A billion on the kitchen table: how Kim Kardashian's sister earned $900 million at age 20

in 2018 Kim Kardashian's half-sister Kylie Jenner was named the youngest person on the Forbes list of the richest female entrepreneurs . The magazine estimated her fortune at almost $ 900 million. It is based on the cosmetic brand Kylie Cosmetics. The company was founded just two years ago, but is already valued at $ 800 million. The main growth driver is Instagram, where Jenner posts selfies almost every hour describing cosmetics applied to her skin and announcing new products of her brand.

https://www.instagram.com/p/BlGA0VgAqBp/?hl=en&taken-by=kyliejenner

Concept

• In 2014, an unusual flash mob started on Instagram: users pressed their lips to glasses, ridiculing model Kylie Jenner's unnatural size after plastic surgery . But Jenner herself did not seem to be hurt by this flash mob, but on the contrary: she decided to make money on it.
• Jenner invested $250,000 of her savings in the production of the first 15,000 lipsticks, and then began to actively promote the product through her social networks. The advertising campaign was so successful that in the first minutes from the start of sales on November 30, 2015, all lipstick was sold out. The cosmetics proved so popular that $29 sets were resold on eBay for $1,000.
• Following this success, Jenner began experimenting with ways to promote the product, selling products through retailer Topshop and her own small stores in New York, San Francisco and Los Angeles, with her first store near Los Angeles attracting 25,000 visitors in two weeks. As a result, the most profitable way to sell was offered by Kylie's mother. Kris Jenner is used to making big decisions in her kids' business. Seeing her daughter's first success, she immediately agreed to cooperate with the Shopify online trading service.
• Kylie Cosmetics does not have its own production, it is the American company Spatz Laboratories, located in China. She is also developing new formulas for cosmetic products, which frees Jenner from having to spend six months testing new cosmetics. Spatz Laboratories' parent company, Seed Beauty, does the rest, from packaging to shipping. In total, more than 500 people work on the production of outsourced cosmetics, although Kylie Cosmetics itself employs only five people constantly and seven more part-time. In 2017, Kylie paid $180 million, or 55% of total sales, for Spatz Laboratories services. Despite the impressive amount, such a business model allows Jenner to manage a million-dollar business from the comfort of her home, slowly plan further development and post beautiful photos on Instagram.
• Social networks are one of the main drivers of company sales. Jenner has 110 million followers on Instagram, more than 1 million on Snapchat and more than 25 million on Twitter. Her products are also advertised by family members: her half-sister, actress Kim Kardashian, as well as models and TV stars Khloe and Kourtney Kardashian.

https://www.instagram.com/p/BhhLE7ZgUSk/?hl=en&taken-by=kyliejenner

What makes Jenner cosmetics so popular?

• Cosmetics Kylie Cosmetics is in great demand, as it is focused on young people. Young people aged 18 to 23 prefer to buy little-known brands that can be found on social networks, Forbes clarifies.
• Companies with similar business models existed before Jenner arrived. For example, back in 2000, former Cindy Crawford and Naomi Campbell beautician Anastasia Soare began selling cosmetics through her Anastasia Beverly Hills store. However, her business skyrocketed in 2013 when she started promoting products through Instagram and sending free samples to users with large followings to advertise to their followers. Now Anastasia Soare has 17 million subscribers, and her fortune is estimated at $ 1 billion. You don’t have to have a big name or work for celebrities to create such a company. Huda Kattan became a beauty blogger in 2010, and three years later she founded her own company Huda Beauty and began selling cosmetics through Instagram. Now she has 26 million subscribers, and the business is also valued at $1 billion.
• Jenner's popularity and family ties played a huge role in the development of Kylie Cosmetics. Like her sisters, Kylie Jenner is the star of the reality show Keeping Up with the Kardashians, in which she has been acting since she was 10 years old. It gave impetus to the careers of all family members who successfully monetized their fame and founded thriving companies thanks to it (sisters Kourtney, Kim and Khloe Kardashian own the Dash fashion boutique chain).

prospects

• Less than a year after its founding, Kylie Cosmetics' revenue rose to $307 million.
• However, now, according to Forbes, active growth has slowed down: after that, in 2017, the company's revenue grew only by 7%, despite the launch of 30 new products. The publication calculated that lipstick revenue fell 35% from $153 million in 2016 to $99 million in 2017. In the first six months of 2018, the company's revenue grew "significantly" compared to the same period last year, Kylie said.
• In the future, Kylie plans to continue to own the company alone, but her mother Chris, who receives 10% of the income of each of the 8 members of her family for the services of a personal manager, does not deny the possibility of selling part of the company. “That's something we're always ready to consider,” she says.

The use of social networks and good taste, in principle, make up the entire business of Jenner. Where tech companies like Hewlett-Packard start in a garage, businesses like Kylie Cosmetics “are born on the kitchen table,” Forbes notes.

Egor Sonin