This new series is called "Companies I Wish Would Go Public" or "#CIWWGOP"...but in many cases won't.
I thought it might be fun to talk about some companies that I have discovered with some pretty awesome business practices and growth potential that will hopefully take them public (i.e. issue shares that the general public can trade).
For my first #CIWWGP post, I am starting with the pretty flippin' awesome www.ipsy.com
What do they do?
Ipsy is a monthly beauty and makeup subscription, which comes in a different collectable makeup bag and contains full size or deluxe-sized makeup, hair, fragrance, body or skincare products that have been custom-selected for each individual subscriber. The subscription costs $10 per month or $110 for 12 months, and it should be worth noting that the price of the bag and products inside equal more than $10...easily. The company has grown and is now valued at $84 million.
Each subscriber takes a quiz that customizes what array of products will be sent to them. The idea is that the subscriber tries the products sent and reviews them - if they like them, they can buy more and in turn help the company's sponsorship base. If they don't like them, they can weed out the bad ideas. Many companies are starting subscription-based services, but I have yet to see one this popular that not only personalizes each order, but sends video tutorials on how to use each product and gains more followers through several social media channels: Twitter, Facebook, Instagram, Snapchat, Vine, etc.
I recently gave the service a try to see what it would yield and here is what they sent me...
I was thoroughly impressed by the selection and the quality of products. In fact the liquid lipstick is my new favorite product and I am on a mega mission to find more! This is the full list of the 5 products in addition to the gold "glam bag" for the month of October.
- Lavanilla Laboratories Pure Vanilla Deluxe Mini Roller Ball
Michelle Phan has one of the most amazing success stories and quite frankly sounds like a very strong, motivated and confident CEO. In 2005, she started a personal blog in which she discussed different makeup tutorials and received requests for further instruction. She started a YouTube channel in 2007 which has since evolved into one of biggest sensations on the website with over 8 million subscribers and billions of video views. This ultimately helped evolve into the success of Ipsy, but also into several collaborations with L’Oréal, Lancôme and a book deal.
What is the growth potential in this market?
As I mentioned earlier, the subscription box/bag market is one of the hottest out there. According to Wikipedia, the subscription box industry is nascent, so there exists minimal data. It is estimated that there are 400 to 600 different kinds of subscription boxes in the United States alone and more overseas. When the economy in a slow recovery after a significant downturn, recession, or depression, consumers are either unwilling or unable to afford big-ticket purchases or risk spending money to purchase a full size product they are not confident they enjoy. These products can range from homes to makeup. A few effects that have contributed to the rise of the subscription economy include: 1) the bursting of the Housing bubble and the attendant rise in personal bankruptcies; 2) lower disposable incomes as wage growth in America remains elusive; and 3) the introduction of new apps and websites over the past few years have increased renting and sharing opportunities.
As I mentioned earlier, Ipsy differentiates from most of these based on the personalization of the product offering itself and social-media-heavy presence. This firm would be a juggernaut if its market cap could stretch to the $1.0 billion level in the coming years.