Why It’s So Hard to Be an Indie Beauty Brand

Startup founders talk the challenges they faced early on


To finance her skincare line Tatcha, Victoria Tsai sold her car and engagement ring, and worked four jobs. Today, Tatcha is stocked in big U.S. retailers like Sephora and Barneys. Tsai was ranked No. 21 on Inc. Magazine‘s 2015 “Inc. 5000 List,” which features the fastest-growing private companies in America. In a beauty industry still dominated by celebrities and big guns like L’Oreal and Estee Lauder, Tsai’s startup story is unique.

Beauty startups face a competitive market worth $60 billion; skincare accounts for the biggest share. To launch, brands have to figure out what they want to formulate and why, and who their consumers are and how to reach them, often on very limited budgets.

Maryna Kracht launched Mahalo Skin Care in Hawaii three years ago. She knew early on that ingredients would be a huge expense. Mahalo products feature tamanu oil (which has anti-inflammatory properties and can promote cell growth), sea buckthorn oil and aloe vera. Kracht looks to appeal to customers seeking something luxurious and handcrafted. “I want people to feel that this is an artisanal product,” she says.

With a team of four employees, she develops her own formulas. She works with local suppliers in Hawaii, uses organic ingredients and produces her own hydrosols, or distillates, such as rose water.

“I did have savings, but not a lot,” Kracht says. “More than anything, I had to be extremely strategic with every single dollar.” That meant lots of time researching ingredients before spending money on developing anything.

Startups like Mahalo, Tatcha and Zelens buck the trend when it comes to typical beauty product development. “Usually you have brands say, ‘I went to a lab and we worked on this.’ They pick out a formula, change it slightly and put it out there. That’s how most skincare is made,” Tsai says.

Zelens was founded by Marko Lens, a plastic and reconstructive surgeon and skin-cancer expert. “I am the one who spends hours in the lab working on your formulations and experimenting,” Lens says. “My first step is to carefully select ingredients I want to use, look at their safety and efficacy data and then start to incorporate them in the base I formulated.”

Given the up-front expenses, self-funded startups find that money, or lack thereof, is a primary challenge.

“I started Zelens initially with only three products, and without any investment in marketing and PR. I had to invest almost $500,000 USD for the research and development of these three products and a launch in limited number of stores in the UK,” Lens says.

It’d be strange to write a story about indie beauty and not mention Glossier. Founder Emily Weiss managed to secure more than $10 million to launch the brand, a spin-off of her beauty blog Into the Gloss. She raised another $24 million recently for expansion.

By contrast, SkinOwl, which Annie Tevelin launched with two products, took off very slowly. “I started with a logo because that’s what I could afford,” she says. “Then a landing page. If I had the money, I’d spent it on SkinOwl. If I didn’t, we’d be at a standstill.”

Fresh from a layoff, Tevelin was on unemployment and had to use credit cards to support her fledgling business. “It was so scary to put expenses on a credit card for a business that you didn’t even know what going to survive,” she says. Her financial constraints ended up being a blessing in disguise, because they helped her pace the growth of her business.

Tsai, meanwhile, launched Tatcha in 2009 with just a single product (her blotting papers, called Original Aburatorigami Beauty Papers), while hiring scientists and starting product development for a skincare launch that came about two years later. The genesis of the idea came from Tsai’s travels.

After visiting Europe and Asia for work, Tsai ended up in Japan, where she was introduced to geishas. “They had beautiful skin,” she says. “I asked them what they were using.” That question led her to a book of Japanese beauty rituals from the 1800s, which formed the basis of the Tatcha line.

With the help of scientists in Japan, Tsai began developing and testing formulations with ingredients like silk proteins, green tea, rice bran, camellia oil and gold flakes. “The very first round of production came from selling my engagement ring. After that, it took about six months to raise funds for all the other aspects of starting a company,” Tsai says.

Tatcha employs a team of five in Japan and another three in San Francisco who work on formulations, testing and product development. The scientists work with her brand exclusively, and she sources ingredients almost entirely from Japan.

Kracht never resorted to formulating her products for Mahalo in her kitchen, as some natural skincare brands claim to. “I am a stickler for everything being sanitized and making sure we’re up to standards. I had a separate kitchen away from the house where I created a little lab of sorts,” she says.

Good to know, as the cosmetics industry is wildly unregulated. Cosmetic products and ingredients do not require FDA approval before they go to market. There are two laws, the Federal Food, Drug, and Cosmetic Act and the Fair Packaging and Labeling Act (FPLA), which regulate cosmetics and labeling, but the FDA leaves it up to companies and individuals to ensure the safety of their products. Consumers, in other words, have to trust that companies will set and follow high standards of safety and quality.

Kracht’s face is the first thing you see on the Mahalo website. She still handmakes her formulas and writes thank-you notes to her customers. “I encounter challenges every day,” she says. “In the very beginning, you’re wearing a hundred different hats. I did everything. It was figuring out the direction of the business.”

To market her brand, the first thing Tsai did was hire a PR agency. She then gathered a list of beauty editors, sent them samples of her blotting papers and waited to hear feedback. “I was on the Today Show a couple weeks from there,” she says.

Tatcha’s success came shortly after, when Takashimaya, the now-shuttered New York City flagship of the Japanese department store, became the first to carry the brand. In late 2015, Sephora became a Tatcha retailer.

Since its launch, Mahalo has gone from production in a small lab in Kracht’s home to a 1,200-square-foot facility with a walk-in fridge. SkinOwl has been growing every year since it launched. “SkinOwl felt like immediate success because we filled a void,” Tevelin says. ‘It’s not easy, it weeds people out very quickly.”

Despite (or maybe because of) what it takes to launch beauty brands, Kracht says it’s startups that are shaking up the industry. “These small beauty brands, mostly women-run, are trying to go up against the Goliaths of the space, but we are doing it with a backbone of five people versus 500.”

Says Tevelin, “There’s a lot more care [taken] in these smaller startup brands, which is why people feel good about spending their money with them.”

Illustrations by Maria Jia Ling Pitt. 

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  • Meg S

    I just bought a pack of those Tatcha blotting papers at Sephora, and they are worth every penny. I want to buy everything else in the line as a result. I’m a little confused about the article’s timeline of her brand – if she launched it in 2009, how did Sephora start stocking it in 2005?

    This was a really fascinating article. Especially about the sanitary condition standards. There was a mess that came out a year or two ago about a Korean sheet mask brand paying people to fold the sheet masks in their homes with no consideration for sanitary conditions. I forget the brand, but it’s somewhere on the Asian Beauty reddit. I buy things from a few of these indie companies (and a handful of others), so I’m glad to read about that. I’ll have to give a look at the others featured.

    • Lauren

      Their sunscreen is the best — highly recommend.

      • Meg S

        Thanks. I have plans to go back and buy everything when I have the money to throw at it. When my la roche-posay bottle runs out, I’ll give it a try.

    • Julissa

      That’s a typo. Should say 2015. We’ll fix it. Thanks for pointing it out!

      • Meg S

        Thanks! I thought I read it wrong until I looked at it again. Nice to know I’m not going crazy yet. It’s only Tuesday!

  • Alexis Towle

    Very interesting article. Thanks for the insight on the Indie brand struggle.

    Alexis|| https://lidsandtricks.com/

  • Willa Konefał Davis

    Yes! More skincare articles pls! (especially loved Julissa’s article about expensive skincare. What is it about a skincare routine that I can’t get enough of?!)

  • Nikka Duarte

    I love this behind the scenes look on startups and small businesses! It can be a tough job, especially when starting out. I’ve been looking to support more small businesses in everything, not just skincare or clothing. Please drop your suggestions below!!

    • Ok, hear me out! This is going to sound like a shameless plug but it really isn’t because I’m a huge proponent of “shopping small” but it also kind of is a plug because, well it just is.

      Remember when everyone had a fashion and lifestyle blog back in the day? Yeah well I started one in 2014 but write almost exclusively about indie brands (mostly fashion and beauty but also music, food, entertainment, etc). I’m not promising it’ll be what you’re looking for but if you’d like to be introduced to at least of couple of new small businesses my blog/website is GlamorousRevelation.com

      Also, I honestly do love Glossier even though I don’t like all of their products (which should go without saying, but what is it with every Glossier customer absolutely loving every. single. thing. they release??). I did however write a rather surface level blog post on the VC backing of Glossier despite their homegrown girl next door aesthetic –> http://www.glamorousrevelation.com/2016/09/the-glossier-dilemma.html

      • Nikka Duarte

        I LOVE SHAMELESS PLUGS. Here for this. If you don’t share what you do (which is awesome), then who?! And thank you!! Your site is not only very good but also consistent- I can tell you post a lot and that’s something I’m trying to get better at!! Thank you!

  • Dior

    I just created my first lip product and this article is totally inspiring to me right now. Not selling any of my jewels, but hopefully someone will invest in me!

  • Shannon

    Why did you mention Glossier? I feel like it added nothing to the article. I enjoyed hearing Tatcha’s growth story and very happy they found their success.

    • Magical Unicorn

      Yeah it didn’t seem like that was a “struggle” story…

    • Kattigans

      I have a feeling that’s bc Leandra is a bestie of EW…

      • Shannon

        Haha, seriously. I enjoy LM & EW’s friendship, but this is so transparently nonsense that I can’t stand it. And the idea that you can’t “not mention Glossier”… easy! Just remove the 2 sentences that have nothing to do with your article anyways!

        • Kattigans

          Completely agree…friendship is totally fine and it makes sense on paper why they would be friends, but for reals this just a little too much. Also, and I know I’m publicly stating this, but for a bit now there’s just something about Glossier lately that’s turning me off, and it’s been ruminating in my mind. I’ve been a huge ITG fan for a really long time but the “darling cool girl of the internet beauty company” schtick is getting a bit tired. I get they’re a brand and need to sell stuff…idk its starting to get a little rehearsed. But also maybe I’m just having fatigue with them.

          • Kattigans

            You know what it is that’s bothering me…it started when I noticed that they’ve been posted that ITG top shelfie with Hilary Swank. That one really turned me off bc of the nonsense she was spewing about supporting women through her athletic wear biz and then you go and see she’s selling arm warmers for $200 and its like “wait, what??”. This DOES NOT make sense. Not the price but the idea that this “supports women”…like which women and how? And then they posted that ITG top shelfie with andy dowell’s daughter which was full of more nonsense about “clean eating” and how eggs are bad for you. I think these things are just kinda trending in GOOP nonsense territory and everyone who wants to healthy and heal their chakras through alkaline water is buying into it and its very very annoying to me. Okay..end of my rant.

          • Alice

            I think what’s annoying is that they try too much to convince you they’re your best friend and that they care about your opinion. And then they are not transparent and are like “you suggested x but we did y bc people will buy it anyway”.

  • Chelsea

    I love the honestly and integrity behind Mahalo, not to mention the amazing smells that make you feel like you are in Kawaii. That’s what I am looking for in skincare–carefully sourced whole, natural ingredients and a luxurious quality to the product. I can also recommend Laurel and Josh Rosebrook as similarly thoughtful, caring brands that source every single ingredient.

  • zschoenfelt

    Before I found this article, I found another article about a straight to consumer company that sells household products. The company’s tagline is, “The first brand ever to offer all their products, at cost.” I thought it fit in nicely with this discussion about indie beauty brands. Although the company is being funded through kickstarter, it will be interesting to keep an eye out for them. Not a plug, and I still need to watch their kickstarter video. https://www.kickstarter.com/projects/494595922/public-goods-revolutionizing-household-products?ref=1xhfdf&utm_medium=referral&utm_source=19.backer.camp