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This piece originally appeared in IR NAUDA business magazine (June/July 2016, No. 25)
TEXT: ANDA BURVE-ROZĪTE
PHOTOS: GATIS ROZENFELDS, PICTURE AGENCY (1), AND FROM MÁDARA ARCHIVE
Ten years ago, when their business was just starting, Lotte Tisenkopfa-Iltnere and her business partners were dreaming about a new world model where businessmen earn money by honest and transparent business. They made it true.
When, in the turmoil of the fat years I first interviewed Lotte Tisenkopfa, who was freshly out of her Culture and Japanese Language Studies, and working on the first cream formulas in a tiny lab under the auspices of the Technical University, I was smiling when hearing her determined vision – «MÁDARA will become a manufacturer known not only in Latvia but also all over the world!» At that time Lotte was talking about her cream realm with huge enthusiasm. Together with chemists and technologists she was sincerely devoted to her research. Her dream and that of the three other owners' of the newly established company – young and educated women – was to create a stunning product.
Together with her business partners Paula Tisenkopfa, Zane Tamane and Liene Drāzniece, Lotte has proved that ambitious goals can be reached. MÁDARA products are known in 24 countries, and they have good visibility in Northern European shop networks. In 2012 Lotte was included in the Forbes Latvia 25 list of Most Influential Business Women. In 2015 Nordic Business Report mentioned her as a strong new entrepreneur along with 20 of the most influential business women in Northern Europe (Björk was also included in the ranking with her green technology business in Iceland).
It was a surprise for me to hear from Lotte in 2016 that «The highest achievements are still very far away.» For example, to conquer the US market in their niche of natural products. MÁDARA has a new production unit, equipment and the office is being set up. «All in glass walls so that people can see what is going on». It is sheer pleasure to keep honest business going with so many development possibilities. While finishing their new production facility in grey and wood shades, Lotte is outlining a socio-political context. «These will be taken off,» she points to the pictograms identifying women’s and men’s rooms. «We will all have common facilities.» Recent discussions about the Istanbul Convention and human rights have made the entrepreneur act actively against silly prejudices.
Comically enough, all around the new MÁDARA factory in Mārupe you really have it like in advertising posters: birds are chirping, green grass, light breezes. However, if we take a better look behind the curtain, there must be both complexities and difficulties behind the beautiful picture. What are they like?
We have overcome them. If we look at our ten years of operation through Snapchat, the basic idea of MÁDARA is: a Latvian brand as a top brand in the world. We have built our business frame exactly in this way, the brand has its roots in our land, in its values and traditions.
MÁDARA co-founders: Paula Tisenkopfa (from left), Lotte Tisenkopfa-Iltnere, Zane Tamane and Liene Drāzniece
«I DON'T WANT TO SOUND PRETENTIOUS, BUT I THINK WE WERE ONE OF THE FIRST WHO INTERPRETED OUR LATVIAN ROOTS IN THE BUSINESS DESIGN LANGUAGE.»
Latvian identity is the DNA of the brand. Possibly, we were one of the first who set Latvian luxury as an aim to be attained. How we looked for that! We were going to the Open Air Museum to research Latvian aesthetics, we sat by the books in the library to find the Latvian quality through centuries. We realized that the Latvian quality is virtue of work, perfect craftsmanship and sophisticated aesthetics. It is not exactly Scandinavian-like. One can see it in the Open Air Museum: all the shades of grey and in the extreme quality of the material. Our task at the starting point of our business was: how do we interpret that into modern design and material? It cannot be done directly – plant a nettle in a flower-pot, nobody will find it sexy. The interpretation should be targeted at a contemporary person.
Lotte standing in a birch grove that supplies MÁDARA with birch water, used in its TIME MIRACLE anti-ageing product line
I don't want to sound pretentious, but I think we were one of the first who interpreted our Latvian roots in a business design language. Now, near my home in Āgenskalns, they have opened a café with graphic design very similar to MÁDARA. Our brand design was created by Liene Drāzniece. As we have seen, Latvian roots are very interesting to the world. Our products are not in New York yet, therefore I still think that we have not reached the top. But I can definitely say it about Europe.
Did you start your business with values in mind instead of a wish to make money?
In the beginning there were four of us, now we are 79. Stability is at a good level in our enterprise. Business can be approached in a very dry and rational manner, without turning much attention to aesthetic issues. And it can be approached in the way crazy people are doing it, including us: trying to use business to prove an idea. To work honestly, to have absolutely transparent management. To base decisions on ethical considerations. It is wonderful if one can prove with honesty and openness that this is the new way to make money. The new world model.
The world has been quite polluted by business. Especially production businesses. Therefore, it is important to try to leave as small a footprint in nature as possible with the business resource we have. Not to fool people about the effectiveness of the product. The new way of making money: to be open, clean and honest.
Can an ethical business survive in conditions where the values mentioned are not followed by everyone?
I think, absolutely yes! If somebody is complaining that they cannot make money, the problem is not in their lack of honesty but in their wrong interpretation of the business product for the clients. Namely, are they sure the clients want it. Is the product good enough and has it been presented well? There are a lot of clients for honesty and openness. In conditions where the world is full of horror and problems, it becomes very important to many people. Moreover, it is important that the business should really be based on values, not that these values would serve only as a stamp on a product packaging.
We use an open business principle in our work: there is a goal and many get involved in its realization – not only people from the company, but also those who share the same values. In MÁDARA, we have products which have been suggested by people from outside the company, who take part in development and testing. Also our factory is a logical continuation of an open business principle. There are producers who have their stainless steel barrel, which they are hiding, lying on top of it, just so competitor can not find out what is inside. Once, we were also doing it like that, but now I am reflecting – why?
Does MÁDARA have a lot of competitors in Latvia?
Very many! When they ask us [in other countries] – oh, you are the ones producing cosmetics – we have a very positive feeling. We are coming from a cosmetics country.
Product development and quality control laboratory, which is a part of the new MÁDARA factory
It is expensive to do multi-level research in laboratories, to use quality raw materials. Does it pay back?
That's right, it is expensive! There is a huge chain of logistics. The easiest way to go would be to hire others to do everything. Then a counter-argument appears: in business, as soon as you order something from someone, there is a need for a compromise acceptable for all parts. Then I don't see any reason to work anymore. I don't think we would have loyal workers either, who would work their tail off, get upset over things for ten years in order to have a really good product. We need an added value, which cannot be measured by money.
Is it only you yourselves who are creating the formulas?
Yes, we are anxious that they should be effective! Proven. Package boxes have been flying at our meetings during arguments with our colleagues about which way is better. Of course, it is possible to optimize expenses. It can be done without influencing product quality, just by professional management. But we cannot cut off the principles – the good raw materials, effectiveness tests and research. Then we wouldn't have either joy or pride in our work.
In the cosmetics field, acquiring certificates must be a difficult process. How are you dealing with that?
The first MÁDARA lab, which existed before the official foundation of the enterprise, was under the auspices of the Riga Technical University Biomaterial Innovation Center, placed in a small room of 20 sq. meters. The first production premises were 40 sq. meters. Our first four products were without an ECOCERT certificate. This certificate confirms that all products are of biological origin, and their raw materials come from an organic farm. When doing checks inspectors can go as deep as waybill certificate numbers, they are analyzing recipes, choosing random packaging. It is impossible to falsify anything.
We have had state institution checks from the very beginning, however, we decided to obtain these volunteer certificates in our second year of operation. We also have GMP ISO certificate – for good manufacturing practices. Today it is mandatory in the European Union. It studies the process part of manufacturing, the premises. How do you wash ceiling lamps? Or dust from manufacturing equipment. And so on. Certificates help to organize a business. Actually, they are helping in our work, not disturbing. The fact that we are trying to wonder about that in Latvia is provincialism. This is a normal world practice on how to control product quality and production.
MÁDARA now owns one of the most advanced skincare facilities in Northern Europe that is also available to the public.
I have never thought about how difficult it is to manage an enterprise and continue its development. It is clearly difficult! The same as with children – sure, they won't listen, they complain and wake up several times at night while they are little! To be terrified by that or to go into analysis would be a sheer waste of resources.
I think these issues will become simpler as social responsibility develops. At MÁDARA, we are actively using support of the European Structural Funds for research and production. I was once in Finland, there the administrators of the EU Funds told me: an entrepreneur comes, tells us his/her idea, gets support and does what needs to be done. If the common sense of responsibility in society is high, control mechanisms can slow down, roughly speaking. There is no need to spare so big resources on their maintenance.
What does research really mean in a cosmetics business?
It can be done in a very simple way: buy formulas and rely on marketing communication. However, the fact that we are doing research, now, and also with a look towards the future, gives us a chance to grow even more – with more specific and even better products. Within the next three years we want to invest 250 thousand euros in research. We don't cry over it, we are happy instead. It will bear fruit – both financially and in terms of product effectiveness and, hence, client loyalty.
A best-selling product: DETOX mask, based on natural sapropelic mud, extracted from the depths of a forest lake in Latgale region, Latvia. The mud dates back 4000 years
Does laboratory maintenance take a big share of the company budget?
We have a lab which develops all our formulas. There are chemists, pharmacists, technologists. Each serum, each lotion is uniquely created by us. There are 20 specialists working in the MÁDARA lab. Of course, we cannot perform all laboratory functions in Latvia. In Europe there are laboratories whose services we use, for instance, for tests. We are cooperating with biotechnology and chemistry labs, performing very specific measurements or doing very specific research.
We have excellent cooperation with the Faculty of Biology of the University of Latvia – we are doing cell research and specifying the effect of the active substances. In the case of a skin problem, such as couperose blood vessels or ageing – in our research we reduce it to biological mechanisms (how wrinkles or facial redness occur). We provide a description of which reactions we would like to increase or decrease. Then we scan a lot of active substances. We choose the most active ones addressing exactly this problem. We also specify the maximum effective dose of this substance – not to go too far with a good thing. Cell tests also guarantee security.
n order to understand how the product works on real skin, dermatological tests are performed. We check the whole mix of cosmetic technologies and active substances. Today, everything can be measured in skin care, each problem can be characterized. We are not living 50 or 100 years ago when we trusted ethno-medical knowledge to granny did it this way. It is great that nowadays everything can be known precisely! It means we can effectively develop very specific cosmetic products.
Which big laboratories in Europe do you send your products to for testing?
There are very specific services. For example, sun protection factor tests. Or the exact amount of vitamins in some of the active substances. Of course, we are doing much of the laboratory research work on our own. We cooperate with different dermatologists, we can find a research group for researching each component.
In the lab with University of Latvia researcher and in-cell founder Anna Ramata-Stunda
Do manufacturers share their recipes?
I would say, yes, they do. We are also interested in sharing. Besides the MÁDARA and MOSSA brands, which is our production, we are offering contract manufacturing services. At the moment manufacturers from Scandinavian countries and France have located their manufacturing with us. They value our expertise in developing recipes for quality natural cosmetic products. Good textures, good performance characteristics. So, we are interested in sharing.
Of course, there are unique active substances, for example, birch water. We are the first in the world to discover birch water’s effect on the skin. It has a very strong anti-ageing effect. It is purely a result of our research! However, we have not patented it. The process of patenting is legally very expensive. It comes to hundreds of thousands of euros. We have to rely on the fact that we are among the the first in Latvia, the quality of the products is good, the same with communication with the public, and that will bring our products through.
How does a specialist come up with an idea of trying out birch water’s effect?
I am the product development manager. My task is to put together specific needs of people, market demand and supply. For example, which new skin problems have been created by modern conditions? I talk to doctors – what patients are coming for visits, what their concerns are like. Then I give a report to my team: hey, we have this problem! I ask plant physiologists to characterize plant groups I am interested in, groups of active substances, which can act on the mechanisms creating the specific problem.
What is your most popular product of all times?
TIME MIRACLE, our Northern birch water based organic anti-aging series. We are the first in the world to discover birch water’s stimulating effect on the skin. It has a very strong anti-aging effect. We have been researching for several years how it can be stabilized in a cosmetic product. We have the most real birch water! Nothing artificially created.
TIME MIRACLE line, based on organic Northern birch water and MÁDARA proprietary CELL REPAIR BIO-COMPLEX that stimulates cell regeneration
Then you must have your own birch grove!
A grove with an organically certified fence around it! We have two large birch water suppliers: from Latvia and from the Karelia region in Finland. Why are active substances coming from nature being used in cosmetics, both conventional and natural, and not artificial substitutes? It is because the substitution process would be very complicated. Active substances from plants (for instance, vitamin E) are much more expensive – it would be a minus for the manufacturer, however, the effectiveness is greater and side-effects are fewer compared to artificial substitutes. In many artificially created substances just a part of the molecule is effective. We are using active substances of herbal origin. Not from the animal world.
Are you not using the animal world for ethical reasons?
In the European Union, it has been prohibited to test cosmetic end products on animals for many years now. We have never done that as ECOCERT prohibits it. In 2014 the EU prohibited testing raw materials on animals. How do we decide if the product is safe? We are applying it to artificial skin cells.
MÁDARA Exfoliating Oil-to-Milk Scrub, lauched in spring 2016
Do world tendencies play a role in the creation of new products?
We, for instance, have a new product, Exfoliating Oil-to-Milk Scrub. With a new approach, which is currently a top product in the cosmetics industry – a texture moderating formula. It is one thing in the jar, but when you apply it to the skin, something completely different. By wrongly exfoliating our skin with a scrub, we damage it. That's why we used maximally soft particles for our scrub. They have a form of tiny wax pearls and they are contained in a soft, oily substance, which is massaged into the skin. But it is difficult to wash oil off! Therefore, when the scrub gets sprinkled with water it turns into a gentle milk. Texture innovation!
How have you calculated prices?
It's very easy: expenses include all parts of the invested work – research, raw material, manufacturing process, packaging. All the taxes have to be paid, too. We do not have a big budget for advertising! MÁDARA ads do not appear during the evening news. We count on our web-page and direct sales-point communication.
What are your aims regarding sales-points? Would MÁDARA, for instance, like to appear in prestigious store shelves in London and New York?
Prestigious sales-points are interesting for working on brand recognition, but from the business point of view it is an intensive expense. Therefore, one should be careful about which sales-points can be connected and which not. We have excellent sales-points in Northern Europe, Sokos, Magasin. Stockmann and Douglas are very good clients.
Is online marketing, Net-a-porter and other flagships, which are looking for interesting and not widely recognized quality brands, on your wish-list?
We have plans and negotiations on future perspectives, but it would be too early to explore that. How do we approach entering into a new market? Step by step! In ten years we have laid the foundations for trade in the region of Northern Europe. We were consistently moving that way, the Finnish market is very good for us, they perceive us as locals. We are doing well in other parts of Europe, too. Since mid-year, we have our own distribution network in Germany and other German-speaking countries. Overall, we are selling in more than twenty countries.
How did you come to export?
In the second year of operation we began exporting. The beginning was not that easy. Last year was a big turn when we were setting up the new production unit. We are going to have symbolic opening in August, it will be available to all – students from schools and universities and all other interested persons will be welcome. Before that we were renting manufacturing premises, and we got short of space.
Now we have 2700 sq. meters in our new premises. And they have a potential to grow. I would say that the first seven years has been a period when we understood and realized how we should work. We started selling our first products at Christmas, 2006.
How many employees do you have?
I know that I am packing Christmas presents for 79 people, models included.
Do you still remember the first days of sale?
One of the founders of MÁDARA, Zane Tamane, was present when the first MÁDARA stand was set up at Stockmann. She called me while she was still setting the stand up, and I had a feeling – wow, it is really happening! Can't be true! Later on, working with other products I understood that success cannot be predicted. It has too many components. We were just in the right place at the right time! In ten years MÁDARA has witnessed a huge change of sales channels. When we started out, it was like: manufacturer-warehouse-distributor-shops. So cumbersome! The Internet provides excellent feedback: it takes no time to understand what the buyer wants, how they like our products, answer their questions.
You are saying we, not me all the time. Does it mean all the co-owners are working together?
We are four co-owners who were thinking of what to call our brand ten years ago: Liene Drāzniece, my sister Paula, Zane Tamane and me. Uldis Iltners, my husband. He had a different occupation before, but he was helping us all the time until he became a co-owner of the company. For a small time, in 2008, we also had an investor ALPS Investments. We share all our ideas.
With Iluta Lāce, head of NGO MARTA that helps women and children, suffered by domestic violence, sexual abuse and human trafficking
What role does being brought up by your parents play in your business?
I have terrific parents. My Dad Tālis Tisenkopfs is a scientist, and also a businessman – he has created his own research company. He is one of the leading researchers in Latvia with many scientific publications. He is independent, he works and travels a lot. My parents gave me a good basis – freedom, self-respect. I was horrible as a child. I was asking too much from my parents. Therefore, now I am telling everyone who is struggling with their teenagers: they will be normal people! Compared to my aristocratic parents, I am another type of person. They are intellectuals, however, I am more like my grandparents, who were also business-oriented. My family has given me the strong feel of my roots, which gives me the opportunity to grow.
Why did you get involved in voluntary work in the resource center for women MARTA?
The world is complicated. There are people who have more stability – I can be super happy about mine, but others don't have it as strong. We don't share the same resources, but nobody is personally guilty for that. It is logical that those who are given more try to level out the injustice in society. One should use one's success to help those who maybe can't defend and develop themselves as well. It is logical if businessmen share their profit by donating. We are all connected in a common development process. There is still so much to do! That's why I want to get involved. To do as much as I can.
Special thanks to Anda Burve-Rozīte and IR NAUDA magazine.