Jan 29, 2024 · 1h 31m · how-i-built-this
Drunk Elephant: Tiffany Masterson
0:00 / 0:00
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of How I Built This, host Guy Raz interviews Drunk Elephant founder Tiffany Masterson, tracing her journey from a stay-at-home mother of four to the creator of a clean skincare juggernaut acquired by Shiseido for $845 million.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 35.8% of the talking time here. How this is scored →
Guy as informed peer 4.2 Guest teaching 3.6 Guest disagreement 2.2 Guy pushing back 2.1
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 47:05 Defending the Drunk Elephant name against industry criticism
Masterson adamantly rejects Raz's suggestion that the name was confusing or should have been moderated, insisting that she would rather fail completely as herself than compromise her instincts.
Hardest push from Guy ▶ 54:05 Host challenges guest's Sephora-or-bust retail strategyRaz actively plays devil's advocate for Masterson's husband's family investors, challenging her dangerous gamble to ignore smaller boutiques in favor of holding out exclusively for Sephora.
Biggest teaching moment ▶ 36:40 Educating host on cosmetic ingredients and barrier functionMasterson breaks down cosmetic formulations, correcting common assumptions by explaining how essential oils, drying alcohols, and silicones compromise the skin's acid mantle.
Guy holds their own ▶ 20:05 Host points out the glaring flaws in Wonder Bar's unit economicsRaz cuts directly through the Wonder Bar backstory by demonstrating how an $18 cost of goods made national wholesale and direct-response television margins mathematically impossible.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| Early Life, Marriage, and Motherhood | 4 | 1 | 1 | 1 | Guy Raz guides Tiffany Masterson through her upbringing, marriage, and family life after the Enron collapse. The tone is highly collaborative and reflective as Tiffany openly discusses her early domestic ambitions. | |
| Early Entrepreneurial Trials: Meatballs and Pantries | 3 | 1 | 1 | 1 | Raz and Masterson discuss her comical first attempts at home business ideas, including frozen meatballs and pantry decluttering. Raz playfully engages with the business logic behind her early efforts. | |
| Direct Sales and Lack of Product Conviction | 4 | 2 | 1 | 1 | Raz inquires about Masterson's stint selling Arbonne multilevel marketing products and her realization that she lacked conviction in products she did not create. | |
| Discovering and Selling the Malaysian Wonder Bar | 4 | 3 | 1 | 2 | Masterson explains how she began retailing the Malaysian Wonder Bar soap for $105 per bar. Raz expresses astonishment at the retail pricing and consumer demand. | |
| Scaling Wonder Bar USA and Supply Chain Realities | 5 | 4 | 2 | 3 | Raz unpacks the complex family distribution structure and the unrealistic supply cost of $18 per bar. Masterson explains how Guthy-Renker ridiculed their cost margins. | |
| Supply Collapse and the Beautypedia Wake-Up Call | 5 | 5 | 3 | 2 | Masterson recounts the turning point when Beautypedia gave Wonder Bar a scathing one-star review despite its cult following. She explains why she trusted the review rather than dismissing it. | |
| Pivoting Toward a Proprietary Skincare Line | 4 | 3 | 2 | 2 | Masterson describes deciding to develop a full skincare line after Sephora noted they do not carry single SKU products. Raz probes the awkwardness of having to sell remaining inventory while planning her pivot. | |
| Listener Interlude: Grace on Southwest Airlines | 4 | 6 | 3 | 2 | Following the listener interlude, Masterson details her self-directed ingredient research and formulation philosophy around the 'Suspicious Six.' Raz questions how an untrained individual could establish clinical causality. | |
| Marula Oil and Benchmark Labs Formulation | 4 | 4 | 1 | 1 | Masterson discusses choosing Marula oil as her hero ingredient and paying Benchmark Labs in Orange County to retain intellectual property ownership of formulations. | |
| Creating the Drunk Elephant Brand Identity | 4 | 5 | 5 | 4 | Raz challenges Masterson on naming a clean skincare line Drunk Elephant despite widespread industry warnings that the name was confusing and inappropriate. Masterson firmly explains her refusal to dilute her personal vision. | |
| Direct-to-Consumer Launch and Investor Friction | 5 | 4 | 4 | 5 | Raz plays devil's advocate for the financial backers who wanted broad distribution, while Masterson defended holding out strictly for Sephora. Raz presses her on the extreme financial and relational risk she took. | |
| Partnership Reset and Grassroots Editorial PR | 4 | 3 | 2 | 2 | Masterson discusses resetting company equity and executing grassroots PR by directly emailing beauty editors with neon, highlighter-style packaging. | |
| The Sephora Breakthrough at Cosmoprof | 4 | 4 | 2 | 1 | Masterson recounts the fateful Cosmoprof conference where Sephora executives visited incognito before ultimately signing a retail partnership six months later. | |
| Sephora Rollout, Employee Sampling, and Hiring Nathan | 5 | 6 | 2 | 2 | Masterson explains her strategy of providing full product kits to all Sephora retail workers and her subsequent recruitment of Nathan, the chemist who wrote the original scathing review of Wonder Bar. | |
| Private Equity Growth and the L'Oreal Lawsuit | 5 | 4 | 3 | 3 | Raz and Masterson discuss the rapid growth that attracted major beauty conglomerates, the integration of private equity, and the L'Oreal patent infringement lawsuit during their sale process. | |
| The $845 Million Shiseido Acquisition and Legacy | 4 | 3 | 2 | 2 | Raz and Masterson explore the $845 million acquisition by Shiseido and the psychological adjustment of going from tight family budgeting to immense wealth while retaining her original creative role. | |
| Reflecting on Hard Work Versus Luck | 4 | 3 | 2 | 2 | In the closing segment, Masterson answers Raz's signature question regarding luck versus relentless hard work, highlighting the exhausting early morning hours she put in. |
Statements from this episode (23)
Masterson: Arbonne's Mercedes sales targets are 'completely impossible'
“Completely impossible numbers, unattainable.”
Masterson: Large Wonder Bar skincare cleansing bar retailed for $105
“The big bar was a 105 dollars. For, to sell, that's retail.”
Masterson: Brother-in-law bought $300,000 of cleansing bars to own North American distribution
“They called my brother-in-law, and they said, do you want to buy 300,000 dollars worth of bars? So he ended up with 300,000 dollars worth of bars to sell.”
Masterson: Wonder Bar USA paid $18 cost of goods per cleansing bar
“Cost of goods, to buy the bar, they were buying the large bars for 18 dollars a bar.”
Masterson: Sephora rejected Drunk Elephant's first product for being a single SKU
“I've reached out to Sephora. They've told me, no, we would never carry a single SKU. Like, in other words, if you don't have a group of products, we're not interested.”
Masterson: Nearly every skincare product on the market contained 'Suspicious Six' ingredients
“Every single product on the market I could find had one or more of these ingredients in them. Except for like a pure oil that you might buy at like a Whole Foods or something.”
Masterson: Drunk Elephant paid $15K–$30K per formulation to own its IP
“No, I think each product was, like, around 30. Yeah, it was expensive. It made it could have been less, it could have been 15, but, so a lot of times, skincare brands will go ask for something to be made, and they don't own it. They just can use it. We owned t…”
Masterson: A publicist pitched a $30,000 focus group for brand naming
“I hired this big, fancy publicist in New York, and I was super excited to work with them, and she actually asked me to put together a focus group. It was gonna cost me 30,000 dollars to talk about the name.”
Masterson: Brother-in-law invested over $400,000 to fund early Drunk Elephant
“Again, Charles is in over 400,000 dollars at this point.”
Masterson: Brands should anchor in one retail channel rather than spread thin
“You don't want to spread yourself too thin. You want to get into one place and really get your feet on the ground.”
Masterson: Drunk Elephant accountant held 7% equity early on
“Like, literally, like, David had seven percent of the company at that point.”
Masterson: Drunk Elephant did zero paid advertising from launch until 2023
“So I decided not to advertise early on. Yep. Never advertised till last year, actually.”
Masterson: Sephora waived its $1M sales mandate to launch Drunk Elephant
“So it was there in Jackson Hole that she told me that, yes, we want to pick you up, all six products. She goes, if you don't sell a million in the first year, we won't kick you out.”
Masterson: Sephora put Drunk Elephant in all stores by September 2015
“And it was Cindy, and she said, Tiffany, there's a thing called the favorites wall at Sephora, and we want you on it. And it's every door. By September of 2015. Every single Sephora. By September of 2015.”
Masterson: Brands do not pay placement fees for Sephora's Favorites Wall
“So when I got the call, we're going in for free. Because you don't pay for the favorites wall.”
Masterson: Drunk Elephant gifted full sample kits to every Sephora employee
“I called Patrick and Charles, and I said, I think that we should put the money we just saved into sampling, and I think we should give every single employee at Sephora the littles kit, which was the whole line, but little version.”
Masterson: Early Beautypedia reviewer gave five stars before joining Drunk Elephant
“Nathan is my head of product development SVP of product development at Drunk Elephant. He is the one that wrote the review for the Wonder Bar... And he had reviewed four of the products, I think, maybe five, and they all got five stars.”
Masterson: Drunk Elephant was the fastest-growing skincare brand in Sephora history
“For becoming the fastest growing brand in the history of Sephora. The fastest growing skincare brand in the history of Sephora.”
Masterson: Drunk Elephant gave equity to every employee after 2017 buyout
“I met with the private equity team trying to, you know, start to really discuss how we want things set up, and I decided I wanted to make everybody an owner of the company. Everybody in the company was gonna have a piece of the company.”