The World’s First Influencer Creates a Makeup Brand: The EM Cosmetics Story

December 7, 2020
Tiffany Regaudie
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It may be difficult to name the world’s first influencer, but Michelle Phan is often credited as just that.

In 2007, when YouTube was a shadow of its current self, Michelle Phan created her first makeup tutorial after receiving a job rejection from Lancôme. 

Phan had been running a blog, Rice Bunny, where she shared makeup tips and expressed her love for the beauty industry. But one day, instead of writing a new article, she set up her webcam and recorded what may be YouTube’s first ever makeup tutorial.

“I taught myself how to edit, and I decided to upload it to YouTube, not thinking anyone would watch it because who would watch this video? It’s not even that good,” Phan said in an interview with Alex Blumberg on the Without Fail podcast

Within two weeks, her video had received 100,000 views and people were asking for more. So she made another video. And another one after that. 

During what’s now referred to as the “golden age of YouTube” Michelle Phan found herself in the right place at the right time: on a burgeoning platform with plenty of room for growth. 

After two Buzzfeed features in 2009 and 2010, Michelle Phan gained millions of subscribers and the traction she needed to launch brands of her own. In 2015, Phan launched EM Cosmetics as a L’Oreal line, only to buy all shares from L’Oreal in 2016. 

Michelle Phan, the first makeup influencer on YouTube, is now a full-time CEO for one of the most distinguished makeup brands of our era.  

In a nutshell: The EM Cosmetics story

In some ways, the beginning of Michelle Phan’s story as an entrepreneur is a cautionary tale. When L’Oreal launched EM Cosmetics in 2015, it failed.

EM Cosmetics had been created for Phan’s young fanbase, but many felt the quality didn’t live up to its higher price point. People complained that the makeup was too chalky and made a mess of their makeup bags. L’Oreal had marketed the brand as a luxury item, but the results fell short on their promise.

So what happened? A few things:

      1.  Michelle Phan was exhausted and struggling with her mental health. After several years as a young influencer on YouTube and for Lancome, Phan became preoccupied by her own fame and began to suffer from depression. 

     2.  As Phan struggled to keep up with the demands of influencer life, her YouTube fanbase went largely unleveraged as comments began to roll in about the quality of EM Cosmetics.

    3.  Phan spread herself thin between too many projects at once. As EM Cosmetics launched with L’Oreal, Phan was also working on Ipsy, a separate beauty subscription company she left in 2017. 

Overwhelmed and burnt out, Phan decided to take a break and fly to Switzerland for a reset. Refreshed after several months of world travel, Phan returned to LA, bought EM Cosmetics from L’Oreal, and took her time to reboot the company at her own pace.

Failure is a part of entrepreneurship––but it’s how you respond to failure that can make or break long-term success. Here are three entrepreneurial lessons to be learned from Michelle Phan’s rise, fall, and revival as an influencer-turned-CEO. 

Lesson #1: Don’t be afraid to fail and start again. 

"I was really hurt when the brand didn't take off. It just sucked," Phan said in an interview with Racked. "It was three years of my life gone, just like that. But I learned a lot from that and I think it was really important for me to fail. It was through that failure that I started to get more interested in the business aspect of everything."

Tips for resetting your business amidst failure:

  • Diagnose your problem. Take a step back from your business and identify what’s wrong. You can’t fix what you don’t take the time to examine.
  • Talk to your customers. Most businesses fail because they aren’t solving a problem for their core audience. Don’t try to sell a product no one wants––the market will force you to back down every time.
  • Invest in your team. Evaluate whether you’re working with the right people. If the answer is no, make some tough choices and reshuffle where necessary. 
  • Redefine your value proposition, positioning, and brand. Michelle Phan rebranded EM Cosmetics with her newfound creative control when she bought the company from L’Oreal.
  • Reduce your product line and focus on your strongest assets. When Michelle Phan relaunched EM Cosmetics, she focused on three items: blush, lip gloss, and eyeliner.

Lesson #2: Build a social media audience and mine the comments for customer feedback. 

During its first round with L’Oreal, EM Cosmetics missed an opportunity to collect customer feedback from Michelle Phan’s large fanbase. 

As a large brand, L’Oreal may have sat too far away from Michelle Phan’s audience to collect meaningful customer feedback. But after Phan’s hiatus and ultimate return to YouTube, she was able to take back creative control and re-engage with her following as part of her rebrand. 

How to collect customer feedback on an ongoing basis:

  • Create a customer feedback database.
  • Devote resources to reading customer comments and collecting high-level feedback.
  • Host a weekly meeting with your team dedicated to customer feedback.
  • Schedule time every week to read customer feedback on Amazon, Reddit, Instagram, Facebook, YouTube, Gorgias, etc.
  • Hire influencers through a platform like #paid and mine their comments for feedback. 

Lesson #3: Learn how to say no.

“We’re taught to take every opportunity because it might be your last,” Phan said in an interview with Alex Blumberg on the Without Fail podcast. “I had my YouTube channel, I had several businesses I was running, I was filming, I was editing, I was creating products, I was marketing … it was to a point where there was an addiction to winning.”

When you’re first starting a business, it’s tempting to say yes to every opportunity. But with every yes comes a risk that you’re diverting your energy away from what matters most to the growth of your business.

How to say no and focus on what matters:

  • Develop a clear growth model for your business. Growth models define your company’s ultimate North Star Metric and keep you focused only on what will move the needle on that one metric. 
  • Trust that opportunities aren’t scarce. With every no comes space to minimize distractions and accept opportunities that will have a real impact on your business.
  • Develop ongoing relationships. This may seem counterintuitive, but when you focus on relationship development for the sake of it rather than for transactional reasons, more impactful opportunities will present themselves in the long term. 

Michelle Phan was a guinea pig of sorts: YouTube’s first influencer who stepped into more success than she was prepared to take on. We commend her for creating the blueprint for many influencers-turned-founders who can now learn from her missteps and feel inspired by her tenacity. 

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