Farouk Systems, Inc.

Farouk Systems, Inc.

250 Pennbright
Houston, Texas 77090
U.S.A.
Telephone: (281) 876-2000
Toll Free: (800) 237-9175
Fax: (281) 876-1700
Web site: http://www.farouk.com

Private Company
Incorporated: 1986
Employees: 150
Sales: $56.7 million (2004)
NAIC: 325620 Toilet Preparation Manufacturing

Farouk Systems, Inc., is a private, Houston-based company that produces hair care and spa products for the professional market. Owned and operated by more than 1,500 professional hairdressers located in more than 60 countries, Farouk is headed by its founder, Palestinian immigrant Farouk Shami, who serves as the chairman of the board. His son, Rami Shami, is the company's chief executive officer. Major products include the Sunglitz line of ammonia-free, hair-color lighteners; the BioSilk line of ammonia-free hair dyes that provide grey coverage; and a wide variety of hair styling equipment and accessories sold under the Chi brand. The most popular of the Chi products is a ceramic straightening iron, but the label also is to be found on professional dryers, clippers, curling irons, brushes, and combs, as well as hair care products, including dyes, hair thickeners, and "transformation" systems for use with the ceramic straightening iron. Farouk also offers services to hair salons, including styling education and merchandising programs. In addition, the company operates an upscale spa in Houston's Galleria Mall.

FOUNDER'S EMIGRATION TO THE UNITED STATES IN 1965

Farouk Shami grew up in Ramallah, Palestine, a suburb of Jerusalem. Here he watched his mother make tapestries, rugs, and blankets. She also made her own dyes, relying on readily available vegetables and plants, and taught her son the secrets of coloring, passed down from one generation to the next, while also fueling a passion in him to become a commercial artist. As a youngster Shami also was influenced by a Palestinian pharmacist who lent him books about the production of hair care products. Like his mother he developed dye and pigments from plants and tree bark and began to experiment, making his own hair dyes, shampoos, and conditioners. In addition, Shami grew up fascinated with the United States, heavily influenced by Westerns in the movie theaters as well as his education in American schools. Determined to sample the personal freedom the United States had to offer, he emigrated to the United States in 1965 and enrolled at the University of Arkansas, which had awarded him a scholarship. His plan was to earn a degree in commercial art and become a teacher, but he continued to dabble in hair care products and also became interested in hairdressing, a form of art in his opinion. He began to attend cosmetology school and college simultaneously, and he grew to love hairdressing so much that he decided to make it his career. His conservative father, however, was less than pleased with his choice and wrote to him asking Shami to forget his plans and to return home. Instead, Shami defied his father and stayed in the United States to pursue a hairdressing career, resulting in an estrangement between father and son. Many years would pass before they reconciled.

Shami learned the art of hairdressing, working at a variety of salons before settling in Lafayette, Louisiana, where in 1972 he opened his first shop. In 1978 he moved to Houston. He continued to work behind the chair and develop his own hair care products, in particular dyes, but his career reached a crossroads in 1981 when he began to experience an adverse reaction to dyes and other harsh chemicals, experiencing difficulty breathing and skin irritation. He went to a doctor and learned that he was allergic to ammonia. It amounted, in effect, to a career death sentence for Shami. "I was told it is impossible to do color without [ammonia] and the doctor said I had to quit pursuing my passion," Shami recalled in a 2002 interview with Houston Business Journal. "But there was no way I was going to do that. I had to come up with another route."

Shami recalled the lessons learned from his mother about formulating dyes and pigments from natural sources. In addition, according to the Houston Business Journal, "Shami committed himself to studying chemistry, ophthalmology and the physics of color to examine how humans see and perceive color. That led him to approach hair color from the standpoint of physics rather than chemical formulation." Drawing $1,000 from his savings as seed money, Shami bought chemicals and began to develop his own non-ammonia-based products. He spent his days cutting hair at Salon Farouk and at night worked in his garage on product development, often customizing products to suit the individual needs of his clients. After years of experimentation Shami developed a non-ammonia hair lightening system that was so unique in the marketplace that Shami became the first hairdresser to receive a patent on a hair care product. In 1986 he formed Farouk Systems, Inc. to market his new products, which he called Sunglitz, unveiled in October 1986.

MAJOR BREAK IN 1986

At first Shami sold Sunglitz to Houston-area salons, but soon began to branch out across the country. His major break came in 1986 when Austin, Texas-based Armstrong McCall, a U.S. distributor of hair care products and salon equipment, took on the marketing of Sunglitz. One of the principals of the firm, John McCall, had learned about the product from one of the company's franchise stores, and then invited Shami to make a demonstration. McCall told Houston Business Chronicle, "My mother, who had been in the business all her life, said it was the most innovative product she'd ever seen." McCall was impressed enough that he signed a 20-year agreement to carry Farouk products. Moreover, McCall would take a minority ownership stake in Farouk Systems.

With the success of Sunglitz, Shami began to add products. About a year after the launch of SunGlitz, he developed the BioSilk product line. Using silk in hair care products was not new, but Farouk Systems took the process of liquefying the silk of butterfly cocoons much further than competitors, making the molecules extremely small. Thus, instead of coating the hair with a silk formula, BioSilk's product was small enough to enter the hair shafts, where it could mend damaged hair, add shine, and eliminate frizzies. An increasing amount of Shami's time was taken up by the hair care products business, so that by the early 1990s he decided it was time to ease out of the salon business in order to become a full-time supplier to the beauty industry. Over the course of the decade, Shami built an 80,000-square-foot manufacturing plant in Houston and a pair of area warehouses, one 75,000 square feet in size and another 150,000 square feet. The company turned out a bevy of new ammonia-free professional hair care products.

COMPANY PERSPECTIVES

I began Farouk Systems based on a mission and a dream. My mission and dream was to provide my fellow hair artists with a safer workplace environment-free of harsh chemicals, advanced knowledge through education and new professional only systems that could not be duplicated at home. This is why Farouk Systems' mission statement has always been and still is: Environment, Education, & Ethics.—Farouk Shami.

During the 1990s Shami was joined by his son Rami, who would become CEO of Farouk Systems. Another son, Basim, also went to work for his father, but he drifted away from hair care products for humans, becoming more interested in fur-care products for dogs and cats. In 1995, when he was in his mid-20s, he learned through salon channels that some champion show dog owners had begun to use Farouk's BioSilk products to soften dog fur and give it a sheen and were now asking if the company could offer a product that was specifically formulated for animal use. Basim Shami adjusted the amino acid content of BioSilk, and then conducted field testing at a local veterinary clinic to produce a product that gave a clean feel and clean scent, important for show dogs because they could be disqualified if a judge detected anything foreign on the skin. The new grooming product, called Pet Silk, was launched in 1995. It became the flagship product for a new company, Shami's Pet Silk Inc., which Basim Shami would head.

1995–2000: PERIOD OF STRONG GROWTH

Starting in the late 1990s, Farouk Systems began enjoying a period of especially strong growth. Much of that could be attributed to new packaging, changes in the sales and marketing departments, and the phasing out of product duplication. At the same time, the company unveiled a host of new products and formulations. For example, in 2000 Farouk Systems came out with Power Plus, a hair loss prevention system; the SunGlitz Color Maintenance System; Color Vision Highlighting System; BioSilk Dandruff Shampoo & Conditioner; Root Booster Power Spray; Silk Therapy Hair Care System; Silk Therapy Thickening Line; Chromatic Colors; and SunGlitz Spray Gel. As a result of these changes and product launches, Farouk Systems grew sales 50 percent each year from 1999 to 2001. In 2003 sales grew by 55 percent, and internationally the company did even better, doubling sales. Part of its success was attributable to the products capturing the attention of celebrities who became devoted users and significantly raised the company's profile. They included the likes of Madonna, Britney Spears, Gloria Estefan, Uma Thurman, Renee Zellweger, Gwyneth Paltrow, Courtney Cox, and Demi Moore. It was no surprise that the Farouk products also found their way onto the sets of television shows and movies. They were used on television shows such as Sex in the City, General Hospital, ER, and America Dreams, as well as the Miss USA, Miss Universe, and Miss Teen USA beauty pageants. Films included Miss Congeniality, Beauty Shop, the Austin Powers movies, Crouching Tiger, Hidden Dragon, and The Muhammad Ali Story.

It was also in the early 2000s that Farouk Systems would venture beyond hair care products by opening the BioSilk Spa in Houston's Galleria Mall. It was the first in what the company hoped would be a worldwide chain of tony spas. The company gained even wider appeal in the 2000s with the introduction of the Chi straightening iron, which led to the introduction of hair dressing equipment and accessories. Farouk Systems took advantage of its proximity to the National Aeronautics and Space Administration (NASA) in Houston, inviting NASA scientists to help it in developing ceramic technology. As a result of these brainstorming sessions, the company was able to develop an iron that used plates that were made from pure ceramics, rather than coated with ceramics, to save on cost. By employing pure ceramics, the Chi heated quicker, kept a more consistent temperature, and produced straightened hair that was better able to ward off humidity and retain its shape longer. The difference in performance was noticeable, and soon hair stylists were using the Chi on the hair of the stars. Farouk Systems then made the product more widely available and found that young women, who had been spending $20 on drugstore flatirons or rolling their hair on orange-juice cans to straighten it, were more than willing to pay as much as $150 for the Chi. It was so popular that Chi became Farouk Systems' most important brand, and the company considered launching new spas under the Chi name rather than BioSilk.

KEY DATES

1965:

Farouk Shami emigrates to the United States.

1972:

Shami opens the first salon.

1981:

Shami is diagnosed with ammonia-allergy, and begins developing his own hair care products.

1986:

The first product is launched; the company is incorporated.

1995:

Pet Silk Inc. is founded.

2004:

The company begins publishing Chi Magazine.

While the Chi flatiron was bringing the Farouk name to a wider audience, the company's founder was also achieving personal acclaim for his charitable activities. He had long been involved with Houston-area charities and national organizations like the Juvenile Diabetes Research Foundation and City of Hope, and he had joined in celebrity causes as well, such as Britney Spears's "Make a Wish Foundation" Tour and NSYNC's Challenge for the Children. But being a successful businessman of Palestinian birth, Shami was especially well positioned to make an appeal for peace in the Middle East. He sought out influential Arabs and Israelis, urging them to find common ground. He opened a branch of Farouk Systems in the Middle East, a place where he hoped Arabs and Israelis could work together. Shami also teamed up with a longtime Texas friend, Richard "Kinky" Friedman, who had fronted the popular 1970s band, The Texas Jewboys, and later became a bestselling author of detective novels. Friedman was also a former member of the Peace Corps and like Shami was eager to broker peace in the Middle East. Together Shami and Friedman created and promoted a product called Olive Oil from the Holy Land, a beauty product that could be applied to hair, soften lips, and added to a bath to produce softer skin. The proceeds of the product were earmarked for the Neve Shalom/Wahat Al-Salom (Oasis of Peace), the only community in Israel where Jews and Arabs sought to educate and raise their families together. Farouk Systems remained an innovative company in the early years of the 2000s. In 2004 it began publishing Chi Magazine, which was distributed to salons for patrons to read. Nor was technology neglected. The company developed nano silver technology, which it wanted to incorporate in all of its hair tools. The microscopic particles served as an antiseptic, eliminating the need for chemicals to clean the tools. In effect, the tools would be as good as brand new each time they were used. To make sure it was on the cutting-edge of technology, Farouk Systems hired one of NASA's top scientists, Dr. Dennis Morrison, as soon as he retired, to serve as a consultant.

PRINCIPAL COMPETITORS

Conair Corporation; Goody Hair Brushes; Helen of Troy Ltd.

FURTHER READING

Barr, Greg, "Reigning Cats and Dogs," Houston Business Journal, May 3, 2004.

"Farouk Scores Record Profits," SalonNews, December 2000, p. S2.

Finan, Kristin, "Wave Goodbye To Those Curls," Houston Chronicle, April 11, 2005, p. 1.

Tawasha, Mary Ann, "Color of Success," Houston Business Journal, May 3, 2002.

"Vision for Growth," Global Cosmetic Industry, May 2004, p. 6.