October 01, 2013
Industry Outsiders Hit the Sweet Spot with NuCerity
by Beth Douglass Silcox
Photo above: Distributors celebrate at a recent NuCerity event.
- Founded: 2009
- Headquarters: Houston, Texas
- Executives: Jeff Graham, CEO & President; Lonnie McKinney, Founder & Co-Chairman; David Dillingham, Founder, Co-Chairman & Chief Operations Officer; Richard Jaenicke, Founder & Chief Technology Officer; David Bain, Chief Financial Officer & General Counsel; Melissa Chambers, Vice President of Marketing; Nancy Wendrock, Vice President of Operations; and Karen O’Quain, Director of Specialty Marketing & Public Relations
- Products: Skincerity®, Skin-Nutrition Rejuvenating Barrier™, Advanced Repair Satin Serum™, Eye Effects 3 Advanced Serum, Body Silk
- Website: www.NuCerity.com
Recent hire signals company is aiming higher.
NuCerity International hit the sweet spot for a direct selling startup when innovation gained traction, in part because industry experience didn’t slam on the brakes. But the recent hire of an industry insider as CEO and President shows NuCerity is ready to take the company to new heights.
NuCerity’s story starts with three visionary entrepreneurs focused on first-to-market technologies and creating brand-new consumer product categories. They first excelled in traditional markets. More than two decades later, they transitioned to direct selling and brought a unique, roll-on polymer barrier technology to the marketplace in the form of Skincerity.
In the Beginning There Was Slick50
It’s been 30 years since Lonnie McKinney, David Dillingham and Richard Jaenicke first combined their entrepreneurial spirits to create a paradigm shift within an industry. Their outsider status may have appeared as a disadvantage to industry insiders, but they liked it that way. After all, innovation often comes from not knowing what can’t be done.
The trio brought forth products and methods for conducting business that industries never before imagined. They introduced portable construction engineering software and the very first lasers used in the construction industry. They owned and managed the largest multi-location dermatology practice in Texas—even though none of them held medical degrees—so doctors could focus on patients instead of billing. And then there was Slick50.
“It was a fantastic thing. We shipped product into 46 countries around the world. We really launched the whole category of engine treatments in the automotive after-market,” NuCerity Founder and Co-Chairman Lonnie McKinney says.
But in many ways Slick50 became a victim of its own success. “We were doing $50-plus million with Wal-Mart, and one day we had that kind of meeting where they said, ‘We need to have a better price or it might be hard to find your product,’ ” McKinney remembers. “Now, I’ll say this, we did have a great relationship with Wal-Mart. It is just who they are.”
Retail profits were dropping because of voluntary retail price cuts, but that mattered little in the negotiations. Nose-to-nose with a big-box retail giant like Wal-Mart, Slick50 wasn’t coming out on top. So the partnership agreed to sell the company to Quaker State and chalked it up to a valuable lesson learned.
Fast-forward nearly two decades, and McKinney sits with Dillingham in the brand-new Houston offices of NuCerity International, discussing the trajectory of a very different kind of company, with products that have nothing to do with the automotive after-market and sales that are in no way connected to retail behemoths.
Still, Wal-Mart’s words ring in McKinney’s ears. “Look,” he recalls the representative telling them, “You need to understand something. That consumer is not yours. That consumer is ours.”
McKinney says, “It didn’t matter that Slick50 was running $40–$50 million a year with Wal-Mart, pioneered cable and targeted TV, or was the first million-dollar advertiser on The Weather Channel. We didn’t have the relationship with the consumer. We didn’t deal directly with the consumer.”
But with NuCerity, it’s a completely different story.
A Product That Begs to Be Demonstrated
Set up at a three-day Texas women’s conference, the plan was to broaden the reach of the company’s product Skincerity, a liquid-based, barrier polymer that rolls onto the skin and turns into a breathable, moisture-retaining film that amplifies any component under it, as well as the body’s ability to heal itself. According to the company’s website, while it seals in the body’s natural moisture to deeply hydrate skin, it both infuses antioxidants and allows oxygen to penetrate the barrier to help restore and rejuvenate skin. The result is smoother, younger-looking skin.
As owners of a large, multi-location dermatology practice, the founders checked out newly developed products at medical conferences all the time. And that’s where they discovered a breakthrough, one-of-a-kind technology.
Financed through National Institutes of Health (NIH) grant funding, the polymer film technology increased the effectiveness of topical antibiotics and antifungals. Clinical testing to meet NIH grant requirements was complete. The science behind the product was impressive, and so, too, was the firsthand experience of the product developer’s president, who suffered a broken wrist abroad.
Two surgeries and one unattractive scar later, the president sought a topical vitamin E that wouldn’t ruin her clothing. Immediately, she partnered the vitamin E and the polymer film technology. They worked together. She and her surgeon were impressed.
“We became enamored with it,” McKinney says. After negotiating worldwide and multi-channel marketing rights to the product, Skincerity was retailed through their dermatology clinics and other medical practices for several years until the fateful women’s conference opened another door.
“We simply rolled the product on women’s hands and explained to them how it worked,” says Dillingham, NuCerity’s Founder, Co-Chairman and Chief Operations Officer. In two hours, their three-day inventory vanished. “This product begs to be demonstrated!” he recalls telling his partners that day. “That was the moment we decided Skincerity was a network marketing product. Put in the hands of women, in particular, they were going to share it with their friends, and that’s exactly what has happened.”
Locking Arms with Consumers
There is, perhaps, no other industry with a tighter connection to consumers than direct selling. Consumers, distributors and companies are inextricably linked, and the importance of those relationships is an ever-present Slick50 callback for NuCerity’s founders.
It’s no accident that the partners believe they sit at the bottom of an inverted pyramid. “Our distributor partners are at the top. Our vendors are No. 2. Our staff is No. 3. We are at the bottom,” McKinney says. “It’s our job and our goal to give our distributor partners the tools and all the opportunity to be as successful as possible. We grow our business by putting our distributors first.”
Dillingham adds, “We will lock arms with you. We will have meetings in homes with you. We will be right here with you to help you grow your business. We absolutely lead by example, and I can assure you, we truly walk the talk. We don’t stay in Houston, Texas, and think for one minute that we know what’s going on in the field. The only way that you know that is to get out there and work with people. That’s what we do here, and it really does make a difference.”
McKinney agrees: “We would never sit there and say we’re the smartest people in the world, but someone would be hard-pressed to outwork us.”
Jeff Graham marveled at the accomplishments of NuCerity’s founders when he signed on as their new CEO and President earlier this summer. “In our industry, if you can be copied, you will,” he says. “They were very smart in that they secured the worldwide licensing for Skincerity, and they secured it not only for our industry, but for any channel.
“By all intents and purposes they had gotten through the first two years,” Graham continues. “They had certainly made some mistakes along the way, but whereas a lot of companies will start with industry experience and fail, these guys—without any industry experience—appeared to be succeeding.
“Now we have an opportunity to really communicate effectively and start to build on a brand-new category that nobody really knows about. We’ll call it breathable masque technology. That’s where Skincerity really fits,” he says.
Driving NuCerity’s early success is an incredible work ethic, trust and respect that starts with the founders and spreads across their field of predominantly female distributors. “We tell our field to recruit nice people, treat them with respect, and help each other,” Dillingham says. “When ordinary people pull the rope in the same direction with the same goals, that’s where you get extraordinary results.”
Graham, a seasoned direct selling executive, says, “The culture is one where the field and corporate are working together, which is very unique for our industry. My sense is that NuCerity distributors, in general, feel as if they are aligned with corporate. They absolutely adore the founders and when describing them they use words like trust, integrity, patience, kindness, understanding and honesty. They have this natural desire to belong to NuCerity.”
Holding Somebody’s Dreams Is Serious Business
“In a traditional business, somebody gives you money and you give them a product. In the direct selling business, they also give you their hopes and their dreams. You have a greater responsibility in direct sales than in any other thing that we’ve been involved with because you actually have somebody’s dreams in your hands. And you don’t mess that up. You just don’t do it wrong,” McKinney says.
Dillingham looks at the work NuCerity distributors do as investing in annuities toward financial security for the rest of their lives. “We say, ‘Take your time. Don’t quit your day job. Just do this if you enjoy it. You have to believe in your product. You have to believe in the company. You have to believe in the people behind the company. When you have that passion, it comes across, and distributors have the opportunity to change other people’s lives too,” Dillingham says.
Nine months after she sold her car to meet expenses and borrowed the $59 startup fee, one NuCerity distributor partner confessed to McKinney that her original goal was to live in a place where her carpet was clean enough to lie on it and run her arms like angel wings through it. NuCerity made that happen for her, and retelling the story brings tears to McKinney’s eyes. “It was the first time I’d ever been involved in a business where changing someone’s life was more important than the sales report. I think that is the culture of our company,” he says.
Of course, it is with NuCerity’s products that these life changes begin, whether for customers purchasing them to improve their skin or distributor partners selling them to build a business. So the company diligently tests effectiveness and consumer trends. “We do things like a traditional business,” McKinney says. “So that makes it really magical when we attach products to a compensation plan. All of our distributors understand that we’re not making crazy claims. We’re out there selling something that changes skin and changes lives.”
Belief + Action + Skills = Results
It’s obvious to Graham that both NuCerity’s founders and distributor partners believe in their products and can put that belief into actions that advance their impact on other people. But in the equation, Belief + Action = Results, Graham says, “I would simply add one more thing: Belief + Action + Skill = Results. It is our responsibility to help distributor partners develop the skill to be business builders.”
The company’s goal is to build on individual strengths, shore up areas that need improvement and recognize the strengths of others. “We’re going to help you learn the skill of partnering with someone who is great at sales. You don’t necessarily have to become great at sales, but you ought to recruit someone into your business who is,” Graham says.
NuCerity distributor partners sell products in the United States and 14 international markets, including Southeast Asian countries such as Thailand, Indonesia, Singapore and Malaysia. “We have a strong, strong core in Canada as well,” Graham says. “I look at the revenue that we’re doing out of Canada, and even in a couple of years I would put us in the top 15, maybe the top 10.” He’s focused on domestic growth this year, so any international expansion will be very strategic. Instead, the goal is profitability in existing markets.
Globally, there are between 27,000 and 32,000 active NuCerity distributors. Some 75,000 distributors and customers combined have placed orders. Enrollment of distributors and customers continues to increase steadily. The company has experienced month-over-month growth since January, with less than .05 percent product returns.
Graham’s plans to expand distributor skills training reflect the needs of an international community. Areas of focus will be personal development, sales skills activities, videos, smartphone apps and improved social media that better connect distributors to the company’s story about such things as philanthropic partner Moms Against Hunger.
Moms Against Hunger delivers prepared, freeze-dried, vacuum-sealed meals and bulk food to some of the world’s neediest children. “We need to better communicate through social media, for example, our involvement, where these meals go, how many kids we’re feeding and in what countries,” Graham says.
Dillingham traveled with the Moms Against Hunger group to inner Fiji after flooding ruined a life-sustaining sugar cane crop. “We took bags of fortified rice and gave it to mothers and children. To see how they were living was just unbelievable. I mean, it was life-changing to be part of that,” he says. To date, NuCerity has shipped 250,000 meals to Fiji, and a few distributor partners volunteered hands-on during the floods in Alberta, Canada, and in the aftermath of a devastating tornado in Moore, Okla.
But, Dillingham says, “Going into these disaster areas is no picnic. Not everybody can get behind those ropes, if you will, to help. So Moms Against Hunger is our vehicle, and we are very, very blessed to partner with them.”
With uncertainty the norm in today’s world, whether it is natural disaster or the realities of every day, McKinney hopes NuCerity is “giving people an opportunity to have control of their lives.”
Dillingham knows they are on the right track when a NuCerity Diamond distributor, who is so fearful of public speaking, wowed a crowd recently despite her fear. How did she get past it? She was more fearful of returning to her life before NuCerity, she told Dillingham, than she was of public speaking. “Now that,” he says, “will touch your soul.”