Sarah Mitroff 

Good morning, everyone. Welcome to Value Creation and the Age of Personalization. I'm Sarah Mitrouff. I'm an editor at CNET where I cover wellness, health and beauty tech. And I'm joined by Guive Balooch, the head of L'Oreal technology incubator. So to get us started, can you tell me a little bit about your background and the incubator itself?
 

Guive Balooch 

Sure, yeah. So it's been a great journey for us. So I've been actually at the company for 13 years. So I started at L'Oreal doing a bunch of jobs as I was an academic and then about eight years ago, the company asked me to think about how technology and beauty would intersect and what it would mean for our industry. And it was a it was a really a new kind of thing for us because when we came to CES that year was this is our seventh year at CES. There were no beauty companies there. So we were just kind of we had this very Kind of white canvas that we could think about and really innovate and try to imagine the future and see if the space would be something of interest for our, for our business. So my job basically the past eight years, so luckily, I've been able to keep this job for a long time, and it's been a lot of fun is to kind of create this products and services that can help us to elevate the normal experience of beauty to new to new levels, through technology. So I have a team around the world, you know, like a startup and within the company, and, and we're really product driven. And we're thinking every year about how to bring something new to the market that we can really, you know, create this space.
 

Sarah Mitroff 

And for people who don't quite understand the space like what's the purpose, what's the value of combining beauty and tech and what does that look like right now? what's available, what's out in the marketplace?
 

Guive Balooch 

Yeah, you know, it's interesting because beauty is such a it's a You know, our companies, 110 years old beauties you can see for hundreds and hundreds of years, you know so much evolution and beauty but the past 10 years, it's been accelerating so much. And I think part of that is this kind of necessity to meet the demand of consumers around how they are expecting to have the right product for them, how they want to have an ability to have a relationship with their product and service, which is different than, you know, we've seen for so long. So I think in order to achieve what you know, are the kinds of values that we want to have in terms of inclusivity bringing beauty to everybody, you know, we have this sharing beauty with all in this kind of bringing beauty for all and L'Oreal. In order to do that we have to have technology because there's only a certain limit to how much we can provide without understanding and giving an empowering people with data with understanding their Their needs in real time, and being able to provide customized solutions. And, and so I think there's a perfect marriage between beauty and technology. Because in the end, you know, everybody has a very individualistic view of how they want to present themselves to the world, and how they want to be seen. So, yeah, I think there's a lot of potential.
 

Sarah Mitroff 

And from what I've seen, kind of the earliest intersection of beauty and tech was using artificial reality and like artificial intelligence to kind of help consumers make decisions about what they're going to buy. What we're kind of the earliest examples that you have seen, or that L'Oreal has used to bring that technology into beauty.
 

Guive Balooch 

Well, I'll be a little bit arrogant because it's the easiest to talk about our example. But there are a lot of examples, I think, out there. I mean, we started the journey seven, eight years ago, as I told you in our first launch, was an AR experience called makeup, genius and Part of the end you'll see it up there as part of the kind of vision of that was that when you go to the to the drugstore, you see people looking at the, you know thousands of possibilities of shades, then they can't try on everything. So the idea behind that was to say, but with technology, we should be able to provide tools and services that can allow people to get to the shade that's right for them or the product that's right for them. But we needed to create that experience with a level of accuracy that people wouldn't have to do, like, you know, show where the lip was on the app. And at that stage. That's where we were with, you know, the iPhone four or five at that stage and the cameras weren't upgraded yet. So. So our first kind of, you know, push into beauty tech was to bring this to the market and it was a really exciting moment and we were able to kind of understand the complexity. Because at the beginning, we thought, okay, we just have the color, and we'll just show the color on the lip. But it's more complicated than that. Because people with different skin tones will have different views when they actually apply the product. So we had to kind of understand the physical versus the digital to ensure that the algorithm was working correctly. But once we got that figured out, I think this was the first big area that we saw technology would provide something really great for for beauty. So yeah,
 

Sarah Mitroff 

and how has that technology sort of changed the game for consumers right now, like when they're out shopping?
 

Guive Balooch 

Well, you know, when we started this, it was, you know, our, our little tech team, which is in r&d, and my team is, you know, 3040 people around the world. But we realized that it was becoming bigger than just our team. So we have a fantastic digital team in our in our group that has now been in charge of the past seven years of putting this technology everywhere. So they've put it on all of our brands like over 30 or 30. Two brands around the world and retailers on the app. So to answer your question, I think it's created really a new way for consumers to be able to find products and try them without having to physically try and if it's the wrong one, you know, have to throw it out and buy something new so so I think it's really transformed the relationship between consumers and also maybe a little bit of the maze and ocean of all the products that are available when they may not have the time to have for example and makeup artists to apply that for them. So now we've we've it's led to an acquisition led by our digital teams of modern face, which is a a tech AR company, basically, that has allowed us to scale has allowed the group to scale what we brought to to seven years ago, six, seven years ago with makeup genius
 

Sarah Mitroff 

right? And so that was kind of what's been going on now the future and you'll see this everywhere at CES now is personalization. Yeah. And your latest product or L'Oreal's latest product is really leaning into that with PR. So like, why is personalization so important? What value does that bring to people?
 

Guive Balooch 

Yeah, you know, it's funny because when we were when you say the values when we were kind of starting to create this team, my approach is very product and test and learn. So it's very different because I didn't build my strategy based on just thinking very, you know, at the beginning of what will beauty tech be we tried these different elements and through tests and learn, we realize the value of personalization. The story behind that is that we, we started with all of these services and tools at the point of sale or like how to get the right measurement of the skin tone, how to do things. And we realized that as far as we can go with giving people information about their beauty, it would never get to the level we really could aspire for our consumers unless we could get them up solution. That was just the Highly tailor made as what we were giving them in terms of information. So I'll give you an example. We did a launch of a technology that we around shade. And we found that 50% of women can't never get the right shade of foundation. And when you look at that, it's kind of weird. You think at this age of technology? How is it possible? Well, I think part of the big challenge around that is that you have way more skin tones of people than you will ever have the amount of products you can put on the shelf. So when we started the journey, we said, well, let's have a tool that helps people get the skin tone and get the perfect shade on the shelf. And we didn't succeed as much as we thought we would because the tool was great, which is what you see on that screen of its face. But then you would have the same amount of shades on the counter that you always had and and it wasn't helping people that couldn't get the right shade, get the right shade. So then we realized Ah, that's what personal ization is personalization is understanding and really getting the right information about consumers habits or skin tone or whatever, and then being able to link that to the formula that meets that level. So this was when we realized that personalization will be a big part of our future in terms of our business and in beauty tech, and also include being able to bring the inclusivity that we want through through our initiatives. So So yeah, so we've been kind of testing many different projects around personalization from Foundation, which I think is an important one. And now we're unveiling as he says, you mentioned that CS, a platform of personalization at home, took us about, you know, six, seven years to figure out how to do this. It wasn't easy because once you have something in the house of someone in their hands, you have to ensure the quality this that you have to ensure that everything works perfectly. There's you know, And you have to make sure you do it with the right elements and that it really works to bring something new. So yeah, so we I'm a big believer in the in personalization for the future of beauty, for sure. What
 

Sarah Mitroff 

does that process look like going from something like this to help you kind of match shade that's already on the shelf? Two now what you have with persona, what was that journey looking like?
 

Guive Balooch 

Yeah, I think it started with when I started my team, my, my boss, who's the head of r&d told me just make sure that what you do works like don't put something on the market that won't if you really want to do personalization, it has to work for everybody. And so, the way we started the journey, as we said on skin tone is one of the most complicated ones because the people that can't get usually the right skin, foundation or people with very light or very dark skin tone. So we have to ensure that what we did here worked on those skin tones and so we had to run studies on over 400 people and do all of the kinds of things that were much more technical. And it was a lot harder than we thought. Because when we first started we I took kind of inspiration from the paint industry. I said, Okay, like when you go to Home Depot, you give them a little Yeah, it did. That was not right. The skin does not work like a wall. So just if anybody wants, doesn't, so I because we, we figured it out. It just wasn't working. We take the color of the product and the color of you know what a skin tone and we would try to match and it wouldn't work. So that's when we realized, okay, we may have to build machines and have more accurate systems to develop the perfect shade. Once we got to a point where we felt like this was really working and that was at a time where people that never could get the right shade were finally able to get it. That's what led us to understand how can we expand this to make it work at home through a smartphone, which has much less accuracy doesn't have a professional that can allow the the Perfect measurements, and you don't have the, you know, luxury of having $1,000 calorimeter. at home. I mean, I don't know if anybody has ever I don't have any I'm
 

Sarah Mitroff 

sure some people who would like love to Yeah, maybe that's
 

Guive Balooch 

dollar calorimeter. And they'll be nobody here. But okay, no, but but I think, you know, we had to ensure that quality so the journey started with making sure that it works and that we were really trying to solve problems that were needed. Sometimes people want to do things like personalization, just for the purpose of the trend, we wanted to solve a problem. So I think once we got that then to get to your point about how do we get at home, we learned from that we created platforms around that. So all the things we you know, made mistakes and learn from we were able to then bring that to this new product that we're launching here
 

Sarah Mitroff 

and what kind of impact you hope that person has, what kind of like customers are you looking for and what are you hoping to kind of get to the next level with as product
 

Guive Balooch 

will the product itself? The personal product minutes you'll see here it's this little handheld device smart device. And basically how it works is that you have three cartridges that are inside the device. And you know it's funny because the device itself is kind of it looks very simple and elegant and it is but that's more the industrial design aspect inside we have to have these very precise motors because we needed to bring the product up and it's so that they could mix at the top. So the way it works is that we have we've designed it so that it can work not just for skincare but also for liquid lipstick and foundation. So the journey would be that you know, the consumer would download the application for example on skincare and it would you tell you based on some information and analysis of your photo through our AI algorithm, it would say okay, these are the areas that you need to focus on for your skin and give you a Set of cartridges like a like a coffee machine almost. And you would put these cartridges in the machine into the device. And it will based on these predictive algorithms that we have through partners we've worked with it will tell you your environment is like this today with pollution and humidity and pollen, and it will dose little bits of the of different amounts of each of your skincare like SPF and actives and and can moisturizer and customize it. And so to get to your question in terms of the skincare one for example, our vision on that is to create a relationship with consumers that smart around their skincare. So many times when I go to people at like in my home life or anywhere and I tell them I work for L'Oreal. I always get comments about I never know what right products use my skin. Nobody understands what's the right and I think part of the challenge is that you you have this kind of one to one relationship today with consumers and skincare. It's like they try things and then they try And they listened. But what if we could provide you the information you could follow and see and adapt your skincare? You could become more predictive, you could figure out what are the things that are working for you and what aren't what is not working for you. And so that's what our goal is on this system. It's not to create the perfect product, but to create a system that will allow people to finally understand and evolve their skincare with their, their own skin over time. So this is kind of our vision on the skincare one, the lipstick, it's more about expression and, and, you know, like I was mentioning to you about ar, ar, ar work, there's so many choices. So we didn't want to give, we didn't want to just say okay, you know, here's even more choices. What we wanted to do was to kind of allow people to try a trend so you could go into the application, we would analyze all the trends and Instagram for the day give you the top 10 colors and shades and you'd click on the one that you like the most. And it would dose at the top, the right amounts of the different colors and you mix and you would have that perfect shade. And it would give you the AR experience that we showed, you know, in the previous to virtually show you how it looks in real time before you even dispense it. And so this is more about being part of a trend, but not having to buy a million products to try them all the time. I'm into, to also allow people to create trends so they can create their own shade. And if they love it, they can post it on our on, you know, social media or on our platform. And then other people could, you know, start to see the York shade as a trend. So So yeah, so I think it's about really about inclusivity about managing a new relationship with people through the right services both digitally and physically with the system. So that's our, our goal with with the persona device.
 

Sarah Mitroff 

Yeah, and helping like there are literally hundreds And hundreds of different products out there. Now, like you said, it's very daunting to try to pick out what makes sense for you what works for you. So to be able to tweak that over time and not feel like you bought one product that now doesn't work for you, and you're stuck with it, and you have to throw it out if it doesn't work, exactly be able to kind of make those real time adjustments. When have you seen personalization? Like, in your developing of all this? When did personalization become table stakes? When was this like the most important journey to go on? Like, around that time?
 

Guive Balooch 

Yeah, I think it came a lot with just understanding what we wanted to achieve with technology. Because for me, one of the biggest challenges was, there were so many trends and tech, but I had to go back and it's really my team that did that. We had to really go back and think about what do people really want? And why will it help? Like will the technology really provides something that you couldn't get without going to a normal Normal experience. And that's a lot harder to answer than you think. Because if I wanted to, I could personalize every product today that we have like, but sometimes you don't need to personalize a product. So I think for us, we started started first with what do people truly want. When we did that we realize things like 50% of people can't get the right shade will never be able to solve that unless we personalize. For example, hair color, we started entire, you know, a new startup and a business around how to personalize hair color. You know, it's really hard when you go to, to the shop to see all the colors and understand which one based on my hair color history and so we knew that there was a need for personalization there. So it's a it's not a very, let's say process driven part that, you know, journey that got us to understand personalization was valuable. It was more these like test and learn and try new things. And then eventually we realized Wow, this is going to be important for how technology will affect beauty. How can we imagine that in 10 or 15 years people will not know what's the right product for them or not be able to have it precisely dosed for their needs, to the right amount, it just doesn't seem like something that won't come it's. So this is where we decided to invest a lot in this area.
 

Sarah Mitroff 

Makes sense, like making sense of all these products you see on shelves, both a kind of a drug store and a prestige level, and helping you decide so that you get the product that actually works for you. Interesting is so L'Oreal is not a tech company that you have said that to me many times. It's a like, leading beauty company. It's been around for over 100 years. What is it like to be a tech team inside a company that is not really a tech company? Or like kind of current definition?
 

Guive Balooch 

Yeah. Well, I'm doing it eight years now. So I have a lot better answer. Now. There ain't The past four or five years, because it's a journey, it's definitely a journey. I think it's weird because at the beginning, I would have told you that it was stressful because first I didn't know what we were going to do. And I felt that the I had gotten this big job and we were a start up in a team. And it was a big thing. And I'm not, I wasn't sure it was going to be anything. And I didn't know really how to manage that. So I, I just, we, you know, I tried to create a team of doers. And I just said, Let's create a team where we just try we do things and and I was worried that being at a large company, the number one beauty company in the world that what is value creation, what is the value creation for a team like mine, where we're doing things where it may not make a lot of money at the beginning and, and so, I think there's constant anxiety at the beginning. You're like, you know, is it the I would love to say that it's amazing. It's great. And there are elements that are amazing. And part of it, I think is I'm lucky to be in a culture of a company that's kind of chaotic in a good way. Like we're not a processed, driven company and L'Oreal or CEO says that all the time. And it's really true. So that allows a little bit of that test and learn approach. But even that being said, we we had to make things happen. And in the so I think at the beginning, there was that kind of stress. Then it was after we did this kind of makeup app, the makeup genius and we started to move it was can we scale, and scaling being a team of 30 people with 100 and thousand 100,000 plus employees and a large company with many brands. We did it we had to learn how to do that. So we started to kind of learn how to do that. And once we figured that out with a lot of mistakes, but also successes, we got to a point where then it was about how do we create money. So every time there's something new, but I think the way I've felt about being a small it's like people say all the time but they don't understand You're very well, because you're a tech team. But maybe it's an advantage. It's an advantage not to be understood if you're an entrepreneur because you can touch everything. We we get to go from, you know, industrial design all the way to manufacturing a product, what kind of team would have the ability to do that in a company as large as ours, now have the freedom to do that. So with all the challenges, there's also great autonomy and great, you know, maybe, maybe not everybody understands, you know, what we're doing and how we're doing. But we're upskilling while we're able to do things that are very broad, so they're good and bounce of it, I think much more good and bad than bad. Now, we're really at a great inflection point, but always, never wake up thinking that I'm amazing. I can tell you that there's a lot of a lot of things we have to do. So
 

Sarah Mitroff 

I'm curious what kind of growth Have you seen, now that you've been this tech company within like a beauty, personal care what kind of growth Have you seen? from other competitors that are now following in those same footsteps trying to bring in technology.
 

Guive Balooch 

Yeah, I think, you know, as I told you seven years ago, when we came here, I didn't remember seeing one beauty company. And now there's so many startups and large companies. And, you know, the point of me saying that isn't to say that we were the first has more to say that we were at the beginning of this journey. And now there's a lot and I think it's great. Like yesterday I saw at CES unveiled, I saw a bunch of beauty tech, and it makes me happy to see that this space is growing because we need to have that in order for the industry to rise. Firstly, and but I think one of the challenges that comes for us when that happens is understanding what what are the right bets we want to take because there when you see the space becomes very saturated with lots of things. Then you get lots of pool from many directions and it could create a risk that You're doing too many things, or maybe you don't know where to go. So we've had to keep our head down and keep thinking about what are the, you know, the big, the big services and the big problems that we want to solve and and to not get too, too focused on the fact that there's a lot of trends now. On the other hand, I think now I see that I don't think that beauty tech is any more niche. I think it's becoming something that's really going to shape the future of all of our companies in this space, because it's just a demand that consumers are having that we have to meet. And I think if we don't do it, it's going to be startups that may not be beauty startups that that reinvent the space. People don't want to be told what to use anymore. They want to be part of the conversation through technology. So yeah, so I think it's just like the space has just exploded, it's incredibly fascinating. And also I'm happy to see that it's it's good to have those challenges.
 

Sarah Mitroff 

Yeah, it feels like we're kind of right on the precipice because for the longest Beauty tech was more niche really expensive devices that people who were very very passionate with buy and now it's expanding to just more and more the everyday consumer yeah um what kind of technology does L'Oreal leverage what kind of trends are you guys looking at how you're using data to like make these decisions about what you go after versus which trends you just kind of don't get sucked into?
 

Guive Balooch 

You know? I would love to say that our process is very defined. If anyone ever asked me to write something I no one has that probably for this reason. If everyone ever asked me to write you know, a like, you know, how did it work? How did you choose? I would like have it would be you know, writer's block because part of it is just falling into different meeting people that are interesting in different spaces. I've been very lucky and our team has to work with incredible people like our UV sun, you know, that little sensor you see up there, we worked with even Bihar who's an industrial designer in San Francisco, and he made me think more about how Industrial Design and Technology meet. And, and we've worked with great tech technology, scientists like our professor at Northwestern that helped us get, you know, access to great technology. So, you know, I'll meet very interesting people, my team will meet very interesting people. And we'll just kind of we built the strategy based on trying to make things that make sense. The challenges when you look at data, like and now maybe we have to look a little more we've been talking to my team, we've kind of debate about this kind of stuff all the time. Do we do we look at trends do we look at consumer insight before we choose a project or to enrich a project when it's a space that still is new? It's not yet. I mean, even if it's become something, you know, highly dynamic. It's not. It's not like something that's been around 100 or 250. So it's been, you know, maybe five, six years. So I think our processes again, we try to solve problems that we think are very difficult to solve. If you didn't have tech that would end when we use that as the bar, the project start to reduce very quickly. You know, we'll see a project or a brief and will be like, you really do not need technology to solve this. And sometimes it comes from us, and we were just like, Yeah, why are we doing this doesn't make any sense. And I think having that it created a little bit of a easier way for us to get to the debt service. And when we did that, we saw a lot of these kind of pillars like personalization, like, you know, data and and precision and devices and all of these kinds of came out of that and built this the way we kind of move forward. So a combination of interesting people like it from different industries, and I'm listening to consumers as well, of course, but all of it and nothing that was really well defined in terms of a strategic, you know, document or a way of figuring out Yeah,
 

Sarah Mitroff 

and you've touched on like the hair color makeup genius stuff that's directly related to kind of making a buying decision about something that will work for them. What was the like impetus or the data that made you want to go after UV tracking?
 

Guive Balooch 

You know what? It started in a in a very complicated way. Because and this was the first time in my journey of this beauty tech, that we had a technology but didn't know how to get the right consumer experience with it. And I learned from the experience that it's the most difficult because, and the story is that I met this professor named john Rogers at at Northwestern and he had this incredible technology about skin tattoos that could measure things on the body. It was like a wearable that was attached And I was like, Oh my god, it's like, this is so cool. And he had all these kinds of really cool things like the first battery free wearables and all this and, and we sat down on the team, and we're like, how are we going to use this technology isn't. And for many years, we thought it's more for research, like we could measure how our skincare products are working. And it's easier when you have something smaller. And then we we were talking to different people in the group. And we have a brand and one of our brands is working on skincare. And some of the people there were telling us that, you know, it's 50 years I found this out, and this is when I immediately understood when to use it. It's 50 years that we we've seen in the beauty industry, the first sun filter, the first sunscreen invented, and the past 50 years we see so much innovation in the products, but melanoma has been on the rise every year for 50 years. So it means and you know, people ask me all the time, how do I look younger sons is the first thing I mean, of course, this was scientists and me because I'm thinking about first, but it's really the most important is to protect yourself from the sun. So what's happening there? Why aren't people changing their behavior? And I think part of is so much of it has to do with cultural, where you lived, you got geographies, skin tones. Like, for example, I have a medium that dark, medium to dark skin, some people would tell me what my skin tone, I never was told to wear sunscreen. So all of these things can create an environment where you don't understand how much real exposure you're getting. So when we saw that, we thought, Well, what if we could create a wearable and we wanted to do something cool, because we as we said, we're not a wearable company. We're not a pure tech player. So we wanted to do something beautiful that people could wear and it could be interesting. And so we started with that kind of tattoo second skin like one which was a little heart and it was called my UV patch. And we launched that we and we had about 2 million that we gave for free. And it was a really cool campaign. It was a three day patch, you use the app and it could tell you how much sun you've been exposed and how protected you were. And we saw that people, there was a set of people that really were changing their behavior. So we said, well, what if we could do something more longer term? So that's when we approached fuse project and Eve with the tech that we had from Northwestern and we said, we want to create a beautiful wearable we have this tech It looks very like Star Wars The star track it had like a lot of gold. I love that I was like people, but apparently, you know, my taste isn't isn't what everyone wear. So we went to a great designer, and we launched the sensor and this is like I'm wearing it right now. And what's really cool about it is that it's it's battery free, so you don't actually have to charge it. So all of those kind of cumbersome parts of wearables where you where's my cable, you don't So it works by just, it stores it. And it's kind of like Apple Pay in a way because like it just uses the antenna, just tap it to the phone and it tells you how much UV you've been exposed to. And so we launched that at the Apple Store last year in September. So it's been a little over a year. And it was the first beauty products that was sold there that's been there. And so we were really excited about it. So to answer your point that I we fell upon it through the technology, but I think in the end, the result was really good because I may not be able to get a million people. I don't know if a million people will change their habits but even if some will be able to it's a good movement in the right direction when it comes to son Karen son safety so so yeah, so sometimes it doesn't have to be a personalized product the way you think it could be personalized information that helps you use the product the right way. And that's an example of what we do.
 

Sarah Mitroff 

Absolutely. So as you well know the beauty industry changes constantly. How do you guys stay ahead of What's going on what's going on out there? And what people are going to want to see next.
 

Guive Balooch 

You know, it's very, it's a very dynamic industry like you just alluded to, you know, what we see the consumers want today what is is different than it was two three years ago in terms of trends. And I think that's a risk because in our industry and hardware, as we all know, in this room, it can take a year, two years, three years to develop a product. And so so what I think though, what I found is that if you look at the trends, they're changing every minute, if you look at really what people have always wanted in their beauty habits, they haven't changed for 100 years. if not more, I'd like I meant mentioned about skincare. People just want to right have the right product, they want it to evolve with their skin, they want it to know they want it to work as they change their lifestyle and their habits and their environment. Makeup they want to choose the right they want to have the right ability to try the trends at the end of any given moment. And so I think if we focus on those kinds of big needs, those don't change, then there's of course, you're right that there is a lot of things that we have to be aware of in terms of consumer expectations around the space that's much more dynamic. And that's just about being plugged into our company. This is an advantage of being a startup within a large company. I will never know all the things that all our chemists know about the trends in terms of products and textures or our marketing people know in terms of what people are aspiring to look for in terms of the packaging, for example, are the related the story of the product. So that's where we leverage the great people that we have within the within the company. So it's a combination of the two that I think keeps us on our toes, and sometimes we're able to meet it and sometimes we're a little bit late, or maybe you're too early, but our goal is to kind of find that right balance. And likewise, technology changes a lot. It's constant Really like we're getting new and newer innovations, how does your team kind of continue to see what's coming down the pipeline and how you guys can utilize that kind of technology? I think it's first of all expanding, its expanding our relationships. When I first started this team, I had a lot of relationships in the health industry, I came from pharma. So even if it was 15 years ago, I came from, you know, I did my PhD and kind of biology and I had a lot of pharmaceutical background. So I took had a lot of people I knew in health, and so we learned a lot from other industries. So I think learning from other industries helps us keep our connections and understand where the world is moving and not just where our trends our tech trends are going. And applying those to beauty has been a way to keep you know, a head on top of that, working really well with our consumer insight teams to understand and and to really, really dig deep and What's happening in terms of the of the world of beauty over time? And what will people expect next year in two years and three years about, about what companies in the beauty industry should give, but in terms of tech, pure track tech trends, to be honest, just being connected understanding, having the right relationships with people all around the industry, and, you know, makeup genius, the one I mentioned to you, it came from the animation industry. So like a typical team may have gone to a, like an agency. I'm not saying agencies are bad, of course, are great. We have a lot of agencies to work with. So if agency or I'm not saying, but if you're trying to look for a tech trend, that to create a service, you need to go to industries that are really innovating in that. So augmented reality seven years ago, the biggest movement in that was animation. So when we went out to look for the trends, we didn't go to an industry that was less mature, we went to animation industry and so that our first experience with that was working with a team that was working on Benjamin Button. And so they have the tracking, and they have the kind of technology on the AR, that allowed us to create this incredible experience, I found that actually, that works really well, because then you don't have a lot of issues in, of course, we have to button up IP and all these but not as much. If you go to people that would never think that beauty would be a place that they'd work. And then so we keep the we keep on top of the trends and also are able to make relationships that help us move quickly, without having to worry about a lot of that kind of business development challenges that come with if you had, you know, had a very competitive space in terms of, you know, your own space.
 

Sarah Mitroff 

What kind of challenges do you guys encounter both developing and then kind of bringing to market something that's a smart beauty device?
 

Guive Balooch 

Oh, I could. That's a five hour question. I did not see these questions. I think, for me the biggest challenges so I've had so many Many I think the first is trying to be fast and understanding what compromises are the right ones that we can take. I'll give you a million examples I'll give you one when we first launched makeup genius it didn't have the the eyebrow, the brow brow products and everyone's like oh we should add the bra prize but we had to be fast and we were like what can we just wait till v2 and what do so I think speed but value creation that was one big challenge for us. Accuracy oh my god is it completely it's way harder than I thought to do this like I have a advanced degree so when you have a PhD you always think that you're you know, at least I did. I was the smartest one at know you're not like I spend hours and hours talking about things like a millimeter of packaging difference or and I think our partners have taught us that like work you know, being able to put something at the that working with bringing something to Apple's retail environment. We learned about all the details and all the things and that made us so much better. And at the same time, it's it's very challenging, we have to be very meticulous and yet fast again. So accuracy I think then choosing the right projects, we've made mistakes, we haven't been perfect. Sometimes I, I'm 100% thousand percent convinced that what I'm doing is the right thing. And then I realized it wasn't right. So how do we know when to say no? we drag on things sometimes for a long time. So for us, it's really about, you know, figuring that figuring that balance out too. So yeah, so I think it's a lot of those elements go into go into play. And then one of the ones that's been very important is is really our partnerships. Like we couldn't do this without the right team internally. Obviously I have this incredible team internally which I am so blessed that they stayed with me a lot of them for so long. But externally, we have to treat our partners as real partners. And we need things that are kind of, you know, sometimes very difficult to give to us at the timing we need. So we've had to manage relationships and partnerships in the way. So all of those have created challenges. But I it's like something that we were, we've learned so much over the past seven years. And now we feel a little bit like more confident that we know how to navigate that. But all of those come into play in every project that we do. I think if you don't have that, then you're probably not ambitious enough. So yeah, so. So those are the things that we face pretty much every day.
 

Sarah Mitroff 

What kind of future technology or even current technology that we have that we can apply to beauty? What kind of things do you see or do you want to see in the future of beauty tech?
 

Guive Balooch 

Well, I mean, obviously, like, the things that we're doing now in terms of personalization, My dream is and my team makes fun of me all the time because I always say the word values a lot and they're like, okay, we get other values but, but I really feel like this kind of this this one that just is so important as inclusivity for me, like there should be everyone on the around the world should be able to get access to products that are made for them that that understand their needs that they can understand. So I really want to push this field of not just Personalized Products but services as far and as close to everyone as I can. And I and I'm sure there will be others in our in our industry that are doing the same. So I hope for our entire industry, it will go there. But beyond that, like I just really big into right now. Precision devices and precision experiences meaning I just feel like in five to 10 years, some of the most complicated and artistic and difficult things to achieve and beauty will become so much easier thanks to smart tools but I That that end part of the, the, you know, the personal launch that we had. We started that project many years ago, but the software part wasn't ready. So we could, we could dose lipstick, liquid lipstick, but we couldn't show people with AR what it would look like and we couldn't do the trends and AI kind of work. And so then we realize it's not going to work together. So I think this area of it's not just the device, it's going to be the ability to do spectacular things to the face, and to your beauty habits that you'll be able to achieve the beauty results you never dreamed of. And I think that there will be so much space for systems with physical lens digital to come together to provide spectacular and magical beauty experiences for so I'm like very interested in that space. And I think that and being able to bring in creativity and then there's another area of sustainability. I'm a big believer that technology for good and technology. You know how can we You know, create services where we have less water usage. And we are have projects in our team that we're looking at that, about how to use technology to do that. And we're to be fully transparent at the beginning of that journey and my team, but we're so excited about the ability to, to bring, you know, technology to point where can be also good for the world in terms of waste, and in terms of sustainability and all of that. So. So I think, yeah, those are the areas that we're really big on. And as you said, it's moving so fast. Maybe next year, I'll have other things and a lot more stress about other things to deal with. But right now, those are the ones that were really passionate about.
 

Sarah Mitroff 

So we do have some time to open up to a q&a. So if anyone has questions you can line up there's mics in the middle of the room. Feel free. Okay, some people some time.
 

Guive Balooch 

It's always the first person that's okay. We have a break.
 

Sarah Mitroff 

You're right. Thanks for the awesome talk. I mean, digital health as well in personalization. And I want to get your experience around. How do you deal with your devices and FDA and the timeline for the validation that you have to go through for medical class two class one, how do you deal with it?
 

Guive Balooch 

Okay, so FDA so we every device that we're working on right now is not medical device, like a class one or of class two medical device. Yet, however, we have some new projects. And we're working on right now some medical devices that are class two and class one medical devices. And so we have now a new team that's within my team that's on the r&d side, that's working on how to navigate that. I'll tell you that we're, we're learning we have a lot of, you know, we're working with partners that understand the space A lot and I think to, to answer your point about that we the future of beauty to do some of the things that I just mentioned, we have to go to that level, there's no way to avoid the fact that we will need some class one and class two medical devices. So we actually have a team on that now, in terms of the devices that I showed you like the UV sensor and all that those fall into non medical device in terms of we're talking just regulatory, non medical device products, we've been lucky a little bit on those to be able to go fast and learn doesn't mean that quality doesn't matter. Because for us at being the largest beauty company where I say that a lot of our startup partners because we can't take that risk and any risk in terms of quality, being the kind of company we are in the terms of the scale. So we do have a lot of strict rules in terms of how to make the projects and we rely on our partners, but the new FDA field this new kind of this bridge between medical devices and beauty is becoming a big, a big trend and a big point and so we've we've had had to develop an internal capacity to, to not only work with outside partners, but understand how we can navigate that and also ensure that what's happening outside is with our partners is actually working. So we're at the beginning of that, but it's something that I think will move very fast in the next few years. Thanks, one, one quick personal life question is your team based in New Jersey or in San Francisco or in New York, because I'm familiar with the office you have in San Francisco?
 

Guive Balooch 

Where's your team all over? So all of the ones that you mentioned, so we have a team in New York and New Jersey. In San Francisco, we I have a team now in China, in Shanghai, and one in one in Tokyo, and one in France. So it's a bunch of people all around the world. I'm in an airplane like every other day, so I try to see them as much as possible, but it's a it's a small team that's very well connected but spanning everywhere around the world. Thank you. Sure, sir. So, guys, I think, tremendous actually thought and insights, just just curious about the use of AI, actually, especially in this aspect of personalizations. With all the challenge about, you know, getting the data, the buys, you can actually, I think you, you know, which is implying, I think this personalization, just curious, I think about the way you wanted to implement actually this AI kind of strategies.
Yes, care.
 

Guive Balooch 

For me to tell you my strategy, which is maybe different because we have so many tech people right now working inside our group and they have different strategies. For us, our strategy has been focused completely on the service, meaning that we want to develop algorithms that have high quality and actually work if they're AI based greats because they have to become smarter over time. A lot of the ones we did before we're not AI. Like when you look at the shade tone, what this is, it's skin tone one, it was more about getting the right formula than it was about creating a neural network. So we just want to make sure that the product, the experience works. So we start with that. Then in terms of the AI implementation, the more we're moving at home, the more we realize we need more of that kind of AI system. But our approach has been very, very user centric and or hum, a humble approach, because we were at the beginning of that, where we don't store any of the data that we're using with any personal data, because we just want it to be fully around creating smarter algorithms over time. So we start with what do we want to achieve? And then we implement the AI system around that. I found that at the beginning of our journey, the past seven years, I spoke a lot about AI and data, but we weren't doing as much as I thought, really, we weren't doing as much as I felt we were going to do because when we have to solve the problems, we realized a lot of them were computer Vision challenges. They were, you know, typical algorithm challenges. And now we're really getting into it with these at home devices. So. So there's that. And I think our approach has been very much about the product because we're such a product and service driven team. Not tall enough for this. Mike. You mentioned the acquisition before in tech, do you see the industry falling more in that capacity making more acquisitions of buyers of startups? Or do you see more partnership based in terms of what you're going to be looking at or what the other competitors going to be looking at in the industry?
 

Guive Balooch 

I think it depends. It will depend on how much we believe that the kinds of platforms that we're creating will bring change to our company organization and our team. So I mean, the acquisition I talked to you about with AR, there was a moment in time where there was just so much necessity to scale quickly and the need for internal competencies around AR That the only way we felt to be a leader and to achieve that was through acquisition. Personally on my team, almost everything we've done about 90% has been strategic partnerships. And I think part of that is because our space is still we're still a relatively small team, it's still a relatively small part of the the p&l in terms of probably everybody today in our industry. And so I think that acquisition model may increase as we see value creation in terms of the bottom line over time, maybe then it just will help accelerate today I see more partnerships, more maybe investments and, and strong relationships with startups that are working all around the world. But the acquisition model, I think, will come just as we've done our acquisitions over the past hundred years, which is when we really believe that it's something that needs to be an internal competency. So I do think it will, it will obviously increase if this space becomes something important they will never be able to only be done You know, through internal internal development, yeah.
 

Sarah Mitroff 

Hi there. And thank you again for your talk I was interested in as this product is increasing inclusivity in beauty. And one of the big challenges of using facial recognition is that there is such a strong bias in the data set in the analysis. So what steps are you taking to make sure that the products that you're releasing are diverse and allow for inclusion in beauty where it moat for the most part until very recently, was very forward facing two white women in particular?
 

Guive Balooch 

Sure. I'll give you a very nice answer, which is my experience and that, I'll tell you, I'll tell you an example. The best way to answer your question is through an example. When we first started the shade, the shade and I have too many stories around that, that I've went around to make up genius and I've went around The foundation, as it's an important question to answer, I'll give you both examples. So with foundation, as I told you 50%, people can have the right shade. There was a moment in time where we were developing the algorithm, where we found that people that were on the very high ends of the spectrum, it wasn't working. And we had a decision to make, do we launch that? And then learn over time about the data and try to make it better? Or do we wait to launch and I mentioned to you, Sarah, about how we need to be fast. But it was a risk that we didn't want to take because we were like, We absolutely do not want people coming to us and saying that your algorithm didn't work because I have this certain skin tone. So we had to spend another six months. And the only way to solve that is by testing it appropriately. You have to test it on the people that have very light skin all the way to very dark skin. You need to work with experts, internally that understand women of color, for example, when we're working on Foundation, we have an entire team around that. So I think I might Answer is more technical in terms of the ways just but it's it's about testing the right way and having the right bar that you have to achieve. We had the same thing with the makeup app. There were a lot of challenges sometimes when people and it's not even just the issue of ethnicity it can be if your lip was very similar to the color of your skin tone. We had challenges in in the tracking, sometimes the lip wouldn't. You couldn't see the lipstick when you moved if you had a skin tone that was similar to your lip tone. And we it was just unacceptable. We couldn't launch the algorithm knowing that so we had to use a different methodology to actually get it was obviously the partners that we had but we had to actually we created this room that was all black paper my team was sitting in the front would tell you we can tell you for hours about that. But it had lighting and all kinds of directions and people with very different skin tones and lip tones to come in to make it work because If we launch that, again without having it, having it work on everybody, because, of course, sometimes you have to, you know, it's not going to always be the level of accuracy. But if you, I think when you reach those challenges if you make sure you try to solve them before you put it on the market, that's how we have not have that issue. And we haven't had consumers complain, but we have seen in in all industries, including ours, when not done that way, it can create a lot of problems. Yeah.
 

Sarah Mitroff 

Great. Thank you all for joining us this morning. It was great to have you and have a good CES.
 

Guive Balooch 

Thank you so much. Thank you for listening. Thanks.

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