Toni Ko built her first company, NYX Cosmetics, and sold it to L'Oreal for a reported $500 million. She's the first to admit that luck played a huge role in her startup story. Well, that--and a childhood shaped by strict discipline. 

"I consider myself the byproduct of child slavery by Asian parents," Ko said.

She's joking, of course. Sort of. 

In front of an audience of about 150 people in Los Angeles's Playa Vista neighborhood on June 16, Ko explained how her background shaped the kind of entrepreneur she has become. Ko spoke as part of the Moonshot speaker series co-produced by Inc. and TeamOne, a division of the advertising agency Saatchi & Saatchi.

Ko said the expectation in her family was that you accomplished the job no matter what--and as a child, school was your job. She recalled how her father gave her coffee in elementary school to help her stay up and study. "I had to go to school on the sickest days. He used to say, 'If you're going to die, go to school and die,'" she said. It might sound harsh, but that's not how Ko sees it. (And lest you get the wrong impression, she laughs a lot as she tells her own story with an obvious fondness for her parents.) "I'm so grateful for those years and to have had a disciplined upbringing." 

It was what helped her learn English after she moved to the U.S. from South Korea at age 13. It also helped her pick up all kinds of business smarts at a young age. While her friends were having fun, she was working in her mom's store, which sold cosmetics and perfume. "It was the best business education I could have had." And the work ethic certainly kicked in as she bootstrapped NYX in the early days. "I worked for five years straight every day, with no vacation and no days off."

Now, as Ko is building company No. 2, a fashion-forward sunglasses brand called Perverse, she's leaning heavily on the discipline that helped her find success the first time around. Here are three strict rules Ko lives by as she builds brands. 

1. Choose your market methodically.

Ko says with NYX, she found the perfect business model formula. She created make-up for customers who didn't want the cheapest drugstore brands but couldn't afford the department store brands. The products had a high mark-up, they're non-perishable, and there was a huge gap in the aspirational price points in cosmetics. 

When she set out to build company No. 2, she researched potential industries meticulously. She looked at food, clothing, shoes, and sunglasses, all areas for which she had a passion. Ko immediately ruled out food ("Very slim margins and you make one wrong move and you're out of business"). She decided that fashion was risky too ("There's very fast turnover and once something is out of fashion, you have leftover merchandise with zero value"). In sunglasses, however, she saw a big opportunity. It met all of her criteria and she discovered that she'd have little competition at the $40 to $70 price point. Why fix something if it works? "This business model will never go out of style," she says.

2. Be just as meticulous with vetting your partners.

Ko says one of her biggest strengths is sourcing merchandise, because she knows how to find great quality at a good price. She's also developed her own way for vetting manufacturers.

"I've cracked the code on how to find Chinese suppliers," she told Inc. in a recent phone interview. "I personally visit each and every factory. It may sound silly, but I look at everything--even down to the carpet. Is it clean? I look at window sills. Do they have dust? Cleanliness is the basis of a great business. I also look at the expressions on factory workers' faces--do they seem happy?"

3. Don't pay for advertising that you can get for free.

A lot of cosmetics and fashion companies try to build their brands on sites like Instagram and YouTube by paying bloggers and social media influencers to post photos and videos. This is a practice that Ko adamantly opposes. Early on at NYX, she discovered that sales of one of her eye pencils took off after YouTubers--totally unprompted by the company--started posting tutorials using the product. It was totally organic and that's how she wants to keep it. You want a realistic sense of the popularity of your products. And if customers are willing to post about your products on their own, why would you pay for it? "What's the difference between that and an ad in a magazine?"

Ko's real ambition is to do what she did with NYX three times in her life. Assuming company No. 2 works out as well as the first one, she hinted she might go back to the beauty industry for round three. 

In the meantime, how do Ko's strict mom and dad feel about her success?

"They're Korean. We don't say I love you," Ko said, laughing. "They're not very expressive, but I know they're proud of me."