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Business Lessons from a Beauty Icon

As I was recently getting up to speed with the personal care and beauty sector, I visited Sephora, Nordstrom, Macy’s, Ulta Beauty and a few others. You can judge my sample size or not as all these were local stores in southeast Florida.

Purchasing trends – the traffic is mainly back vs. pre-COVID. Skincare and beauty products designed for specific skin types and colors are trending. Cosmetics – bright/popping colors are back, and COVID didn’t really made a dent to beauty products use cases post-COVID.

“People are loyal to people and not to brands."

Interestingly so, one message came through loud and clear – social media influencers heavily weigh on consumer purchasing decisions… I’m sure this isn’t news to any of us at this point.

One of my partners and advisors @Brian Byrne, always praised Estee Lauder for the quality of their brands, science, business acumen and performance. I had to study them a bit more in detail.

What I noticed as I researched ELC, was that Estee Lauder herself (or Josephine Esther “Estee” Mentzer then married to Joseph Lauder) was a natural influencer. She had a mantra back then that was “Telephone, Telegraph, Tell a Woman." This was a 1940s way of working the word of mouth aka social media in today’s world. My opinion – the two secret sauces of hers were (1) high-touch marketing and (2) pushing boundaries by being different and standing out the crowd… a lot.

A few stories. One was about EL marketing her product to women at hair salons getting their hair done and getting old “good” school field marketing working. Another story was about her trying to get an account at one of the most prestigious Parisian stores, Galleries Lafayette. Well, the meeting wasn’t going her way and EL got a “no”. I imagine with little hesitation, EL “accidentally” spilled one of the perfumes (“Youth Dew”) on the floor. Luckily that was a busy day and customers smelled the fragrance and started asking of it. She received the order. Last one… and more recent, back in 2020 EL had NASA astronauts photograph its product in cosmos. See the photo above.

That was some real hustle… and as a small company EL went against Elizabeth Arden, Revlon, Helena Rubenstein, and Charles of Ritz that dominated the market in the first half of the 20th century.

Also, it’s important to note. Beauty products back in early 1900s as it seems, were mainly gifted to women. EL created a movement by opening beauty market to women as primary buyers and not just end-consumers.

Getting down to EL other key strategic attributes. These have been – in-house R&D and manufacturing as well as a long multi-year new products pipeline. Then came beauty as science and many other standards that most competitors use today. As any large conglomerates trying to generate growth, strategic M&A became a heavy focus as well as use of technology.

Thinking of all that EL had accomplished, it’s clear that the founders, EL and her husband, pushed the boundaries of how consumer experience and marketing were done as well as constant and aggressive ingredient/product innovation.

EL was truly an iconic founder and ultimate “influencer” of her own product. Going back to the point I was making at the top about how today’s consumer decision-making is heavily determined by influencers, EL fits the image perfectly.

One of the beauty section managers I interviewed said, “people are loyal to people, and not brands” re-iterating why influencers play such a big role. Not that the concept of influencing by word of mouth is any new… storytelling has been around as long as we’ve been walking upright.

Business takeaways here are pushing boundaries by being different and innovative, high quality, high-touch high-service experience, and not getting “no” for an answer.

A final note, EL started her business with “only” $50k in 1946... well that amount equates to ~$750k in current terms. Not a bad seed round!


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