Building a Better Lipstick –

Building a Better Lipstick – – Company Business and Marketing

Jennifer Couzin tries to succeed online where other cosmetic companies have failed Will women go for a new Internet brand?

RETIRED AT 37 AFTER A STINT AT a successful startup, Jonathan Grayson didn’t need a job at an Internet company. He recalls sitting on his roof in San Francisco, watching the ships go by and drinking gin and tonics, when called to ask him to be its VP of engineering. Suddenly, working for a dot-com that aimed to give every woman her own personal lipstick was a lot more appealing than pursuing his passion of underwater archaeology.

Grayson was enchanted by Reflect’s proposition: allow women to build their own beauty products by having them fill out a questionnaire and describe what they want in a lipstick or shampoo. “The whole idea of letting women decide what beauty was to them, as opposed to saying, This is the model for beauty to which you must aspire captivated him, Grayson says. He was convinced that Reflect, backed by Procter & Gamble, which owns 65 percent of the company, as well as Redpoint Ventures and Institutional Venture Partners, which own another 15 percent (employees own the rest), had all the ingredients for success.

Ten months after Grayson joined the company and more than a year after it launched, the engineer’s hunch still holds. has risen above a virtual bloodbath in many online retail sectors, including beauty products, and in early October launched a design-your-own perfume section. While other dot-coms are laying off employees, Reflect is adding 20 employees to its staff of 60. But it all turns on one big challenge: Can Reflect persuade women to change the way they shop for cosmetics?

There’s no question that without the guiding hand of consumer giant Procter & Gamble, Reflect would not have attracted the investors and executive talent it has. In addition to providing financial backing, P&G boasts 5,000 scientists doing beauty research around the world. Perhaps most important, P&G knows how to be an effective manufacturer — just the thing Reflect needs, since it’s as much a custom manufacturer as a retailer.

Still, the company faces some big challenges. The first is persuading women who have spent years using Oil of Olay or Chanel to design their own beauty products. “We have to make sure we get it right every time,” says Ginger Kent, CEO of Reflect, who joined the company from Hasbro, where she oversaw the U.S. toy group. The company plans to use Procter & Gamble’s research to improve its ability to customize products; it’s hopeful that a shampoo better-geared to different ethnicities or one for hair frequently exposed to sunlight will mean happier customers and repeat sales. Prices are comparable to high-end beauty products, with both shampoos and lipsticks going for $12 (though prices will increase in a few weeks).

Competitors argue that even the best science may not be enough. “In order to sell a prestige product, you must immerse someone in brands,” says Angela Kapp, senior VP and general manager of Estee Lauder Companies Online. Since ELC bought in April, it has been working furiously to build a site by next spring that includes nine Estee Lauder brands. While Kapp admits that “if anyone can make it work, it’s P&G,” she still questions whether customers will let go of brands they have trusted for years.

Some investors think the answer is a resounding yes. In September, Reflect garnered $30 million in its second round of funding, bringing its total to $80 million. At Fine Fragrances, Reflect’s newest venture, users answer questions about the mood they want for their fragrance (sexy, bold, sporty), and select images they like best. This follows the main questionnaire in which customers select which bird they’d like to be and the kind of house they’d like to live in. Whether Reflect takes off, one thing’s certain: Buying cosmetics has never been so interactive.

COPYRIGHT 2000 Standard Media International

COPYRIGHT 2000 Gale Group