Peter S. Cohan
Updated: March 16, 2020
Starting Up
Worcester needs to provide synergistic startup benefits
By Peter S. Cohan
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Last July, I interviewed Sophia El-Hayek, a Leominster native who holds two degrees from Worcester's Assumption College, about her startup. Since then, her company, Phenic Natural Skincare has gained national visibility and it looks to me as though it could benefit from a dose of outside capital.
Can Worcester supply that and the other resources her company needs to grow?
El-Hayek earned a bachelor’s degree in international business in 2013 and an MBA in 2015. She worked at Canton shoe firm The Rockport Co. and Marlborough health company Helen of Troy. These experiences taught her the importance of customer service, product pricing, and retail display marketing.
She started Phenic, which targets the clean and natural skincare niche, in 2017. In April, Phenic was accepted for a second year at StartUp Worcester, offering her office space and mentoring.
The global skincare market was worth about $141 billion in 2019 and is expected to grow to more than $180 billion by 2024. In a Feb. 21 interview, El-Hayek said the company will introduce new products to target that market including “gentle facial cleansing bars, which will be available this spring, and a CBD beauty oil, which we plan to release in the summer [and its own] brand of amethyst crystal rollers.”
Phenic plans to expand manufacturing to keep up with its growth. While the company manufactures small batches in Worcester, it is working with a partner to plan for the next growth stage. When its volume reaches a certain level, Phenic intends to hand off production “to a contract manufacturer so that our operation will be more efficient, and we can maintain product quality.”
Phenic’s marketing and distribution strategies have yielded growth, as online sales increased 70% since July and its Instagram presence soared 300%. El-Hayek was recognized as one of Pulse Magazine’s People to Watch for 2020.
The company has made progress toward national distribution. El-Hayek said she has made valuable industry contacts in Los Angeles, Miami, Chicago and New York City. In January, Phenic attended the Indie Beauty Expo in Los Angeles. The trade publication Beauty Independent recognized Phenic as an up-and-coming brand.
El-Hayek and her co-founder Alexandra Haigis have built all this with their own money. This has constrained Phenic’s budgets, which are tighter than those of its competitors. The bright side is those constraints have caused Phenic to select smarter growth opportunities.
To achieve its ambitions, Phenic will need outside capital. El-Hayek says she is excited and looking forward to taking on outside investment. Can Worcester provide the resources Phenic needs?
She sees some challenges. Worcester “is not close to the beauty and skincare industry. This requires us to travel for industry events and appointments with our suppliers. In a sense, Phenic Natural Skincare is developing within a bubble away from other players in the industry. It could be argued that there is a lack of synergy, which we could have if located in a major city such as New York or Los Angeles,” she said.
Yet she is grateful Worcester is “a very supportive community. The StartUp Worcester program really gave us a head start and provided us with resources and a network that we did not have before. Our [Service Core of Retired Executives] SCORE mentors have been great at proactively searching the SCORE network to find us contacts who can best advise and help us with our goals. While there isn’t much of a skincare/beauty industry here, there is a growing fashion scene that is very complementary to skincare and beauty. We look forward to collaborating with other local businesses in this space.”
El-Hayek wants Worcester to remain Phenic’s home. As she said, “The landscape of the city is changing, and new businesses are opening up and growing. It feels great to be a part of Worcester at this time. I am very optimistic about the future of this city and very much want to remain here. When people ask where our company is from, I am so proud to tell them we are from Worcester.”
I hope Worcester can supply Phenic enough tangible resources for growth, such as capital and access to distribution, to enable El-Hayek to achieve her ambitious objectives for Phenic.
Otherwise, I would not be surprised if the business benefits of moving the company to one of the cities where she has made valuable contacts overwhelm the emotional tug that keeps El-Hayek in Worcester.
Peter Cohan of Marlborough heads a management consulting and venture capital firm, and teaches business strategy and entrepreneurship at Babson College in Wellesley. His email address is peter@petercohan.com.
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