Kath Merlo and Kristy Morris, Co-Founders of KAILO
“The level that this journey has taken us is so massive that for me, this is the scariest moment in business that I have personally ever felt.”
When Kath Merlo and Kristy Morris met, there was an instant connection that went way further than just finding a new friend and getting together over coffee and chats. It was paired with a common interest in their neurodivergent children and a passion for the well-being of their families. It was almost like they went from zero to 100 in about 30 minutes. Friendships were formed, and a business partnership got its start, which ultimately not only led to a successful Medispa business in Australia but also to growing a brand that has just taken on the luxury wellness market in the United States, including all the ups and downs that come with the territory.
Kath and Kristy, how did your initial friendship turn into a business partnership?
Kath: The initial idea behind KAILO was formed out of common interest and the realization that things that we were passionate about were not available in our home country Australia. The idea came pretty early after we met for the first time. Within a week of meeting Kristy for the first time, my husband and I decided to take some time off and move to America for a year to do some treatments and therapies with our son. While we were there, Kristy and I happened to be there at the same time, which was also where we started to really become close in terms of what we enjoyed, what we loved, and what we hoped for in the future for our families and ourselves. At some point, we had this discussion about why there weren’t more of these kinds of treatments back home in Australia, and how we we a little bit behind compared to the rest of the world. We both loved the wellness industry and were passionate about lots of different types of treatments and things that can help people live better lives. But we were just able to access them by traveling to the United States or Europe. So we decided that we should take that idea upon ourselves and create something that we were missing in our country. Our goal was to create a place where people could access different skin health treatments or see a nutritionist or an energetic healer. A year or two later we had the opportunity to purchase a small Medispa in Brisbane, including their database and existing clients, which led us ultimately to the opportunity to open a space in the Calile Hotel, which is where we are right now.
Photo Credit: KAILO
"The key to success is oftentimes not as mysterious as people think. It’s really simple, you just go hard and strive for what you want, as long as it takes."
From your experience, how do you find and pick the perfect business partner? Is there some kind of characteristics you should look after?
Kristy: I think it’s important to look for people who are authentic and have integrity. I can sit here and say that Kath Merlo is probably one of the most authentic people you will ever meet, you want to work with or be in a partnership. You need someone with whom you can be honest, you can be raw, can share what’s good, what’s bad, and what’s not working. If you’re both being honest, you can work through that. And it’s not personal. Besides that, we knew each other on a different level first before we became business partners. Kath and her husband Dean have been very successful in their own rights previous to KAILO. They understand business, and they understand what it takes to go somewhere. It’s been five years now and we’ve had our ups and downs, so I think we’ve stood the test of time.
Kath: I feel the same way. I love that she is incredibly passionate, incredibly dedicated, and a very kind person. I always knew that I wanted to be in business with her. What’s great about our relationship now is that we are first and foremost very good friends, and we care deeply about each other. We have enormous respect for each other’s boundaries and for each other’s lives. We don’t live in each other’s pockets, we don’t socialize every day of the week, and we have our own lives. We don’t impose ourselves on each other and give each other space. We both have great respect for each other’s families and extended family. I think we’re just we’re very fortunate to have each other.
Photo Credit: KAILO
"Unfortunately, too many brands forget that and their engagement stops when they see their product on the shelf."
Photo Credit: KAILO
Did your business go through challenging times yet that essentially shaped your business?
Kristy: Yes, it did. We did have two more partners involved in the business in the first couple of years, but they are no longer involved for various reasons. Unfortunately, the separation of them was also probably the hardest time that I think we’ve been through. With the first partner, Kath and I realized quickly it wasn’t going to work and she exited the business pretty much within the first 14 days of our opening. Even though we respected that it wasn’t the right fit for her, it was still a tough time. The second partner decided she would leave right when COVID broke out. We were in an eight-week lockdown and had to somehow look after our team and keep the business afloat. Brisbane is a very small city and we had to navigate the challenges of COVID.
Kath: I think the problem with our other two partners probably was, that I don’t think we understood each other enough. We probably didn’t have the kind of deep discussions around what our visions were. We may have thought that they wanted the same things that we wanted, but that wasn’t the case. Looking back, I think we also didn’t dedicate enough time to make sure that the partnership between the four of us was going to be right. In hindsight, it was probably the best thing that actually could have happened. We were very lucky that all this happened in the first four months of us being in business. We were able to just move on and really create our brand the way that we wanted it to be. Since that happened in 2020, the business only skyrocketed.
When founders are on the same page, have the same passion, and want the same things, everything is easy. I think that’s been our biggest lesson throughout our journey. We have learned to let things go that are not aligning with us. If it’s not the right fit, it’s not the right fit. And that’s okay. The key focus for us is focusing on the culture of the business and bringing in the right talent to take KAILO where it needs to go. It’s not that anyone’s doing the wrong thing, sometimes it’s just not meant to be.
Talking about the concept developing phase. Did you both want the same thing right from the beginning?
Kristy: Always. And even when we’ve made decisions, and would then change our mind, it would happen on the same day. I would call Kath or she would call me saying „I’ve been thinking about it, I’m not sure…”, or “I couldn’t sleep last night. I didn’t want to do this…“. We would then brainstorm and juggle ideas, but we always had a very clear vision of what we wanted to create. The plan was to open a Medispa with different practitioners, treatments, and service offerings with a more holistic kind of approach. Initially, we started with only six employees and therapists and now we’re at over 40 practitioners, therapists, and doctors. We also always knew that we wanted to offer our own products someday and host our own events like our wellness summit that we had last year (the next one is planned to be in October 2024 in Brisbane). We’ve done lots of different things around gut health, and breaking down the taboos around injectables and all sorts of things. Just recently, we had an event with an amazing sexologist with about 40 people on a very intimate evening. And it was fantastic.
How about the international expansion? Was it also always a part of the big picture?
Kristy: We always had a big vision, but we knew we had to take a good five years to build a brand first. We thought, that if we built a brand that we could leverage off, we would have something to show once we go abroad. We are the first brand in Australia to do what we’ve done. And in doing that, we have created international recognition and won multiple awards. We knew that if we could seek recognition for delivering an exceptional level of service as a one-stop shop, we could then build product from there, and then leverage up the brand, which is what we’ve done over the last 18 months. Medical practitioners from all over the world come to our wellness Summit now and we are collaborating with companies like Gwyneth Paltrow´s brand Goop here in the United States to do things with us in Australia, or with Kourtney Kardashian´s brand, Poosh. Our goal is to maintain that and then work off that. The big picture is to be a global brand and be a household name in time.
At what time did you decide it’s time to expand overseas and launch your brand in the United States?
Kath: I think we just started to test out the waters by starting to go to some of the big trade shows in Las Vegas a bit over a year ago. The thought was to start small and see if there’s an interest and build from there. KAILO got an amazing response and we made some really great connections.
I don’t like to use the word organic in this set, but it is kind of what it was. When we talk about the organic growth of our business, we kind of comparing it to having a baby. You’re in survival mode and the first years in business are just that. The question we are asking is, what are we going to do next to get that door open? How do we do that? Who do we call? Who can I google? What can I search for? So it’s genuine everyday survival. You just do it until you figure it out.
Here’s the thing though: we’re self-funded and we’re essentially still a startup in the very early days. It’s not like we’ve got 20 million dollars to pour into it. We have to be very considerate with our budget and every single dollar has to give us value. But every decision that we’ve made so far, has been a big one. So, where do you save? There’s just no option for failure. Of course, it hasn’t all been perfect and we’ve spent money on things and strategies that weren’t the best ways for us to spend the money. But you don’t know what you don’t know. To get to the next level, you have to make mistakes, that’s just part of the game. So you have to choose the risk, and it’s quite a scary road. But if you allow your brain to go there, you won’t do it. So we’re just not allowing ourselves to think about that.
I was just reading something about Richard Branson where he talks a lot about the mistakes he’s made. What resonated with me is that in every single relationship that he had, whether it was a business contact or someone he was learning from, he tried to be truly authentic with every single person. That’s definitely something that has also worked for us, particularly in the States. The people that we’ve met here while doing various trade shows are just blown away by our honesty. We just put ourselves out there and we’re also very vulnerable. We are not afraid to ask questions. At our Summit last year, we had some of the best minds in the world in their field. For example, the best brain surgeon in Australia. We got asked so many times how we were able to get that guy for our event. The trick wasn’t a trick, we literally just asked.
Photo Credit: KAILO
Photo Credit: KAILO
Photo Credit: KAILO
Kristy: The key to success is oftentimes not as mysterious as people think. It’s really simple, you just go hard and strive for what you want, as long as it takes. Sometimes it works, and sometimes it doesn’t. And if you fail, you get back up and learn from that. Talking about tough moments in this business and getting back up again, I would like to share this quick anecdote: One week before we had to close for COVID, we had bought all of our stock for all of our treatments, over $60,000 worth of products! Then we had to close down and had $11,000 in the bank. We were so scared that we would not be able to survive this. But we got on the phone, called all of our customers, and we sold all of that product within four weeks. We literally had no other option; we had to fix this.
Kath: We also have to mention, that it’s not like Kristy and I are doing everything. We have this amazing team that we can count on, who come up with ideas and drive it. It’s a collective power that pulls our brand, and I think that’s really special. We’re not experts in everything. I’m not a skin therapist. I’m not an expert in really anything actually. But that’s why you employ people so they can help you achieve the goals in doing what they can do best. If it wasn’t for our therapists delivering what they deliver, we would not have a business. It’s as simple as that. We always say that we can never forget, what is the core of our brand. It’s those people who show up for us every day, seven days a week, and deliver. Our people are our business. They are a special bunch of ladies, like a little family.
Coming in as a startup in a new market/country, how do you try to dominate the industry?
Kristy: Our strategy has been to get a high-end retailer like Neiman Marcus to collaborate with us. We are putting all of our eggs in one basket and only focusing on this collaboration, which also means that we are not focusing on anything outside of that. It’s our priority to nail that to a level that we can maintain really good sales and get consistency with them. We were told by an incredible mentor, that If we can build our brand off of that, we can leverage that standing and work our way down. Initially, we were planning it the other way around, but she explained to us that it would be very difficult to manage that as a startup. If you’ve got 50 retailers, that’s 50 different locations that you have to manage. Instead, get one big one, do it well, and then everybody will want your brand. So we took that advice and engaged a PR company for a year to get our name out there in the United States. The hardest part wasn’t even getting into Neiman Marcus (even though that wasn’t easy either), but keeping the product on their shelves is actually where the hard work starts.
How did you get in touch or pitch your collaboration to a big name like Neiman Marcus?
Kristy: Our team was approached by two ladies at the iSpa trade show in Las Vegas who owned a gym called One Mind Body in Topanga, CA. They invited us to come to Los Angeles to do a pop-up at their location. Neiman Marcus happened to be next door to this gym. At some point, one of Neiman Marcus´ managers came over to the event and tried our product and loved it. She came back one hour later with more people from her team and we got to meet the buyers.
Was it very easy to convince them of the product?
Kristy: We feel the product was the door opener, but it’s been a process of probably six months to make this deal happen. But they let us know pretty early on that just putting the products on their shelves and then just not ever showing up wasn’t going to work for them. So, when they signed us on, we went through that, discussing in-store activations, pop-ups, and having team members going in and educating their team regularly. They wanted to know if we would show up regularly. They even gave examples of brands who did do that and have been successful, as well as brands who had a great product but did not make it to stay past 12 weeks, because the support just wasn’t given.
How are you doing that from the other side of the world?
Kath: We will have a rolling system with team members showing up at Neiman Marcus to give the support they need. Initially, we will have someone on the ground in LA, who has been working for us for the last year. But we are also working with a company that specializes in consultancy and sends trained staff to the locations regularly. They will visit each store for five hours a week and then just bill us for their hours. We got that contact actually from Neiman Marcus which was awesome.
Besides having this support, we also want to think outside of the box. We care about our brand so we want to give as much as we can, whether it’s to the retailers or the customers. We like to do little activations and work with other wellness practitioners to support our product palette. Brochures can only do so much, but having a person to talk to and answer your questions makes you feel better and helps to decide if you want to purchase the product or not. We’ve got a real cost of living crisis going on nowadays, so people are watching what they’re spending. And if they are going to make a purchase, it has to be meaningful. That means for us as business owners, that we have to do everything we can to support the retailers to make the product accessible and interesting. Unfortunately, too many brands forget that and their engagement stops when they see their product on the shelf.
Photo Credit: KAILO
Photo Credit: KAILO
What if a different retailer is approaching you saying “We love your products and we would love to have you in our stores?” Are you going to decline at this point?
Kristy: For us, it’s about staying true to our brand. We have had opportunities that didn’t fit and we passed on them. Our goal is to stay at the luxury level, which means we wouldn’t say yes to just any retailer anyway. We want to be picky with where we place our products. And that was also the advice that matched our belief system. If you don’t stay true to it, you’re not backing your brand. You might be able to get into many other retailers, but then you would have to cheapen your price point because that audience may not be open to spending that amount of money on your product. So our strategy is set at the higher level and focuses on the newer markets. We could focus on every retail outlet around, but that’s not our approach. We prefer to have relationships with a few key outlets that align with our brand values.
We were also in last year’s Oscar nominee bags, which was obviously very rewarding. These are little bits of credibility, but then you get Neiman and it lifts this whole thing to a new level - now we can do a PR story and really push and back ourselves. I’m hoping that this is the ultimate opportunity that will support our direction, and we are willing to take that risk.
How challenging is it to run a business on two continents now? And how are you mastering it with family and being away so often?
Kath: As mentioned before, it’s really about building that team that can deliver for you, and that’s how it’s going to work for the United States. We obviously will do as many trips as we can to be there. Kristy has been in the States six or seven times in the last six months, most of it to set up manufacturing in San Diego. You kind of get on a roll, and then you have a break for a few months and just turn into a jet setter.
Kristy: It’s important to realize what you can do when you’re here in person. It is mind-blowing! When you’re so far away and not visible, it is much harder and things get lost in translation, especially in manufacturing. If I hadn’t been literally face-to-face in a meeting the other day, there would have been a misunderstanding that would have cost us $75,000, just because it got lost in translation. At the end of the day, that’s on us because we are the ones paying the bills. But through a detailed conversation face to face, we were able to get across. We tried to solve that before via Zoom, but nobody was understanding what we were trying to say. And then we were in a room with six people and all of a sudden everybody involved understood.
Are you able to grasp how far you have come and are you celebrating your wins?
Kristy: There is an element of success that Kath and I speak about quite often, which is that we never celebrate our wins, ever. When we accomplish something, we have a moment and then we’re like, Okay, now we’re gonna do this. Even at the signing of Neiman Marcus, we’ve tried not to tell people because we want to have that moment of PR properly. We told some members of our close family but that was it. And when someone compliments our achievements, I get tight in a sense because it’s such a massive undertaking. It’s mostly when other people say „That’s amazing“ or „You won that award“ that we pause for a second to take a breath, but that´s basically it. The level that this journey has taken us is so massive that for me, this is the scariest moment in business that I have personally ever felt. Being a business owner is challenging but also very rewarding at times. You just have things on your plate constantly that are meant to allow you to get even further than where you are now. We have a never ending “to do” list of things to achieve each day through business and family.
@kailo_aus