Michelle Phan's success story on how she went from Youtube star to $84 million startup founder

3 November 2014 / 1 year 12 months ago

Michelle Phan — with more than a billion views on YouTube and seven million followers; her own L’Oreal line and lifestyle media network; booming e-commerce beauty startup called Ipsy; and a new book — is teaching more people how to decorate their faces than perhaps anyone else in the world.

According to Recode.net, the 27-year-old mogul had a modest start with her family — living on food stamps at one point — and now has a company with an $84 million annual sales run-rate.

She has 700,000 subscribers who receive her Glam Bags — little sacks of makeup samples — for $10 a month. The makeup business is famous for its high margins.

Her interviewer, Re/code’s Dawn Chmielewski, asked how it all began.

“The first videos I uploaded on my own personal channel were videos of dogs,” Phan said.

In 2007, Phan was a waitress, and couldn’t even get a job at a beauty counter because she didn’t have sales experience. She was undeterred.

“YouTube was the biggest thing in the college community, and it just made so much sense for me to have a platform,” she said.

“Instead of feeling down about it, I opened another door, and that door happened to be a laptop.”

Phan began doing makeup tutorials. And people loved those makeup tutorials. Eyeliner technique turned into far more sophisticated lessons, like how to look like Lady Gaga in “Bad Romance.”

“I showed people how they can transform their face,” she said. “[Lady Gaga] really helped put me on the map.”

Meanwhile, large makeup brands like Lancome were struggling to get hits with good viral makeup videos. In 2008, a Lancome executive Googled around and found a Phan tutorial in which she was cramped up on a plane, showing her fans how to do makeup on the plane.

Lancome signed her as a spokesperson.Asked about the economics of YouTube, Phan said, “It’s like any medium — you have the subscription, but that’s not going to make all the money. You have to bring on sponsors, and you have to sell a product.”

And not every viral star has to have seven million followers — there’s a healthy YouTube middle class: “So many of my friends have 200,000 subscribers, and they make around five to six K a month,” she said. “Which is completely cool.”

When asked about the EDM lawsuit, Phan said she was given permission to use EDM music for her makeup tutorials, which was a nice backdrop for her tutorials and nice publicity for the label.

“Until I started making money,” she said. “And they thought their music was what was making me successful.”

Phan launched her own label with Cutting Edge Music.

Related article:

Popular Youtuber Michelle Phan sued for using music without permission

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