"No cream should have more ingredients than you can count on one hand." This was the condition when the Swiss Anna Pfeiffer developed her vegan natural cosmetics brand FIVE Skincare . She wanted to create the best natural products with a maximum of 5 ingredients and thus make cosmetics understandable for everyone. In September 2017, she had a successful appearance on the TV show "Die Höhle der Löwen" , which helped her and the brand to become very well known. In an interview, she told us what happened afterwards, how FIVE came about in the first place and what the everyday work of an entrepreneur looks like. She also gave interesting insights into the e-commerce business and revealed her 3 ultimate tips for prospective founders.
Anna, what motivated you to start your company?
Before founding FIVE, I worked as a freelance graphic designer, but increasingly lost interest in my job. I felt the desire to create something complex and independent that would better utilize my skills, which are quite broad. Then, during a break, I wanted to take care of my sensitive skin. At that point I had no idea about skin care and was simply overwhelmed by the flowery and overblown beauty promises. The interchangeable brands and endless ingredient lists didn't make product selection any easier. Ultimately, FIVE was born out of my own need for an understandable and natural skincare line. When the final idea crystallized in my head, there was no stopping me.
What is FIVE's recipe for success and why do you think customers buy your product or in your online shop?
Our recipe for success is the almost dogmatic positioning of offering natural cosmetics with a maximum of five ingredients per product. This makes our story very easy to tell. Another plus is our catchy visual appearance with the distinctive FIVE brand and the blue bottles. It was clear to me right from the start that we had to set ourselves apart from other brands in order to even find our place in the highly competitive market.
From your point of view, what does it take to successfully run an online shop or an e-commerce business and what knowledge or skills should you have?
I think it's getting more and more difficult in this area because the competition never sleeps. At the same time, you need less capital, for which all sorts of technical connections exist. The pioneers in e-commerce still had to spend a lot of money here, while we install an app with a few clicks. So there are pros and cons to getting started now. Today it is possible to simply start with an online shop and see how far you can get. You should definitely have patience and the will to familiarize yourself with basic technical topics so that you don't have to outsource everything. If you don't have either, then you need a lot of capital because rapid growth and external partners devour a lot of money.
You are a solo founder and have built your company all by yourself. Would you do it the same way again or do you also see disadvantages in it?
While I'm in the spotlight at FIVE, I'm not entirely a solo founder. My partner Felix is also a partner in the company and gave me intensive advice, especially in the early days. We have very different skills and I had to learn the economic background first. Nevertheless, the responsibility was always very clearly in my hands and I think it's good that we had this clear division. For me it was an advantage to found and build up FIVE on my own responsibility, but that depends very much on the personality. Building a company comes in waves, sometimes it goes according to plan, sometimes not so, and it's not always easy to motivate yourself for this marathon. It would be an advantage if several founders could spur each other on. At the same time, my path gives me all the freedom you can imagine. I can dispose of my time completely freely. That's very important to me and that's why the solo path suits me.
How much start-up capital does it need to start and which costs do you underestimate the most?
That cannot be answered in general. Basically, there is always the question of whether you want to grow organically or whether you need to go faster. Completely different scenarios for the start-up capital can be derived from this. The rapid growth necessitates a high marketing and personnel budget, while organic growth can break even faster, albeit at a low level.
Where did you get help and support when you didn't know what to do?
If I don't know what to do, and that still happens very often today, I always try to do some research first. Sometimes it can take days for a solution to emerge. Personally, I'm more the type of person who then bites down and digs until the problem is solved. I ask others less often, I still have to learn that.
How do you manage to find the right balance between sustainable entrepreneurship and successful growth without losing sight of your principles and corporate values?
For me it's not so much an either/or question, sustainability is an integral part of our business. I believe that environmental awareness and entrepreneurship do not have to be mutually exclusive, but can even offer opportunities. It is important to take this into account from the start. Sometimes a sustainable solution can even save costs. For example, we don't have any folding boxes for our glass bottles, as these are usually disposed of immediately after unpacking. However, this also saves us the cost of producing this packaging. Of course, there are also scenarios in which a conflict of interest arises. A good year ago we started in Switzerland to send our natural cosmetics in a reusable box on request. The management of the box, including cleaning, is taken over by an external partner and we pay an amount for each box that we do not pass on to our customers. This is because we do not want the offer to be used less. We want to go this sustainable route, but we can only afford the resulting losses as long as the contribution margin on the shopping cart is right. That's why it's important to include reserves for such unplanned adjustments right from the start.
Which shop software do you use and which software or apps are recommended?
Our shops run on Shopify and I'm very happy with the solution. When it comes to apps, you have to find out what you actually need for your own needs. At the beginning I had far too many applications and over the years I have reduced them to the most necessary ones. This is because they can slow down the shop and the strict data protection guidelines are not always observed, which can lead to problems.
Many founders do not have the large marketing budget. Which marketing measures did you start with and which ones would you recommend to others at the beginning?
We started with the TV start-up show "Die Höhle der Löwen". This created a powerful notoriety boost right from the start, which has been a blessing for us. After that I tried a few things and gave up on most of them. Since we are building FIVE with no investor capital, marketing expenses will need to be recouped soon after. Classic PR via an agency, for example, didn't work for us because we couldn't finance such a long-term investment in brand development. In general, my experience is that with every offer you should think twice about whether you can and should afford it. I think it makes sense to build up the skills in this area in-house and not outsource them to external agencies. However, we have had very good experiences with blog articles (SEO). In general, I want to further expand the content area. What should also not be underestimated are recommendations from enthusiastic customers. We attach great importance to good support and that pays off.
Do you do the logistics yourself or when is it worth outsourcing shipping and storage?
It was clear to me from the start that I wanted to outsource as much as possible. Now, after a good three years of experience with external logisticians, I no longer see it quite so clearly and we are flirting with building something of our own in Switzerland. External logistics is a great relief. But you have to be aware that a lot of individualization is lost. We are often not able to fulfill simple customer requests because we cannot intervene enough in the logistics process. This doesn't quite fit with my philosophy of making everything possible for our customers.
A major financial challenge for founders is the purchase of goods and materials. How do you ensure that you have enough liquidity and offer the goods that your customers want or buy?
In fact, this presented me with great challenges. Finally, we were able to secure the financing through a guaranteed bank loan. When it comes to inventory management, good statistics and forecasting are imperative. I'm very happy that we only have five products, it makes things easier to understand.
What does your everyday life as an online entrepreneur look like?
My working days are not very structured, I'm not so much the routine type. I still work in a co-working space without a fixed workplace. (Currently in the home office because of Corona). My support staff also works from home. Production and logistics take place externally. My tasks are varied, which I like. In the morning and again and again in between, I work through the operational e-mails about orders and logistics, which require a quick response. In between, I deal with reporting and controlling, production planning and procurement, briefings for blog articles, social media, optimization of the shop, Google Ads, interviews, etc.
You appeared on the TV show The Lion's Den in 2017 and also got an offer from Judith Williams. Was that when you thought, "Now I've made it, now I'm successful!"? Or what happened after that?
Six months passed between the recording and the broadcast. I remember both sections as very positive, but also intense. Immediately after the recording and Judith's offer, we started negotiations. However, we couldn't agree on a common strategy and that's why I decided to build FIVE without the support of her. In the months leading up to the broadcast, I was very busy with the production of our natural cosmetics, the launch of the shops and the process automation for logistics. We actually only went live with the online shop in Germany and Austria about two weeks before the show. The shop in Switzerland was already there at that time. The broadcast was then the acid test. I never felt like "now you've got it" because I knew it would be years before we would be known and successful. In addition, the financing had not yet been secured at this point and had to be secured for the first time. I was a little more relaxed for the first time when we had broken even some time later, i.e. our sales were higher than our costs. Participating in the show was a formative experience for me personally. It was a positive experience that showed me that I can function very well under great pressure.
What are the further plans for FIVE and what do you still want to achieve with your company?
We want to continue to build FIVE as organically and sustainably as possible and become better known to people. I focus on content that really brings added value. In addition, the range is to be expanded to include other products.
What three ultimate tips can you give prospective founders and online shop operators?
1. Look for ready-made shop solutions and applications and only change what is absolutely necessary. Reason: customization is very expensive and difficult to update. In addition, you do everything about three times at the beginning until you have found the right solution for you. The key here is to remain as agile as possible.
2. Even if the production or acquisition costs are higher, rather have small quantities of your own product made or buy less. Reason: Without experience, it is difficult to estimate how much of the respective article will be sold. In the worst case, you are left with thousands of expired products. It's better to fail on a small scale first and learn from those mistakes for larger orders.
3. Give yourself plenty of time. Reason: Many measures do not take effect immediately, success comes with time. For example, our blog articles only perform well a few months after publication. My accountant once said that it takes a company five years to get out of the worst. I think the number may be good on average.
Thank you for the insightful and very interesting interview, Anna!
Photos: © FIVE / Ladina Bischof / Anna Pfeiffer