Such Polish for One So Young
How Dinah Mohajer became the Estee Lauder for Gen-X
Dinah Mohajer never meant to start a fashion empire. She just wanted some pale-blue nail polish to match her platform sandals. So the University of Southern California pre-med student decided to mix the stuff herself. Then, while sporting her jazzed-up toes around campus, "eleven girls stopped me in one day and said, 'Oh my God, that is so cute!'" recalls Dinah. "So my sister was like, 'Are you retarded? You could make money at this.'"
She may talk like a ditzy Valley Girl, but Mohajer, 24, is anything but. At near-meltdown pace, she and her "symphonic grunge" musician boyfriend, Ben Einstein, also 24, have created Hard Candy, a 21-month-old cosmetics company with sales projected at $20 million by yearend. With everyone from Alicia Silverstone to Dennis Rodman wearing its products, tiny Hard Candy is the envy of the industry, where the likes of Revlon Inc. and Estee Lauder Cos. spend millions each year on market research and advertising alone.
Now, says Mohajer, "we're going to expand Hard Candy into a cutting-edge cosmetics company with staying power for the long haul." With a new line of lipstick and a nail polish for men already on the market, Hard Candy is looking to branch out into everything from licensing deals with clothing companies to launching its own movie production unit.
No one seems more surprised by her success than Mohajer, who conjured up her nail polish career as nothing more than a summer lark. "I was just totally freaked out and psychotic from studying," she says. "I figured it was my last summer before being chained into medical studies." The way things are going, she says, she may well stay unshackled.
One day in May, 1995, just after her big hit on campus, Dinah and her sister, Pooneh, went to the mall to shop, lunch, and brainstorm. Over salads and mineral water, they came up with the name Hard Candy, which Pooneh, then a 29-year-old entertainment industry lawyer, got Dinah to trademark at once. Dinah decided to start with four pastel colors.
Back at Dinah and Ben's West Hollywood bungalow, the couple sat around thinking up cool names. Pale blue would be called Sky, green would be Mint. Eventually, they came up with some 60 shades with names like Trailer Trash, Gold Digger, Jailbait, Porno, Scorn, and Manic. Pooneh made a $3,200 loan; $50,000 came from Mom and Dad in Michigan.
Dinah and Ben started with tiny bottles of white nail polish mixed with darker colors already on the market. When they had four bottles ready, the pair brought them into Fred Segal, a Santa Monica clothing store frequented by celebrities and other hip dressers. "This little 16-year-old girl saw the bottles and just had to have them all," says Ben. "It was crazy." The store manager immediately priced the bottles at $18 each. An elite brand was born.
Fred Segal ordered 200 more bottles on the spot. Ben also shopped around a few boxes of finished polish to the trendier local boutiques. When such Hollywood celebs as Drew Barrymore, Cher, Boy George, and Quentin Tarantino started showing up in the entertainment press wearing Hard Candy, orders poured in. Then, one night in July, Clueless' Alicia Silverstone appeared on The Late Show with David Letterman. He asked about her Sky-blue nails. She gushed. It was a moment marketing executives wait a lifetime for.
"PSYCHO SLAVES." A month later, Seventeen ran an item on Hard Candy, including Dinah and Ben's phone number. The ringing started at 4 a.m. and went until 2 the next morning. Putting in five extra lines just made matters worse: "We were running around like psycho slaves."
Day and night, Ben and Dinah mixed chemicals, then squeezed the finished polish from plastic ketchup dispensers into little glass bottles. "After five hours it was, like, I feel so sick," says Ben. Adds Dinah: "We were definitely inhaling some hard-core vapors."
As volume picked up, Dinah and Ben tried to buy bottles and chemicals in bulk and have orders filled by pros. That's when the couple got a jolt of reality. They could buy base in five-gallon jugs from a wholesaler, but no one in the beauty supply business would "lead us past the retail wall," says Ben. Finally, a local bottler agreed to handle the work between bigger jobs. They moved front-office operations to an 800-square-foot office in Beverly Hills. "We really wanted the 90210 zip code," says Ben.
Stories ran in Vogue, Sassy, Allure, and Elle. Nordstrom and Neiman Marcus were clamoring to carry the product. Hard Candy "just caught on like wildfire," says John Stabenau, divisional merchandising manager for Neiman Marcus.
But while their products were gaining popularity, Dinah and Ben were "totally losing our hair," says Ben -- and running out of cash. With no billing system in place, the two had assumed their 30 or so customers would pay as shipments arrived. They didn't. Meanwhile, a squadron of about 50 helpers, mostly friends and hangers-on, were coming and going at a dizzying rate. On their way out, ex-employees were helping themselves to nail polish, computers, even furniture.
The biggest crisis came in February, 1996, when Hard Candy's bottler fell weeks behind schedule -- just as a new brand appeared in local stores called Crazy Candy, with colors amazingly similar to Hard Candy's. Suspecting the bottler was knocking off Hard Candy, a lawyer friend of Ben's and a local sheriff showed up and ordered the company to hand over its remaining supplies.
By then, Dinah had checked into a hospital, suffering from dehydration and exhaustion, and she and Ben realized they were out of their league. "I was, like, dead," says Dinah. "Ben said there's this company, Ernst & Young, that could help. I was like, O.K. So we called 411."
In March, 1996, the management consulting firm delivered Hard Candy's savior: Bill Botts, a 61-year-old former Rockwell International Corp. executive with a smattering of cosmetics experience. Calm and fatherly, Botts pulled out functional charts while wide-eyed Hard Candy staffers sat around him on the floor. He explained such foreign concepts as cash flow, invoicing, production, and distribution. "It was like a light going on," says Dinah.
Botts, though, wasn't so sure he wanted to join the brat pack. He had started and sold several high-tech companies, including Vertex Design Systems Inc., now a unit of software company Autodesk in Sausalito, Calif. The last thing he needed was "these kids running around stumbling over each other."
But Mohajer's enthusiasm and the prospects of a big score won Botts over. First, he drew up an organizational plan. Dinah would retain creative control and majority ownership. Botts would be CEO, with a minority stake. Ben and Pooneh, who had joined Hard Candy full-time, would also get healthy equity stakes. Botts then hired a finance officer, production chief, and director of marketing. He used his contacts to set up a network of sales reps to sell to customers including Neiman Marcus, Nordstrom, Macy's, and Bloomingdale's, as well as Harrod's in London and stores in Europe, Japan, Taiwan, and New Zealand.
Despite its solid structure, Hard Candy could sizzle away as fast as it heated up. "Fashion is quixotic," says Allan Mottus, editor of The Informationist, a cosmetics trade magazine. "Turning a fashion statement into a brand name is a whole other thing."
But for now, business is booming. Everyone from Estee Lauder to funky Urban Decay has come out with Hard Candy imitations. Revlon just launched a knock-off line called StreetWear.
Dinah exudes confidence. "We've got a great team that's ready to play the game to win," she says. Spoken like a tycoon. Totally not retarded.
By Eric Schine in Beverly Hills, Calif.
This article was originally published in the Mar. 3, 1997 print edition of Business Week's Enterprise.