Before Michelle Phan’s videos netted her more than a billion views and eight million followers on YouTube, and before she co-founded Ipsy and had her name on a line of beauty products, she was the bashful teenage daughter of impoverished Vietnamese refugees, and sometimes bullied at her high school in Tampa.
"I had a hard time relating with my culture," recalls Phan, who then amends that: "With other people."
But she learned to hustle early on. Her family couldn't afford a computer--her father had a gambling problem, which sometimes forced her mother to hide rent money in Phan's teddy bear--so she started selling candy to her classmates, so she could buy one herself. (Phan also helped manage her mother's one-person nail salon, which convinced her to never open a shop of her own.) In 2003, she started blogging on Asian Avenue, an early social network for Asian Americans, and soon joined formerly huge Xanga and Angelfire. Among other things, she showed followers how to create a ninja costume from a simple black T-shirt, and how to make face masks using ground-up aspirin. In 2007, she turned her attention to YouTube. She began by posting dog videos--she was sad, she says, and they cheered her up--but soon noticed "what got a lot of views were always my beauty tutorials."
Phan applied to a new YouTube program through which video creators could make money from ads--and was promptly rejected. Once accepted, she started out making 5 cents a day. Still, she understood that YouTube was a new kind of launchpad, from which she could quickly build a brand--and for free. So, while still in college during the depths of the late-aughts recession, she quit her weekend job waitressing at a sushi restaurant and got serious about YouTube, posting her tutorials much more frequently, and directing followers on her Xanga blog to watch them.
She grasped how the then-nascent social-media ecosystem worked, to say the least: Phan, who's now 28, rapidly became first-generation YouTube royalty. Forbes estimates that she made $3 million in 2015 from the site. (She says the correct figure is lower.) In 2011, she parlayed her online cred to co-found makeup subscription service Ipsy, which sells beauty product samples in a monthly Glam Bag for $10. Today, Ipsy has more than 1.5 million subscribers, as well as a series of conferences that cost $150 to attend. (There will be four this year, up from two in 2015.) Last year, it scored $100 million in funding.
But that's not the signal fact about Ipsy, nor is its reported $800 million valuation (Phan and her reps won't confirm the figure), or that it took in more than $150 million in revenue last year. It's that it's profitable, and turned a profit, according to Phan, almost immediately, when it sold out of its very first Glam Bag offering. "We didn't need marketing money," she says. "I told Marcelo [Camberos, Ipsy's co-founder and CEO] that I can make great content"--and find the "right creators" to make even more.
In this, too, she was right. Today, Ipsy itself is a platform of sorts: Its more than 10,000 video bloggers have access to a state-of-the-art, 10,000-square-foot studio space in Santa Monica, California, where they can produce videos, which they can then beam out to their followers elsewhere on the Web. (Ipsy denies reports that it has a promotional relationship with its bloggers, but it's not hard to find videos in which its name is mentioned.) The company also employs eight in-house stylists, whose videos promote what's featured in the monthly bag, and who can make six-figure salaries doing so. The power of all that promotional muscle is an immediate boon to smaller beauty brands that end up in an Ipsy bag.
"You just can't get that kind of exposure," says Samara Granofsky, the founder of the Montreal-based Trust Fund Beauty, which had its Elegantly Wasted vegan nail polish in Ipsy's subscription bag last August. Afterward, Granofsky says, Trust Fund Beauty's online sales in one month exceeded the previous six combined.
The social-media game has changed since Phan first cracked the code. "Gen Z--they're not on YouTube as much. They're on Snapchat," says Phan, who also has more than 2 million followers on Instagram. But Phan and her bloggers have adjusted.
"Snapchat is one of the biggest social-media platforms that I have," says star Ipsy blogger Nikita Dragun. Snapchatters, she says, "get to walk around with us every day. With YouTube, you upload once or twice a week."
Whichever platform Phan and her bloggers use, she has long understood the connection with fans that has made her company possible, and can cite many moving stories about it: One male viewer's mother grew too weak from chemotherapy to make up her face--but by watching Phan's videos, he learned how to do it for her, which brought the two closer in her final days. "No amount of filter, or editing program, can ever re-create authenticity," Phan says--but with it, "you can really touch someone's life."