No. 13: E.l.f. is the cooler, smarter, hotter older sister of beauty brands

plus, Blake Lively's new launch, an airline for dogs, and Google's really bad AI ad

Sorry I’m a day late this week — I think you’re going to like this one though :) Also, hi new subscribers (thanks

Julia @smarterinasec

for bringing some of you here!)

🧲 OBSESSION OF THE WEEK

Blake Lively, queen of good hair

Blake Lively is launching a haircare line called Blake Brown, exclusively with Target in August. Yes, celebrity brands are a dime a dozen and would not typically get me excited but this one feels so much more intentional:

• beyond Betty Buzz, Lively isn’t really overexposed when it comes to brand deals or collabs — not an ‘oh great, not her again’ situation

• exclusive distribution in Target vs. trying to build on DTC from the get go is unique and is the right strategy for 2024

• haircare as a category is on fire right now; trends like heatless curls, hair masks and oils, and air dry styling are proof; this one follows her personal haircare philosophy of switching between keratin and moisture-rich formulas (am I sensing a new trend? hair cycling?)

• timing is key, and the launch coincides with her starring in the highly anticipated It Ends With Us when she’ll be in the press consistently

• MOST IMPORTANTLY her hair is amazing and people care about it (per Google trends data)

Excited to see whether the line lives up to the hype.

🍿 BRAND NEWS

• Google’s new AI ad, “Dear Sydney",” wherein a dad uses Gemini to write a letter to an Olympian on behalf of his daughter ad is kind of a dumpster fire (it’s giving Apple crushing iPads for sport). People are not thrilled (so much so that Google turned off YouTube comments), and it’s a good reminder that we want AI to do things we don’t want to do, not things we love. I’d like to see a brand tell that story.

• Rhode is teasing something new (“a little treat?”) at 9am PST and I personally love their super simple email to waitlist flow.

• In honor of National Avocado Day (there really is a holiday for everything), Chipotle launched a guac-proof lip stain, in partnership with WONDERSKIN

• There’s now an official airline for dogs, called Bark Air. Started by toy company BARK and a private jet charter service, it’s very expensive (one-way domestic tickets are $6k and international are $8k), but the first flights sold out… so there’s a market for it.

• According to the Financial Times, big name brands like Pepsi and select P&G brands are out — in fact, the world’s 10 biggest brands lost 20% of their value in 2023. This isn’t surprising, as customers are becoming more price sensitive and more skeptical of trends like “shrinkflation.”

• The iconic Beverly Hills hotel (you know, the palm leaves) partnered with quirky accessories brand Stoney Clover for a collection that’s giving 90210.

• Apparently this Harvard class called The Business of Entertainment is so good, celebrities like Channing Tatum and LL Cool J are signing up.

• I love that Italian gymnast Giorgia Villa has a parmesan sponsorship and poses with giant cheese wheels. Now this is a brand deal.

• In another example of mall brands trying to become relevant again — American Eagle launched their “Live Your Life” Campaign featuring actresses Nikki Rodriguez and Kristine Froseth and athletes Coco Gauff and Trevor Lawrence.

• Gap x DTC clothing brand Madhappy are launching a collab on Friday, and people on social media are going crazy for it. I’ve written about Gap’s comeback in the past, and this feels like an extension of their strategy, especially by tapping influencers and likeminded brands.

Gap x Madhappy

🎯 DEEP DIVE: E.l.f. Beauty is 20 years old & more relevant than ever

Context

Buckle up — this is a good one.

E.l.f. Beauty (which stands for Eyes. Lips. Face.) is one of the earliest truly DTC brands out there. They were founded back in 2004, are based in Oakland, CA, and sell a mix of over 300 products within makeup, skincare, and tools. Their products are 100% cruelty free and they are sold in 17 countries, as well as stores like Target, Walmart, and Dollar General.

According to an old CNN article, back in 2004, E.l.f. founders Joseph Shamah and Scott Vincent Borba launched the brand based on the insight that women with expensive cars and LV bags were buying bargain priced cosmetics. So the duo set out to create a company that offered “higher quality and innovation, all at a low price.” But selling $1 lipstick on the internet was unheard of in 2004 (it’s now $3).

Fast forward 2 decades and the company is now run by CEO & Chairman Tarang Amin. Under his leadership, E.l.f. is now the third largest mass cosmetics brand in the US and has grown revenue 77% year over year. They are currently doing over $1B in annual revenue.

Why Now?

• product-market fit: the brand’s “high/low” ethos is more real than ever in the TikTok era, whose influencers promote $10,000 Hermès bags paired with $49 Zara jeans. They also lean into dupe culture and love when their products (like an $8 lip oil) gets compared to Dior’s $40 version.

• brand identity: E.l.f. knows who they are and aren’t afraid to have a point of view when it comes to not just beauty, but culture at large. I’d say their brand tone is unapologetic, rebellious, experimental, and bold.

• marketing spend: we’ll get into the details below, but it’s no secret that the brand spends a ton on marketing. In fact, they spend between 25-34% of net sales on marketing.

• product innovation: customer feedback directly informs the brand’s product innovation strategy; on a livestream with the CEO, viewers were begging for a dupe of Drunk Elephant’s viral bronzing drops; shortly after, E.l.f. launched their version. Their innovation process is quick: they do marketing, research and development and product testing at the same time — allowing them to move more nimbly than peers.

• strategic acquisitions: E.l.f.’s $355 million acquisition of skincare brand Naturium, founded by influencer Susan Yara, was incredibly strategic. The skincare brand focuses on star ingredients, efficacy, and mass distribution (Target is a key retailer) — three things that are key to the brand’s growth. CEO Tarang Amin noted that “Naturium demonstrates the same spirit, values, and growth characteristics we find in E.l.f.”.

• Gen Alpha approved: The brand isn’t just for Gen Zs and millennials — they are also the number one cosmetic brand among teens

• ownership mentality: one of the brand’s core tenets is to treat everyone at the company like an owner; to that end, every employee has equity — they’ve doled out $150 million thus far. This is rare for a beauty company.

The Details

Given all of the levers outlined above, there is truly so much to talk about with this brand, but here’s just a sampling of activities over the last 6-8 months alone:

the Hot Girl Walk Olympics campaign featuring Olympian Gabby Douglas and actor Patrick Warburton

• Days ago, they launched a campaign to promote their Power Grip Dewy Setting Spray as the “official sponsor” of the Hot Girl walk, a TikTok phenomenon. The video compares the Hot Girl Walk to an Olympic sport, complete with sports commentary from Olympian Gabby Douglas and actor Patrick Warburton. It’s a big tongue in cheek and it works perfectly for their irreverent brand tone.

• Last month, to introduce their E.l.f. Skin Bronzing Drops, they enlisted actress and activist Jameela Jamil in an Animal-Planet style ad called “Peculiar Behavior” to introduce the product, nod to the excitement around this particular launch and the feedback that it was based upon.

• In May, the brand launched their ‘So Many Dicks’ campaign, which had nothing to do with their products. The OOH campaign, focused mostly within NY’s FiDi, called out the alarming number of of “Dicks” – Richards, Ricks and Dicks that sit on corporate boards — compared to a small number of women and members of diverse groups. E.l.f.’s board, on the other hand, is two-thirds women and one-third diverse.

e.l.f. x Liquid Death’s Corpse Paint collab

• in March, they partnered with punk-rock water brand Liquid Death to create a quirky gothic Corpse Paint makeup kit; promoted on Roblox, it created 12B+ impressions and sold out within 45 minutes. 68% of these purchasers were new to the brand, which is an incredible acquisition win.

• E.l.f. became the first beauty brand to sponsor the Indy 500, partnering with Katherine Legge, the only woman in the field of 33 drivers; they livestreamed the race through innovative channels like Roblox

e.l.f. UP!, the brand’s Roblox experience

• E.l.f. is the first brand to test real-world commerce on Roblox, targeted at users 13+. This adds to their existing experience called e.l.f. UP!, which “takes users on a dynamic, personalized journey to become successful entrepreneurs and cultural changemakers” and has a 96% positivity rating. Clearly, a partnership with Roblox allows them to speak directly to Gen Alpha without directly selling to them (yet). They’re also on Twitch.

Hot Take 🌶️

If it wasn’t clear, there is very little to critique about E.l.f.’s brand strategy — they truly are firing on all cylinders. It’s worth noting that their marketing budget is ~$250 million annually, which is unheard of for most brands. Still, there are lessons to be learned that can be more broadly applicable:

• use collabs wisely: E.l.f. knows that collabs aren’t just for revenue, but for introducing the brand to new audiences, communities, and fandoms; I love the stat that the Liquid Death collab was largely purchased by net new customers.

• act like a tech company: the company has given out over $150 million in equity to employees, has define clear brand values that they live and die by, and are consistently testing and learning with new channels, products, and audiences. They created a TikTok reality show, acquire companies that win where they don’t, and are even experimenting with Generative AI with ‘E.l.f.gpt’ which will empower employees “to do what only humans can do, including creative and strategic thinking,” says CMO Kory Marchisotto.

• innovative or die: E.l.f.’s approach to product innovation is truly noteworthy. By extracting customer insights, they are constantly incorporating that feedback into their product roadmap, like the example of the SKIN Bronzing Drops above. Listening to your customers shouldn’t be mind-blowing, but you’d be surprised…

• make masstige multigenerational: E.l.f. doesn’t appeal to a single generation or demographic group, and that’s intentional (and the reason they are a billion dollar brand). They can appeal to different audiences through targeted partnerships, channels, and products.

• go big on social: with a marketing spend that’s 25% of revenue, a strong digital footprint is tablestakes. But E.l.f. makes the most of the spend by doing things that haven’t been done before and starting a conversation.

• bring your brand into the conversation: E.l.f.’s CMO says of their culture-grabbing philosophy — “our famous question is, 'Why the E.l.f. not?" which kind of tells you everything you need to know about their philosophy on being part of the zeitgeist. I love that they’ve run campaigns that aren’t selling you a product (like ‘So Many Dicks’) and partnered with organizations that are good for the planet. What these activities lack in revenue creation they make up for in brand value.

Lastly, if you want to dive really deep, their recent investor presentation is great.

Last week, 86% of you loved Marc Jacobs’ strategy, while 14% of you hated it. Rough.

🆕 TREND REPORT

A new section, to keep you guys cooler & more informed than everyone you know.

• Tradwives & Ballerina Farm. A huge topic of conversation in recent weeks has been tradwives (“traditional wives”), thanks to a profile on Ballerina Farm (Hannah Neeleman), a TikTok tradwife with 10M followers. The article paints her as a vehicle for childbearing for her controlling billionaire husband, who made her give up her dreams of being a ballerina for life on the farm. Honestly, I thought the profile was pretty biased and it’s hard to tell where Hannah’s feelings end and the author’s begin. But just a couple days ago, an article from The Cut claims that Neeleman has been super positive about her life on social media, saying “It’s the world we created, and I couldn’t love it more.” So, I think she’s doing okay. Maybe.

• Kim Ye-ji, a South Korean shooter, is the current viral star of the Olympics. She took silver in the women's 10 meter air pistol event and she is giving total badass vibes. I love her.

• Dating apps are dying (still). One dater in NorCal says, “It’s total enshittification on there” and I really hate what but love how it’s being said. Apparently, date-me docs (like romantic resumes) are a thing.

• Apparently, fast food is also dying. For the first time since 2020, McDonald’s sales are down 1% (which doesn’t seem like that much?) but it was enough to prompt them to bring back the $5 meal at the end of last quarter. Starbucks sales are also not looking too hot. Analysts say that it’s due to inflation and a pullback of consumer discretionary spending on food/drink and more towards travel/experiences… but also, is it Ozempic?

🎲 ONE LAST THING

The Olympics definitely have a chokehold on me this year, and I thought the above chart was super interesting. It shows the bonuses Olympians get for winning gold medals — Hong Kong is definitely doling it out big time.

Also, are you guys seeing all this coverage of dating apps in the Olympic Village? Bumble confirmed that they’ve seen a surge in users tweaking their profiles to include Paris and mentions of the Games, and Tinder is seeing a nearly 20% uptick in swiping activity in France. It’s apparently being referred to as the “Olympic Villa,” a nod to Love Island.

Lastly — ad spend for the Olympics surpassed $1.2B which is a record. I don’t know how I feel about all of this consumerism during a time that should be about teamwork and human potential? IDK.

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have a great week.

- Sabena