Rodan And Fields Build Billion Dollar Fortunes Off MLM Skin Care Company

By on July 24, 2018 in ArticlesBillionaire News

At some point, you've been approached by a Rodan and Fields consultant. Perhaps it was a long-lost high school classmate who friended you on Facebook only to DM you her sales pitch for the life changing skincare she sells. Or maybe it was an old friend who takes you aside when she sees you in the grocery store to share her anti-aging secret. Rodan and Fields, besides being a multi-level marketing skin care line, is a company that has made its founders, Katie Rodan and Kathy Fields billionaires.

The two self-proclaimed "Wrinkle Warriors" have been at the forefront of a successful skin care line since the 1990s. Their first product was the popular acne treatment Proactive. They met back in the 1980s and a billion dollar, decades-long friendship was born. Kathy Fields and Katie Rodan met at Stanford in 1984. Fields was straight out of the University of Miami Medical School and Rodan had recently graduated from the USC School of Medicine. They were in Palo Alto to do their dermatology residencies. They quickly bonded over a shared sense of fashion and remained friends as they studied for their board exams and joined separate all male dermatology practices in San Francisco. A few years later in 1989, Rodan found herself frustrated by the lack of advances in treating acne and felt the market needed a new alternative. So, she decided to create the acne solution that wasn't available at the time. The first person she called to tell her idea to was Fields.

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In 1990, the two women signed a contract with each other declaring themselves equal partners in a company created to make an acne treatment. The contract marked the official beginning of their business partnership. The two set out to create a product to fill the gap they saw in the acne care market. They kept their day jobs while working nights and weekends at their kitchen tables to turn their side project into a wildly successful household name. That product was Proactiv and unlike other acne treatments, Rodan and Fields' formula felt like a high-end beauty cream.

In 1993, Rodan and Fields paid a visit to Neutrogena's headquarters with their new acne product. Neutrogena told them that infomercials would be the way to market the brand. At the time, infomercials were in their infancy. The doctors were horrified. Neutrogena ultimately turned them down. The doctors thought that was it. However, Neutrogena had given them an idea. Rodan's mother provided an introduction to one of the co-founders of infomercial company Guthy-Renker and talks began. In 1995 Rodan and Fields licensed their product to Guthy-Renker. They had spent $30,000 of their own money over five years developing Proactiv. Guthy-Renker marketed and distributed the product and paid the doctors an estimated 15% in royalties from sales.

Proactiv quickly became Guthy-Renker's most successful product and was responsible for approximately half of the company's sales. The acne treatment brought in a reported $1 billion in sales in 2015. In March 2016, Guthy-Renker entered into a deal with Nestle to expand Proactiv's international sales. As part of the deal, Rodan and Fields sold their remaining rights to Proactiv royalties. For that, they were paid a lump sum estimated to be more than $50 million.

Rodan and Fields were still passionate about solving skin care problems. Both doctors noticed that over the years the people coming into their offices complaining about wrinkles were getting younger and younger. The pair set their sights on the anti-aging market. They launched the Rodan + Fields line in 2002. The following year Estee Lauder bought the brand. It languished in the cosmetics giant's massive portfolio of brands. In 2007, the doctors bought their brand back. In the meantime, they had studied direct-selling firms and tested that format by holding a Rodan + Fields party. A TV station covered the party and interviewed the doctors about direct selling. The station was flooded with phone calls from people wanting to get involved.

Rodan + Fields has been a multi-level marketing company ever since. Consultants are paid a commission for their own sales and for the sales of people they recruit. More and more salespeople are signing up with Rodan + Fields each year. When Rodan + Fields relaunched as a multilevel marketing company in 2008, the company had just 1,350 consultants; at the end of 2016, it had 287,000

From 2010 to 2016 Rodan + Fields revenues increased an average of 93% a year, growing from $24 million to $627 million in 2015. Katie Rodan and Kathy Fields' success at building not one but two skin care brands has netted them each an estimated net worth of $1.5 billion.