What the CEO of Adore Beauty Thinks About Investing in Beauty

HOSTS Maddy Guest & Sophie Dicker|26 October, 2021

Meet your hosts

  • Maddy Guest

    Maddy lives in Melbourne, works in finance, but had no idea about investing until she started recently. Her favourite things to do are watching the Hawks play on weekends, reading books, and she says she's happiest, 'when eating pasta with a glass of wine'. Maddy began her investing journey when she started earning a full time income and found myself reading about the benefits of compound interest in the Barefoot Investor. Her mind was blown, and she started just before the pandemic crash in 2020. What's her investing goal? To be financially independent for the rest of her life, and make decisions without being overly stressed about money.
  • Sophie Dicker

    Sophie lives in Melbourne, and enjoys playing sport, and then drinking red wine immediately after finishing sport. She works in finance, but honestly had no idea about investing until her partner encouraged her to start. She says, 'my interest has only taken off from there - I find it exciting… I mean who doesn’t like watching their money grow?' Her investing goal is to build the freedom to do things that she's passionate about - whether it be start a business, donate to causes close to her, or to take time out of the workforce to start a family. Right now, there’s no specific goal, she just wants to have the freedom when she'll need it.

Adore Beauty was the largest female-led IPO in Australian stock market history. On today’s episode, CEO Tennealle O’Shannessy gives us her best elevator pitch for why Adore Beauty is a great investment (cough cough, TimTams). Tennealle shares her thoughts on investing in the beauty industry and her experience of joining the company as CEO just months prior to the IPO in the midst of 2020 Melbourne lockdowns.

Keep track of Sophie and Maddy between the episodes on Instagram, or on TikTok, and come and be part of the conversation on Facebook with our You’re In Good Company Discussion Group.

Got a question or a topic suggestion? Email us here


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Maddy: [00:00:06] Hello and welcome to your angry company and investing podcast striving to disrupt the norms in the finance industry. I'm Maddy and as always, I'm in some very good company with my co-host Sophie.

Sophie: [00:00:17] Hello, Maddy. Coming up on today's episode, we are going to get some behind the scenes insight on one of the Covid you do on one of the companies that our community talks about a lot, which is adore beauty. So we're going to be looking at what happens pre and post IPO. 

Maddy: [00:00:37] We're going to be doing a deep dive into the beauty industry and as always, we will be adding to our watchlist. 

Sophie: [00:00:43] But first, Maddy, I have a couple of jokes which are actually not thoughtful. I just was laughing to myself, so I have to add a couple that a beauty themed to get us in again. Why is lipstick losing market share in the makeup industry? Oh, why? Because they live in the mascara like mascara 

Maddy: [00:01:04] masks, right? Mask. OK, OK, obviously not funny is their next one. 

Sophie: [00:01:12] What kind of makeup does a sad clown wear? 

Maddy: [00:01:16] Well, I don't know what foundation. I like that one. 

Sophie: [00:01:23] OK, so go with number two and cut number one. I'm giving Kevin. But before we get into today's episode, we would like to acknowledge and pay respects to the one drew people of the coloured nation who are the traditional owners of this land. We pay our deepest respects to the elders past and present, and to the next generation who we hope to create a different future for. 

Maddy: [00:01:39] Before we get into today's episode, let's hear from a wider community member. 

Maddy: [00:01:44] Show me the money, honey. 

Community Member: [00:01:46] Hi, my name is Kat and 25 years old and I'm a PhD student as a student. I earn a $30000 a year stipend that is untaxed, so this breaks down to around about one thousand one hundred ninety five dollars a fortnight. I've only just started investing are right back at the start of October, and so far I've invested $2000 in my plan is to use some savings. I've built up around about $12000 or so and spread that out over this year and next to invest every day in my portfolio. Currently, I have two holdings that ethical ETFs iffy and fair. My portfolio's balanced to around about 75 percent at 25 percent fair. But this is something that I'm willing to look at again as I continue investing, and I'm definitely considering and open to buying some other ETFs and potentially some individual shares as well as I continued buying. So the current value of my portfolio is $2000, and it's been floating around that mark basically for the last fortnight, but I'm excited to see where it goes. 

Maddy: [00:02:53] Today we are blushing because we are very excited to be joined by Tennealle O'Shannessy, CEO of Adore Beauty. Tennealle joined the door in August 2020, around two months before it listed on the ASX. Prior to joining, the adored tamed, Tennealle spent nine years at Stake, where she was the managing director of the Americas business. She received an MBA from Melbourne Business School and a graduate degree and an undergraduate degree from Monash University. Welcome to the show. 

Tennealle O'Shannessy: [00:03:23] thank you very much for having me today. 

Sophie: [00:03:24] We are very excited to chat with you today to new and so to allow our audience to get to know you a little better. We have a couple of questions. The first being. What's the best thing that's happened to you this week? 

Tennealle O'Shannessy: [00:03:36] Oh, great place to start. Well, I'm based here in Melbourne and I've got three small kids or three kids under eight. We've been in lockdown for over 200 days or so this week. I think it's safe to say the whole family is very grateful. It's our last full week of homeschooling. 

Maddy: [00:03:53] Fair enough. But it's very cold, the longest lockdown in the world. You can add that to your savings, though, 

Maddy: [00:04:00] and to 

Maddy: [00:04:00] nil, if you could have dinner with anyone, who would it be and why? 

Tennealle O'Shannessy: [00:04:05] For me, it would definitely be my grandfather. So he passed away. But when I was young, when I was a teenager, we were very close and we had this kind of relationship where he was just unconditionally proud and supportive of me. I'd love to have dinner with him one more time and just let him know that I'm doing OK. 

Sophie: [00:04:20] Oh, that's such a sweet answer. I really like that. And then our last question is, if you could be a stock or company, who would you be and why? 

Tennealle O'Shannessy: [00:04:29] I don't think you have to look very far for inspiration beyond the Australian start-up scene. It's such an exciting time to be in start-ups. Yeah, we've got many examples. A couple that I'd call that a great example is Afterpay. So it's an example of a company that identified a key structural trend and a change in consumer behaviour. They developed a proposition that was deeply customer led and built a loyal audience based on word of mouth. So you saw them disrupt larger and very well-resourced incumbents. I think that's an amazing success story. Another great example led by Australian founders, and I was fortunate enough to spend almost 10 years with this company, Sait, who's shown an incredible sustained growth path because of their clear purpose and their focus on the customer. 

Sophie: [00:05:16] Amazing to incredible companies. I didn't realise that sake was based out of Australia, so it was founded in Australia. 

Tennealle O'Shannessy: [00:05:22] It absolutely was. So, so two brothers and and one other founded it here in Melbourne, and one of the brothers remains active in the business. 

Sophie: [00:05:31] Oh course, are still found a lead. Love that. So we wanted to ask you. I mean, we have a lot to unpack today, and I think people would be very excited to be listening to this one. Considering your role as CEO at Adore Beauty. So we kind of wanted to dive into a little bit about your role there and what drew you to adore beauty? I mean, you just mentioned that you were previously at sake. What drew you to, I guess, the beauty industry? 

Tennealle O'Shannessy: [00:05:56] Yes. So as I touched on, I've really, always really enjoyed working in founder led businesses. I think that there is an energy and a purpose and a long term focus with founder led businesses, and a door is obviously another one in that space. But what attracted me to beauty in particular, I was much more attracted to a doors approach to beauty, and that's really captured in our aspiration and purpose, which is to help customers feel more confident and more fabulous every day by giving them a very empowering, personalised beauty shopping experience. So the way I think about beauty is much more is a self-care category one rather than one that's just focussed on appearance. So this very customer centric approach really resonates with me. So it was the approach to beauty that attracted me. And if I contrast that to, I guess what the more traditional approach to beauty has been. Traditionally, the approach has been to present a very glossy, airbrushed, unattainable image and almost to treat customers like their students or patients. So I think what adore beauty has done is sought to disrupt that by really empowering our customers, giving them all the information they need to make a decision, as well as entertaining them with content. So we look to bring that very real, authentic voice to beauty, and as part of that, no topics are off limits. So I think one of the, you know, we also have a couple of really popular podcasts and one of our podcasts have a has a segment that we actually call cringy convos, which which goes into those topics in beauty that others might not. 

Sophie: [00:07:29] Only one real voice that I've been loving from Adobe is actually your tik-tok. There's actually some really great content on there. Really funny, loving it. 

Tennealle O'Shannessy: [00:07:40] The other thing I love about that is what you see on Tik-tok is that that's how employees so our employees sharing their recommendations, their experiences. And so I think that that that's part of what makes it so real is, you know, these are people that that work in our customer experience team or our warehouse. And that and what they do with the content is really quite funny at times. 

Maddy: [00:08:02] I think when you talk about a doors approach to beauty that has really rung true during COVID, you know, in a time where so many of us aren't leaving our houses or going to work or the social occasions that we normally would. And yet there's been such a focus on, you know, skincare and doing beauty sort of routines that make you just feel really good. And I think that's been a really nice sort of shift in mentality of the whole, I guess, industry. But I'm really interested to hear because then I imagine the life of the CEO. I personally think about Anne Hathaway and the intern actually like rides around on and back around the office, and then she runs down to the distribution centre and parks the path of the self and then comes back. What does the typical day? As I say, you are at 8:00 for you.

Tennealle O'Shannessy: [00:08:46] I look, I only wish I was cool enough to ride around 

Maddy: [00:08:48] the back of the office on a bike 

Tennealle O'Shannessy: [00:08:52] lanes a little more straightforward. So as I mentioned wearing the look down here, so I've formed a bit of a ritual of forcing the whole family to get up really early to go for a walk and get a coffee before we start our days. That seems to set us up nicely. And then for me, I predominantly am working at home at the moment, so I'll sit down. I'll create urgent emails from the night before. Part of those emails also, and this is a part of my day I really enjoy includes a summary of all the feedback we have got from customers overnight. So we've got a we use Slack as our communication channel. We've got a dedicated channel where the entire business has access to customer feedback that keeps me really close to the customer, just understanding parts that they've enjoyed about their shopping experience and areas we can continue to improve. After that, I have a daily virtual check in with my executive leadership team where each of its the and the goes for 15 minutes and each of us share firstly the best thing that happened to us in the last 24 hours. And then secondly, what what are we focussed on today? So it's just starting the day with that really positive intent in us, and then I'll spend my days working with the team. Looking at things like framing, shaping and evolving our strategy and our strategic priorities, analysing and looking for levers to further drive our business operational performance and then leaning into other topics like Investor Relations Board Communications and then also working with key internal committees in our business, like our Diversity and Inclusion Committee. Having said all of that, I actually was at our customer fulfilment centre at our warehouse yesterday. I do. I do tend to go there once away. I think it's great to be really close to the team that are responsible for our most customer facing role, so I go there. Unfortunately, my skill set is limited. They only give me the jobs like packing that, making the boxes I did. 

Maddy: [00:10:46] I do do that. 

Tennealle O'Shannessy: [00:10:47] I haven't graduated all the way through. I understand I'm a little bit too slow for 

Maddy: [00:10:50] they're like, 

Sophie: [00:10:53] Oh no, it's good to say. I guess the say you're really down and dirty doing

Maddy: [00:10:57] the packaging Covid. 

Sophie: [00:10:59] So I guess today we wanted to cover a couple of topics and one of those is IPO's. I think, you know, we've seen a lot of IPOs in the space over the past year, and a lot of our community is looking into why that happens. And you know, I think it's exciting because it means that people can invest in these companies when they do go public. But first, we wanted to do a little recap of what an IPO actually means. Sure.

Tennealle O'Shannessy: [00:11:26] So an IPO or an initial public offering is basically the process of offering for sale to the public for the very first time shares in a company. So as you said, that allows the public to be investors. So in Adobe, this case, Adobe Beauty was self-funded for most of its twenty one year history and bought in a private equity partner quadrant around two years ago before listing in October last year. 

Sophie: [00:11:50] Can I quickly ask when you say you brought in a private equity partner? What does that mean for AB? 

Tennealle O'Shannessy: [00:11:56] So for a dual beauty at that time, what Kate and James were looking for was really what they saw was such a significant opportunity in front of them in terms of Adore Beauty's addressable market, the growth that they had been able to achieve in the lead up to that event. They recognised that bringing in a partner that that brought in some additional strengths to the table for them around investing for growth, unlocking new opportunities for growth was really what adore beauty needed at that stage in the evolution. So Quadrant came in and invested in a door at that time as as as a as an equity holder.

Maddy: [00:12:37] So in general, why do companies go public? And then I guess what was the rationale for a door? 

Tennealle O'Shannessy: [00:12:43] So there are many reasons a company chooses to go public. So it might be things like to access capital to drive growth. It might be to provide liquidity for early investors for a door. We've actually been profitable as a business since the start. Frankly, we had to be because we were self-funding, so we weren't profitable 

Maddy: [00:13:03] in the business wasn't going to last for too long.

Tennealle O'Shannessy: [00:13:05] So that means that we've been able to fund our organic growth plans for so many years. So that wasn't the main driver for us. For us, the reason was twofold. Firstly, we believe we've created something that's genuinely special with the business, how it's set up, our culture, our values. And we really wanted to build a sustainable future for the business that went beyond individual investors or founders and so on. An IPO allows this to happen because it creates a separate entity that goes beyond any individual. And what the IPO also did was to provide us additional flexibility to in the future, consider the inorganic path to growth options as well as the organic. 

Maddy: [00:13:50] So one of the things that I love that's often said about the door is that it was the team overnight success. The company raised $269 million as of hot of the IPO. And, you know, going from never sort of. Probably I imagined having that kind of capital before to suddenly having this inflow of money from investors. What actually happens with that money? And, you know, can you just use it however you want? And what do you actually put it toward specifically? 

Tennealle O'Shannessy: [00:14:20] Yeah. So as I touched on, our organic strategy is one that is able to be self-funded through the business. And so rather, we think about where we're sitting at the moment, which is access to capital as well as no debt, where a business that's really well positioned for flexibility around how we grow in the in the future. So what that means is it allows us to pay a little more aggressive where we see opportunities for growth. It allows us to consider paths to growth that are both inorganic or potentially through M&A in the future. So the biggest thing it does for us is really unlock flexibility to take advantage of all the opportunities that we're. 

Sophie: [00:15:00] I guess that's very exciting, I mean, Maddy and I, always watching the M&A space, and I think we have spoken about a lot that if big companies are able to, you know, stay agile and able to acquire other companies or look into doing that, then it does give them a competitive advantage in the long run. We are very curious. You joined a door just a couple of months. I think it was like two or three months before the IPO. What does that process look like? Because I can imagine it was somewhat mayhem, especially during lockdowns. 

Maddy: [00:15:34] Yeah. 

Tennealle O'Shannessy: [00:15:36] Oh yes. 

Maddy: [00:15:37] Quite a lot object from being 

Tennealle O'Shannessy: [00:15:41] in the middle of being in the middle of lockdown, starting a new job wasn't enough. We just felt we 

Maddy: [00:15:45] thrive on board. So I did provide 

Tennealle O'Shannessy: [00:15:49] a little bit of context. We listed the business on the ASX while operating under stage four lockdown restrictions. So that means that I didn't actually get to meet most of the broader deal team involved until several months after when we opened back up. Wow. And so that time for us was like compressed roadshow. I think we did something like 90 plus meetings over over the course of a month across multiple time zones. I think it's fair to say we survived off lots of chocolate and coffee, but at the end, what kept and what kept all of us going, we were all incredibly proud to be listing as what was the largest business at that time with a woman founder and a woman CEO. So that's something we were incredibly proud of. 

Sophie: [00:16:35] What did I guess some of the main or key components of the pre IPO process? Like what is a company really looking at before they're going live on a stock exchange? 

Tennealle O'Shannessy: [00:16:44] So first, first and foremost, it is that what you have is a very well thought through robust strategy laid out and a clear path for growth that you can communicate and articulate to your investors. And so we had an, I guess, an interesting opportunity in front of us because we needed to talk to investors about what was an industry vertical they were less familiar with. So as you can imagine, the majority of the investors we spoke to were middle aged men who weren't necessarily the first customers of of adore beauty. So what we had to do, in addition to having that very clear strategy and outlook for the business, was also spend a lot of time talking about the industry and what's special and unique about beauty as a category and how consumers in the beauty category think about that category. So beauty is quite different in many other categories in the e-commerce space. A beauty customer tends to view the category as one that you know a beauty purchase is very personal for them. It's highly emotive. As as you touched on earlier, the skincare, you know, these types of products are products people are putting on their face, so they spend a lot of time choosing the product that's right for them. They are incredibly loyal once once they find a brand that they they connect with and they tend to spend more in the category. So our customers tend to review their own platform, spend more with us, so they'll increase their basket size and try new things, and they'll also increase the number of times per year they shop with us. So we also had to ensure that we went on this clear path of education on the industry as well as the business. And then I think it's also very important to ensure that the business is ready in terms of its core data sets and processes. So I'm thinking about things like its financial processes, its governance, its be its board structure. And so one of the decisions we made really early was to bring in onto our board to non-executive directors, the board within very deep public company experience. And that helped us a lot in navigating some of the key changes the business needed to be needed to make, to be to be ready for the listing. 

Maddy: [00:18:57] I want to touch on what you mentioned about needing to explain the industry a bit more because we know that, you know, there's this industry is a little bit more male dominated. And I read that a door was actually the largest listing with a female founder, female sailor and majority female board, which is just incredible. But I also read that the company rejected pitches from all male teams, so I'm really interested to hear, I guess, your perspective on why you think it's really important to have gender diversity in the IPO process. 

Tennealle O'Shannessy: [00:19:29] Yeah. Look, I think that that was one of the key decision variables for us as we were speaking to the various partners who would lead us through that process. And really, what we were looking for is in particular for a door ensuring that the deal team represented the diversity of our customer base and understood and were passionate about the space in the same way that we were. And so I think that what we saw through the process was the importance of that diversity shone. Through with members of the deal team connecting with our customer, understanding what she was looking for and then supporting us to be able to tell the story in a very customer centric way. And so I think that, you know, this business has been founded upon principles of diversity and inclusion. Both Kate and James are incredibly passionate about the topic. And I think that that passion starts with leadership at the top, but it's reflected in key decisions made along the way and the decision that you just called out that we were keen to partner with partners across the IPO process who had diversity in their teams is a really strong example of how we put that on the front of our leadership agenda. 

Maddy: [00:20:42] Yeah, I think that's awesome. So if and I often talk about how investing in companies that you're interested in and align with your values can help to make the process really interesting because you get to put your money into things that you enjoy and then you get to sort of follow those companies and stay really engaged in the process. We often joke that you can actually do investing research by shopping online at Adobe. And then when you get the parcel, it's like, Oh, well, you're just testing to see the customer experience and things like that. And I heard you tell a really great story about how when you were going through that IPO process, you actually had customers getting in contact that had never invested before. To say that they were interested because, you know, the brand really resonated with them and things like that. So I wanted to touch on a little bit, I guess that and then who the sort of the main investors in an IPO process because we had a lot of people reaching out to us saying we invest in the Adobe IPO and it's sort of in that I know in the initial IPO stage, it's not quite that simple. 

Tennealle O'Shannessy: [00:21:43] I think it's it's I mean, it's a little more tricky in the initial IPO stage, but still possible. So the main investors in an IPO do tend to be the larger institutional investors. However, most IPO processes do have an allocation for the retail customer base that can be accessed through a broker. And so that can happen, but it does need to generally happen through a broker. I think you touched on a point that I was also going to raise. I think one of the things that if I'm sitting here in five years time that I look back on and being most proud was that many of our female adult customers contacted us and did let us know that they were investing in the stock market for the very first time because they saw a stock coming on market that they genuinely understood. They love the business and value proposition, so that gave them the confidence to dip their toe in the water and try investing for the first time. 

Sophie: [00:22:34] It was actually this time last year, October 2020, when Maddy and I were talking about starting up this podcast and when I was running through the idea with friends to get their feedback on how we think it would work, and Adore came up so many times because everyone was like, Well, you could talk about that. Your beauty IPO like, that's happening right now. It was literally this time last year. So I guess thank you for the inspiration. 

Maddy: [00:23:00] What the hell I was going to say. 

Tennealle O'Shannessy: [00:23:02] Look, it's so great to say, I guess, much more diversity onto the topic of investment and, you know, bringing financial freedom to to females. So congratulations on the podcast. I mean, the amazing job 

Sophie: [00:23:16] we've come full circle where I've been talking about the Adobe IPO a year post talking about it. And now last question in the around IPO is, you know, post IPO, we often see a lot of volatility in the stock price. Why does this occur? And I guess, you know, as an insider of a company, are you watching the stock price go up and down? Or is it just another metric 

Tennealle O'Shannessy: [00:23:40] that can be many reasons for this, so it can be the industry it operates in? So for example, if you take a look at e-commerce, it's been quite bumpy over the past 12 months with the impact of the ongoing COVID uncertainty and what it means for the industry. It can also be driven by less liquidity in the stock early days so people are not as keen to have if they've bought a position not as keen to to sell in the short term. And then lastly, it does also take some time for the business generally and the management team to build credibility and a track record in the public markets. Although I have to say, looking at Kate's reaction when she's told she needs to build a track record after having growing the business for 21 years, it is quite amazing to me. 

Sophie: [00:24:26] And then what? See an insider's view on the stock price volatility, you know, as the Adore beauty team, are you looking at the stock going up and down or is it just another metric that sits in the background? 

Tennealle O'Shannessy: [00:24:35] I think we care very deeply about creating long term shareholder value. But I think that the most important way we do that is to continue to execute strongly on our strategy, to continue to delight our customers and bring them back as returning customers. And so I think in the in the short term, there's a lot that happens to a share price that is larger than the control of the business. The one thing that's absolutely in our control is to continue to overdeliver on every promise that we make to the market, continue to grow, and that's the best way that we create shareholder value in the long term. Great answer. 

Maddy: [00:25:12] We are going to take a quick break for sponsors, and we'll be right back to chat more about the beauty industry with two new. So to nail a door is like the apex, it's the best of the best when we look at the intersection of e-commerce and beauty, in my opinion, anyway. So how do you define a Dollars position in the beauty industry? 

Tennealle O'Shannessy: [00:25:35] Firstly, thank you for that. I think in our minds, we still very much think about ourselves as the Challenger brand that was built in in a garage and doesn't really have the right to be taking it to these, you know, very well resourced department stores. But here we are. So it's wonderful to hear you say that. I think that our DNA is something that is thinks about ourselves a little differently. But the way we think about a door is it's much more than just an online store. We think about ourselves as a personalised beauty destination where we've combined both the retail elements or the e-commerce part, but also the media part. So the way we think about it is in effect, we're replacing both the traditional retailers and the department stores, but also the more traditional media for our customers and our brand partners. So, so where where customers would have historically gone to more glossy magazines to consume content in education through our content proposition, we actually replaced that element also. So we think about our value proposition as offering three main headings Range Authority. So access to a range of brands spanning luxury to professional, to niche, to mass stage more than what you'd have to go to five or six shops to get access to all of those brands. That's the first leg of our value proposition. The second is offering a simply a seamless digital shopping experience with lots of ways to delight our customers along the way. So we offer fast free delivery, get a gift with purchase and samples with your delivery. You get the iconic Tim Tam that comes if I was going to say it's all designed to genuinely delight our customers while they're shopping. But then the third element of that and this is the one way we've increasingly focussed over the last two to three years, is on data driven personalisation and our content. So we've invested and built out a content team and we produce content that spans everything from them. We've got blog posts, we've got YouTube videos. You mentioned Tik-tok. We've got multiple podcasts that have gone to gone to number one in the charts. I think our core podcast, Beauty IQ, has just ticked over three million downloads. So it's such a great podcast. But to have a retailer that has that kind of reach with a podcast is quite unheard of. So that's how we think about our position in the beauty industry. Well, I 

Sophie: [00:27:58] think that whole content area is really important, especially that you because you don't have retail stores like the customer, really needs to be able to learn about the product or see how it's used. It adds that element without actually adding like, you know, the brick and mortar stores. I also think it keeps it very dynamic in a space where this younger customer is coming through and everything is digital, so it still provides that kind of full suite of service for whoever's buying the product. I am interested. The business, as you said, was founded 21 years ago 1999 in the garage. How has the beauty industry changed over this time? Because, you know, a lot has changed in the past 20, 29 years? 

Tennealle O'Shannessy: [00:28:38] Yeah. So if we go back to 1999, there were no smartphones. Was a Facebook. There was no Instagram or Tik-tok, no tik-tok. 

Maddy: [00:28:47] And PayPal was able to 

Maddy: [00:28:49] extract the internet was quite early days. 

Tennealle O'Shannessy: [00:28:51] Even even Google wasn't what I think Google had started a year earlier. 

Maddy: [00:28:55] So we're kind of going way back 

Tennealle O'Shannessy: [00:28:58] and people were very firmly shopping in stores only. So we've had quite a journey in disrupting the physical shopping experience and really encouraging our customers to come online. And the way we had to do that in the early days was we need a head, frankly, that the budget or capital, nor the channels that exist now to acquire new customers. So the core way we acquired new customers was to provide simply a delightful shopping experience going over and beyond in the hope that firstly, those customers would keep coming back. But then maybe they had such great experience they'd tell one more person and that would bring one more customer line. So that was the focus on the customer side of things. We also had quite a journey encouraging more and more brands to come online. So at that time, back in, nineteen ninety nine brands were very firmly thinking about their offering as an in-store experience. And so it was quite a journey that we had to take our brand partners on and encouraging them to think about. Firstly, online as a channel. And then and then when they first thought about it, then they were thinking, Look, I'm going to do it myself, or I'll only consider doing it with my department store partners. And we really had to earn our place through trust and credibility. That they got to a point is a premium brand where they would trust. I a pure play e-commerce player like a beauty to represent their brand in the right way. And so we very much had many, many years of building up those long term brand partnerships to get to the point where we are today, where we're at a scale where the conversations we have with brands are very different. So if we contrast that to where we sit today, I think it's very well established in beauty that all of the growth in the industry is coming from the online channel. That this structural shift to online is something that although it's quite early days here in Australia compared to the US and the UK is very fast growing and driving all the growth in the business. And so our brand partners now are having quite different conversations with us around how can we partner to really support their growth aspirations in the online space? 

Sophie: [00:31:09] But also slightly, somewhat aligns with kind of not the demise, but definitely the drop in the department store that really resonated. Like I used to go with mum to the department stores to buy her lipstick. But now, you know, it's not as frequently that you would go to a department store to buy your skin care or makeup because it's so accessible to get it online if you've already chosen a product that you like. 

Tennealle O'Shannessy: [00:31:29] We genuinely believe that if the online shopping experience can be better on on every dimension in the physical shopping experience and you did, you did her touch on that point where we've already chosen a product you like. But what I would say is that in the last two to three years with what we've been able to do with things like content to things like extensive product reviews, access to tools to support shade selection on our website, access to sampling with the, you know, trying new products as they come through. All of those things mean that increasingly we're seeing our customers actually try products for the first time online and getting really comfortable to do that. So we're really we're really confident that the online shopping experience can be better for many reasons than what can be delivered in the in-store experience.

Maddy: [00:32:21] Yeah, it's an interesting one as well, because I remember when Sophie and I were chatting about this stuff, we were doing a Practise podcast episode a year ago. We were talking about a door, and I remember thinking at that point when, you know, we're still sort of reasonably early days with Covid that are, I don't know, I really like going in-store for makeup because, you know, you can chat to someone and you can ask your questions. And yet now, 12 months later, my perspective has just shifted entirely. And I think, you know, this consumer trend to online shopping and things like that that we've seen through Covid is probably benefiting a door beautifully in that respect. I'm interested to hear where do you see this industry sort of headed in the future, 10, 15 years down the track? And how is a door sort of positioning itself to really be best placed for this change? 

Tennealle O'Shannessy: [00:33:09] So taking a long term view? Unquestionably, the structural shift to online will continue. But when I think about who will the e-commerce winners be, it will be those that remain deeply customer centric and understand what the customer is looking for and how the customer will shop in five to 10 years. And so this is something we talk about quite a lot. And in fact, the ongoing role that our founder Kate Morris has taken in the business is to be our head of innovation and really to answer that question, what will the customer be looking for when they shop in data in five to 10 years? So I think, you know, there's a there's a lot of buzz around the key emerging technology base trends. So things like personalisation, virtual try ons, as well as tech enablers like AI, virtual reality, machine learning. But my observation would be that starting with a deep understanding of the customer and the customer needs and really thinking about how technology supports what underpins those needs remains critical in understanding all of these trends. 

Sophie: [00:34:11] I love that idea of being customer centric, especially because I think in something like the beauty industry, people's idea of what beauty is is also changing really rapidly. So to be able to keep up to date with that trend and really understand what people are looking for when we actually come to defining the term beauty. I think it's really relevant and companies will need to keep up with that so that they can continue to sell their products, I guess, and services? 

Maddy: [00:34:39] Absolutely. 

Sophie: [00:34:40] And our final question for this topic, what do you think makes Adore Beauty an attractive investment for, you know, someone like Matty and I, retail investors? 

Tennealle O'Shannessy: [00:34:51] OK. Right. When I stop, 

Maddy: [00:34:53] this is your guest. That's right. So the way we

Tennealle O'Shannessy: [00:34:57] talk about it is firstly, adore is in a very large addressable market. So beauty and personal care here in Australia alone is eleven billion dollars. We're very early in this structural transition to online. So today around eleven and a half percent of purchases are made online. If we contrast that to the US in the UK with Covid, they wrap it around. You know, I think it's. 18 to 20 percent online. If we look at the most developed markets like China and South Korea, their online penetration levels are almost 50 percent. So there's just so much headroom for Australia to go to catch up to what online purchases and online penetration look like in this category globally. And so that's the market opportunity. I think what we're really excited about is a dose got a really strong, pure play market leadership position here, and we believe we're really well-placed to take a disproportionate share of this accelerated structural shift to online that we're seeing. We remain really customer centric. We've got a really strong customer value proposition that I just talked through. And I think the thing that's most exciting for us is we've got a really strong track record of executing against our strategic priorities and taking share and growing faster than the market. So we're not a business that sits here and says all it's great. You know, the market's going to grow by whatever percentage will just sit there and grow with the market. I think when we look back over our track record, we've been taking share for many years and that's absolutely our intent as as the online segment continues to grow.

Sophie: [00:36:27] I was actually laughing because when we have like a document where we write down all our questions and underneath, what do you think makes Adobe an attractive investment Maddy has written? It sends Tim Tams with every order. And I was laughing last night because I was like, Aren't they an Australian? Would right? Yeah, I'm going to. I'm going to invest in a dog, so I sent him to him. It's like, you've just given this, you know, amazing pitch. 

Maddy: [00:36:49] And we just thought it intends to do it. 

Tennealle O'Shannessy: [00:36:55] A little funny story to finish on how important the team Tim is to our customers. We probably didn't fully understand until one year. A couple of years back, as part of an April Fool's joke, we we decided to go out on all of our socials and say, Look, we've heard the customer feedback about your passion to be healthy. So we've made the decision to swap out the team to our pocket of Australian organic sultanas. 

Maddy: [00:37:18] I saw this and so and the uproar was to the next level. So that is very clear that the Tim Tam 

Tennealle O'Shannessy: [00:37:27] is an important part of what we 

Maddy: [00:37:29] offer. 

Sophie: [00:37:29] So Sultanas is just a no go. No thank you. 

Maddy: [00:37:34] Actually, pretty nice, though, to be fair, I guess poutine 

Sophie: [00:37:37] puts in sultanas in Maddy's next order. 

Maddy: [00:37:40] And so to know each episode, we ask our guests to add a stock company, news trend or industry anything that they like to our watchlist. And the purpose of this is to get us thinking outside the box and broaden our horizons in the investing space. Of course, we're not financial advisors and it is just educational purposes, but I'm very excited here. What are you adding to the watch list today? 

Tennealle O'Shannessy: [00:38:04] Say, look, there's actually a couple of articles that I'd like to share that is in the spirit of educating on the beauty journey. There are some fantastic articles that talk about the key global beauty trends that we're seeing and what are some of the emerging things coming through. So I'll post those and give your listeners the opportunity to learn a little bit more about all things beauty globally. 

Sophie: [00:38:27] Perfect. We will definitely be posting them in our Facebook group and getting a bit of insight from the Adore Beauty CEO. Exciting. And our final question for you today is what piece of advice would you tell your younger self starting out on your investing journey? 

Tennealle O'Shannessy: [00:38:45] It's actually a piece of advice that you touched on earlier in the podcast, and I wanted to pick it up then. But for me, I found the greatest success where I identified investment opportunities that aligned with my values, aligned with my purpose so that I genuinely enjoyed the the research phase and getting to know whether it's the asset class or the company and followed it over time. So what I'd say to myself early days is rather than, I think, my my early approach was seeking to do my analysis and understanding and looking to do things like time, the market, those kinds of things. I think the reflection for me has been I get the most enjoyment and spend the most time because I get the enjoyment if I have identified companies that really resonate with my values and invest there. So that's where I've focussed my investment in more recent times. 

Maddy: [00:39:38] So if I talk a lot about that on the podcast, it's great to hear it reinforce 

Maddy: [00:39:42] from someone with the status 

Maddy: [00:39:44] and with the respect from our community of yourself, or just really get support sought revenge on to say so too. Neal, thank you so much for joining us today. Before we let you go, is there anything that you would like to plug or anywhere where people can find out more about yourself or adore beauty? 

Tennealle O'Shannessy: [00:40:02] Look, the one thing I'd love to say is a plug given, given we're here on a podcast is I'd really encourage your your listeners if they're if they're looking for something a little lighter 

Maddy: [00:40:12] and potentially a little more entertainment to come in and have a look. 

Tennealle O'Shannessy: [00:40:16] As we touched on, you know, I think the Beauty IQ podcast is very funny. It's a very different topic, but it's something that really allows you to immerse into the beauty space and and we've got we've recently launched it a second. I'm actually a third podcast. We've got multiple podcasts coming in that we call bite size beauty. And as part of that, that will be broken down into smaller segments looking at different topics. And so if you're looking to get deeply involved into the world of beauty, check out some of our podcasts. 

Sophie: [00:40:47] Well, you could use it as investing research if you were looking to invest in Adobe Technique. 

Maddy: [00:40:55] And I really I really 

Tennealle O'Shannessy: [00:40:56] liked your last part. You know, buying the parcel to check the customer 

Maddy: [00:40:59] exposure and 

Tennealle O'Shannessy: [00:41:01] the goodie bags and the team time it's just in

Maddy: [00:41:03] search of it. 

Sophie: [00:41:06] Well, thank you so much for your time today. We really appreciate 

Tennealle O'Shannessy: [00:41:10] it. Thank you so much for having me. It's been a lot of fun. 

Sophie: [00:41:13] What a full circle that has been, maybe a year down. 

Maddy: [00:41:17] So exciting to have Neil on the show today. I have to say I never thought we would be hosting the CEO of an amazing company like Adobe, but it was an absolute joy. 

Sophie: [00:41:27] Here we are. As always, we will be posting content to our social media streams. Jump onto Instagram. We are why YIGC podcast? 

Maddy: [00:41:37] Jump into our Facebook group and ask any questions about today's episode. Or we would love to hear your thoughts, especially maybe around to Tennealle's pitch, as to why Adore is a good investment. I personally am feeling pretty swayed at the moment, but I have to go and do a little more research. Maybe we can share it in the group at YIGC Investing Podcast Discussion Group 

Sophie: [00:41:56] We will also be posting her articles that she added to the watch list into that group. So if you want to check them out, definitely jump there. And also, if you could leave us a review, if you're enjoying the podcast, then we would greatly appreciate it because it helps us reach more people just like you. 

Maddy: [00:42:11] It also helps us get guests like Tennealle. So thank you so much and we'll catch you next week. Bye.

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