and where do you see the most opportunity?
The current beauty environment in the U.S. is quite healthy. Differentiated businesses are doing well, as are service businesses. As a brand, you need a reason to exist. Our positioning is that Benefit is fun and makes customers laugh. You see our tagline—“Laughter is the best cosmetic”—all over our company. It’s the activities we do, such as emergency mascara technicians driving around during fashion week in New York providing emergency makeovers, or Beauty Boosts, which are cute compliments that a customer can receive every morning by saying, “Please send us a tweet,” and they get a compliment back. We’re always asking, How can we differentiate ourselves by making people smile or laugh? As you look in any industry, if you can differentiate yourself you can make a difference and have above-average results.

The other thing is services: With online as an alternative, people are looking for unique experiences. If you have a service element to your business, you can interact with your customer in a much higher way. We do that through brows. It creates a very loyal customer who keeps coming back, but also it’s just a really rich way to interact with your customer.

How is South America trending?
We are in three countries. The most established is Mexico, where we’re in Sephora and El Palacio de Hierro. We are in Chile with Falabella and in Brazil with Sephora. We don’t need to be in every store. We don’t want to be the biggest, we want to be the best. In any store where we are, we want to be, if not the top brand, in the top three. In South America we are doing that, especially in Mexico and Brazil. Our strategy is to keep moving forward in a way that we’re doing very well in small incremental units. Eventually they add up to a very substantial and impressive business.

How do you see that business evolving over the next five years?
We are anticipating rapid growth over the long run. The interesting thing about the South and Central American markets is what can you learn from those markets and bring back to the U.S.

Is that because of the changing demographics of the U.S. and what it means for your business here?
Yes. There are differing demographics here. We are interested in being exceptional in the places we’re at. We need to maintain that, whether the entire industry is going up 10 percent or is flat. That teaches you things that hopefully you can bring back. The Latina population is close to 20 percent of the U.S. We have wonderful products that work with all skin types, and as an organization, we’ve become a lot better and more inclusive of all segments of the market.

There’s a perception that Benefit is product driven and fix-it driven. Is that a fair assessment? How do you fully realize all categories?
There is nothing wrong with having a good definition and people understanding what makes you different from other businesses. The way I would define our products is they are instant beauty solutions. [Our customer is] a young woman who is on her first or second job, in her late 20s maybe, very successful at work. She is working very hard, she gets to the end of the week, she’s got a date, and the fact that she’s been working hard shows. She needs a quick solution. In 10 minutes, we can make her look and feel fabulous. That is our positioning. Is it a fix-it positioning? Yes, although it may be more of a fake-it than fixing it. That is quite a broad positioning. It encompasses amazing concealers, great primers, even mascaras. The point is, they have to be simple, instant. There is usually a yuck-wow, so you can see a huge difference between before and after. And it works.

Before Benefit, you founded a skin care line.
I did. It is called Prescribed Solutions Customized Skincare. It is a line of high-performance antiaging products sold through doctor’s offices that can be customized for different skin types. I started it with a business partner, David May. We built it from the beginning, where we were cutting the labels on my kitchen table and getting into doctor’s offices, all the way to about 500 offices when we sold it. Now it belongs to a company called Ferndale Labs, a Michigan-based pharmaceutical company.

How has your entrepreneurial experience informed your present position?
As an entrepreneur, you are quite resource- constrained and you have a reasonably short time horizon, by comparison to large companies. At the same time, you have a lot of authority and you’re extremely nimble. The advantage of cutting labels on your kitchen table is you may need to change one of those labels. The next batch is changed. Some of our early brochures were printed on ink jet and we would literally go through a variety of versions with our first customers and tweak them and get them better and better and better. In big companies, you can’t do that.

What it comes down to is finding the trade off— trying to keep some of those positive aspects of entrepreneurship in a bigger company.

What motivates a lot of entrepreneurs—and certainly did me—is the ability to own your own business, own your destiny and run with it, and make decisions you believe are best for the company and also make decisions that come out of your own pocketbook. LVMH, in general, and Benefit, in particular, are structured in a very entrepreneurial way, in that from a business perspective, people do own their own businesses. The U.S. owns the business of making sure the U.S. customer is delighted with the brand.

What is it about beauty that attracts you so much?
I’ve got a quirky background. I studied physics. I was an engineer for a while. I worked in foods—in fats, oils, dressings, prepacked salads, even cheeses. I realized nobody wanted to talk to me when I was in the prepacked salad business. Nobody cared. People care about cosmetics. It’s about their identity. They care a huge amount what it’s going to look like on them, whether it works on them. It continues to be the motivating factor. The idea of having a customer that is so excited by what you do is a motivating thing.

How would you describe your management style?
The important thing is to develop your team. I believe that you work with your existing team and invest in your existing people. In a very short time, we doubled the business. Amazing success, but I’m even more proud that we did that with essentially the team that was there. We didn’t come in and change every senior manager position and do a total housecleaning. We tried to unleash the great ideas through the strengths people have. It’s more long term as well. I want people to be in the same company years from now. You need to take that long-term skill-building view to people. Everything else follows—you’ve got good people, they’re in it for the long term, they have authority.

What’s the most difficult business decision you’ve made?
Probably the decision to sell Prescribed Solutions. After you’ve developed and nurtured a business, it is your baby. You know everything about the brand—virtually every area was at some time your responsibility until you got large enough to be able to put people in place. Deciding to sell it was tough. It came when we realized that the only impediment to growth was increasing the size of our sales force. We were looking at some strategic partners who could do that and the partner we came across wanted to own it.

If I reflect back and ask, Was it a good move? Yes. The company continues to be successful. The difficulty in selling was also because of the commitment to the people you made to get to where you were—the commitment to the employees who you won over, got on board and believed in the dream you believed in. It’s also true for the customers. Our second customer was Dr. Pat Wexler and she helped us a lot. I was very careful when I sold it that the people who were buying it would uphold the importance of them and the standards I believed they deserved. Fortunately they did.

Do you see yourself starting something else from scratch?
Yes. It’s motivating. It’s easier than people think, probably. It’s a huge amount of work. But it’s not as much about having the best idea. These things evolve. Good outcomes come through a very decent idea plus a lot of hard work, a lot of feedback and listening to the market. The impediment I often hear to starting something new is, “I haven’t had the most brilliant idea ever.” Yes, you need a decent idea, but it’s more about conviction. Are you willing to put the time in? Are you willing to question yourself? It’s always fun to leave open the possibility of starting something new. Having said that, Benefit has a huge way to go. We are just scratching the surface.

What drives you?
We all work in the cosmetics industry, which is inherently frivolous by nature, but it makes a big impact on people’s lives. We are spending so much time, literally, trying to make people laugh. It is an awesome job. And very motivating. The creativity of the teams, whether it’s in packaging or promotions or events: You see it and get motivated for another day.

In Brief

A graduate of Oxford and INSEAD, Aurelian Lis joined Benefit Cosmetics in 2010 as general
manager of North America. Lis has a broad background, having worked at companies as diverse as Unilever, where he focused on strategic, operational and sales capacities for brands including Elizabeth Arden, and Delia’s Corp., where he held the position of chief operating officer. Prior to joining Benefit, he founded Prescribed Solutions, a dermatological skin care brand which was acquired in 2009. Lis, who reports to Benefit ceo Jean-Andre Rougeot, was promoted to his current position overseeing North and South America in 2012.