In case you missed it, startups are thriving and shaking up the Beauty & Grooming Industry. Social media, popular influencers, user-generated content, and direct-to-consumer e-commerce have significantly reduced traditional barriers to entry like distribution at key retailers and big media budgets. Thus, the vanities of today’s beauty enthusiasts will likely feature a mix of newly discovered and well-established brands. Big Beauty has certainly taken note. In recent years, we’ve witnessed key acquisitions like IT Cosmetics by L’Oréal, Dollar Shave Club by Unilever, and GLAMGLOW by The Estee Lauder Companies. The major beauty companies are also starting to play a role in cultivating startups. For instance, earlier this year LVMH announced Sephora Accelerate, an initiative designed to support female beauty entrepreneurs.
I recently had the pleasure of attending the FounderMade Beauty Summit 2016 in New York City. Per the website, FounderMade is an executive entrepreneurial summit geared toward supporting founders as they scale their businesses through mentorship, corporate financing, and strategic partnerships. FounderMade hosts similar summits for Wellness and Food. I’ve attended several marketing and startup conferences and FounderMade Beauty was easily one of the best experiences I’ve had in recent years. The one-day summit featured several thoughtful panels, in addition to the Discovery Lounge where attendees were treated to product demos from nearly 30 brands.
6 Key Takeaways
#1. It’s not just about millennials. Instead, there was acknowledgment that beauty remains relevant across all demographics from Millennials to Boomers. Ironically, this revelation came from a panel entitled “How to Build a Beauty Business for the Millennial Generation.” Many of the Founders were inspired by a personal need not currently met by the existing marketplace. As such their strategy was more about identifying and targeting those with a similar need versus targeting a specific demographic.
#2. Health & Wellness was a common theme with several brands positioned as ‘natural’ or ‘organic.’ A key challenge for these brands is finding ingredients that can be sustainably sourced. Honesty and transparency about ingredients is critical especially in today’s social age where angry consumer feedback can quickly go viral.
#3. Founders discussed their key approaches to innovation. Problem-solution innovation was one approach. There is also the opportunity to introduce existing products to other geographies as evidenced by the expansion of Korean beauty brands to North America. And the CEO of Tula – a skincare line featuring probiotics technology – spoke about applying what works in another category to the beauty space.
#4. In the panel, “Learn What Will Set Your Business Apart from the Rest,” summit attendees were able to get into the minds of investors from firms like L Catterdon and North Castle Partners. Before approaching investors, it is essential for Founders to have a truly differentiated product; a solid brand story; an appropriate pricing strategy; and promising sales. “The single best source of success is patience” and “Overnight success in beauty is 10 years” were key nuggets from Andrew Shore of Moelis & Co. However, there was also discussion about globalization and its impact on the accelerated growth opportunity for today’s beauty startups. Another investor identified traits that were common to the most successful founders. These individuals are amazingly confident but also self-aware. They remain curious about their own business as well as the category at-large. They are open to adding team players that are “better than” themselves.
#5. A late afternoon panel featured the Founders of brands with significant traction like Birchbox and Beautycon. These panelists shared key learnings and wise advice based on their own experiences. In the beginning, don’t put all of your marketing dollars in one basket. Test and measure multiple tactics to determine what works best for your company. Identify a niche and go deep within that niche. Do not give up your idea and equity too early. Try to avoid investors until you feel it is necessary.
#6. Strolling through the Discovery Lounge, I came across brands that represented the full spectrum of beauty – skin care, hair care, fragrance, and cosmetics. The presentation of these brands belied the fact that they were startups. Across the board, packaging was attractive, premium, and eye-catching. Formulas were sophisticated with luxurious textures and high quality ingredients.
Although I am not a founder, insights shared at events like this keep me inspired as a marketer and as a business leader. Overall, it was a day well-spent and even more so for the many entrepreneurs in the audience.