How did Megan Gage, Founder, Hot Tot go from a social worker to building a safe and natural cosmetic global company for children? Within 12 hours of submitting her first press release, Megan’s business started to grow. Learn how she did it ALL!
- Market Research: Learn her approach to market research and how that helped defined her buyer.
- Manufacturing: From learning about cosmetic formulators and finding the right team to work with, Megan candidly shares tips on how to save money and ask the right questions.
- Branding: Knowing the name “Hot Tot” would bring out critic’s, Megan took the time to define what the name and her company stands for and implements it everyday. Learn why beauty isn’t just skin deep.
- Publicity: Out of 100 magazine and website features on Hot Tot, learn which feature produced the greatest revenue.
- Distribution & Licensing: How Hot Tot went global
That and much, much more valuable business advice.
READ the Transcript
Rachel: Hi, I’m Rachel Olsen, founder of Best Mom Products, where mompreneurs share their adventures in business. Today, I’m excited to be talking with Megan Gage, founder of Hot Tot, professional hair products for babies and children without the use of harsh or harmful chemicals. A former social worker, Megan shares the challenges of diving into the cosmetic industry and manufacturing realm without any previous experience. Today we’ll learn how she overcame the bumps in the road to landing her product in major publications like; Earnshaw’s, Parenting, Pregnancy, and other major outlets. Welcome, Megan. Does that sound about right?
Megan: Yes, but we are in Pregnancy and Newborn Magazine. Pregnancy Magazine is something different, and we haven’t been accepted by them.
Rachel: So let’s get started, how and what year did this come to you, and how long did it come to take to come to fruition?
Megan: You know, it kind of started as a joke. If you would have told me a couple of years ago that I would be doing this full-time, beyond full-time, I would have thought you were crazy. The story goes, my son was born in June of 2009. And I started using a little bit of lotion and pomade to give him just a little baby curl on top of his head. Never intending it to be a business but people responded pretty well. And so we would go to the mall, we would go out to eat, and everywhere we would go people wanted to stop, they want to talk, they want to touch it, they had questions.
About six months into that process, I kind of jokingly told my husband that somebody should create a product that does this. Ha-ha. Famous last words, right? So, that kind of sparked the idea in his mind, and so he started encouraging me that “You should look into this.” And I kind of just brushed him off, I never intended to do anything. And as people continued to stop and talk about this little baby curl, he started to kind of harass me. “You should just call and figure it out”…and so that was kind of how it was born.
We officially formed the company in 2010, at the end of 2010 because by that point I had become pretty passionate about the health and safety in children’s products. I stumbled upon an article that outlined the common chemicals that were found in most children’s products, that people have no idea, things like formaldehyde. One study suggested that 82 percent of the top selling baby products have formaldehyde in them. And it’s not even required to be on an American label, it’s a by-product. When you combine two ingredients, you get this by-product and so you don’t have to tell people on the label. After I learned that, I thought, “There might be a place in the market for something that was going to pay a little bit more attention to health and safety issues.” Prior to that, I did not want to be one of eight million baby brands. I didn’t have the confidence, I had no idea how it was done, and I had just quit my job as a full-time social worker to be a stay at home mom. So I wasn’t particularly looking for a new career, but I became really passionate and that was kind of what drove this process.
Rachel: That’s great. So tell me what did you do now. You have a social work background. It sounds like your husband’s kind of saying, you’ve got to do something about this. What is the first thing that you did to research it? It sounds like you went and saw other products and did some online research about health and safety.
Megan: Sure. I think that everything in this day and age begins with a Google search where you just kind of Google and see what’s out there. I will be honest. I couldn’t believe as this idea kind of evolved in my head, I couldn’t believe that no one had done it before. To me, it was so obvious on just some of the things that me as a mom looks for. I don’t have a fancy marketing degree or anything like that. I just wanted to create something that appealed to someone like me and my girlfriends, my neighbors, the people that I know, my sisters, things like that.
So I started with a basic Google search to see what kind of children’s hair products were there on the market. And there really wasn’t much. I found that there were a few common themes. Fruity scents, everything tended to have a very fruity smell. So I thought a lot about the scents that I like, and most of them happen to be other brand scents, which you didn’t want to duplicate. So one night I was giving my son a bath and it just kind of hit me like a ton of bricks. That as a kiddo my favorite baby smell was a Cabbage Patch. And I have really vivid memories of scrubbing my doll in the sink trying to make that new baby smell come back, and so that was kind of the idea for the signature scent. We actually sent a doll to the lab.
There are a couple of really great fragrance houses. We worked with one called Leger Moods [SP] and we duplicated the scent. It was a lot of back and forth, are we close, and, you know, here are 10 vials of things that we think are suitable. So, that was kind of how that happened. I didn’t tell anyone for six to nine months after we had launched the line, but I kept having a lot of people scratch their heads, that it reminded them of something and they couldn’t figure it out. So now, we kind of wear that on our sleeve because I think so many women associate that smell with a really happy, kind of simplistic time in our life. And so it’s fun to bring it to the next phase as we get older.
Rachel: Yeah, no, that’s amazing. I want to talk to you a little bit about the cosmetic formulator and going to a fragrance house. What do fragrance houses or I don’t know, did you say fragrance houses?
Rachel: Tell me a little bit about how did you find them, and what is that process like?
Megan: Well, you know, we are actually on our second manufacturer. And so, I would like to tell people that I don’t feel like a startup anymore. Because we learned so many of the lessons on phase one, that when we were ready to move into a different place, we knew what questions to ask. My first formulator, I found him via a Google search. It just started with private label cosmetics, and so I had a big list of places who were specializing in natural and organic products. I just kind of called everybody and said, “Here’s what I’d like to do.” And with private label cosmetics oftentimes, they have a signature formula that’s on the shelf. And they allow you to put it in your own package and put your own scent, and then that becomes your product. I didn’t want to do that. I wanted to start from scratch, I had learned all about chemicals and their effects on a growing body. So, I really wanted to start from the beginning and pull all of these things out and make something that was specially designed for kids’ hair.
Right away, that kind of eliminated most of the people on my list because people didn’t want to work with me. They kind of assumed, and they were right, that I was a mom who had no idea about the way that this worked and I was not going to hang in there. So, it takes a lot of lab time to do that, and they weren’t going to waste their time with someone who wouldn’t hang around. So I found the gentleman in Canada who ran a small lab, and he was willing to work with me. So that was the first round of products that actually came about. Shipping things back and forth across the border, it took a long time, so it was a really slow process to try and approve something. Oh my goodness, I think that we ordered our first set of samples maybe, in August of 2010, before we had ever formed, cooperation and we started the process of mailing back and forth. The first products that we had ready for sale were available in April 2011. So not quite a year. So there was a lot of back time of testing, sending it to friends, and seeing who liked what. After that, the lessons that were learned, as soon as I realized that this could maybe, be something, it was important to me that we be an American company. I live in Colorado. I love Colorado. The first press release we ever sent out, within 12 hours I had an email from the editor of Pregnancy and Newborn Magazine. And, she emailed and said, “We love the concept, can you send us some samples to photograph?” And so that was kind of my ‘aha’ moment. That maybe, this could be something because prior to that I was just kind of rolling with the punches and seeing what would happen.
But when I realized that it could, I had a little sample, one of those little cosmetic samples that you get. I had been given it at Nordstrom and I thought this is a good product and I’m going to see who made this. And so I just called the number on the back and you’re transferred a whole bunch. People think that you’re crazy but at the end of the day I ended up on the phone with someone and they said, “I see your calling from a 303 area code, and this product was actually made in Denver and I know who made it.” And they said, “We’re going to give you the number, you can call, and good luck in your endeavors.” So I called the number, and I’m sure people thought I was crazy. I’m a mom that would like to start a hair styling company. And the guy invited me over, and we just kind of walked through the facility. I took him what I had, my line started with four pieces and I said, “Do you think that we might be able to work together?”
Cosmetics is a really expensive industry, and I am not L’Oreal Paris, so I had to ask for a lot of special favors. And so, I told him upfront, I’m on a very limited budget. A lot of the big brands that he mixes order 20,000 at a time and things like that. And I am not able to do that, so I was very honest and upfront and said, “I don’t have ability to do this, but I really believe in my idea and if you could work with me, we’ll take this journey together.” And he was, so sometimes you have to ask for things because people don’t offer them in the beginning.
Rachel: Right, and so what are some of the other things that you asked for? For the person that’s listening out there because I think almost every single person I’ve talked to, the first manufacturer never works out for one reason or another. It’s like by the second or third manufacturer people find who they’re going to work with. So what are the questions that you wish you would asked the first time around?
Megan: The first time around, for example, I didn’t ask to see copies of lab reports. I think sometimes when you’re honest, you just assume that everyone else is honest, too. And sometimes it’s best to just be able to verify for yourself. So I didn’t ask to see copies of lab reports to make sure that we were using a phthalate free fragrance which was really important to me. Or sustainability reports to make sure that these products were going to last 24 months on the shelf, like we were promising. We had some issues with those kinds of things, and I think we were working with a small company and maybe, there were some kinks in their hose as well. But when you’re introducing your brand for the first time, you have to make sure you get everything right. Where we had a made a few mistakes, it was pretty costly because we had to take all of that product and discard it because it wasn’t suitable to put out into the world.
Rachel: Oh, interesting.
Megan: So things like that. With the second person I wanted to see everything, and I know that you said that this is past my protesting but I want to see, and I want to know which lab you’re using, and I wanted to verify all of those things. Things like, an ingredient that does not produce dioxin. We have a dioxin free certificate and I wanted to see. So I think that you live and you learn, and it doesn’t mean that they’re not honest, but it’s just because it’s too expensive to do it at their time and so I am very thorough this time. It’s nice because I can be really confident when I sell my products I know that they’re good products. I know that they will and won’t do all of the things that I say they will and won’t do. And so, we’ve learned from that. I also ask for a lot of price breaks. If we do it for this price, I know that your minimum order is 1500, and can you run 800 for me. My product line has grown from four items in the beginning to now we have eight products. So that’s pretty expensive, but I’d rather have a complete line as opposed to a few products with a ton of inventory. And so I always ask if I pay an extra set up fee can we do 800, or a 1000, or 1200, or whatever it might be. With my label guy, I’m always saying, “I would love to pay you full price but I’m a mom and I’m a startup and can you come off your price at all.” And for the most, part people are wonderful, and I think that if you find a group of people who are willing to work with you, they’ll support you and give you what they can. Not everyone always agrees to price breaks, and I feel awful sometimes having to ask, but the alternative to not asking is that you don’t get to do it. And I would much rather do it and swallow my pride, and hopefully the day will come for us when I don’t have to ask for special favors. And I will repay those people for their willingness to help me in the beginning. So I think that it will all work out in the end.
Rachel: I know, I love it. It’s great, and they know that, too, because people who are willing to work with you also believe in your product, and they’re there with you every step of the way. The further they go along, the more they want to see you succeed. They’re invested in it, too.
Rachel: Tell me a little bit about it. Let’s switch gears from manufacturing. Your product is on the market. Within 12 hours, you said it got into a few publications. What did that mean? Your hair product, did they use it on a model, or did they actually take photos of it?
Megan: With the first one, the 12 hours that you were speaking of, was Pregnancy and Newborn Magazine. I wrote a press release, and I just kind of found editors’ emails and I just sent it out. For Pregnancy and Newborn, that was like our big, exciting moment. We sent products to them. They tried them. The editor had a baby, and so she was using some of the products, and they photographed them in-house. And then they put them on an editorial page that featured other products. So, we were actually featured as their Crush of the Month in August, 2011. It just showed the products. It was a photo I had never seen, but it was so amazing to be included at all. I wouldn’t have cared if they pictured the products and said, “They’re here but we don’t like them” because sometimes any kind of impression that you can make is powerful.
Rachel: Right. That’s amazing. What happened? What was the result of that besides feeling like you’re on to something? This is great. Did you see an immediate spike in sales from that?
Megan: I will be honest, not really, but it made it a lot easier for me to sell the line because when I would call a boutique or try to present it to someone, everybody automatically assumed that you were a mom making hair gel in your kitchen sink. While that wasn’t the case, saying that we were featured in Pregnancy and Newborn, that gave you validity. Even though they hadn’t heard of you, no one had, but they felt like maybe, they should have because Pregnancy and Newborn had selected you. We were featured in Parenting Magazine, and that was amazing. Sales went through the roof. Unfortunately, our Google Analytics account crashed after three weeks, so I have no idea. I wish I could give you better numbers, but I could tell you that the sales just kind of piled in. Even yesterday I had someone call and say, “I want you to overnight a package because I’m going to give it as a birthday gift. I saw you on Parenting Magazine.” So, that was really powerful and amazing.
Rachel: That’s interesting. When were you featured in Parenting Magazine?
Megan: I believe it was March of this year. So March of 2012.
Rachel: OK. And now it’s July, so you’re still seeing some sales come in from that.
Megan: Absolutely. And people mention it where they say, “I saw you here, and I like it.” And it’s been really powerful because again, you just kind of add to the “As Seen In” types of things.
Megan: We also have relationships with a couple of other magazines where they use us for editorial type work. So when they shoot a cover or a pictorial for that magazine they use our products on the models. Sometimes we get an editorial credit, and sometimes we don’t. But I would tell you it really doesn’t matter because to me it builds your reputation as a professional brand. Specializing in kiddos’ hair care. And while they can use other lines, we want to be the premiere line for the children’s fashion industry. Any time they give us a credit, it’s always amazing. It’s a bunch of talented people and so to feel like you had a very small part of that beautiful spread, it’s really flattering, humbling, and it’s exciting.
Rachel: Yeah, no, definitely. I want to talk to you a little bit about brand because your packaging is beautiful. I know that you did it all yourself, the name Hot Tot, and then you have this vision. You said it just now like premiere fashion for the children’s industry. How did you come up with that? Was that something like early on you sat down and wrote it all out? Tell me a little bit about that process.
Megan: We had a couple of different ideas. My husband, my sisters, and my girlfriends, and we just kind of started bouncing them around. I will tell you Hot Tot was the first name that we thought of, but I was too afraid to commit to it. I bounced around other names and pretended like I was considering other things, but I think in my heart I knew that this was what it was. In my heart from day one, I always knew exactly what it was going to look like. But I sat down with a graphic designer and kind of described all of these things and my husband spent 20, 30 hours designing different logos to choose from. But at the end, I knew that it was just a crown, and he put it together as a crown in Photoshop so.
Rachel: That’s amazing. So is your husband a designer?
Megan: He’s not. He’s just a really savvy guy. I mean, he really has done luxury on a budget.
Megan: He took our money on things that mattered most, like products and product development, but we really have cut corners in every other area because we only had $40,000 to spend on this. Which is a lot of money, but when you’re competing with big brands like Revlon and L’Oreal, it’s really not that much. So he’s very computer savvy. We sketched it out on a napkin and that was kind of that.
Rachel: Yeah, so you had $40,000 and you decided you were going to spend most of it on product. At what point…are you profitable right now? Or as you make sales, do you just put it right back in the company?
Megan: We have yet to make a profit yet, but everything goes back in, and I think that it’s looking like we could be soon.
Rachel: Editorial in the magazines that you are in. I know you put together the first one. Did you hire a PR firm, or are you doing this all yourself?
Megan: I have hired two PR firms. At this point, we have been featured over a hundred times by everything from magazines targeted towards grandparents, to children’s magazines, to blogs, fashion and beauty blogs. I hired a PR person last year after she had seen us in Pregnancy and Newborn Magazine and she stole my money and ran. I mean she literally took my money and disappeared.
Megan: She had me send her a few boxes of products to celebrity gift and they never were sent out, and I thought that it was a good lesson to be learned. As I said earlier, sometimes when you’re honest. you assume that everyone else is honest. too. And those lessons teach you to be much more savvy. So I learned from that process that maybe, that wasn’t the best avenue. As things continue to grow and build, we got a little bit better. I hired another PR girl, you know, PR is very expensive. So again, I asked for a discount not because she’s not worth what she charges, but because it was just way beyond what I was able to do. She worked really hard, but I’ve learned that the best features have come from my outreach. She’s lovely, but I think that you have to find someone who understands your brand, and something like children’s hair care is a really kind of unique difficult placement because how many times a year do magazines do features about kid’s hair or something like that. So I don’t have a PR person right now, I’ve learned that that’s an expense that I probably can’t afford right now. And so I’m doing that piece myself. But, I do as much outreach as possible because advertising is not in our budget.
I think every imprint that you can make is really powerful. So any time an opportunity like this, where you can help other women and possibly inform them of your brand at the same time, that’s a really good opportunity. So blogging, I found so much support from mommy bloggers. And a lot of them require you to purchase an ad or we can’t feature you. Again, it’s not in the budget. So I often tell people, “If we can make this happen, I’m going to support the people who supported us in the beginning.” I speak of the company like us, like there’s a whole army of us but it’s really just me. I would tell you that I’ve gotten used to do doing that because when I sell it, people don’t want to buy your brand if they think you’re a one man show. So sometimes, my husband helps me pack boxes, or my sister comes and we’ll give her opinions on things. But, I say us because I feel like we are a company.
Rachel: Right. No, I agree.
Megan: Sounds a little bit neurotic, I know that.
Rachel: No, I think it sounds professional. And you’ve learned that.
Rachel: And you are a team because even though you say it’s just you, you have a team of product developers.
Rachel: They’re not internal but you’re relying on a graphic designer, and you rely on a lot of other external sources so.
Rachel: I noticed, it’s interesting. I want to talk a little bit about social media and marketing. You were talking a little bit about bloggers. Which outlet has been the most results oriented for you? Where do you see the most results between Facebook, Twitter, or bloggers. What helps you?
Megan: It just kind of depends. I would say, the most powerful feature we’ve had up to this point has been Parenting Magazine. Hands down, that led to sales, and then that led to building a recognizable brand where people have heard of you before, and that was really helpful in terms of helping sell the line. Sometimes, blogs are helpful. For the most part, I would say they don’t generate much in sales. But, it’s an opportunity for people to hear about you and then they stumble upon you again, six months later and a lot of the time it seems like people want to touch something 15 times before they’re ready to purchase it. And so, it starts that process where they’ve seen you more than once, they’ve heard of you, and so when they see you again in six months they’re a little more comfortable with your concept. And they’re ready to spend $15 and give you a try.
Rachel: Right. You have a photo contest on your site where the prize is $750. So I want to ask you about that. What made you decide to run that type of contest, and how did you decide upon the prize amount? And is that something that you’re going to be giving out as a company?
Megan: It is, yeah. We’re going to be giving it out as a company, and then I think there’s a charitable donation that’s tied up with that. So we’re going to donate to a charity of the winner’s choice because that’s really important. The company is called Hot Tot, but the concept of a Hot Tot is really kind of intertwined in the way that we do things. We define a Hot Tot as a confident and stylish youngster, who gives to their neighbor and cares for our planets. As I decided on that name, I was really reluctant to go ahead and put it out there because there was going to be some negative response about the use of the word “hot” in terms of children.
So I thought if we define this, then it kind of silences the critics. We’re not trying to make little kids look like beauty queens. We just want to help provide safe issues for common kid hair problems. The contest provides an opportunity to tell us why that child makes a world a better place which I think kind of gets people thinking, in terms of like, not only is my child cute, but let’s think about something that really matters. So people come up with really creative ideas, somebody said they visited a nursing home. And I thought what a cute idea, they smile at people. Organic baby food. I mean, the list just goes on, and people are really creative and I really appreciate that. I think it also kind of pulls the trigger on parents talking about like who would you like to help then. And kind of gets the ball rolling, and hopefully, that lasts a lifetime with those kids.
Rachel: Right. It sounds like your tying in kind of your social work and your other passion in life with this.
Megan: Absolutely. Well, I think everybody has heard that beauty is only skin deep, and so we definitely are not a superficial company. While we have product that might seem superficial on the surface, we stand for something that is much deeper than that. So I think that the contest provides an opportunity to kind of show that, and put your money where your mouth is, and then it’s fun. Moms want to show off their kiddos, we all think that our kids are the cutest. And so it’s fun, and I would tell you it’s really flattering every time we get a new entry. It’s really amazing to see that this person uses the products on their kids and they like it, and it makes you feel like you’re a real brand.
Rachel: Right, you are a real brand. I feel like for having a social work background and figuring out this whole world, as you talk you’re so articulate and you’ve really thought through your brand, what you stand for, and you put it out there. You know all of the touch points, and it seems like you definitely researched what it takes to be a brand. So I feel like you’ve made phenomenal progress for not having a business background and jumping into this a few years ago. Congratulations.
Megan: Thank you. You know, I think that when it’s important moms will listen. And so I don’t have a business background, and I really didn’t do that much research as far as what does it take to be a successful brand. But I think that if you approach it and keep in mind how you would want it approached if someone were approaching you. If you were the consumer, what would you be drawn to? What would you like to see? And for me, I wanted something that looked really pretty. I imagine all of the girls in a circle at a baby shower, and everyone always passes around the best gift of the day. “Where did you get that, what is it, and let me see it.” So I really wanted to visualize that my products were being passed around that circle.
Rachel: How many retail outlets and salons are you in at this point?
Megan: I think we just broke the 50 mark. In 50 salons and boutiques. In the beginning, I really thought that the boutiques were going to be our bread and butter. That we were going to be at these cute, cool, trendy kids boutiques and that people were going to see it and pick it up. I’ve learned that that really is not the case. Some boutiques we do quite well in, but it really is children’s salons that we’re kind of making our mark. In the future, I would like to be in more adult salons. I had someone reach out to me who works with some big adult brands. They gave me a bit of free advice, and they said, “This should be in adult salons because moms are the ones that make the choices.” I’ve spent quite a bit of time sitting in the waiting room in children’s salons on the weekend kind of as the fly on the wall and asking kids pick one of those bottles over there. And they always pick the fruity bottle with the cartoon looking label, every single time. But if you ask the moms which product are you going to pick, they always picked mine. So I think that was pretty powerful. It’s a tough sell trying to get you into an adult salon because no one has ever done it before. No adult salon has ever had success with a children’s brand. But I think that it’s very possible. They can bring us in there. We don’t compete with their primary lines so they’re not going to lose a penny of revenue. But they have an opportunity to bring more in. So it’s a tough sell and it’s a slow process, but we continue to try.
Rachel: That’s great, that’s fascinating that what you went in thinking was going to be successful wasn’t. And I get that feedback a lot. You try something, you’re set on that, and then it turns into something else. But that’s interesting, that’s a great approach for adult salons if you can get in there. It sounds like you thought this through and you’re on your road to success. And I want to ask you what does the future hold? What would you like to see for Hot Tot?
Megan: I would like for us to be a real brand. A brand that someone has actually heard of, and right now we are not very well known it takes a lot of convincing. So you have to convince people there’s nothing wrong with kiddos having their very own products. And you have to explain to people why the traditional formulas are not appropriate for growing bodies. The products are too heavy, they don’t wash out easily, the chemicals have a biological immaturity that impairs a child’s ability to detoxify chemicals. They’re much worse on a child than they are on an adult. If we could be a more recognizable brand, those hurdles would instantly be overcome. I would like to be in other places. We just opened up the doors and said we were willing to be sold in other areas. And we now have three accounts in Canada, one in Singapore, and we’re going into the Middle East. So that’s really exciting. It’s exciting that someone in Dubai had even heard of my brand. They reached out to me and not the other way around. So it’s a dream. We started talking about having the labels be redone in Arabic, and it’s amazing to think that across the world somebody else could get it and could like it and could be a part of their daily routine. That’s really overwhelming and amazing.
Rachel: That is, that is. It’s something that you created, that you visualized, and brought to fruition, so amazing. Tell me a little bit about, throughout your whole journey, what would you have done differently looking back?
Megan: I don’t think I would’ve done anything differently. I think I entered into an industry that I knew nothing about, and I think that naivety was a really good thing because I never would’ve had the confidence to do this had I known then what I know now. I always felt like this would be so much bigger than I was capable of doing, and I’ve learned that that’s not the case. People respond to authenticity. They get that you’re in this for the right reasons. This has become my dream and I didn’t know that it ever would. But I don’t think that I would’ve had the courage to pursue it had I had all of the information. I think it was good, and you would get in and you’d have a small amount of success and then you realize that, holy cow, this is big. Until you have a little bit more and realize that it is big, but we can do it. Rome wasn’t built in a day, and so we started that process.
Rachel: Yeah, that is awesome. Congratulations, again.
Megan: Thank you.
Rachel: I want to thank you for coming on and sharing your story. You are very authentic and very sincere. And I appreciate you being so open about everything from funding, to your manufacturing challenges. For the listeners and viewers out there that have watched, if you like what you heard, please sign up for our subscription at www.bestmomproducts.com where more interviews like this can be found.