Financial Adviser: 5 Business Lessons Everyone Can Learn from Rolando Hortaleza, Founder of Splash Corporation
Many people dream of becoming entrepreneurs, but not all have the courage and determination to turn that dream into reality. Rolando Hortaleza, a name synonymous with success in the Philippines, is one such individual who dared to follow his passion and create an empire in the personal care industry.
Hortaleza's journey began in the family business, Hortaleza Vaciador, where he was deeply involved in helping his parents and siblings run the operation. This early exposure to the world of entrepreneurship likely instilled in him the values and skills necessary to succeed in business.
Despite completing his medical studies and residency, Hortaleza decided to chart a different course for himself. Instead of pursuing a medical career, he opted to follow his entrepreneurial aspirations.
This journey kicked off with humble beginnings. Hortaleza started by selling repackaged beauty products like acetone and hairspray to local beauty parlors. To distribute these products, he leveraged his family's Vaciador outlets.
As the demand for his products grew, he expanded his distribution network to include competitors. Recognizing the power of branding in the competitive market, Hortaleza decided to rebrand his products as ‘Splash.’
In just 10 years, Splash's revenues grew remarkably. However, the true turning point came with the introduction of MaxiPeel, an exfoliant product that revolutionized the personal care industry. Alongside another successful brand called SkinWhite, Splash's revenues skyrocketed to the billion-peso level per year, a success that cemented Splash's position as a key player in the personal care industry.
The impressive growth of Splash in the ‘90s led Hortaleza to make a strategic move by taking the company public. Through an Initial Public Offering (IPO), he successfully raised P2 billion pesos, allowing the company to expand its reach and invest in further development. This move not only provided him with additional capital but also solidified Splash's position in the market.
Nine years after taking Splash public, Hortaleza sold his company while it was at its peak. This was after he received an irresistible offer from a multinational firm to buy out his ownership.
With the proceeds from the sale of Splash, Hortaleza set hi sights on new opportunities. He acquired the bagoong manufacturing operations of Barrio Fiesta, which Splash bought from the Ongpauco family, and grew it to become a leading brand in the bagoong market with an impressive 80 percent market share.
Hortaleza's entrepreneurial pursuits did not stop there. He diversified his portfolio, branching into the world of finance, with a financing company called PG Finance. Additionally, he ventured into the hospitality industry, owning a hotel, and explored the burgeoning cloud kitchen business.
The entrepreneurial journey of Hortaleza is a remarkable tale of resilience and vision. His ability to adapt, innovate, and make strategic decisions has not only created a lasting legacy but also serves as a source of inspiration for future generations of entrepreneurs.
How does Hortaleza’s story emphasize the importance of seizing opportunities and being open to new challenges in the business world? What can we learn from Hortaleza's ability to build and expand successful businesses across different sectors?
Here are the five business lessons everyone can learn from Rolando Hortaleza, founder of Splash Corporation:
1| Know how to seize opportunity and create value
Identifying opportunities allows businesses to tap into unmet needs or underserved markets. By addressing these gaps, companies can offer products or services that customers are willing to pay for, leading to increased revenue and profitability.
Despite having a family business primarily focused on sharpening nippers and selling beauty products to small beauty parlors, Hortaleza recognized opportunities to offer other products.
He started by selling repackaged products, including acetone, and leveraged the Vaciador outlets from his family's business to access the market. When faced with difficulties selling under the Hortaleza brand due to competition, he swiftly adapted by rebranding his products into “Splash.”
As his company grew, Hortaleza didn't limit himself to one product. He expanded into various categories, including hairspray, facial cleansers, and even introduced groundbreaking products like Tretinoin Hydroquinone under different brand names: MaxiPeel and Extraderm.
By introducing whitening products ahead of major competitors and expanding into international markets, Hortaleza demonstrated his ability to pioneer trends and tap into emerging market demands.
“I started the business in 1985,” he says. “At that time, I was still in my residency training because I'm a medical doctor by profession, but I never practiced my profession because during my youth, I helped in the family business.
“We had a family business called Hortaleza Vaciador, which was doing sharpening of nippers, scissors and the like, and at the same time selling beauty products. Our primary customers were small beauty parlors and individuals, yung nagha-house-to-house service.
"After that, I was forced by my parents to take up medicine, but it wasn't where my heart and mind were because I wanted to do business. So after I did residency for three years, I quit and I decided to go into business.
“Using my savings, I invested in small products that I could offer to our family business, which, at the time, had seven or eight branches of Vaciador. I started with P12,000 and supplied it to our family business's stores.
“The first product that I sold was acetone. We were simply doing repacking. I would buy drums of alcohol and then transfer it to another container. When you buy cough syrup, they don't throw away the bottles; they send them to a junk shop, which then sells them to second-hand users and ako yung bumibili nun, tapos nililinis ko.
“Nag-start ako dyan. Hindi ako binigyan ng parents ko ng business or capital, totally zero. On my own talaga. Even if we had a family business, I conformed to their terms of payment and everything, lahat ako lang. I was doing rediscounting. I would issue a check tapos bibigay sakin ang cash with five percent interest. Doon ako nabuhay, and marami ako nakilala sa Chinese community.
“Yan yung ginawa namin yung mga easy-to-produce na products, yung walang formulation. Repacking lang. Then I would sell that to the family business and I would tell them, ‘If you sell one piece, I'll give you one peso.’ I gave commission to our sales clerks.
“Doon ako lumakas then I started selling to other stores. But later on, I had difficulties because I came from Hortaleza Vaciador and I was also selling to the competitors of Hortaleza. Ayaw nila.
“So pinalitan ko yung brand ko kasi it was disadvantageous to use Hortaleza. I used another name, which was RBH cosmetic, my initials. Pero wala syang brand recall, so pinalitan ko ulit to Splash.
“During that time, there was a movie called Splash, yung kay Daryl Hannah, about a mermaid, kaya yun ang ginawa ko. I used Splash to represent something refreshing, something dynamic, progressive. May meaning din yung brand kasi syempre exposed na ko sa marketing nun eh, so naging successful naman and, afterwards, I started expanding into other categories such as hairspray and facial cleansers.
“Then, after two years, I launched a product called Tretinoin Hydroquinone under the brand names MaxiPeel and Extraderm. Naging hit yan and within just three years, we reached one billion in sales during that time.
“After that I expanded into other categories, including whitening products. We were the first to introduce whitening products in the Philippines, ahead of Unilever and other players in the region, such as Indonesia and Malaysia.
“Our products reached as far as Nigeria, other African countries, the Middle East, and Southeast Asia, so we expanded in the region during that time, focusing on exports. We were very successful and became one of the top personal care companies in the Philippines, ranking number six. This started my career as an entrepreneur. In 2007, I took the company public.
“We were doing well compared to our competitors. After nine years as a public company, I received offers to buy my company. I got an offer that I could not refuse and delisting the company from the stock exchange was one of the conditions for the sale.
“I sold the company because I believed that it would be more productive, not only for my family but also for the employees and the brand. This would allow them to expand their business not only in the Philippines but also in other parts of the world because the new owners were very strong and already well-established in Asia, the Middle East, Africa, and, of course, in India.”
2| Know how to discover what the market wants and create products that deliver
Consumer insights provide valuable information about what customers want and need. This knowledge can guide product development, ensuring that what a business offers aligns with market demand. This minimizes the risk of creating products or services that won't sell.
By tailoring offerings to meet specific customer preferences, they stand out in the market and can attract a more loyal customer base. When a business knows its customers' motivations, pain points, and communication preferences, it can create targeted marketing campaigns that resonate with the audience.
Hortaleza used consumer insights effectively to sell his products by engaging with customers directly and incorporating their preferences and needs into his business strategies. He actively interviewed customers of Vaciador, which provided him with valuable insights into what customers were looking for in personal care and beauty products.
He recognized that innovation must resonate with consumers. This insight led him to prioritize both the supply and demand sides of the business.
“Yung values ko kasi as a doctor, you work almost 24/7, you sleep anywhere sa public hospital, tapos ang bibilis naming kumain kasi nga hindi naman kami 8 to 5, especially when you are on training.
“I acquired that discipline na extended time, so during the start of my business, nagwo-work ako hanggang linggo, umiikot ako tapos hanggang alas-dose nagtatrabaho kasi sanay ako eh as a practicing doctor. Wala kami time, wala kaming arte, tapos we talked to the patient, doon din nadedevelop yung compassion mo.
“Yung nag-start ako, wala naman ako choice eh but to interact with people. Ako yung naghahanap ng distributor and supplier; lahat yan kinakausap ko, ako lahat yan. In fact, wala nga akong barkada noon, trabaho talaga, so yung interaction ko sa customer laging andyan yan.
“Ini-interview ko yung mga customers ng Vaciador. For example, ‘O, bakit bumibili ka nyan? Saan mo ba ginagamit yan? Ano ba yung malakas?
“During that time, wala kasi akong management experience, doctor ako eh. Hindi ko alam yung ginagawa ko pala was consumer insights. I designed products based on consumer insights.
“Tinatanong ko, magkano ba yung price that you are willing to pay for this product? What do you think about the packaging? What do you think about the product itself? What type of promotion do you think will attract you and eventually convince you to buy the product?
“Those were the practical operating platforms that you can use to sell the product, and at the same time, design the product. It's not a perfect formulation like, ‘Uy hindi maganda yung label na ganyan, e di gagawa ka na naman.’ But you generate those ideas from the consumer, not from your own thinking.
“We started the whitening craze in the Philippines through our brand name, Skin White. Naisip ko yung whitening products kasi nga tinatanong ko yung mga consumers. During that time there was this derma clinic, nagtitinda sila doon lang sa mga customers nila. So one time, I talked to our customer, ‘Are you using our products? What else are you using?’ Sabi sa akin, ‘Ah doc, I am buying this exfoliant, doon lang mabibili sa derma clinic, parang two to three products lang per customer.’
“So I tried to find out, it was easy to copy the product naman, ang ginawa ko was to offer this to other stores. So kumalat sya naging available sya sa lahat ng naghahanap, at lumipad yung product. Yung demand umabot hanggang Visayas and Mindanao. During that time, na-out of stock ako, talagang pinipilahan sa planta namin yung exfoliant.
“Yung sa formulation you can get it easily naman. Binili ko nga yung first formulation ko from my cousin. I didn't know that from suppliers of chemicals they can provide you basic formulation so it was not hard to formulate it.
“Yung sinasabi nilang cutting edge na products, I can copy that but the problem is how are you going to sell that product to the consumer. Walang magsasabi sa ‘kin sa personal care na hindi ko kayang kopyahin. Its available anywhere, but the thing is, how are you going to market this? It's a combination of the supply side and the demand side and the most difficult part is the demand side. How can it trigger purchase from the consumer. How do you promote that?
“Ako nga sinasabi ko, innovation is only innovation once it reaches the mind of the consumer. Kung hindi naman alam ng consumer yan na innovation, hindi naman nya gagamitin yan. So, even if you have the greatest innovation in mind, if you cannot market it well, wala rin.”
3| Know how to identify and capitalize niche markets for innovation
In the world of business, introducing innovation isn't just about keeping up with competitors; it's about finding the untapped spaces in the market and offering something truly unique.
Niche markets provide fertile ground for innovation. Smaller consumer segments often have unmet needs and desires, paving the way for creative solutions. Businesses that tap into these niches can develop groundbreaking products or services.
Serving a niche market fosters strong customer loyalty. When a business caters to a specific audience, it can develop deep connections with its customers, resulting in long-lasting brand loyalty and advocacy.
Hortaleza's expansion strategy was driven not only by extensive research but also by seizing opportunities. Rather than rushing into large markets where he might not be ready to compete with industry giants, he looked for niches where he could establish a strong foothold first.
In niche markets, education is key. Hortaleza knew that he needed to educate consumers about his innovative products to gain their trust and loyalty. This involved explaining the unique benefits of his offerings and how they addressed specific needs better than existing products.
“You introduce innovation when it hasn’t been offered yet by competitors, otherwise kung nanggaling lahat yan sa consumer, commodity yan,” Hortaleza says. “So kailangan something different na titimplahin mo yung commodity at alam mo yung butas sa merkado and dyan mo i-introduce yung innovation.
“The challenge with innovation is its small market. That's why, at that time, we called it as a niche market. It may not appeal to a big company, but for a small player like me, it does. It's an attractive niche market.
“Sometimes, you expand the market based on opportunities as well, not only on your research or strategy such as identifying a large market. Actually, pag malaking market, minsan you’re not yet ready eh. So, even if it's a small market and there's an opportunity, I'd rather expand into that particular market segment. So hindi siya based on theory na babanggain mo kaagad. Like, for example, si Unilever, saan siya malakas? Hindi mo sya pupuntahan doon to compete. Tingnan mo muna kung saan ka puede.
“When there is a niche market, you educate the consumer, then you expand it. That's the only way to win and enter the market. So during that time, hindi ako umaalis sa niche ko. Yung napansin na ako ng Unilever, billion na ako.
“Before, yung power of the supplier over the retailing company was much higher and stronger because the retailing industry was not yet mature. Nag-start pa lang yung SM noon eh. Suppliers could dictate their own terms and there were only few players in the personal care industry. Ako lang.
“Pero now, nag-tilt na. Syempre nag e-expand yung retailer, yung power ng retailer over supplier lumakas dahil na-commoditized na yung supplier. Nagkopyahan na yung mga suppliers. Nag-evolve na yung business eh.
“Before MaxiPeel, I went into facial cleanser. At that time, Eskinol was the dominant brand, but I was able to grab market share from it using my brand called ‘Extract’ facial cleanser. Ang positioning ko noon, extracts from natural sources such as Avocado and Cucumber, eh yung sa kanila, synthentic eh. Yang yung innovation ko.
“During that time kasi, I wanted to professionalize the company. Because I am not a chemist, I needed help from technical experts, so nag hire ako. Yung una inimprove nila yung hair care products ko, tapos napunta sila sa facial cleanser until such time pag may nakita ako sa market, ibibigay ko sa kanila: ‘Can you do this? Can you replicate this product?”
4| Know how to professionalize the business by enforcing organizational frameworks
The ability to implement effective systems and processes is often the difference between stagnation and sustainable growth. Knowing how to incorporate business practices empowers you to make informed financial decisions, transition from authoritarian leadership, and ensure that your organization operates cohesively toward a common vision.
Hortaleza realized that to manage a growing company effectively, he needed to acquire new skills and knowledge. He attended an executive program in the US and committed himself to constant learning by reading books on management, marketing, and leadership.
Hortaleza understood that successful business leadership required systematic processes. He implemented systematic processes to streamline operations in his business and reduce reliance on individual leadership.
“I attended an executive program in the US because I couldn't keep up with the company's growth, and I was working with professional managers and CFOs and I could not understand their language,” he says. “I could understand basic P&L concepts, but when it came to reading financial statements, I struggled. I realized that without this skill, I couldn't grow the business, so I had to either interview them or ask them to teach me. I would ask ‘What do you think? How do you analyze the financial statement?’
“So, after that, I began to apply systematic implementation of our processes. That's the only way you can lead a business. If you don't have the system and processes in place, it will always be very dependent on the chairman and CEO, and I did not want to do that, dahil napapagod ako eh, kaka-explain, lahat pipirma ako.
“I had to install systems and processes to have a basis for how we would work. Ang tawag ko nga sa sarili ko ay corporate entrepreneur. I start a business without systems and processes, then I install systems and processes, then I give it to someone or sell the company, and then I start another business. That's my motivation.
“Tapos nagbasa ako ng mga books, halos lahat ng management books, marketing books, alam ko lahat yan, yung about leadership and any types of leadership. Yung types of marketing like yung 4 Ps of marketing, ine-expand lang naman nila, but very universal.
“Even yung Total Quality Management, it was invented by the Japanese many decades back, nilalagyan lang nila ng sweetener and the author would place a new terminology but the management philosophy and discipline are very basic. Its common sense.
“May hotel nga ako, sabi sakin, ‘Is this the first time that you're going to to do a hospitality business?’ Sabi ko yes. Sabi nya, ‘So you don't know anything about hospitality.’ Sabi ko, ‘What's the difference between running a hotel and an FMCG (Fast-Moving Consumer Goods) company? It's the same discipline. You have different languages, with a front office, back office, but running the business is the same. Doing marketing is the same. Very basic. It’s more about how you are going to execute.
“Before when you don't put a system and processes in place, you tend to be authoritarian. You say, ‘You do this, you do this, you do this’ and there's nothing wrong about with authoritarian leadership. But it's not sustainable.
“The only way to sustain it is to create processes, so they can refer to that process as the professional way of doing things. Later on, your job is not anymore dictating; it's coaching and mentoring. What's the context of the system procedure? It provides clarity in what you're doing.
“The process should start from your vision, mission, values, and your corporate strategy. So you align everything to one point of reference, which is your strategy. Otherwise, magkakaroon ng maraming redundancy and inefficiency. Your job is to contextualize your processes and make sure everything will go in the same direction.”
5| Know how to guide and teach your children life lessons
Teaching children about business introduces them to financial concepts such as budgeting, saving, investing, and managing expenses. These skills are essential for making informed financial decisions in adulthood.
By exposing children to business principles, you encourage them to develop an entrepreneurial mindset. They learn to identify opportunities, take calculated risks, and think creatively to solve problems.
Hortaleza stressed the importance of having a clear set of values and life objectives. He encouraged discipline as a foundation for personal and professional success and advised his children to develop and solidify their strategies, aligning their actions with their goals, particularly in the context of staying in business.
Hortaleza also highlighted that parents serve as influential role models, and the behaviors and values children observe in their parents can have a significant impact on their own development.
He provided his children with valuable life lessons that encompassed values, work ethic, financial responsibility, adaptability, and the importance of building and managing relationships. His guidance aimed to prepare them for success in both business and life.
“I always tell my children to have a single point of reference: the values, your objectives in life, and discipline. And then, if you want to stay in business, you have to firm up your strategies and align everything with that. But very important are your technical competencies because you're second-generation. People will tell you that you have to prove something before they respect you.
“I tell them that they have to deliver results and work hard, and as much as possible, there's no such thing as work-life balance at this point. It's always tilted toward work kasi yung mga bata ngayon kailangan nila mag-balance yung life and work, but no, no. There's no such thing as that in the beginning of your career. It's always tilted toward work, and then later, when you become successful, magbabago na yan. Yun lagi kong sinasabi sa kanila, that it's not about balance.
“In terms of money, I give them accountability. I asked them to go out and live on their own so they can manage their own finances kasi that’s the only way they can learn how to budget. You don't live with your parents. Yan yung tinuro ko sa kanila and tapos nakikita rin nila ako kung paano ako gumasta, like living within your means and enjoying life, but you cannot do so right now because you are not yet successful.
“Actually, yung mga bata ngayon they are very smart. They are educated and they have a clear understanding of right and wrong. Hindi mo naman kailagan sabihin na ganito ang dapat gawin. The advent of social media has exposed them to many issues.
“Hindi mo basta matuturuan yan. Ang gagaling nga nila eh. While they may have their own major life philosophies, yung nakikita nila sa parents nila, malaking influence yun.
“When you're just starting a business, you have nothing to lose eh. Lahat taya. You are very aggressive, but when you have achieved something in life and you gained a lot of experience and as you look forward to your life objectives, you may not want to make aggressive decisions.
“Instead, you opt for calculated moves to achieve your goals. Kaya ako, I am very finance-oriented. I treat my cash as an investment. I allocate a portion into my business while maintaining a portfolio. I ensure that 10 percent of my portfolio does not erode my lifestyle to move and enjoy life.
“To me, everything is all about managing relationships. In business, you need to manage your relationships with your customers and suppliers. In family life, you must also manage your relationships and your kids so talagang you have to make an effort on how to engage with them.
“Sinasabi ko sa mga anak ko, in life, it's all about networking. For example, you have to associate yourself with the right people. If you want to be successful in business, you manage relationships with successful businessmen. Unfortunately, ako hindi ko nagawa yan kasi trabaho talaga ako. Wala ako mga sinalihan na organization.
“There's a saying that if you're talking to three successful businessmen, you will become the fourth, something like that. So, sinasabi ko huwag kayong sasama sa mga friends nyo na hindi productive. Hindi ka naman biased doon pero you want to be associated with successful people para maging successful ka rin.”
Henry Ong, RFP, is an entrepreneur, financial planning advocate and business advisor. Email Henry for business advice hong@or follow him on Twitter @henryong888