Manscaped CEO on going public: 'We have grown way beyond the groin'

Manscaped Founder and CEO Paul Tran joins Yahoo Finance Live to discuss the grooming brand's outlook as it expands into the lifestyle space and plans to trade publicly via a SPAC deal.

Video Transcript

BRIAN SOZZI: Manscaped has been tidying up male groins since 2016. And now it's looking to add some tidy profits to your stock portfolio. The consumer products company plans to go public by merging with a SPAC dubbed Bright Lights Acquisition Corp. in a deal expected to close in the first quarter of next year. Manscaped is being valued at $1 billion, a.k.a. unicorn status, as the company has also pushed into new growth areas such as ball spray toner, ball wipes, and anti-chafing ball deodorant.

Let's dive into the company with its founder, Paul Tran. Paul, I don't mean to giggle. I mean, but these are some of the names you have given to these products. I am not pulling the stuff out of thin air. But Paul, ultimately, good to see you here. What do you view as your competitive advantage?

PAUL TRAN: Brian, great to be here. Thank you for having me. Well, the competitive advantage is we make phenomenal products. And we tapped into a market that was underserved. Before Manscaped, nobody was talking about male groin. There was no brand. But now, fast forward to about three years later. You know, we're now the de facto standard for male groins here.

And, you know, many people see our ads. They see our commercials. But nobody knows how fast we've grown during that amount of time. So we went from a $3 million TTM to almost $300 million in revenue in just three years, with only $23 million of capital raised, while being profitable and amassing over a million active members.

BRIAN CHEUNG: Hey, Paul, Brian Cheung here. So why go down the SPAC route here, right? I guess, we know your kind of growth trajectory. You have all these new products. Why did you ultimately decide to team up with the SPAC sponsor that you did? And what do you hope to use the capital that you're going to raise to do? Are there other types of categories, maybe even outside of the male category, to expand into?

PAUL TRAN: Well, great question, Brian. For us, it was a dream to build the next multigenerational brand. That's what we set out to do. And to do that, we believe that we had to be a public entity. We wanted our million members to also be owners. And to answer your question, why the SPAC route, it's because we found the perfect SPAC partner. We wouldn't have gone down the SPAC route if we didn't find the perfect SPAC partner.

Like, for example, you have on the screen here, I mean, Bright Lights brought us Channing Tatum. They are experts in that channel. And so, beyond just a check, a really large check, which we didn't really need because we were already profitable, they added a lot of value. And that's what we chose the SPAC route.

JULIE HYMAN: Yeah, Channing Tatum is a pretty perfect person to think of when you think of something like this, given his films. Paul, it's Julie here. And I want to ask just in terms of how these products are specific for this use case. In other words, like, can a guy just buy a Gillette and do the same thing? In terms of your moat for these types of products, how do you think about it? And how do you make that value proposition and pitch to consumers?

PAUL TRAN: Well, I'm going to get pretty technical here. And, you know, we create products. And the interesting thing is that we've grown way beyond the groin. So we started in the groin, we dominated. But we now cater to the entire male body. So we have products for hair. We have products, you know, deodorant that's going to be coming out, lip balm for men.

And it's very-- they're all very specifically designed. For example, our trimmer, electronic products, was created specifically to remove hair on loose skin. And for men, that is a problem area. There wasn't really a trimmer designed specifically around that use case. So there is a lot of IP around how we actually do that. And so, we see that as a competitive moat.

In addition to that, you know, our brand voice and the way that we honestly and authentically speak to men, we believe that that is an incredible moat. As we expand into 38 countries into retail, we have the ability to speak directly to men, rather than go through a retailer, because we're digitally native. And, you know, in addition to that, we're actively deploying over $100 million in branding and marketing. We're the official sponsors of the San Francisco 49ers. We're the sponsors of the UFC. We aim to be really-- we want to be really authentic to men. And we want to create phenomenal products.

BRIAN CHEUNG: OK, so but that's an interesting point because, you know, to Julie's point about why couldn't you just use a regular razor, I think a lot of this has to do with brand awareness, because people aren't googling, looking for a trimmer specific to men that has the characteristics of the things that you're using to differentiate the product.

And a lot of people, including myself, have seen your ads already. I think I even saw a video. You're very self aware. There's a video of seniors reacting to Manscaped ads. And there's even a long version of it, apparently, on YouTube. Tell us about your marketing spend. How much of an expense is that to the company? Because it does seem to be pretty important to your business model.

PAUL TRAN: Yeah, so marketing used to be a higher percentage of revenue. But as we scaled so quickly, marketing spend as a budget has scaled tremendously. We're now actively deploying $100 million in media. But as a percentage of revenue, it's decreased. And that's exactly what we're looking for. We're building an international multigenerational brand. That takes capital. But what's special about us is we're able to recycle that capital so quickly. So instead of raising hundreds of millions of dollars, we only raised $23 million while being profitable and, after this transaction, 100% debt free, with close to probably, barring any redemption, it's $200 million on the balance sheet.

The media for us is a way for us to talk to men. You know, traditionally, traditional players have to go through a retailer. They talk about their value propositions on their packaging. We use media, we use influencers. We use all of our platforms, including TikTok and Instagram, to speak directly to them, to let them know that, you know, women led the way in this hygiene behavior, and now men are following. And it's OK, right? It's perfectly fine to talk about it. It shouldn't be a taboo topic. And we-- and if you're going to do it, use the right tools for the job.

BRIAN SOZZI: Paul, I'm on the website right now. And I'm looking at this product called ball spray toner. What is the origin story of a product like that? What are you hearing guys come to you and say, hey, folks at Manscaped, what do I need right now? And what are some of the new use cases you're hearing from people?

PAUL TRAN: Yeah, so that product fits in line with how we think about solving these problems for men. And it is all about routines. It's not any singular product. And if you look at how we approach solving these issues for men, it is around an entire routine. And for example, in the groin, that routine covers the hair removal, which is our lawnmower series of products, you know, our Crop Preserver, which is a kind of a wet deodorant for that area, and of course, our boxers. And so we think about it as an entire routine.

What's really interesting is that we made one pair of Manscaped boxers for a content piece. And men wrote in asking us whether you can buy Manscaped boxers. So we've now deployed two million Manscaped boxers into the market. Now we're not an apparel company, but we're really proud that men are willing to wear our brand on their bodies. And so, we realized that we're quickly becoming a lifestyle brand that has the permission to extend and take care of men from head to toe. And you see that in our active million numbers.

BRIAN SOZZI: Paul, you have one really interesting story. Tell us a little bit about yourself and why you founded the company.

PAUL TRAN: Well, I've always been an entrepreneur. I'm an immigrant here and came over when I was about five years old, you know, to this great nation. I just like-- I love being an entrepreneur in this amazing country. And I started a-- always started businesses. And it was Manscaped that it was-- it was looking at the male body.

And going from head to toe, you realize that there was a brand and a product for every single need that you can think of. But there was white space in the groin. And so, the hypothesis was either dudes weren't practicing this hygiene behavior, or there was no market for it. And, you know, once you start putting products for it, you quickly realize that there is a huge market for it.

You know, we've deployed four million trimmers in the last three years and with hundreds of millions in revenue. But if you think about it, there's over 80 million men in the US, 40 million millennials, and globally, there's 900 million men. You know, so the target demographics for just self-care and gorin care alone is massive, but that's only one of our verticals. We also have a really large suite of consumable products, which has been scaling tremendously also.

BRIAN SOZZI: Well, I look forward to following your public company journey. Manscaped founder Paul Tran, good to see you. We'll talk to you soon.