At just three years old, makeup subscription service Ipsy is well on its way to reaching an ambitious goal: Promote personal beauty and discovery among women around the world.
That's according to Ipsy's 28-year-old co-founder Michelle Phan. Phan first rose to prominence as a YouTuber back in 2007, posting regular makeup tutorials for an audience that's now roughly 7.5 million. (That's more than the viewership of the top 10 beauty brands combined.) With more than 300 published videos and one billion views to date, Phan ranks alongside Web mega-celebrities like Bethany Mota and PewDiePie. In 2013, she launched her own cosmetics line, Em, in partnership with L'OrÃ©al.
Phan's motivation to start her company, however, dates back to before she was dictating beauty trends for a global audience: "Ipsy was an idea that I incubated when I was 19 years old," she told Inc. While on a trip to Thailand, Phan stumbled across a kiosk where dozens of girls were scrambling to pay for makeup samples, and she learned that in most of Asia, beauty products are nonrefundable. As a result, women in Asia are willing to spend money to test them out.
Five years later, in November 2011, Ipsy was born. Deriving its name from the Latin word ipse, meaning 'selfhood,' Phan and co-founder Marcelo Camberos hope the makeup subscription service will grow as a "beauty community," too. So, far 12 million people have signed up for updates and reviews from Ipsy on ipsy.com, Facebook, Instagram, Twitter, and, of course, YouTube. There, Phan's own network of stylists publish beauty videos on Ipsy's channel.
As for the subscription service itself, one million people have signed up to fork over $10 a month for "Glam Bags" filled with samples from big-name beauty brands like Urban Decay and NYX Cosmetics, as well as lesser known labels. (For instance, ever heard of Mitchell and Peach? The U.K. company's Fine Radiance Face Oil was featured in the March Glam Bag.) Phan's stylists tailor the samples to the wearer's skin tone and personal preferences, and customers, dubbed ipsters, are encouraged to post product reviews online. Each Glam Bag also has its own theme: April's is 'Beautifully Bohemian.'
Although the makeup subscription model may sound familiar (think Birchbox), Phan's company has a different outlook: "We're not a beauty authority," Phan says. "We're a beauty community." Ipsy operates as a marketing tool for the smaller, independent makeup companies, which don't always have the funds to grow organically. And as Phan told us, promoting other female entrepreneurs is the most exciting part of the job.
But it is still a job--a big one, too. Ipsy is in its fledgling stages, says NPD Group global beauty analyst Karen Grant, and it faces much bigger competitors. She adds that the makeup subscription model remains a small, niche sector that may not be profitable for new entrants. After all, many customers still prefer browsing products online and in department stores to receiving samples in the mail. Still, makeup--and motivating women to express themselves--is a powerful business model. As Grant notes, "for the first time, the makeup industry is outpacing the skin care market, and the brands that are showing the biggest lift overall are those alternative types."
To date, Ipsy has attracted $2.8 million in funding from investors, including Amalfi Capital, 500 Startups, Bullpen Capital, and Social Capital. And while the company refused to disclose its 2014 revenue, it expects to bring in $120 million in sales this year.
The company ultimately plans to expand to Asia, and Ipsy plans to launch an open studios network for local artists--providing them with the necessary resources to shoot their own videos. "At heart I'm a creator, and I believe that part of being an entrepreneur is creating," says Phan.