Beauty and the Beat with Emily Weiss (Glossier) and Kirsten Green (Forerunner Ventures) | Disrupt SF (Day 3)
5:17PM Sep 7, 2018
We're going to do a little bit of a one at we're going to go from quantum computing to new retail, but we have to have the best in the game. On the founder side, we've got Glossier's Emily Weiss, who has been completely dominant in her space. And on the investor side, if Kirsten Green who is widely regarded as one of the best retail investors, if not just general investors out there today.
So with that, please welcome these two to the stage. Emily Weiss from Glossier and Kirsten Green, from Forerunner Ventures and your moderator, Ingrid Lunden. Let's go.
Hi, everybody. Thanks for thanks for joining me.
Thanks for having us.
So, got the water sorted out. Yeah, here we go. Right. Let's just get right to it. So Emily, you guys started with a blog Into The Gloss then you moved into you know, expanding the beauty brands. You've gone into Glossier. Tell me a little bit about that story. Can you take us through how you decided to do that? Was that something you always knew you would do from the beginning? Or did you go into that thinking blog and then beauty?
So everything we've done for coming up on four years, it'll be on October has been based on the fundamental belief that beauty is an incredible conduit for connection. It's something that women men, all of us deal with on a day to day basis or decisions about what we put on our body, what works for us.
And the interesting thing about the beauty industry and this is a, you know, 450 billion dollar global market. It's going to 750 billion by in six years. So it's growing 7% faster than the developed world's GDP.
The interesting thing about this industry is that it's held the reins for so long when it comes to expertise, direction and tops down messaging. And so fundamentally any product that we've created at our company including Into The Gloss, and then leading up to our first brand Glossier has been built bottoms up. It's been built with absolutely nothing between us. And the final end user.
And that might sound really normal. Like, of course, beauty brands, all the things that we're using are built with us in mind. But in fact, so many of the conglomerates that exist, their end user is actually the third party retailer, and that third party retailers needs.
So our mission from the beginning has been to break down those walls so we could build better products. And that has led us to, you know, consistent, you know, triple digit growth for three years, 70% or more of which has been through peer to peer, not through paid marketing.
Yeah, but when you first started, it was like 2011 right Into The Gloss. Yes. And then you kind of did Glossier three years later. Did you know in 2011, that that's what you'd be doing, or did you start one and think, well, where's the revenue? Where's the revenue? Okay, look.
No, we've actually never thought about where's the revenue. We've always thought about where the unmet needs from people, we've always put people at the forefront of any decision and thought. What's the next best product, whether that's a digital tool which we're embarking on now, building or whether that's a physical product. And it's so happened that in the exploration of having human conversations for two years and publishing those conversations, a lot of unmet needs were uncovered.
Okay, gotcha. Kirsten. Yeah, you guys got interested in Into The Gloss at what point?
When Emily was she had the blog up and running. Yeah. And when we started our conversation, it kicked off with Emily's like observations about all of the learnings you've gathered from that experience and all of the unmet needs, right?
So, really, I think what captured my imagination about the opportunity to work with Emily from the very beginning had to do with her incredible insight and instinct around the consumer and this idea that like, she came from a place of like, I know these people, and I see what they want, and I see what they need and what's missing in the market. And it was like that that was the original place that the business idea was coming from.
Yeah, that's a really that's probably the best formula for doing any commerce business at all right?
It's, it's critical, because that's the magic that is, I mean, that's what the real opportunity today is, is to build something for your like Emily said, for the end user, which is the customer and that's like the biggest shift among many other shifts that are influencing changes in the retail ecosystem is just the consumers path to purchase. Yeah, and how they're discovering things, how they're identifying with ideas, how they're feeling compelled to shop. That has all evolved and a lot of it has to do with that connection that gets built with the consumer.
How, when you're growing into looking at, you know, evaluating e commerce opportunities for funding so that's really where your specialty is. Yeah, as a as an investor. Um, where are you, you know, how how do you have boxes that you took her, do not worry about things like, do they have a website? Or they're too dependent on another platform like Instagram? Or something like that.
And I think we kind of try to challenge ourselves to start from a bigger picture place, which is, you know, what is really going on in this big ecosystem that is retail, where are the opportunities? Where are the dislocation happening, and where are the opportunities to play into that and enter the market with a wedge.
Okay, ultimately, what we're looking at doing is investing in companies that we believe you know, of course, have the opportunity to be meaningful standalone businesses but that are really must have assets or companies that are doing something fundamentally unique in the context of the market they play in that adds to the opportunity and the value.
So Emily, you guys you know, you've you've described how you've been able to identify this customer and everything I mean that customers correct me if I'm wrong, it's a female Yes. Mostly and it's tends to be Yeah. Mostly female tends mostly on the younger side rather than, let's say older women, or you go,
all right, okay. All right.
Speaks to like, you know, the, the emotional place that you're Connect. Yes. Well, yeah. does not have age boundaries. That is a psychographic opportunity.
I agree. So, does that mean that you're going to start like doing stuff for but you know, older, older women or little girls? Or let's say men? Yes. That is that something you're looking at mail may not
The interesting thing. And Kiersten you mentioned this, just now about about glossier and how we approach beauty in general is that today, it's much more about a psychographic than it is a demographic. The great thing about our core, you know, brand of glossier is that these are fundamental essential beauty products for every single person. You know, whether you need a moisturizer or even a, you know, chapstick, we have bomb. com. It's one of our best selling products. Every one of our investors has one in their bag right now.
So we approach smell good smell great guys right now.
But we fundamentally approach you know, product development from the standpoint of how can we create this, you know, core foundation almost like underwear of every person's beauty routine. And the interesting thing about a known Another thing you just mentioned, Kirsten, is that the path to purchase here for beauty products has so long been held by a lot of, you know, complex tops down marketing. And what we've noticed over the last, you know, three years of growth is that people are helping other people, period.
Every single person whether it is you'd be amazed at the millennial customer who passes our products up to her mother or the person who you know the aunt have a daughter who's in the mirror at our showroom, meeting a teenager next to her who's asking her what color boy brow she's putting on. So this is an incredible connective experience. And it's a it's a lightning rod for conversation and the connections that are formed through beauty and the ability for our products, whether it is our forthcoming, you know, platform or whether it is our physical products, the ability for those to help people tell their story
is really interesting. And in particular, when you look at what's happened with social media today, you know, there was a lot of hopefulness five years ago, four years ago, even around the ability to democratize media and the ability for individuals to influence other people. Now, we're in an era where we're seeing a lot of the, you know, underbelly and a lot of the shadow side of that democratization. And I think emerging out of that is going to be
a lot of more specific topical narratives that are that people are aligning on through new social channels. And so as we look towards the future of our product development of you know other unmet needs
Our users are going to continue to tell us that because they're going to have conversations with each other. And we're going to get very smart in a scalable way. Leveraging data, leveraging technology to help people tell their stories, find the information they need, about beauty on the internet on a dedicated platform. And those conversations, they'll tell us what they want, and we make it for them.
Okay, let me just turn the conversation to you Kirsten. Now, we've got a lot of a lot of beauty and fashion brands. And e commerce in general is really, you know, as Emily was saying, I'm really focused on using social platforms to sort of spread the word and everything,
we're going to come back to what you guys are doing in two seconds, but how much do you feel that it's important for the companies that you're funding to have their own platforms versus being too dependent on the third parties? Do you think the third parties are always going to be there or do you think that we need to build more self sustaining stuff?
Now, we had Bumble onstage yesterday you know they said that they've you know, most of their logins are no longer Facebook logins, you know, I think that's a really interesting point. You know, they're, they're really moving off that platform. So what do you think about that? I mean, I read about that with your companies.
So I think we, you know, we look at our hope is to partner with founders, looking to build companies that, you know, reach large swaths of customers in deep connected ways. And we believe that part of building a big business is showing up in various places, if not as many places as your customer shows up.
So, you know, kind of from the beginning we allow ourselves or challenge ourselves to dream about how might this company show up in social media on its own website in somebody else's store as part of an entertainment as you know, and just many different incarnations, I think that's one of them. But the biggest opportunities in business today and challenges today is just to meet the consumer in so many different places.
And and the opportunity in that is that you really, you know, have a chance to articulate your vision. Your brand, and your personality of your brand, and so many different ways that like that's the place where you have a chance to build loyalty and like a deeper connection, because product in so many ways has become table stakes, like a consumer has so much choice out there.
Yeah. And it's such a breath of product and there's so little breath of connection.
right. So, I mean, we think about it from the standpoint that having a great product and a strong value proposition is table stakes. The wind comes from developing a relationship with your consumer. Yeah. And in so many ways, you know, talking about a brand is kind of like talking about a person's personality and the real, you know, opportunity is to kind of use it in an expressive way in many different places. And what we're interested in is building businesses that that reach customers.
Yeah, well, I think that's a really interesting point because, you know, I'm sure you guys saw the reports. I think they came out earlier this week that Instagram is working on a social Shopping Network. Yep.
I'd love to hear what you guys think about that. I think that it to me, it sounds like you know, completely fits into what you're saying. Because what it is, it's about the data, who owns the customer who understands the customer, you can send all kinds of things to them, what are they going to buy? And who who controls the information about what the customer wants buy.
I mean its credibly powerful. You just heard Emily talk about, again, like at the core and center of our business. And I think that that's like, you know, that today, there's businesses being invented that way, and it's their advantage over time, that's just going to be the norm too, because really, you're you're tasked with building a relationship with the customer and you have to have the insights to be able to do that.
What's your take on this Instagram report?
I mean, it makes sense I mean, 70 I think it's 72% of millennials by their make their purchasing decisions for beauty or fashion products through Instagram right? I mean glossier has a long relationship with Instagram we launched on the platform before we even had our website up four years ago. We actually just hired our head of product from Instagram.
Keith Paris, he led DM and camera at Instagram. So Instagram is an incredible tool. I think one of the challenges might be that these platforms or not built around specific topics, they were built around specific media expressions. So if you look at YouTube beauties, I think the second biggest category on YouTube, it's following consumer, I think, tech unboxing videos.
This may be outdated information, but it's still kind of hard to be able to search for what is the best mascara and when you look at a platform, even like Amazon, you know, no woman has ever told me that their criteria for best mascara was what is fastest or cheapest? Yeah, that's not how people are buying emotional things like a fashion or beauty, you know product but the leading paradigm of what an e commerce experience gives you is one of efficiency and one of Breath of product when what users are actually doing and
Wanting is a breath of connection. And to understand whose story do I want to believe, when it comes to best mascara. So you know at glossier that is, has been since, you know, day one back in the, Into The Gloss days, putting the individual at the center and having the product follow rather than the other way around.
Okay. But, and I mean, I think that doesn't necessarily exist today. And that's what we see as the future of retail and the big opportunity, but you see people like tempted to take actions on these other platforms, because they're there for entertainment, they're there for discovery and it's happening, you know.
Do you think that that's potentially a threat to individual brands when you see a platform like Instagram trying to move into these areas? Because I mean, I would guess that if, if this works, if they do it, and it works, they will do it for fashion, they will do it anyway.
like to the extent that we have businesses that start with selling their own product and start with kind of just doing it off of their own site I would like nothing more than for
More great channels for those brands and companies to reach customers. And so like, I think it's a benefit. I think that it gets the product out in more places. You know, shopping is not a one size fits all experience. People want to have it in different ways. And like, I'm all for that. In many ways. I think that like,
I don't wanna get too crazy drawing analogues. But if you think about kind of, you know, big box retailers or big mass retailers or department stores where they have all kinds of things. And part of the draw was that you could find so many things there. That was a huge powerful that continue, you know, there is a role for that in retail and like that experience has underperformed relative to consumer but they still like that aggregated performance and some of it is being transferred over to these platforms. Yeah, like in Instagram.
Yeah. Okay. You mentioned Amazon. Can we talk about them for a second and now they're doing really interesting thing and fashion just to use an app kind of adjacent area of business. They've become a massive presence in it for ages a ton of fashion brands didn't want to have anything to do with Amazon, they would not sell into them to be resold over time. We've seen a gradual loosening up of that. Because it's Amazon. And they've built all their own brands. And now Nike or j crew, or whoever is now working with them. How is it working with them for you guys? Do you ever sell into them now?
No, no, that would No way. No, no, we don't plan to I think No, no, have they approached you.
A lot of people have approached glossier the Yes. The
The interesting thing about Amazon and you know, how they've addressed a just obviously like one of the biggest consumer needs which is, you know, solving buying is that in the process in some ways, they've kind of killed shopping, Amazon killed shopping. I mean, you know, the facilitator and the
Amazon facilitated buying the killed shopping. That's great.
And you know I think in terms of Breath of product yeah obviously no one will ever beat them. They have done the most phenomenal job right? But that's not a it's a little bit like saying oh, I live on a street and there's a sushi restaurant, right? I'm going to eat at the sushi restaurant every night. I'm going to do take out. I'm going to go there for my anniversary. I'm going to date night, I'm going to have my best friend's birthday there. The sushi restaurant meets all of my needs. When it comes to dining.
You know, e commerce is 10% of global commerce. That's nothing. We are at the dawn of e commerce and this is one user experience and it's a phenomenal user experience
in terms of beauty or fashion where you're literally watching 72% of millennials making their decisions based off of Instagram. Mm hmm.
It's it's proof that people are looking for other people and you have almost 80% of people who won't buy something before reading a review, whether it's on Amazon or Google or whatever it is.
So I think I think it's exciting that we are really at the dawn of e commerce and that there's going to be so many paradigms. And what we're focused on building is an emotional commerce experience, which is focused on a breath of connection and not a breath of product.
How do you advise your portfolio companies, Kiersten when it comes to Amazon? Because I mean, they are literally like the elephant in the e commerce arena. Right? You know, they you said it perfectly.
I mean, I think it's on a case by case basis. You know, I think you've got to put it in the context of kind of, you know, what else? What are the underpinnings of your business model? What are the core products that you're selling? What can you get out of it?
And there might be there might be a place for it. There's a lot of customers there there's a lot of eyeballs there. There's a lot of people originating searches there. So it's a little bit about like, what do you stand to get from that? Is the access worth maybe what you're losing, you know, is there something important in terms of information that's being shared that you feel like maybe threaten and opportunity you have, and I think for some categories, that's truer than than other categories.
Do you think so? I mean, glossy is really big. with with with its demographic. It's really amazing the you know where you've done a great job do you think though that that gives you some sort of adventure because I know that Amazon is desperate to have more of your customers for other things have they ever you know is there in a scenario that you can imagine where you might want to work with them more
I think it's tough because you know the reason glossy is NPS is consistently 80 year over year when other beauty companies are somewhere between 40 and 50 is because of our direct connection with every single person. Yeah, our ability to serve to develop better products because we're involving our customer, our ability to react immediately when we get a DM which I think happens every every second at this point. You know, we have such incredible cost of such an incredible visceral connection with all of our users.
where, you know, you really have to balance do we go and meet people's needs where they want to be met, which is really important. If someone's on Amazon searching for glossier, like, you know, they're gonna have to come over to gloss. That is a user need, right? So we're not naive to that. But at the same time, you have to balance Well, you know, how does that threaten the People Powered ecosystem that we have built, and that we are building that leads to an 80 NPS that leads to a more satisfied user experience?
Okay, good answer. And, okay, I just got to shift this just a tiny bit to talk a little more business.
Now. You guys are how much have you raised in funding?
Oh, gosh, I actually I think 82
82 where are you sitting? Now? I know that generally speaking, e commerce tends to be a very capital intensive business you're always needing to acquire customers are growing, there's logistics. There's all kinds of stuff that takes up money. Yes. So are you needing to raise more I know that you're
absolutely absolutely not. So there's something a few things that are really interesting about this category. The first is, you know, like very high margins.
The second is we have no seasonality. These are evergreen products that we spend. I mean, we have a, you know, a quality process and a development process that is quite literally the opposite of fast fashion. I mean, these are products that if you look at, you know, a skew like clinics, dramatically different moisturizer, this is a moisturizer that makes hundreds and hundreds of millions of dollars that was invented one time in 1962, right unless you've never changed it cross generational, you know, a global and so we are fortunate to have, you know, a really great business and the only reason for us to raise more capital at this point is, you know, to buy something or to
You know, open zillions of stores. But stores are not our growth lever. They could be. But we believe in glossier.com as a direct channel, and we believe in investing the capital that we've raised in the development of glossier.com as a superior beauty experience than any of the ones that exists today.
Okay. Kirsten. Do you feel that? You know, given how much e commerce companies do raising funding, some of them do well, in some crash and burn, as you know,
do you think that there's a formula there? I mean, would you say that there is possible to do the, you know, I don't think I think that's a, you know, relatively speaking a pretty modest amount of money that you guys have raised in the world of e commerce. Do you think that that's better formula in general? I mean, where are you seeing too much money being thrown in this industry right now, because, you know, when you have a SoftBank that has so much money to spend and needs to invest it they will start putting it into all kinds of things smart and not smart.
Yeah, I mean, I think anytime Any business takes capital, you really need to think about like, what? Like, what is the ROI potential on that capital? And like, how additive is it to the value you're generating? And, you know,
so part of it is having an awareness around that and what the different opportunities for that are in your business. The truth is, is that, yes, e commerce businesses, you know, can or have taken a lot of money. I think there's a lot of changes in the business models today that are differentiating those needs from one business to the other. We have several businesses that are selling products that are doing it in a made to order way that are doing it in a customized way that have very different kind of inventory turn patterns.
I think that, you know, there's there's different philosophies on how you go about building your business. And a lot of that can tie back to how much money do you go and search for kind of, you know, beyond product market fit? Do you go search for product positive unit economics before you start pursuing growth, or do you pursue growth ahead of that and that can change the dynamic on how much capital you're raising too and I think you have to keep it in the context.
Have you know, what business are you building for whom? And what opportunities in the market
no, no specific formula? There's no one one size fits.
There's not. I mean, there's definitely like, there's definitely a set of metrics and a set of things to consider. But I think that, you know, you can map them in different ways.
You don't think that we're in an overheated market for e commerce or anything like that right now?
I think we're in an overheated market in general. Yes. So, you know, I think getting the fires I think it requires people to, you know, requires founders to be that much more disciplined about what it does. And Emily and I have had conversations all along the way about the opportunity that we're getting you know, that exists when we get more capital into the business and also the you know, the doors that we might be closing with that to our or the hurdles that we might have to be challenging ourselves to.
So I think you just really need to be very conscious of why you're taking the money what you're going to do with it and what that gives you and what that takes away from you
Emily, are you guys profitable yet?
I can't comment on that
are you cashflow positive? Yets
I don't want to comment on numbers but again
We have a ton of runway that we're primarily actually just really investing in people, you know, Kat Lake from Citrix just joined our board. Really amazing addition and, and in terms of people were hiring right now. It's it's a very exciting time for the company
Do you still feel like into the gloss is a core part of the business and quite the same way since you know we've spent all the time basically talking about glossier.
Well, yeah. It's I mean, it's, you know, it is part of our brand team is a, you know, two person team, it is not, you know, a growth channel, it's not a channel for us, I think it really, but you're going to keep it going, right. I think your relational part I really, it really created the important thing is, you know, if you look at, let's say AOL Instant Messenger, creating messaging into the gloss serve to create a really unique user behavior, which was to democratize beauty and to make everyone their own expert.
and to really again, flip that invert the entire system of product person to go person product. Yeah, and I think the most interesting thing for us is how we can scale that. And this is why we're, you know, investing so heavily in technology and our companies already, you know, ramping up to almost be 50% technology, how can we enable, how can we take that user behavior that now is the norm for beauty? And how do you scale that? How do you enable everyone to have their own top shelf?
Yeah, I have to say, I was looking at it this morning, and two very relevant articles for me, they have nothing to do with makeup at all. One was um, how to deal with bags under your eyes, you know,
things after you wake up in the morning and the other about long haul flights. I'm flying back to London tonight. So I think it's, I'm very cool.
It's incredible. What happens if you see what you know, again, beauty being a conduit for connection is incredible. You start out asking someone you know, what lipstick are you wearing? And you wind up, you know, becoming roommates or, you know, getting higher than that. Yeah, so, it's an incredible way to to have a voice
Yeah. Okay. We're out of time. Thank you so much. You two.
Thank you so much. Thanks very much.