Digital Beauty at Johnson & Johnson Innovation, JLABS.
Kathryn Cavanaugh | Partner, Grace Beauty Capital
Odile Roujol | ex L’Oreal, Advisor& Board Member, leading @BeautyTechSF community, Advisor Next World Capital
Tonya Soman | Venture Partner, 500 Startups
[Moderator] Elizabeth Wu, — Senior Analyst, Scientific Innovation, Consumer
On a sunny Monday, in the South of San Francisco, I was humbled to be part of an amazing panel about the beauty revolution under way, engaging the conversation with 70 attendees: from Bio tech companies, startups Founders, investors, and C-suite level executives in Corporations. There is a digital beauty revolution afoot as technology and beauty merge to create novel approaches to provide consumers with deeper insights into their skincare needs. Technology is becoming the catalyst for personalization of beauty solutions, creating new business models that change the way consumers select and access their beauty products.
Let’s look at the trends shaping the digital beauty revolution and the role digital applications, devices and data analytics will play in this evolving market. And let’s share a few insights for Startups …
What are the hottest trends in the beauty/skin care market today?
SELF CARE, SELF EXPRESSION. THE RISE OF COMMUNITIES
We all agree. People want first to belong to a Community. Consumers express their individuality. They like new indie brands giving fresh perspectives and unique benefits that big brands can’t fulfill.
They like brands with a personality that is genuine. With initiatives that go beyond corporate social responsability and truly give back to society. Today’s consumers increasingly seek transparency when it comes to their beauty products
And as a consequence Direct-to-consumer beauty brands, and more generally the number of brands is exploding.
CUSTOMIZED COSMETICS THANKS TO DATA AND ARTIFICIAL INTELLIGENCE/MACHINE LEARNING
We reminded all of us that Personalization is not a new phenomenon, but the use of massive amount of data is, using machine learning to determine recommendations.
-PROVEN BEAUTY has been founded by Ming S Zhao, Harvard alumni, Y combinator 2017, using data analytics for customized skin care. Their skincare quiz enables people to share information about their needs.
- CUROLOGY founded by David Lorstcher, a platform enabling to chat with a dermatologist who can prescribe the relevant concentration for Acne products in your skin care routine. They gather a lot of data about you, and therefore have the knowledge to “personalize” their recommendation according to your skin type, but also sleep, diet, sport routine, and where you live (sun).
I like this example, as they now expand to the anti-ageing category (with brown spots, wrinkles) as there is an alliance of big data with human interaction.
Future belongs to companies who get it about being human, even when they scale.
How companies are using social media to attract and retain customers? How is technology influencing how brands are launching (to get feedback about their products).
Let’s illustrate the trends by a few rising companies.
Again we all agree, social media analytics tools will help indie brands or celebrity influencer launching a brand to scale faster (vs 7 to 10 years), leveraging the knowledge of their community. Great solutions using huge amount of data can help to read not only the volume of followers and their engagement but their virality, and focus on their interests and what they like as brands.
SOCIAL STANDARDS has just a new amazing feature on influencers, reading all verticals. They are based in Oakland, and have a warm welcome from M&A teams and private equities, and global brands.
I’m a big Instagram fan. But let’s not forget it, Social media evolve. You could have surprises in the way we shop with new tools such as visual search at Pinterest in the near future, especially when planning big things and moments in our life.
I also believe in live events. Livestreaming will convert people « browsing » beauty into beauty shoppers.
- BEAUTY STREAMER is exciting as a solution. Founded by the serial entrepreneur Seth Goldstein, it’s a startup enabling people to be connected, listening to an influencer or make up artist, discovering on a shared screen how to apply the products, and being able to purchase them at the end.
It’s not only a new way to discover, learn and shop, but the emotional connection “sharing a live moment together”.
It’s a revolution under way which could connect friends, or thousands of people belonging to the same community and sharing the same interests. Discovering, learning, shopping with other people, connected at the same time (after the wave of tutorials on YouTube, it could be the next big trend).
- MIRA founded by Jay Hack and Brandon Garcia, Stanford alumni, is a solution enabling customers on line to have their tutorial and video adapted to who they are thanks to computer vision.
Conversational is the new trend. Personal assistants, voice-based technology will evolve to curate products.
TOKY WOKY is a great French startups working already with Sephora US on how to activate their community of users and customers sharing advice and tips, talking about products and brands.
Chat bots will be the next wave, but experts will remain essential in the ecosystem.
No surprise reading the news, customers will be more and more educated to their data, and biometric data and demand either privacy or compensation.
With increasing health conscious lifestyles, awareness and ethical consumerism, is the trend for natural ingredients and organic brands sustainable?
Again, we agree with Tanya and Kathryn.
MOTHER NATURE AND GREEN IS ON THE RISE FOR LONG
Beauty is increasingly associated with health and wellness. « Clean beauty » becomes mainstream. Consumers are seeking greater health benefits, transparency and sustainability from their food, it’s the same for beauty products.
For many, it’s a lifestyle choice. Organic appeal to people who want products that reflect who they are and where they live.
Consumers today are doing more research, they are more aware about developments and technology, or just of toxic ingredients forbidden by the regulation in Europe or in the US.
I’m personally a big BRANDLESS supporter from the beginning.
BRANDLESS founded by Tina Sharkey is a brand, but first an engaged community. For them “goodness”matters. It’s not just about being aware of toxic ingredients and avoid the worst, it’s a way of living.
Exactly like you eat healthy food, have a sport practice and a sleep discipline. And it’s even better when products are available at 3 dollars, at reach for all of us.
How are Millennials and GenZ changing consumer expectations, have changed the go to market strategy and business models of the industry?
What we said, each of us with our own words, is about:
THEY WANT THE HUMAN TOUCH:
They like to interact with influencers, or experts. It’s not about technology but about emotional relationships.
I’m amazed to see an influencer in acne, being authentic to herself and sharing pictures or her before and after make up, sharing tips for her skin and having a Million of followers on Instagram.
THEY WANT TO CONNECT LIVE, LEARN FOR LIFE:
As shared, after the wave of YouTube videos, Livestream could be a new way not only to discover products but to be educated and learn, and shop.
THEY CRAVE FOR PHYSICAL EXPERIENCES IN A DIGITAL WORLD:
As the world becomes more and more virtual,
Millennials are technology connected (on line, social media) and spend money on experiences rather than products.
We are in an era of context. What matters if we want to touch them is: with who they are, what they are doing and where.
They share their experience.
An example is the success of the pop up stores, and in San Francisco, Color Factory or the Ice Cream museum, enabling tribes of teenagers to take selfies in a colorful environment.
What does it mean for global brands?
Tough job! As you deal with an existing culture, a brand one, a corporation one.
To be relevant, you need to be part of the conversation. We come back to the era of context.
You need to be true to yourself, authentic. Soon, the user generated content and micro influencers, local ones will take the lead. Only unique and original voices, consistent in their messages, and story telling, will be heard.
As Tech investors are coming in the Beauty Space, what is and what is not venture backable ideas from a consumer vs tech lens?
Tanya and Kathryn are the experts, I would say that you need a vision, a purpose. An amazing team.
Great products or unique services. An idea that can scale.
Data- and mission-driven Founders will be the champions. It’s how I choose @BeautyTechSF speakers.
Direct to customer and platforms are the future, but the champions will love tech but understand what means to be a global brand, have a strong culture, having consistent messages, a compelling content.
Are you seeing more strategic investors in beauty deals, and how is that viewed?
My answer would depend on the stage.
I agree with Kathryn, early stage startups, you should avoid Corporate ventures or their partners, as putting at risk your revenues, especially if B2B2C (exclusivity in deals).
Later, best is not a majority in the capital table, and a win win strategy, as the conversation enables the corporation to learn about new trends, and the startup to test ideas.
The later, the better…
How is technology enabling data and in
sights that can be translated into new product development and new consumer behaviors?
In-Store technologies can help increase customer engagement with brands as well as boost in stores and mobile sales.
I’m a proud Board member at GLAMST founded by Agustina Sartori, a daring Woman in Tech coming from Uruguay.
She’s a Millennial and gets it about how to help people choose their shades on line or in store, and how technology is just an enabler for a great experience!
The behavior of the young generation is shaping the behavior for most of us.
What do you see as best ways to raise money if sharing your learnings in the Beauty industry?
Best is a syndicate with the best VCs in technology but also people understanding the beauty ecosystem and brands: retailers, media, influencers, product and go to market strategy.
What will it be in the next 5 years? Is there a bridge between corporations and startups ? Or Silicon Valley ecosystem and Europe or NY, or Asia?
At Shoptalk, Glossier founder Emily Weiss has been a great speaker. Still, some executives were listening to her looking like surprised on the insights. She was talking about experience, listening to customers, engaging with a community. Something any early stage founder would mention to you on stage or in a chat while grabbing a coffee every day in San Francisco.
Silicon Valley has amazing founders with a purpose, and leading tech trends such as data analytics and computer vision. All social media platforms are near San Francisco and working hand in hand with the new generation of founders. So be ready for new solutions and ways to discover, learn and shop!
Los Angeles gets it about influencers, life style brands (and lifestyle)) and entertainment.
The Silicon’s Beach could play a bigger role in the future.
With a bridge of the West Coast with Asia.
New York has always had an edge in design and content, with creative agencies, amazing designers and leaders. And having a lot of Europeans living here.
We should learn from each ecosystem. Best investors syndicates in consumer goods and Beauty Tech would be an alliance of a tech focus with a vertical expertise. It would also be great to have Co-Founders like the two part of an apple for a great customer experience and an impact in people’s life.
Diversity is the way to build great companies.
Asia has amazing startups. China has super power in AI and machine learning with huge volumes of data.
K Beauty is here to stay with great textures, natural ingredients, and sophisticated packaging.
J Beauty could be surprising in the years to come as a sophisticated and innovative market.
The US market has one advantage, its size and the fact that a lot of talents here come from all over the world.
I expect new rising platforms in the ten years to come, huge ones.
And I believe some niche brands will become global brands faster than ever, empowered by analytics tools to be “Even more Human” and connected to their customers.
Listening, and responding.
What advice would you give a startup?
A great idea and great products are the basics in a crowded place.
Listen to your users and customers. For real. Meet them!
Find your own voice, as a brand and company.
Build a strong team: Co Founders, Executives, Advisors and Investors.
Consider your Board as part of your team, helping you to grow as a Founder.
To Conclude, it was a lot of fun, and I enjoyed very much the great conversation.
WinforumNY in New York, May 21, should be the opportunity to launch the @BeautyTechNY (follow us on Twitter for more news).
And next @BeautyTechSF meeting will be hosted June 25 at Orange Silicon Valley (rush as already a waiting list on the meet up app, else follow us on Twitter and Insta).
See you soon! Odile