In a recent article written by Lexy Lebsack for the publication Glossy, an anonymous CEO declares, “The rise of fast beauty’s hyperconsumerism is driven by investors, not consumers.”
We were curious if investors and other decision makers in the beauty ecosystem, including brand founders and manufacturers, agree with the CEO’s thesis about what’s driving fast beauty’s hyperconsumerism.
So, for this edition of Beauty Independent’s ongoing series posing questions relevant to indie beauty, we asked 24 of them the following: If, in your judgement, there’s been a “rise in fast beauty’s hyperconsumerism,” what are the reasons for it, and what should the beauty industry be doing about it?
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Annie Kolemainen Brand President, Eva NYC Fundamentally I would disagree, but I also don’t think it is that black and white. Sure, investors pressure brands for growth, but I would argue this pressure exists with or without investors, especially in a growing category. And some form of brand growth is usually essential for long-term success.
As the beauty industry booms, a space that is highly consumable, I think it is only natural for more players to enter into it and want a piece of this increased consumer spending. So, with this intrinsic pressure for growth, and fairly low barriers to entry, there is going to be market saturation. The sheer excess and accessibility of beauty definitely isn’t hindering a rise in hyperconsumerism, but it’s being fueled by consumer interest and engagement.
I want to believe, maybe naively, that the majority of brands keep their consumers’ needs at the core of everything they do and create. But in order to stay relevant and engaging, I would agree brands are creating more faster, which is super interesting for me because at Eva NYC we have taken the opposite approach.
Before investors, we leveraged agility and inherently took more risk. We would churn out innovation, launch newness many times a year and hope something would take off. But the truth is, it’s not a sustainable model for the brand, the consumer or the environment. I am here to champion slower beauty!
In the past few years at Eva NYC, we have really shifted our focus to building equity on our core products and adopted a fewer, better mentality with innovation. This strategy has not only worked for us, but it’s given us greater ability to narrow in on our consumer needs and be more conscious about what we create. The more beauty brands hold themselves accountable to a higher standard, I think the better the industry will be.
- Sonsoles Gonzalez Founder and CEO, Better Not Younger
The rise of social media has been the biggest contributing factor to the growth of hyperconsumerism in the beauty industry. Videos and images constantly bombard us with portrayals of seemingly perfect lives, often featuring idealized bodies, hair and faces.
This relentless exposure can have a detrimental impact, particularly on young women, who may feel inadequate and pressured to "keep up" with these unrealistic perceptions through increased consumption.
It's undeniable that the beauty industry benefits from this rise in consumption. However, brands solely focused on chasing every trend and launching me-too products at any cost are unlikely to achieve lasting success.
In my opinion, consumers ultimately seek trust, quality and purpose in the brands they choose. These qualities can only be achieved through a deep understanding of their needs, desires, and values.
By engaging with consumers on a deeper level, brands can build genuine connections and foster a sense of community, ultimately leading to more sustainable and meaningful relationships.
- KARA LAFORGIA Founder, Kaz Ventures and Kaz Konsulting
There no doubt has been a rise in fast beauty's hyperconsumerism, but it hasn’t fully been fueled by investors. If you have the right investor, this shouldn’t be an issue, and your investors shouldn’t be driving your decision-making in regards to product development, innovation and new product launches.
I personally have invested in several beauty brands where their product innovation is 100% fueled by their current customer base, meaning new products are 100% co-created with their audiences. Some brands I’ve invested in will generate a minimum of 100,000 answers before launching anything new. It’s genius.
Founders will receive feedback from their current customers on what new products they want to see in what colors, what categories are trending, what newness they want, what type of packaging, etc.
In many cases I think product innovation/hyperconsumerism is largely driven by retailers. Major retailers do indeed want to see new product innovation and product expansion to grow brands long term and justify a rollout to more doors nationwide. In my experience, I see retailers requesting newness as frequently as once a quarter, sometimes more.
Additionally, I think beauty hypercosumerism is most fueled by social media. Consumers are often buying things they don’t need with ease through Instagram, TikTok, Meta, etc. Brands spend billions on advertising to acquire new customers and social media platforms make it too easy for customers to buy things they don’t need.
Finally, when I made my debut into the beauty industry in 2013, the barriers to entry for starting a beauty brand were notably higher. As a brand, you needed a compelling narrative, appealing packaging and effective products, and the market wasn't as saturated.
However, over the past decade, the surge in emerging managers and venture capital funds has significantly altered the landscape, providing access to capital that was previously limited. The rise of consumer-focused funds in particular has contributed to a substantial increase in available funding for first-time founders. While this influx of funding has empowered many founders, it has concurrently led to a surge in the number of brands, resulting in a shift toward hyperconsumerism.
- Adeline Koh Founder and Formulator, Sabbatical Beauty
It’s both investors and consumers, and it’s also how we are consuming differently from how we used to that is chasing this.
Every business at every size understands that the consumer requires newness to get excited about the business. Newness creates interest and buzz.
But how we now consume has moved from consumerism to hyperconsumerism because of the accelerated pace of social media platforms and chasing virality. Fifteen years ago the concept of “virality” was nonexistent. Now, virality is the holy grail of just about every e-commerce company.
Investors are simply trying to go where the money is because chasing virality is really chasing the pot of gold behind that ever-fluctuating rainbow.
Honestly, I think hyperconsumerism and its issues go beyond investors, consumers and brands. It’s locked into the structural DNA of the beauty industry.
The beauty industry is most obsessed with newness. You see this in its obsession with trends and new appearances. This obsession is just hyper-accelerated by digital platforms.
Can the beauty industry move beyond its obsession with trends and virality? I think that is the more important question. Can we move beyond an ever-changing obsession with the hottest new look, hottest new product? I am not sure.
One could look at the fashion industry for a similar example. Fast fashion and its terrible impact on the environment and labor have been well acknowledged. Slow fashion has been born in response to this. But has slow fashion become mainstream or is it ultimately just another trend among the many, many more to come?
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I believe fast beauty hyperconsumerism is clearly driven by investors. As the founder and CEO of a private, non-investor-backed beauty group, we are careful with our product launches to fill any gaps we see in our core categories, and we focus on targeting our core audience.
Investors want to see their investment in a beauty brand multiply quickly so they can sell it and make a quick profit. It is hard to achieve this unless A). You compromise the brand DNA/distribution channels, and B). You reach outside your core audience into a much younger audience to get a bigger piece of the pie.
With investment in the beauty industry drying out due to a lot of negative returns and major bankruptcies, it would be natural that beauty will return to more sustainable growth patterns and sticking to a core customer with the lowest customer acquisition cost.
- CRISTINA NUÑEZ Co-Founder and General Partner, True Beauty Ventures
This article had me both nodding and shaking my head at times. I do agree with the CEO that there are so many investors on beauty brands’ cap tables who do not understand how to build a long-lasting brand in this industry and therefore expect a rapid expansion of product assortment and distribution points to achieve (unrealistic) growth to justify their entry valuation or accelerate their investment horizon.
But spending the past few years exclusively investing in and meeting with beauty brands, one thing has become apparent. Investors and brand founders alike can miss one of the most fundamental principles to scaling a beauty brand. That is that productivity of assortment and distribution matters.
We have met with so many brand founders that, for reasons such as speed to market versus competitors, a desire to create newness, an attempt to have a PR moment, the influence of a retail partner or an opportunity to drive sales during a fundraise, pursue a path of proliferation of SKUs that can certainly contribute to the hyperconsumerism we see today.
While I don’t agree with the CEO that investors are the main cause for this hyperconsumerism, I do think that the right investors have the power to help course correct and support brand founders in doing the best thing for the business.
To the point the CEO makes about representation in venture capital, as an 80% female investment fund, our team represents the consumers of the brands we fund. The CEO is right about the need to have more women in venture, and we are working every day to change the face of beauty investing.
In addition, patience is a virtue born out of our operating and private equity backgrounds, which taught us to operate a business as if you will own it forever in order to make the right long-term business decisions.
In summary, launching more hero products and fewer me-too products is better for business and better for the world. Investors and brand founders are more aligned than one would think.
- Matt Unger President and Chief Commercial Officer, Cosmetic Solutions
The surge in fast beauty is underpinned by a multitude of factors influencing both the supply and demand sides. However, it's evident that the U.S. beauty and prestige beauty markets are experiencing rapid expansion, primarily propelled by escalating consumer demand.
This demand surge is notably fueled by the burgeoning consumerism of gen Z and gen alpha, coupled with their growing interest in proactive skin health maintenance.
What sets these younger consumers apart is that they are establishing their skincare regimens at a younger age than previous generations. They exhibit a remarkable level of skin education, possessing keen awareness of the ingredients they prefer to incorporate into their routines.
Moreover, they prioritize preventative measures, including daily facial sun protection. This heightened awareness and proactive approach are key drivers of the escalating demand within the beauty market.
However, as consumer needs evolve, brands are responding with delightful innovations that are fueling further demand. Many of these innovations come from the brands and their creative founders and leaders, while many of them are dreamt up by custom formulators and manufacturers like Cosmetic Solutions.
We are collaborating to deliver new usage opportunities, experimenting with novel applications and textures, and reimagining packaging and dispensing methods to align with consumer preferences. This adaptive approach ensures brands remain relevant and responsive to the evolving demands of their target audience.
Undoubtedly, investment plays a pivotal role in fueling the supply side and driving continuous innovation within the beauty landscape. At Cosmetic Solutions, we view this investment as a boon, benefiting both consumers and the future trajectory of the skincare industry.
It enables brands to venture into new territories and subsegments, catering to the diverse preferences of consumers. As a result, we offer ready-to-go solutions that facilitate brands' endeavors to meet the ever-growing demand while ensuring an accelerated speed to market.
The relationship between consumer demand, brand innovation and industry investment underscores the dynamic nature of the fast beauty sector. By embracing this evolution, stakeholders can capitalize on emerging opportunities and steer the industry towards a vibrant and sustainable future.
- Sonya Brown General Partner and Co-Head of Growth Equity, Norwest Venture Partners
We are seeing a rise in beauty hyperconsumerism, driven primarily by the market’s expanding consumer demographics and the power of social commerce.
Young people are entering spaces like skincare much earlier than they have in the past, and there are more men in the market now purchasing not just from men’s brands, but from general beauty brands that attract a variety of buyers.
A huge driver of hyperconsumerism has been an increase of social content and the rise of affiliate marketing and TikTok Shop, which have quickly transformed the click-to-buy experience.
- Ashlee Posner Founder, State of Change and Lucent Labs
The surge in fast beauty isn't solely driven by investor pressure, although I do agree that there are many out there applying that pressure, it's fueled by the younger generation's craving for novelty, instant satisfaction and the powerful influence of social media platforms visually showcasing trends.
This evolving consumer demand has aligned with shifts in manufacturing practices, including the adoption of platforms and manufacturing methods that offer faster speed to market and lower MOQs, creating lower barriers for brands to add and test new products.
If we want this to change, founders need to be clear about their mission, and if they are taking on investment, find partners that align with their ethos and timeline. At the end of the day, I think it all comes back to education.
Founders who understand the impact of this hyperconsumption need to provide information about environmental and social implications and empower consumers to be more mindful, focusing on quality over quantity and promote products with longer lifespans and minimize waste.
At State of Change, we are trying to showcase these small design changes that have a huge impact on our body and the planet.
- Rachel Hirsch Founder and Managing Partner, Wellness Growth Ventures
While investors certainly play a significant role in shaping the beauty industry landscape, attributing the rise of hyperconsumerism solely to them overlooks other crucial factors. One notable factor contributing to the rise in hyperconsumerism is social commerce's emergence and rapid growth.
Social commerce has revolutionized the way consumers discover and purchase products, making shopping more convenient and accessible than ever before. The influence of social media in promoting products and fostering virality has further fueled consumer demand and contributed to hyperconsumerism.
Additionally, the attractiveness of investment opportunities in the beauty industry, characterized by high margins and a robust mergers and acquisitions sector, has undoubtedly influenced market dynamics.
Institutional capital infusion can change the competitive landscape by providing certain players with the resources needed for rapid growth. However, it's essential to recognize that consumer preferences and behaviors ultimately drive the success of beauty brands and products.
Capital raising needs to go beyond access to capital and prioritize alignment between entrepreneurs and investors regarding values, expectations and goals. This alignment fosters successful partnerships and ensures that investments contribute positively to business growth and consumer satisfaction.
Furthermore, industry stakeholders should continue to innovate and adapt to changing consumer preferences, leveraging the power of social commerce and digital platforms to engage with consumers effectively.
In summary, while investors play a significant role in shaping the beauty industry, hyperconsumerism is influenced by various factors, including social commerce and consumer behavior. To navigate the evolving landscape successfully, stakeholders must prioritize collaboration and innovation while remaining attuned to consumer needs and market trends.
- ELIZABETH BROWN Senior Associate, Vanterra Ventures
Unfortunately, this historically has been true. During the heights of VC deployment over the past 10 years, investors wrote checks into beauty brands before they had product-market fit.
In order to try and scale to meet returns expectations, investors encouraged brands to create new products and say yes to every available retail door, contributing to a rise of fast beauty's hyperconsumerism.
As the mentality shifts back to capital efficient growth, smart consumer investors are understanding that building a beauty brand for exit takes time. The most successful beauty brands typically have select hero products with strong product market fit, and economics that are sustainable to grow.
These brands can grow to scale off a limited SKU count, narrow productive distribution, and cult following, without being reliant on the need to hop on every viral trend.
I also encourage brands to leverage their existing loyal customer base to inform new product launches, given existing customers are likely to be your most reliable sources of growth.
- Stephanie Lee Founder and CEO, Selfmade
My perspective is that this is a yes and situation. To blame just one population ignores to the system it and we operate in. Capitalism is a tool of white supremacy culture and a patriarchal society, and beauty isn’t exempt from being a tool to uphold this structure.
So, this is to say anyone that benefits from hyperconsumerism needs examination: retailers, manufacturers, banks, debt agencies, advertisers, government, social media as the new retailer, and more. Even the societal pressure as an individual to “have it all” has been perpetuated by social media perfection, hustle culture and comparative lists like Forbes 30 Under 30.
These measurements of capitalistic “success” means that to be accomplished also means upholding this structure. Here’s who isn’t benefitting: the planet, our mental health, communities of color who are more susceptible to negative impact of environmental epidemiology (living where manufacturing happens or where waste is dumped, etc.).
I don’t have an answer for what the beauty industry should do about this that can encompass the enormity of the changes that need to happen on every level to actually make a difference (rather than performative). I can tell you what I do as an individual and brand owner. I make conscious decisions on what I need vs. want and prioritize sustainability in my choices.
In practice, at Selfmade, we intentionally created products on consumer need and collaboration without scarcity marketing tactics. I’ve been selective of the type of investors we have involved with the business and prioritize sustainable long-term growth.
- CHRISTINA YU Principal, NextWorld Evergreen
I can’t speak for all investors of course, but blaming fast beauty’s hyperconsumerism solely on investors is misguided. New product launches are costly and experienced investors would know that launching a ton of new products in the hopes they become viral is a poor use of capital.
At NextWorld, one of our key investment criteria is that a brand has a hero SKU-driven product strategy, which is the opposite of launching many new products every year. A hero SKU-driven product strategy means focusing time and resources on a limited number of launches per year and only launching those that a brand feels has the ability to eventually become a top SKU for the brand.
I think the rise in fast beauty’s hyperconsumerism is largely driven by the confluence of 1). faster speed to market due to shorter product development and manufacturing lead times, 2). DTC and e-comm removing barriers to entry for brands getting products into consumers’ hands faster, 3). prevalence of social media as a key form of marketing which enables products to go viral, 4). brands chasing trends and revenue whether compelled by investors or other factors, and 5) access to capital which allows brands to speed up their go-to-market.
As stakeholders in the beauty industry, I think the onus is on all of us to be more intentional about our decisions as consumers, brands, retailers, co-manufacturers, investors, etc., and have more awareness of how we might be contributing to fast beauty.
- Stacey Tank CEO, Bespoke Beauty Brands
The rise of social media has lifted the waterline when it comes to the volume and nature of beauty-related content online. What started as a wave of how-to videos about applying makeup has evolved into PR unboxings, product trial videos and beyond.
This has sparked more interest from consumers and, unlike other splurge categories like buying a new handbag or shoes, beauty products are more affordable. For less than $15 or $20, you can try something new and treat yourself.
Consumers sharing excitement around a new bronzer for summer can bring a moment of joy that cuts through the sometimes stressful and chaotic world that we live in. It’s also a fun topic to share and try with friends, bringing people back together after the painful COVID years.
- LORI WACHS Managing Partner, Penultima Capital
As someone who’s invested in consumer companies for over 30 years, I’ve come to appreciate what a savvy and discerning group the U.S. consumer is. While a company will often come onto a consumer’s radar through one of their hero products, I find that the most successful companies keep that consumer by offering a highly curated line of differentiated products that continue to solve pain points for the consumer.
That’s how the all-important trust factor is built, which results in sticky consumers and a steady growth trajectory and is what makes for the type of company into which I look to invest. There’s no question that consumers like newness, and that social media enables the proliferation of the launch of countless products by companies trying to make their mark.
However, given the choice of a company that has a relatively concentrated community of loyal and engaged users of a handful of products versus one that has a broad group of fickle consumers who are always chasing the next hot trend, I’d clearly invest in the former all day long.
- Trinny Woodall Founder, Trinny London
I think there's great validity to that as a concept. Whenever I have been in front of investors, it's always about, “What's your pipeline? How many products are you selling? How are you keeping up with…?” I think we're in an age when investors drive the future growth of beauty, which is why so many beauty brands have a sharp rise and a sharp fall.
It’s my opinion that we should build sustainable brands. In this context of sustainability, I mean brands that have a long life. Along with building a brand that has a long life, it’s important to also find a consumer that is not into such instant consumption that they will be there one week and not the next because that will not give retention.
Companies must look at what is going to give them retention. I ask myself constantly what are the messages that I'm giving out to my customers that make them want to come back to me in five years’ time, and that I'm still relevant for them at that time. This is the most important question they should be asking.
- Andrew Ross Senior Advisor and Venture Partner, XRC Ventures
Hyperconsumerism is indeed a threat to the long-term health and performance of the beauty industry, not to mention all our physical and mental health through overconsumption, greenhouse emissions and waste. Everyone in our beautiful beauty ecosystem shares some of the blame, however. We should all take this opportunity to have a long, hard look at ourselves and the entire ecosystem through the lens of longer-term, sustainable value creation.
Consumers love innovation and newness. This is what makes this industry so fun and exciting! Consumers are also starting to understand the consequences of this love, however, from the inventory that has built up in their bathrooms and on their makeup tables, to the waste and extractive supply chain issues from overconsumption just as in fast fashion apparel.
As an industry and especially as brands, we must think harder about the right balance between true innovation and mere newness. Can we create a truly superior performing product or a new form or benefit or even subcategory versus the fifteenth lip oil on the market with an off-the-shelf formula or even worse a “dupe” that invests in doppelganger packaging over quality ingredients?
Distinctive innovation drives trial and usage, and repeat drives sustainable, profitable growth as well as the right kind of dopamine hit for consumers, effective results versus mere acquisition because “TikTok made me buy it.” Those are the foundations of a beautiful brand and a beautiful valuation.
Retailers also became addicted to newness—new brands and new products. They cared less about brand building if there was always another brand or product in the wings that a consumer wanted to try at least once.
The good news here is that retailers too have realized that this is not the way to maintain consumer love and loyalty and create value for themselves. They are reducing the noise in stores and being more strategic with new brands and product introductions, as well as rethinking experience.
Investors as always follow the money. If the formula “grow the top line as quickly as you can and then flip it” works, then that is what some will do to generate a return for their LPs. This was a zero interest rate policy (ZIRP) phenomenon, however. It simply will not work today. This has resulted in fewer, more thoughtful venture investments, and an exit by many uncommitted investors in search of the next return bubble, mostly in AI.
Committed investors like XRC Ventures understand the space better, including the drivers of sustainable, high-quality value creation, which have an outsize impact on economics and multiple valuation. Advice for founders here is simple: Do your diligence and don’t take money that is not aligned with your brand vision and purpose.
- MAGGIE ABELES VP, NewBound Venture Capital
An important distinction to make is that the rise in hyperconsumerism is not contained to beauty. From our perspective, hyperconsumerism is a macro trend that has permeated through many industries and was catalyzed by factors including the global pandemic, the rise of social media and influencer-driven marketing, the increased speed of product development, etc.
While increased capital availability has certainly played an enabling role, labeling it the main catalyst can lead us to miss the big picture regarding the material shifts happening in consumer behavior and the U.S. economy.
Fundamentally, we are not trend-driven investors, we’re innovation-driven. That requires a disciplined focus on fundamental consumer shifts driving innovation and opportunities for category disruption.
That’s not true of all investors, of course, but we believe it’s true of the majority of high-quality investors that we partner with in the early-stage space. What I believe is really highlighted here is how founders and CEOs are sometimes let down by partners not focused on creating long-term value and instead get too caught up in trends that aren’t serving the long-term mission of a brand.
We have purpose-built a strategy that circumvents this attitude and instead focuses on developing strong partnership and support with our founders, enabling them to build for long-term value creation and staying power.
- Rachel ten Brink Founder, CEO and General Partner, Red Bike Capital
Investors and companies have a continuous dance with consumers. Hyperconsumerism is driven by investors and companies, but it only succeeds because consumers willingly participate.
Beauty is a category where the majority of sales have always come from newness, but this has been amplified by social media and influencers. Consumers are looking to be delighted and excited by what is new and are willing to participate.
While it is true that consumers can be overwhelmed by choice and that there has been a movement towards “slow beauty,” it's a tough bargain for brands. If you truly only need a handful of products, are you truly serving your customer the best products? Where do you grow from there?
Brands need to balance consumer needs and their business needs. SKU proliferation, inventory mismanagement and high development costs can kill a business, but so can lack of growth.
- Maryam Zamani Founder and Oculoplastic Surgeon, MZ Skin
Yes, there is, of course, a point that the rise of beauty hyperconsumerism is driven by investors. When a brand is governed by its investors, they have a pivotal and key role in determining the direction and focus of the beauty brand. Their hope is that the brand will go viral and, in turn, give them bigger profits.
However, I think the real driver is social media, the need to always seek newness and be part of trends. We are all consuming so much new information in short snippets. Our attention span has declined as we are constantly bombarded with short videos or posts about various products. Some products stay consistent, but it has become the culture to find the most amazing next thing to quench our thirst for more.
This is the true reason behind all hyperconsumerism now. I see it even with my children. They see a product on TikTok twice, and the third time they ask me for it only to put it to the side once they see the next new thing. It is a vicious cycle.
- Odile Roujol Founder, Fab Co-Creation Studio Ventures
I would disagree with this statement. Consumer VCs are obsessed by exponential growth in the mid-term, but also and first and foremost a path toward EBITDA as they are fully aware that it's the only way to have a successful acquisition in the future by a corporation, a great multiple for them and their LPs, and a success story for the founder.
The issue is with the big retailers. They all push new brands they take on their shelves to create new SKUs, some of them don’t fit the brand strategy and vision (for example, affordable versus premium, bundles and sets that decrease product margin).
They may ask for a product in a new category they are interested in (for example, supplements). I hear so many stories of founders claiming one partner in distribution asked them to invest in the space in the last few months.
Therefore, big retailers are costly for a startup in its early stages as cash is needed for paying for inventories. I always warn founders I chat with to care about their North Star and to have the courage to say no when jeopardizing their top priorities and future.
Yes, big retailers help startups with short-term revenues and global awareness, but in the end, only the brands with healthy fundamentals will survive the period. Don't rush on developing new products before carefully having checked that they are needed and are different and better than others.
- ELIZA BECKER VP, Consumer Investing, VMG Partners
I think it is impossible to attribute the rise of hyperconsumerism to one variable, though if I had to pick one it would be neither the consumer nor the investor, it would be the internet. Social media enables consumers to see more and desire more, while e-commerce allows that same consumer to make purchase decision at any time of day from any place in the country and have the product in their hand in less than 48 hours.
For centuries, entrepreneurs have innovated to make consumers’ lives better. They have grown companies and brands. In today’s world, everything happens faster. Companies can scale faster both one because they have better tools and technology to bring products to market quicker and introduce them to consumers all over the country and the world faster and two because there are more sophisticated and available capital opportunities in both equity and debt.
Within beauty, nothing should stop entrepreneurs from creating products and brands that bring more joy, more health, more happiness to consumers.
- TINA BOU-SABA Investor
I found the CEO's perspective offered in the article to be quite thought-provoking. She observes that many investors set aggressive sales targets for their portfolio companies, and in order to hit those targets, brands launch new products to "upsell" their current customers rather than engage in prohibitively expensive new customer acquisition. This is a valid point.
New customer acquisition is indeed challenging in the current environment, whether that be online or in a retail setting. At the same time, some investors operate on a relatively short timeline to exit, which creates a demanding growth imperative for brands.
I'll address this in two parts, one related to investors and the other to product differentiation. The CEO here makes the point that the beauty industry needs more investors who are "patient" and "believe in the operating principles of the brand founder and founding team." I agree wholeheartedly.
During the DTC boom of the 2010s, some VCs invested in consumer brands as though they were technology companies, emphasizing growth at all costs and a winner-take-all mentality.
Of course, in retrospect, that investment model was wholly inappropriate for consumer brands. It takes time to build brands! There is a natural arc to building brand awareness that is difficult, if not impossible, to circumvent.
But even as many technology VCs have pulled back from consumer brand investing, there continues to be debate around what is a realistic growth expectation for an investor-backed consumer brand. There is no right answer here, but, most crucially, there must be alignment between a founder and her investor(s) on this topic. The partnership will not be successful if the definition of success, including timeline to exit, is not shared.
At the same time, I think that the nature of social media platforms and brands' quests for virality thereupon has contributed to this "hyperconsumerism," independent of the pressure that may come from investors. Many brands see this as the path to accelerated growth regardless of whether or not they have investors. New products represent new opportunities to go viral; social media rewards those brands that keep trying.
Perhaps it feels easier to tell stories about new products than it is to drive excitement for the existing library. Said another way, perhaps social media platforms make it seem easier to drive trial than it is to create truly differentiated products to which customers are fiercely loyal.
The latter is not easy! But it is those products that loyal customers know and love that will ultimately create significant terminal value for brands. That, in turn, is what a large strategic acquiror will pay for (should that be the desired exit).
My advice to brands is to focus above all on building customer love through products that delight the core consumer. Take the long view with the right investors, if appropriate, and be highly strategic with respect to new product introductions.
- SCOTT GURFEIN Founder, Skyefox Ventures
This is silly. While the world and the beauty industry in it moves faster than ever having much to do with social media, the game is still the same: Build a brand selling products consumers will buy and rebuy. Launch and offer new products under that brand. Rinse and repeat.
If you have a question you’d like Beauty Independent to ask beauty investors, entrepreneurs and manufacturers, please send it to editor@beautyindependent.com.
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