We’re just back from the Los Angeles Beauty and Money Summit where up and coming beauty brands shared their experiences and hope to make it big by impressing investors and larger brands. We were there to get a pulse of new brands, keep abreast of new developments in the mainstream beauty market, and present our point of view and predictions for personalized beauty technologies. Key topics of the day included omnichannel, prestige, personal experience, natural and hypoallergenic ingredients, sustainability, women entrepreneurs, efficacy, and humanization of beauty.
View the presentation
What stood out however, was not necessarily the beauty brands themselves or any technology per se, but the stories behind these young companies and the personal passion that fuels their success. For many young companies they are more focused on humanizing beauty, empowerment, and independence than technology alone. CEOs and founders were most often strong, smart, and exceptionally creative and persistent women who had an idea and passion for their product.
Usually based from personal experience and many times overcoming major hurdles, each founder was uniquely gifted and had a story to tell, articulated through their products they worked so hard to develop and bring to market. Anyone who has started a company, developed product and brought it to market should be revered. It’s exceedingly hard, and while technology plays a role in every part of the industry, at Beauty and Money, it was refreshingly second seat.
Inspired to follow their dreams
We saw presentations from twelve young companies all with a dream of building a successful and attractive company that might someday be sold to a larger brand to leverage its marketing and distribution power and scale. Most of these young companies face a very fickle and crowded market, where the odds of surviving beyond 3 years are stacked against them- on average only 10% make it longer. To achieve that milestone it requires persevering, a little luck, and working hard to develop the brand story, community, and consumer who will cherish and accept their brand as their own. These are smart and tenacious women who won’t take “no” for an answer and really know how to push the boundaries of what a founder can achieve. As high-lighted by founders of Playa, Ellis Brooklyn, and Doctor Rogers Skin Solutions, finding the right omnichannel mix between direct to consumer and specialty retail, like Sephora, was a key to early success in brand and customer development.
We were there to discuss a big industry topic – Personalization. The topic was well received at many levels. The global brands we spoke with acknowledged the importance of meeting the consumer where they are at and on their terms, but also realize technology solutions can’t succeed if they impart a barrier to the enjoyment, ritual, or ease of access. Any technology, no matter how clever, must account for both the realities of the situation, and the user’s perception of its role in the job to be done. Technology isn’t a replacement for quality, it’s simply a multiplier – helping enable better customer experience, performance, awareness, adaptability, etc.
As always, high-quality efficacious products are at the heart of the user experience, which means the partnership between beauty experts (those who truly understand beauty) and technologists is key to the success in this new digital era. Users are constantly (and subconsciously) looking for the best functional, emotional, and cost optimized solution- beauty products are no exception. We enjoyed chatting about these topics with Lori Haram (Estee Lauder), Carla Ruiz (Shiseido) who understand this consumer and market dynamic well, and other companies actively looking at how technology and the user experience can play nicely together.
- There were many interesting companies and presentations. Mixed in the many small companies led by incredible people, were a few ideas that stood out: SkinSafe is a company born out of the Mayo clinic by a physician trying to help his dad find skincare products that would not irritate his skin.
- Jennifer Yen, who was a former TV Power Ranger who had suffered embarrassing skin issues due to heavy show make-up, and several women who suffered skin issues due to pregnancy and hormonal imbalances, founded YENSA and Pur-lisse as a result.
- Dr Heather Rodgers, after treating thousands of patients with skin issues and injuries, had seen what worked and what didn’t. This compelled her to create something better. Founding Doctor Rogers, while being both a full-time dermatologist and mom, she successfully created a growing line of skin care products that are both good for your skin and the world.
- And last but not least, Judith August, a legendary model and beauty company founder who has been in the industry for over 35 years, had an insightful perspective on her experience in beauty over many years.
Be relevant, get noticed
So many companies, and so many stories, but all one thing in common – how to become relevant and noticed in an exceedingly digital world led by online micro and macro influencers and an omnichannel strategy that balances direct to consumer and specialty retail channels
During our presentation, a few themes became evident. Amazon is an emerging force in the beauty space and will continue to be so. While not everyone believed the new Amazon, data-driven Belei line was exceptional, everyone acknowledged it was an important milestone, and likely not the last beauty product we see from Amazon, who prides itself in putting the customer center to all it does. Given the trend that more data is better, nearly every attendee raised their hand when asked if data was key.
The challenge for any brand is access to real user data (purchase, use, efficacy, and contextual data). We know the big brands are developing apps and front-end’s to collect more data, but they currently can’t compete with the big box, specialty, and online retailers who have access to megadata and trends across brands at a highly granular level- these being Amazon, Sephora, Feelunique, Douglas, CVS, and Walgreens-Boot to name a few. It’s not a level playing field.
Other key themes included:
- Omnichannel is a necessary strategy to overcoming hurdles in growth. Customer acquisition cost is a major barrier for many young beauty brands looking to go direct to consumer alone. Partnering with specialty retail (like Sephora) and/or “curation-as-a-service” companies (like Birchbox) help new brands quickly build brand credibility and awareness with new customers in a saturated and competitive market. Playa, YUNI Beauty, Ellis Brooklyn, and Doctor Rogers Skin Solutions are great examples of this.
- Prestige is a key merger & acquisition consideration for legacy brands evaluating beauty startups. For startups looking to get acquired, demonstrating scale is less important than brand prestige, because these large beauty brands already have global distribution and sales channels established and look to merge acquired brands into their channels.
- It is not just about natural and sustainable products, but about proving it works. Efficacy is becoming a currency of beauty as consumers demand products that work for their skin (e.g., hypoallergenic needs) and prioritize peer opinion and ingredients over brand.
- Women founders are a key catalyst and leading the charge in the next generation of beauty companies. Many great examples, but one of our top picks, was a product sample curation company called FabFitFun that inspires women to live happier healthier lives through product and brand discovery, by selling consumers a lifestyle membership that includes a $50 box of beauty, wellness, fitness, home, and technology goodies, worth $200 on a quarterly basis. In the beauty and health industry, trials are hugely important and FabFitFun helps (somewhat) democratize the ability for small and large brands alike get product samples out to the consumers, by playing an important role in a brands omnichannel strategy. We loved the business model and the use of technology to help the company begin to target various users in unique ways. Yes, this too is “personalization.”
Many amazing stories, passionate women founders, and exiting things happening in the beauty space. We are looking forward to staying engaged on this journey, helping how we can, and seeing how the stories unfold.