Today, Explained - The making of a beauty king

Episode Date: February 14, 2025

Sephora revolutionized high-end beauty and turned tiny brands into household names. Now, comes the reckoning. Fast Company’s Liz Segran on whether Sephora is too powerful. This episode was produced by Amanda Lewellyn, edited by Amina Al-Sadi, fact-checked by Laura Bullard, engineered by Patrick Boyd and Andrea Kristinsdottir, and hosted by Noel King. Transcript at vox.com/today-explained-podcast Support Today, Explained by becoming a Vox Member today: http://www.vox.com/members Facade of Sephora store in Concord, California. Photo by Smith Collection/Gado/Getty Images. Learn more about your ad choices. Visit podcastchoices.com/adchoices

On Today Explained, way back in the mists of time, 1998, a new beauty store hit the scene. Its appeal was choice. It would put hundreds of these carefully curated beauty brands in a single store. And as a customer, you were free to roam the aisles and test all the products that you wanted to your heart's content. And that was just a very unusual idea at the time. You no longer had to be Teen Clinique or a Lancome lady.

Maybe for you, it wasn't solely Maybelline. And that was fine. In Sephora, you were free. Consumers loved this new way of shopping. Sephora became a kingmaker. It is still a very big deal to get your little brand into a Sephora Bay. But now comes a kingmaker. It is still a very big deal to get your little brand into a Sephora Bay. But now comes a reckoning.

Does Sephora have too much power? Get in loser, we're going shopping. It's 2025, so stop struggling to get your job posts seen on other job sites. Indeed's Sponsored Jobs can help you stand out and hire the right people fast. There's no need to wait any longer. Speed up your hiring right now with Indeed. And listeners of this show will get a $75 sponsored job credit to get your jobs more visibility at indeed.com slash vox business. Just go to indeed.com slash Vox business right now and support our show by saying you heard about indeed on this podcast.

Indeed.com slash Vox business. Terms and conditions apply. Hiring, indeed is all you need. Human eggs are only the size of a grain of sand, but the space they can take up in your mind can be gargantuan. Now there are a lot of concerns with some experts saying this procedure really just serves as another way for companies to make money from stoking women's anxieties. Egg freezing has been presented as a kind of girl boss panacea. But what's the reality? That's

this week on Explain It To Me, new episodes every week, wherever you get your podcasts. It's Today Explained. I'm Noelle King with Fast Company senior writer and friend of the show Elizabeth Seagrin, hey Liz. Hey, it's so good to be here. You recently wrote a big piece about Sephora and just how much power it has in high-end beauty. What is Sephora's deal? Oh my gosh, I think that for all the beauty junkies out there,

and even people like me who casually wear makeup and don't fully understand how to apply eyeliner, I think it's really easy to understand the appeal of Sephora. It's such a fun place to shop, and we love wasting hours there on the weekend discovering new brands. But, you know, actually, all of that, all of the innovation around retail has put it in this position of being the most powerful player in the high end beauty industry,

which is worth $30 billion globally. And so we're talking about those brands that are slightly more expensive than what you would find in drugstores. And Sephora has got that market locked. It has 700 stores in the U.S. as well as a thousand outposts at Kohl's. Wow. So it basically now controls the fates of beauty brands on the market.

And that is why so many beauty founders are so desperate to break into Sephora. And even though there are other retailers like Ulta Beauty and Nordstrom that are trying to replicate the Sephora model, Sephora is just one step ahead of the competition. And I think that the reason for this is that it is able to identify and pluck these exciting beauty brands

and keep the aisles stocked with a new array of beauty brands. And so there's always something to go into the store for, something new to explore the next time you're in the store. Come shopping with me at Sephora. I'm going on a huge tour. I want this Dior lip gloss, this pink shade. Let me take a look at some of the new stuff. Maybe there's something better over here. Ooh, the closest sunlit. I saw Patrick Ta. I've never bought anything from Patrick Ta.

Should we get a blush? And actually, I think that what most of us don't fully understand is that, you know, we think that Sephora is out there, you know, finding these brands, putting them on the shelves, and that's the end of the story. But actually, my reporting uncovered that actually Sephora is getting really deep with the founders of these brands into shaping every aspect of the brand, from the products that they're creating to the packaging. And founders are willing to cede control over their brands, these startups that they're creating,

because being in Sephora guarantees their success. Sephora will give these brands mountains of proprietary data to help them succeed. And that's why the biggest brands on the market today, like Drunk Elephant, Rare Beauty, Sol de Janeiro, all of them got their start at Sephora. Is there a brand that helps us understand just how much power Sephora has here? Yeah, I think that the brand that kind of tells the story the best is Glossier. Mmm, Glossier. As a millennial, I, you know, I'm very, very well versed with this brand.

It popped up in 2014 at the height of the direct to consumer movement. My name's Tia and I'm wearing Generation G in like. And we all know it because it is this beautifully millennial pink brand and everything is very minimalist. So I'm using Lidstar in Slip. I'm going to press it right in the center of my eye. The most important part of my makeup routine, Glossier Boy Brow in black.

And it basically pioneered this concept of makeup that looked like you weren't wearing any makeup at all. Like you just woke up in the morning glowing. Rosewater spray. And so Emily Weiss, the founder of Glossier, came up with this brand and she publicly stated that she wanted to build a beauty brand without partnering with a retailer. We really wanted to to offer this incredible new luxury experience and we were able to do that by going again direct to consumer and not be beholden to retail partners or wholesalers

who are going to make your brand become something so that it fits on a certain gondola or a certain aisle of a store. Glossier emerged at this time when all of these venture capitalists were just pumping money into startups. And Emily Weiss was really, really good at raising money for Glossier. In total, Glossier has raised $266 million, which is just an astronomical amount for a beauty brand. And its last valuation valued at $1.8 billion.

And so it had all of this money to pour into acquiring new customers, creating really innovative products that consumers wanted. Glossier sent me all of their bombs on calls. Look at how cute these packages are. Glossier Cloud Paint. I love it so much. It's just... I feel like it looks so natural on you.

And even building these gorgeous stores that we're seeing pop up in New York and in Boston and all of these different places. Basically, it's like the Apple Store where you can just try on all the products and the associates come up to you. I tried this super glow serum first and I loved it. It was just a fascinating time because the internet had created this entirely new way for brands to emerge.

And so that's why all of these investors were so eager to pour money into these brands, because they really thought that this was going to be the future of the way that we shopped, that we wouldn't need retailers anymore, because we could just go online or go to Instagram, discover a brand and buy products directly from those brands. And actually during this time, we saw just an explosion of beauty brands because it's actually really easy to launch a beauty brand. All you need to do is partner with a lab, come up with some nice branding, and there you go.

You could have a small number of products and you have a beauty brand up and running. And so there were about 1,000 new beauty brands that popped up between 2015 and last year. So Glossier is one of those companies that really makes its bones in the age of the internet has democratized anything. We can be close to the customer, we can work with a third party chemist, we can get the influencers to wear our stuff on Instagram. It is boom times for Glossier, but you would not be Fast Company's Liz Seagrin if things had stayed that way.

What happened next? So Emily Weiss was the face of her brand, Glossier. In many ways, the success of the brand was tied to her being this charismatic female founder who was part of what we would call the girl boss era. Girl boss. Girl boss. I got excited. That's right. That's right. And at the time that was still considered

a really wonderful thing. But the whole concept of the Girl Boss sort of soured because during the Black Lives Matter movement and that period where we were scrutinizing what was happening at all of the brands that we shopped from, it became clear that Glossier wasn't really treating women of color very well, both in terms of its customers

and in terms of its sales staff. In August of 2020, just before Glossier laid off all its retail staff due to the pandemic, the group behind Out of the Gloss published an open letter to Glossier, detailing the many grievances that they had with the company and what change they would expect from the company. I just found an exact dupe for Glossier U because if you don't know, the girlies are girl-cladding.

And it was also really hard as a woman of colour to find shades at Glossier that really, you know, spoke to me and that I could use. And so I think the world sort of began to see that, you know, there were problems, right, with Glossier. And so at some point, Emily Weiss stepped down and brought in another CEO. And it was this new CEO who basically said, you know, let's just like rethink what we want Glossier to be. And in addition to sort of setting new policies in place that ensure that the brand was, you know, more inclusive across a lot of different dimensions, she also had the idea that the

best way for Glossier to succeed and to grow was to give up the stance that it was just going to be a direct-to-consumer brand and just fully sort of give itself over to Sephora. So about five years after it launched in 2019, it had reached upwards of $100 million in revenue, which is a lot, especially for a beauty brand. There are very few beauty brands that are able to get to that level of scale, but it just wasn't enough. It wasn't the kind of money that would justify Glossier getting acquired or getting a major IPO,

which is what its investors needed of it. And so in order to get that kind of money, Glossier had no choice but to enter Sephora. And so in 2022, everybody was shocked to discover that when you went inside a Sephora store, there were these beautiful millennial pink displays that Glossier had set up. And so Glossier totally reversed its stance.

And suddenly it was there next to 300 of its competitors. But it realized that that was the only way for it to get the kind of scale that it needed to satisfy its investors. Fast Company's Liz Seagran coming up. What Liz? Coming up, coming up, coming up. Okay. How Sephora is changing the way we think about beauty itself. Oh, love it. Hello podcast listeners. I'm Sean Romser. I'm here from the Today Explained Show and I've got some news you can use. We're taking Vox Media podcasts on the road and heading back to Austin, Texas for the South

by Southwest Festival. March 8th through 10th, we'll be doing special live episodes of hit shows, including our show today explained. Where should we begin with Esther Perel, Pivot, a touch more with Sue Bird and Megan Rapinoe, not just football with Cam Hayward and more presented by Smartsheet. The Vox Media podcast stage at South by Southwest is open to all South by Southwest badge holders. I'll be the guy in a Mr. T costume.

We hope to see you at the Austin Convention Center soon. You can visit voxmedia.com slash S-X-S-W to learn more. That's voxmedia.com slash S-X-S-W-A. This week on ProfG Markets, we speak with Alice Han, China economist and director at Greenmantle. We discuss the potential impact of tariffs on China's economy, on Tesla is fairing against BYD, and how a Trump presidency could shape China's foreign and domestic policies. Trump is the biggest dove in a house full of hawks. Everyone else around him wants to push him towards being more hawkish on China, on trade, on tech, on military. And I sense

that whether it's Rubio or Hegseth or Waltz, they're going to try to push the agenda of being tougher on China and having more deterrence vis-à-vis Taiwan. You can find that conversation exclusively on the ProfG Markets podcast. It's early in the year, and so people might still be hard at work on those New Year's resolutions. Dry January, sober October, whatever you're doing, you are not alone. No buzz boos is all the rage these days. And now to the growing movement of sober, curious living.

It's a trend rising in popularity among younger generations who are choosing to reduce their alcohol consumption or just not drink at all. And that got us wondering, how in the world do they get the booze out? For that non-alcoholic beer, do they start with regular beer and somehow de-boozify it? Or do they recreate it from scratch without ever touching a drop of the hard stuff?

This episode of Gastropod, we've got the weird history… Welch's grape juice, anyone? And breakthrough technology fueling today's non-alcoholic boom. Plus, why is it so hard to make it taste good? We've got the answers. Find Gastropod and subscribe wherever you get your podcasts. Beauty. Style. Today Explained. Today Explained is back with Fast Company Senior Girl Boss Liz Seidrin. Liz, you report that before Sephora was the behemoth it is today, it, in fact, was an innovator.

Tell us about the beginnings. You know, what was so interesting as I was reporting this story is that it allowed me to kind of go back to what beauty brands were like when I was in high school, so 20 years ago. And back then, the only way for us to really get access to these high-end beauty brands was to go to a department store. Hi, can I help you?

And there, if you recall, there were these beautiful glass cases and there were these brand representatives. You should try this. And the only way for you to try these different products was to have one of these brand representatives talk you through everything. You look amazing. Of course she does. But Sephora in 1998 showed up in the US with this completely different concept.

And the concept was that it would put hundreds of these carefully curated brands into a single store, and there would be no gatekeepers. And that meant that as a customer, you were free to roam the aisles and test all of the products to your heart's content. And it also meant that you didn't have to be loyal to a single brand. And this was really a wild concept, and it just made the store so much more inclusive. And so consumers just went wild for this new way of shopping. And other retailers quickly tried to replicate this model. Two of the biggest ones I can think of are Alta Beauty, for instance, and Nordstrom.

They're all trying to create this kind of more open, exciting model for shopping for beauty. But Sephora, to its credit, has managed to always stay one step ahead of the competition by ensuring that it has the coolest, trendiest, latest brands in store. And also, I think that it has a role to play in actually just kind of shaping beauty trends from the ground up.

And so for instance, I don't know if you've noticed, Noelle, but there are more expensive high-end shampoo brands than I've ever seen. I have indeed noticed. So there's like pattern beauty and Olaplex and Virtue. And this is not an accident. Shampoo had always been an inexpensive drugstore purchase, but several years ago Sephora decided that consumers actually would be willing

to drop a lot of money on fancy shampoos and conditioners. So it actually went out there and cultivated a new generation of these brands. And lo and behold, five years later, here we are throwing $40 or more on a bottle of shampoo. And so what I'm trying to say here is that it's basically Sephora's world, and we're just living in it.

It's a big deal to get your brand into us into Sephora stores. How do brands become part of the portfolio? What do they have to do? It is a rat race. If you are a beauty founder, you are devoting a lot of time to trying to figure out how to break into Sephora. Okay. There's several different ways to get yourself in front of a buyer at Sephora. Now, we want to have to tax Sephora right down in the comments

and get their attention so we can get our brand into their store, because we know it needs to be there. So so I've heard all kinds of stories. There are brands that are sending packages of makeup to Sephora on a weekly basis hoping that somebody at the headquarters will open it up. There are founders who are stalking Sephora buyers so that they can start a conversation. So, you know, these brands are all desperate to break into Sephora, but actually Sephora is kind of holding all the cards and it's going out there and deciding which brands

are going to be the next billion dollar brands of tomorrow. In order to be in Sephora, you have to spend a lot of money at Sephora. So if you sign a contract with Sephora, first of all, it means signing an exclusivity agreement saying that you won't sell your products anywhere else for at least two years. So that's the first thing. But then you have to pay a lot of money for the in-store fixtures. So when you go into Sephora and you see those beautiful bays of products, the brands themselves

have to pay upwards of tens of thousands of dollars, often a lot more, sometimes hundreds of thousands of dollars, to have those displays. And then whenever you make a sale, you have to give 65% of that sale to Sephora, which is much higher than the industry average. And so brands are just paying a lot of money to Sephora in order to be in store. But in exchange for that, they are getting access to this enormous audience of beauty lovers.

Their loyalty program alone has 40 million members. And if you think about the number of people who are coming into store every day and going to the Sephora website, there is just nothing like it. So brands and founders are willing to do whatever it takes to be in the Sephora store, to spend all of this money, because the upside is just so big. all of this money because the upside is just so big. What do the founders say when they're asked about the really big trade-offs that brands have to make in order to get into Sephora?

If you think about a brand like Sol de Janeiro, a few years ago, it was acquired by L'Occitane for $450 million. And so the founder of Sol de Janeiro had a massive payday. And so it was totally worth it. But they do say that they are basically ceding control of their companies to Sephora. And that means that they're not making all of the decisions that a founder and a CEO typically would make.

They're letting Sephora make decisions about things like packaging. There's a brand called Soft Services that creates beautiful skincare products, and it wanted to create these eco-friendly, refillable containers. But Sephora said, no, that's too complicated for us to sell in our store.

So they basically had to redesign their packaging to make it disposable. These are the kinds of decisions that Sephora is helping them make. And, you know, there's a lot of pressure on them to sort of take all of this advice. Because that's basically the only way for these brands to hit the kind of scale that they're looking for. I would imagine, Liz, that it's really hard for a company to go on record and say, you know, being associated with Sephora, being in the Sephora store was bad for us. Is anybody, will anybody talk openly about the downsides? Yes.

And so the people who are willing to talk about the downsides are those who were in Sephora, but then got kicked out. And so I think that's another really important part of this. So there are 300 brands in store, and those brands are constantly rotating because there is a number of brands that are not selling at the rate that Sephora needs them to sell at. And so those brands get unceremoniously kicked out of the store.

One very notable brand is J. Lo's Beauty Brand. Even she, you know, her brand wasn't able to meet the targets that Sephora had set. And so these brands that are not able to succeed, their founders tell me things like, you know, it's kind of like a pay to play model because you have to pour so much money into Sephora in order to succeed that you're basically kind of on this hamster wheel, you know, trying to go out and get VC funding,

pouring it into your brand so that you can meet Sephora's targets. And then, you know, it just, that you can meet Sephora's targets. And then, you know, it just that keeps going on and on and on. And it's a very stressful, expensive process. And so those founders would say that, yeah, there are a couple of brands that are big winners, but there are a lot of brands that really struggle to compete in this environment. And it's tough.

It's tough to be independent. To be a small brand sounds great, full creative control, all wonderful. But as you've laid out, if you're not able to poke your head up above the parapets, so to speak, no one ever sees you. That's right. And, you know, there are thousands of beauty brands on the market today. So the market is just so crowded that it is really hard to get anybody's attention. And so in order to succeed here,

you really need a retail partner. And Sephora is known for being the most powerful of these retailers, but it comes at a cost. You're spending so much money at Sephora, from the in-store fixtures to the samples that you see in stores, to even training up staff who will be able to do the marketing and doing the in-store trainings.

All of this is very, very expensive. And so it's definitely a complicated calculation that founders need to make when they're trying to break into this world of Sephora. So Liz, it was capitalism all along. Everyone listening to this episode will be inside of a Sephora this weekend. I personally guarantee it.

What should we think about this when we walk in for our concealer? I think that Sephora has created a really exciting in-store experience, and that's really hard to do. You know, across the retail landscape, we're seeing so many retailers shutter and close. And here is Sephora constantly innovating, creating these really, really exciting experiences for us. But I also think that it is creating this culture of excessive consumption.

It's constantly, you know, cultivating our desire for new beauty trends, and it's making us feel like we'll never have enough makeup or shampoo or skincare to make us feel beautiful enough. And so that's really problematic as well. Fast Company senior writer Liz Seagrin. Liz, thank you so much. Thank you.

Amaskaloo Ellen produced today's show, Amina El-Sadi loves a red lip. Andrea Christen's daughter exfoliates with coffee grounds and Laura Bullard enjoys a little red light therapy. Patrick Boyd shampoos with Atelier Bloom. Most Lux on the list, go figure. The rest of our team, Abisai Artsy, Hadi Mouagdi, Victoria Chamberlain, Peter Balanon, Rosanne Miles-Brian, Travis Larchuk, and Devin Schwartz.

Jolie Myers is our deputy EP and Miranda Kennedy is our EP, also pretty. Keep your third eye open for Sean Rommasferm at South by Southwest in Austin on March 8th. He's going to be talking to New Jersey native Rami Youssef. I'm Noelle King. It's Today Explained.