The Lip Bar (TLB): Melissa Butler (2020)

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29:17Hey, welcome back to How I Built This from NPR. I'm Guy Raz. So it's right around 2010, and Melissa had just had one of those life-changing phone calls with a supplier who asked, just kind of randomly, if she was looking to buy products to make soap or lipstick. And in that moment, she decided lipstick. For one thing, lipstick was actually one of the few kinds of makeup she wore. At the time, I think that I was into reds, oranges, and purples. Oh, yeah. Yeah. And part of it, like part of the reason why when we launched the lip bar, we had such crazy colors is because I remember it being so difficult to find purple lipstick.

30:03Like I wanted purple so bad, but it's like only a couple of brands sold purple at the time. And it was hard to find and it wasn't in stock. And I'm like, why is it so difficult for me to like have this bit of self-expression? And then I'm trying to think about like, well, what's the next step? Like then you're going to get a box of just powder, pigment powder for lipstick. But how do you make lipstick? Like where do you go to learn about how to make a lipstick? Did you did you like go online and type in lipstick recipes? Yeah, pretty much. I probably Google how to make lipstick and there wasn't that much out there at the time, but I just started experimenting and I probably made, I don't know, a thousand batches of lipstick.

30:50None of them worked before I found one. That was like it. First of all, what do you melt together to just get the, you know, the base for lipstick? Well, this is the way I've explained it. Like all lipstick is basically the same. It has its same like core ingredients all of it has a wax all of it has oil and all of it has a pigment right now depending on the waxes depending on the oils and the other additions that's going to impact the amount of color that's going to impact the texture if it's soft if it's creamy if it's moisturizing if it's long-lasting now all of those other things are optional right and then depending on the proportions like that's going to affect the texture like when you apply it to your lips how that is sort of spread onto the surface of your skin, right?

31:39Like a thinner coat or a thicker coat, things like that. Yeah. So if you have too much oil, it's going to be soft and it's going to feel luxurious on your lips, but that lipstick probably is going to break. If you have too much wax, then it's not going to spread on her lips in a nice silky and creamy way. If you don't have enough pigment, then you can have this beautiful color, like the actual So lipstick could be a bright pink, but when you actually put it on your lip, no color shows up. So it has to be a really delicate balance of pigment, oil, and wax. It's like a really luxurious and expensive crayon.

32:18That's exactly what it is. And when you had all the ingredients and you started to melt stuff together, what did you pour it in? I mean, can you just go online and get lipstick molds? Yes and no. So most companies, like the huge companies, the L 'Oreal's of the world, they pretty much had a monopoly on the molds market. So there was, from my understanding, and this is in 2012, there were only a couple of suppliers in the U.S. who made molds. And the biggest one was Cavalla. And I was able to buy maybe four used molds. And trust me, they were not cheap. I think I've spent like a whole paycheck on them.

32:59Like thousands of dollars? Yeah, the molds were maybe$1 ,500 a piece. What are they made out of? Like metal? Steel. So they were also very heavy. I bet. So yeah, I probably bought maybe$6 ,000 or$8 ,000 in molds. And how I bought them and how I had access to them is I found a lab that was going out of business. And I think they were in Louisiana. And this guy was selling them and I found them on Craigslist, I think. I'm trying to imagine you in your apartment, like after working on the weekends, melting down all this stuff and experimenting with different colors and pouring it carefully into the mold and probably getting like lipstick material all over your kitchen.

33:42Just stressing out. Yeah, it ruins grout. Like there have been so many times where I've ruined stoves. I've lost security deposits. When people came to my house, like it was literally a lab. Like I definitely didn't have an apartment. I had a lab. And so, you know, the whole table would be spread out with all of my different ingredients that I kept in these airtight jars. And after I made like, let's say I melted down this perfect lipstick and I poured it into the mold. I really wanted it to the lipstick to cure. So I would put it in the freezer. So people would come over my house and want ice and I have no ice because my freezer is filled with lipstick molds.

34:22I'm like, oh, if you want ice, you're barking up the wrong tree. I don't have ice. I have lipstick. And you were presumably working like 60-hour weeks at Barclays. Oh, yeah, absolutely. And I was so committed. I started looking for suppliers in China for packaging. I started, like I would come home. I would maybe get home at, you know, 7, 8 p.m. And then I would stay up until 3.30. Wow. You know, working on the recipe. I have no idea how I functioned. And then I would get back up at 7 and go to work. And did you tell anybody about it? Were you like talking to friends like, I'm making lipstick.

35:00I'm just really excited about this thing. Oh, absolutely. They were all my first customers. Like every single time I made a product, like I never wanted to drink my own Kool-Aid. So I would invite people over to try on the product. Like people I met at work, anyone who would try it, honestly. I remember taking lipstick to work actually. Like, hey, I made this. Can you try it out? And people were like, no, is it going to break me out? You made it. No, I don't. Does it – how do you know it works? And I'm like, I don't. That's why I want you to try it out. We don't test on animals. Just on Barclays and Blays.

35:34Just on humans. Yeah. We test on finance people. So, and you're kind of experimenting and teaching yourself again and again. And at what point did you land on a recipe that you thought, yep, because you said there's oil, there's wax, and there's color, right? And so those are the basic ingredients, but you want to get a certain type of wax and a certain type of oil and a certain type of color that speaks to you. So when did you know that you found that right formula? Yeah, I mean, my parameters for me were they were just crystal clear. I was like, it needs to be vegan. I don't want any animal products or any animal byproducts.

36:13And I want it to be as natural as possible without compromising the color. So I knew that I wanted to create wild and crazy colors, things that you really didn't see on the market at that time. And I want it to feel good. So what's something that feels really good and creamy? And I was like, shea butter. I'm going to put shea butter on the lipstick. And that was it. Like I just started then looking for ways to source shea butter or coconut oil. And I think I tried a ton of different natural ingredients to add to, you know, that baseline formulation. calculation but really you know I found out that it was working when people started saying like hey can I get a little bit more of that and that was it.

36:54And did any of your like colleagues or or colleagues or friends were they assuming that this is something that you might like sell at a farmer's market on a weekend or like was that what they assumed were they even asking you what you were going to do with this? I think I made it very clear that it was going to be a website. And I don't think anyone took me serious until I got a shipment of our packaging. And here I am with 30 boxes, 30 boxes, like they're on the couch, they're on the floor, they're everywhere. And here I am just kind of waiting, like, you remember that company I said I was going to start?

37:28Yeah, it's in my living room. And I think that's when they took me seriously. So you were presumably making the sticks in your kitchen, and then you were putting them into the Into the lipstick tubes. The tubes, okay. Into the lipstick tubes. And you found a factory in China to make that packaging? I did. And the inspiration behind the packaging, because our packaging really stands out. It's really cool. It's intricately designed. And the inspiration was a birdcage. I love the old school Victorian birdcages that are just super intricate. I don't like the idea of birds in cages. No. But I love the beautiful craftsmanship.

38:07And so I was like, I want it to kind of look like that. I want something that doesn't look like a traditional tube because I'm building a non-traditional company. And I had been asking a lot of friends like, you know, what do you think about makeup? And oftentimes, especially for black women, what I found was they felt like beauty wasn't for them. That it was made for, not for their skin or their complexion. Yeah, absolutely. That it wasn't for their complexion, that marketing didn't cater to them unless they were, you know, putting something in a brown bottle. And then they're like, hey, this is for black people.

38:42So here I am, friends with a lot of people who are now, for the first time in their lives, they have disposable income, you know, because we were all fresh out of college, basically. and making a pretty solid salary. And I was just like, there's a huge gap in terms of like what my generation wants and what's readily available in the market. I mean, you look at your website today and clearly your products and your brand, they're designed for every kind of person, every skin tone, every racial and ethnic background and group. When you were initially coming up with the idea, Were you saying, you know, to your friends who you were kind of asking for feedback, were you sort of saying, look, no one is serving us?

39:31You know, we are consumers and we spend a lot of money on fashion and beauty and we don't feel like products are being made for us. And so I want to make products for us. Was that how you thought about it initially? Yeah, I think the goal was to create a brand where black women could be the default. So we create products, like you said, for every single skin tone. But when we first launched in 2012, I was just like, I don't want black and brown women to feel like they have to fit in to the lip bar. I want them to know that they are the lip bar and they're not the default anywhere else. And my brand is going to be where that starts.

40:19OK, so you come up with a really cool packaging design that that looks kind of like a birdcage. And you've got this factory in China that can make the boxes. Do you remember how many packages like like lipstick dispensers you had to order? Yeah, I think the minimum order quantity was 12 ,000 units. Wow. You had 12 ,000 units stacked up in boxes in your kitchen. And you had to pack each one by hand. You had to take the actual lipstick and pack it in. Every single one. So I hand poured it into the mold. And my mold held, I want to say, one held 48 units and one held 72 units. So this is going to take a while to do.

41:00This is going to take a couple weeks. Yeah, this is serious. But I think I launched with 12 shades. and the goal would be to sell all of this in a year. Yeah. And with the soap bar, you were going to name each soap, like the Margarita or the Lime Ricky or the Gin & Tonic. Were you going to do that with the lipsticks too? I did. And so we have Cosmo. That was one of our colors. And Gin & Tonic is still one of our colors actually. But we had things like Fuzzy Navel and all these crazy names. Sour apple martini. It was literally a green lipstick. Fuzzy Naval, I think, was like a light orange, like coral lipstick.

41:44And because it had that bar tie-in, my concept was that whenever you bought a lipstick, you actually also got a recipe card for that drink. By the way, do you remember, I mean, you must have, I'm assuming you got 12 ,000, these tubes, right, of the packaging for the lipstick. you had to spend a lot of your money on this was any part of you nervous about doing that I's not even just like a lot of money I think I spent all of my money guy I spent my entire savings um because the thing that I didn't take into consideration was you buy it but then you also have to get it here so I learned a whole new skill set about like ocean freight and like dudiffs and tariffs and taxes and all that jazz.

42:31So I think buying the units and then actually getting them to my Brooklyn apartment may have cost me$13 ,000. I mean, and then on top of that, I have to buy all the ingredients. I'm planning a launch party. I have to have pictures taken. So the startup cost for the business was probably around$30 ,000. And so as you were getting ready to launch, this is still pretty much you doing everything. I mean, were you turning to friends for help at all? Yeah. My friends ended up being my founding team because I didn't know anything. I didn't know any better. So Roscoe, who's our creative director, she moved to New York.

43:19She moved to New York three weeks before we launched. And some of my other friends in finance, I'm like, can you do our sales? Can you do our branding? Can you do it? I had a team of six people. None of us were making any money. And Roscoe was somebody you knew from high school? She was a friend from high school? Yep. But Roscoe had been one of my really good friends from high school. We both went to cast together. And you basically said, hey, Roscoe, I think her last name is Spears, right? So she wanted to start a career in fashion. So New York was attractive to her anyway. And all of my friends, they just kind of were like, what's the lip bar?

43:54I told them. And then they were like, OK, cool. And so now here we are. We have a business. And so I remember at our launch party, the very first person who showed up, We weren't even finished setting up yet. She came like 30 minutes early. It was a beauty editor from Teen Vogue. And I think we were all stunned, like, wait, people care. People are listening. And so it was a really fun event. And we got a lot of people to come, which was really interesting because we didn't really have a big budget. And we didn't really know anyone in New York City. And we had gotten the attention of some beauty editors.

44:33So that was super cool. And we were so proud. At a certain point, you were going to have to make the decision of whether to quit your job. Now, I should make the caveat here that you were, one of the biggest advantages I think you had was that you were young. Yeah. That if it didn't work out, you know, you could maybe go back to finance or something like that. But it sounds like you kind of just got to a point where you're like, yep, I'm ready. I'm going to quit my job and do this. And I think it happened like in 2013. Were you nervous at all about quitting this job in finance? No, I wasn't nervous.

45:15I think you're absolutely right. I think one of the magical things about being a first-time founder, especially in an industry that you don't know anything about, you're completely naive. And you think that everything is going to work. Like, I didn't have a plan, but I knew that it was going to work somehow. and our first year in business we launched in 2012 i think we made 26 000 right and that was mostly from friends and family who would yes absolutely but that 26 000 even though it's not a ton of money i was so proud to make that 26 000 i couldn't believe it i was like wait what i think i think my job on at barclays you know i think i had been making like 70 000 or something at that time.

46:04And so like to make, you know, essentially a quarter of my salary, I was like, this is a thing. Yeah. All right. So you quit Barclays. Yeah. And does anybody in your, I mean, your mom, like, you know, she had to work really hard to, you know, to make a living to support you. And then you go off to college. And I'm sure so many people are so proud of you. And And you had relatives in Detroit who were like, oh, my gosh, she's – if I'm your mom, I'm like, my daughter's at Barclays. Absolutely. She's working on Wall Street. Absolutely. I'm so proud. And then you call me and you say, Mom, I'm quitting.

46:46I'm starting a lipstick company. What did people in your family say? Oh, they thought I was crazy. My mom, she was like, what? And then I remember her literally explicitly saying, who's going to pay your bills? And I was like, well, I'm going to pay my bills. I think I saved up. I tried to save up what I thought would be a year's worth of my expenses. I ran out in like six months. But my family thought I was crazy when I quit. And my feeling was just like, look, I am more comfortable with the idea of failure than I am with regret. And that's what made me say I can do it. And now you are the CEO of the Lip Bar.

47:35I'm assuming you have no money, right? How are you financing this business? Oh, my goodness. We're literally dead broke. Me and Roscoe ended up like Airbnb-ing her bedroom and she moved into my room so that we could like cover our expenses. You know, if the first year we made$26 ,000, then I think the next year we may have made like$56 ,000, which is great. We're doubling. Yep, that's growth. Yep. Yeah, we're growing. But ultimately, we're not really making money. We're not really profitable. And Roscoe was doing freelance work on the side. She's doing freelance work sometimes and I'm full time and I say full time with like air quotes because it's not like I had any benefits or a salary, but I'm giving this my full attention.

48:25Full attention, yeah. So I was still making the products in my kitchen. I was focusing on innovation. I'm making new colors and I'm thinking of new marketing ideas because, you know, Roscoe is handling the creative in terms of our photo shoots. But basically, I'm handling every single thing else because like my first team of friends, that first team had all fizzled out probably within the first, I don't know, nine months. So, yeah, I'm on social media. I'm documenting the process of me making lipstick. And people are really intrigued by that. People can't believe that I'm actually making lipstick in my kitchen.

49:04So you are grinding away. Roscoe's grinding away. You're trying to get this off the ground. You're doing this in New York. And I guess around 2013, maybe 2014, you decide to move it to Detroit, like to go back to where you grew up. Why? I mean, New York, right, is the global center of fashion, one of the global centers of fashion. Yeah. Certainly the center of like the fashion industry in the U.S., the big makeup brands, I think, are headquartered there. So why did you decide to leave New York? Well, number one, I was running out of money. Right. And I had been thinking about it like, should I stay in New York?

49:50We had already made a lot of connections with beauty editors. We had been getting press. So I felt like we made a mark and we could still grow without being there. And then on top of that, I saw the narrative of Detroit changing. Around 2013. Yeah, yeah. So, you know, in 2012, when I first started the company, it was all about Detroit and Detroit's ruins. And in 2014, the narrative was changing. Shinola had just come to Detroit and people were investing in Detroit and downtown was becoming cool again. And bakeries and vegan restaurants. Yeah. I was like, maybe it's time for me to go home to build this business.

50:37And number one, I can be a part of this renaissance. I can make sure that people who look like me are a part of this renaissance. Because I had been experiencing firsthand what gentrification looks like because I was living in Brooklyn. I never thought that Detroit really deserved the bad reputation that it had gotten. and I wanted to be a part of like this new thing and to meet the movers and shakers that were making it happen. So I was excited for the city. I just wanted to make sure that black people were a part of the resurgence. When we come back in just a moment, how Melissa and Roscoe spread the word about the lip bar, first on a nationwide tour in a retrofitted airport shuttle bus and then with an appearance on Shark Tank, which does not go particularly well.

51:29Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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53:42hey welcome back to how i built this i'm guy roz so it's around 2014 and melissa butler has left new york and moved the business to her hometown of detroit and she knows that if women could just try her lipstick, could just see the colors. They love it. So I knew that I wanted to be in retail, but I knew that we also weren't ready. So I decided that in order to get our products in front of customers, that we would instead of trying to figure out what counter can we get behind, how do we bring the counter to our customers? And so we built the lip bar truck, which was what we deemed the most glamorous beauty experience on wheels.

54:30And we went on a tour. You built like a truck that was decorated with your logo full of like an ice cream truck? So my ex-boyfriend built party buses like from his bare hands. Wow. It's basically like a shuttle bus. so you know he took out the old funky seats and you know built a countertop like wrapped around the entire bus built a cash register in the back because the goal was always we're going to build this truck and then we're going to go to different cities and park on the street but then when i what i learned is that you're supposed to have a permit and this was like the major plot twist But the responsible part of me said, OK, why don't we find stores that we can park in front of and partner with?

55:22Then we could do it without the permit. So I started finding partners in all these different cities that I wanted to go to. And our most impressive partnership is that we got Urban Outfitters to agree. And this is the Urban Outfitters in D.C. to agree to partner with us. And they brought in like water and drinks and they allowed us to park in front and they kind of rolled a red carpet so that it was clearly like a part of Urban Outfitters for the day. The one in Georgetown. Yeah. Yeah. So we were able to open up the side doors and we put a TV right there so that if people are just walking by, they can kind of see our messages like flashing in display.

56:03So people would naturally stop because they're like, this truck looks cool. So many people thought that it was like drinks naturally. So they would come up, guys would come up and say, what do you got in there? You got beer? And we're like, no, we have lipstick. Come on up. Bring your wife. And then, like, oftentimes the woman would come up because she was so intrigued. She's like, you have lipstick on there? And she would come up, and the whole truck was mirrors. Wow. And she would come on, and she would try on the product. And, you know, she would more often than not love the product and make a purchase.

56:38And how long did this tour last? We went on two different tours. And I want to say the first one, which was the largest one, maybe six weeks. Wow. Were you able to finance the trip through sales? Yeah. Yeah, absolutely. So the first tour was wonderful. And that inspired us to go on a second tour. And that's when we went on this, like, Black college tour. So we went back to my alma mater and to drive from Detroit to Florida is crazy in a truck that's not so great. And so a guy on the way back from this like black college tour that we did and we actually made a lot of money and we were really excited about it.

57:22Wow. The truck started breaking down. And like I remember we were maybe four hours away and we just kind of stopped the truck and we parked it and we were like, OK, maybe she just needs a rest. Okay, maybe if we just give her some time off. And I think we just let it sit for an hour and then she took us home. And that was the last time we really drove it. But I'm so emotional about the truck so I can't get rid of it. Meantime, you still need to get some visibility. And so you decide to do something that is really smart but also really risky, which is to apply to be on Shark Tank. Yeah. Yeah. Which is a great idea.

58:03But, you know, lots of people apply to Shark Tank. So how did it happen that they picked you? Do you know? Well, I think Shark Tank picked us because we were fun and we were being ourselves. So we submitted a video where we were talking about the product, but also we were hula hooping. So it was kind of gimmicky, but enough to like make you pay attention to what we were saying. And they want people who are going to be good on television and fun. Yeah. Yeah. Welcome to the Shark Tank. We had Jamie Siminoff, who founded a ring, on the show. He described his experience that it was really terrifying, you know, because you don't meet them until you actually walk out and pitch your product.

58:46Hi, I'm Melissa Butler. And I'm Roscoe Spears. And we live in Brooklyn, New York. We were kind of nervous, and they were so cruel to us. Oh, my goodness. This is a new innovation. I can see a massive market share in the clown market. They told Roscoe that she looked dead. That she looked dead? Because of the color of her lipstick. So, Roscoe, aren't you worried if you walked into a bar with that color lip, somebody tried to resuscitate you? What you end up seeing is probably seven or eight minutes, but we were recording for maybe an hour. So I'm explaining to them that the industry is changing and that the bigger companies are slow to change.

59:28And we're a smaller company and we're fast to change. And that's that's our strength. And they were like, well, if the big companies wanted to do it, they just would. And they would crush you like the colorful cockroaches you are is exactly what they said. And they would crush you like the colorful cockroaches you are. You only have so many minutes on Earth. Don't waste them trying to sell lipstick. I'm out. Wow. Wow. You know, there's a shtick there that kind of that that mean kind of shtick. And that's part of what they do. But but I think I think Kevin O 'Leary said, hey, the chances that this business will succeed are zero, practically zero.

1:00:07And what they didn't show on air is that when he said, like, don't waste your time trying to sell lipstick, they then went into this whole internal debate on what we actually should be doing. They're like, listen, you're beautiful girls. Your dresses are nice. Why don't you go into the fashion business? Which is so offensive. And I had been so prepared to talk numbers because like, here I am like a former finance girl and like, I'm ready to talk business. And they didn't, I think the most disappointing thing for us wasn't that they called us colorful cockroaches. Like I actually didn't even care about that statement at the time.

1:00:42I think that it was more offensive that they did not even consider us as business women. But it sounds like, it sounds like even though you felt like they were not so kind, that it forced you to refine the story you were telling about Lip Bar, about the Lip Bar. It did. And it forced me to start thinking more so about how we market the company. Mark Cuban was really adamant around me being at the forefront of the brand. He was like, look, your story is really cool. You need to step into your brand. You need to be your storyteller. At this time, I was not at the forefront of the business. I didn't want Melissa Butler to be the lip bar.

1:01:30I wanted the lip bar to be the lip bar and for Melissa Butler to be Melissa Butler. And so over time, I did realize that that was hurting the company with me not being at the forefront. Because today, people are looking for brands that are going to be more transparent. And they want to know who's behind the business. Who is a person? Yeah. Yeah. Yeah. All right. So you come back to Detroit and eventually this Shark Tank episode airs because I think they end up airing like six or seven months after they're actually filmed. Yeah. And we had no idea. They don't really warn you. They don't tell you, right?

1:02:04We found out maybe 10 days in advance. And even though you got kind of pilloried by them, that must have helped your visibility. Oh, it's crazy. Oh, our website crashed that night. I want to say we had like 40 ,000 hits to the website within just a couple of minutes. Wow. We had all this stuff on like back order. We couldn't like maintain the orders. I was still shipping the orders, I think. And Shark Tank really like fast tracked us into like hiring people. Yeah. By the way, you were still, this is just being financed entirely through cash flow. Completely. You had not raised any money or anything.

1:02:41You're hiring people and paying them probably a small salary and offering them some equity. Really just paying them a small salary. Right. And we're hiring entry-level people. Right. Basically like hourly workers to just help us ship the orders. And we had just started transitioning into getting the products manufactured. So that was my goal. Like, okay, well, Melissa, you need to get your product manufactured so that you can then launch into retail. Wow. And then it was time. I was like, I'm going to find a retailer and Target was our goal. Target was your goal. Target was the only people we pitched.

1:03:15And now Target, everybody wants to be in Target, right? I mean, that's like the top place to get into. They get pitched a million times a day. Did you even have any connections? Like who did you know to call? I had no connections and so I couldn't call anyone. But I'm going to just start reaching out to the buyers. And so I went on LinkedIn and I started searching for Target buyers, like color cosmetics buyers. Like I was searching everything. I love that. Beauty buyer, color cosmetics buyer, Target buyer. And I think I was like emailing like 12 different people. So this is probably an eight-month process of me stalking people at Target.

1:03:56Wow. And so after eight months of stalking people, you eventually do connect with a target buyer, I think a makeup buyer. Yeah. And I'm curious, like, what did you say in your email to her? Because, I mean, I'm sure that this buyer was getting lots of emails and you had to stand out. So what did you write? Oh, I mean, I threw the whole kitchen sink in. And I told her a little bit about the story and about our truck and how cool we are and how, you know, I think we had maybe 40 ,000 followers on social media or something. I told her that everything was vegan and cruelty free. I talked about how cool our packaging was.

1:04:37But I think the real thing that stood out was that I talked more than anything about what we could do for Target instead of what Target could do for us. I'm like, my customer's shopping there and she's not shopping there for makeup. and it's because you don't have me basically. And so on my second follow-up, she came back and was like, oh wait, your packaging actually is really cool. Can you send me some samples? And I probably screamed. I don't know. I probably, I screamed and I probably took a lap around my house because that's what I do and I'm really excited. And then we had a call and she was like, look, I think that your brand is really cool.

1:05:14But also I know that your brand is really small and like maybe too small for Target. I don't know. And she was like, but I'm willing to take a chance and allow you to drop shit on Target.com. Like, do you want to launch on Target.com? I'm like, absolutely. Wow. And so what we did was we launched a brand new color and we blasted it to our audience, but you couldn't get it on our website. You could only get it on Target.com. But how did you, I mean, there's thousands, tens of thousands of products on Target.com. How did you gain visibility on the website initially? So the thing about launching in a retailer is it's not their job to sell your product.

1:05:52It's your job to sell your product. So we literally pushed all of our like our emails, our social media followers, all our friends and family. It was like a brand new launch. Like, oh, my God, we're in Target. We were so excited. We shared it with our community in a way where it was a win for all of us. Like, can you believe that the lip bar is now on Target.com? And they bought that color. and it sold out actually. And she was like, okay, I want to introduce you to the store buyer essentially. And we pitched it and we were launching in Target nine months later. Wow. You know, I think a lot of people will walk into a Target and think, oh, all the products here, the people who make them are probably multimillionaires, but it's actually not that simple because there's lots of products at Target and you got to sell them.

1:06:41But I have to imagine that being on the shelves at Target meant that you started to generate some revenue that started to make your business sustainable. Yeah. So we launched and we went into 44 stores. That was the test that was offered. We didn't have a marketing budget, but we had a publicist. We hired a publicist. And the reality is the makeup aisle didn't really have any small businesses. So the fact that we have shelf space and target as this really small brand was like an anomaly so we had this huge pr campaign you know a lot of people started talking about it refinery 29 talked about it team vogue talked about it and we we had like the number one selling lipstick for the first month of our launch with no marketing budget and target was like whoa we weren't expecting this of this brand and so we grew very quickly.

1:07:38So we went from 40 stores to I think 144 stores. And then we went into like 400 stores. And now we're in about 500 stores about to expand again. Wow. You I think in 2018, for the first time you brought in some outside funding, you got an outside investment. Did you ever I mean, think about pitching to VCs and to venture, you know, to investors or did that investment kind of, do they kind of come to you and say, hey, we want to, we want to invest? Well, it's a mixture of both. So now we're in Target stores, right? And we're growing in Target and, you know, we needed money. We needed money for - To finance the business.

1:08:19Yeah, because this is inventory and the beauty industry is not necessarily replenishable. So the average woman, it may take her eight months to even use her favorite lipstick. And I remember having calls with investors and pitching people and they would all say like, Melissa, you're so impressive. Like you're such an impressive founder, but we're not going to we're not going to invest. The reality is, guy, black women are starting businesses faster than any other group of people in this country, but we're not getting funding. And also because we're not getting funding, we can't really grow our ideas.

1:08:55So if we really want to, like, reduce the wealth gap in this country, we're going to have to start giving opportunities to women who look like me. Tristan Walker was on the show, founder of Walker and Company, Bevel is his best known product. And he pointed out on the show that if you look at the beauty industry and consumers by far, far and away, on a proportional basis, black consumers spend more money on beauty products than any other group in the United States. Yeah, it's been reported that we spend nine times anyone else on beauty. But meanwhile, you know, black businesses, black beauty businesses aren't well funded.

1:09:42So for a smaller company, it's like we have to fight tooth and nail to get a little funding. Yeah. Yeah. And I should say you were able to finally get some money from a fund that was started by the beauty entrepreneur, Richelieu Dennis, which is a fund I think he started for black women founders in 2018 and then in 2019 you decided to actually open a brick and mortar store in Detroit which is I think really close to the Shinola store right yeah we're right behind the Shinola store we're basically in their alley and I had never even wanted a store just because like no I don't want to maintain a store think about a store.

1:10:25We were already in Target. But the thing about Detroit is even with its resurgence, there's still very little within the city limits. So, you know, I felt like this was my opportunity to really like, again, be a part of that renaissance and really give people the opportunity to shop high quality makeup. And it really warmed my heart, Guy, because, you know, we open in the dead of winter. We opened on our birthday, essentially. And we opened to a line of maybe 200 people in the dead of winter. It's freezing. Because people were just so excited about that, about this opening. People were so excited.

1:11:10This is a city where there, frankly, isn't a lot of opportunity. And so typically, people have to leave to build something. And I am a person who left, but then I came back and they've shown me so much love. Like the lip bar has grown since we've come back. Like we 5X the business since I've moved back to Detroit. Of course, then 2020 happens. COVID shut down. The retail business really gets hit. Parts of the beauty industry do okay, but there is a slowdown. Did you guys see a pretty significant slowdown, you know, once COVID became a reality in March and April? Yeah. What's crazy is like February was such a good month for us.

1:12:00February was unprecedented. But, you know, I think it was just preparing us for what was next. Yeah. You know, people always talk about the lipstick effect, which is this idea that even in an economic recession or even a depression, women will still rely on those small novelties that make them feel good. But you typically only put on makeup when you're leaving the house and no one was leaving. And we were really, we were really concerned if I'm going to be just completely honest. I was like, I don't know how we're going to survive this business. the goal and the approach was really to just do the things that we had always done, which is like just continuously connect with our customers and meet them where they are.

1:12:50Our relationship with our customer is so strong because we actually are our customer. So, you know, I'm not married. I'm on online dates right now. And so I'm looking, you know, how do I update my profile? How do I look cute for my FaceTime date? How do I instill confidence to my team. And for me, that was like very easily lip color. I was like, by putting on this lip color, like I look a little bit more alive. I look more confident. I look like I'm ready for the day and we pivoted our messaging and then very quickly our sales rebounded. So while March was a tough month, April was, we had grown back to like our norm.

1:13:31And then June with the whole Black Lives matter and this more apparent need to support small businesses and particularly small Black-owned businesses, we had our best month ever. Wow. Yeah, I mean, you know, a lot of growing awareness and desire among many people who are watching and taking part in the protests against racial injustice to support Black businesses. And a lot of Black entrepreneurs we've had on the show have talked about those months as being, they were just overwhelmed with what happened to their businesses and the attention that they received during that time. Does that continue for you?

1:14:11Has it been sustained? Our sales have sustained, but that level of support, no. I think that, I mean, for me, I didn't expect it to. So I remember when it was happening, I call an all hands meeting with my team. And I said, look, we're getting flooded right now. And it's our goal. And it's our job to make sure that these aren't charity dollars. And that's the thing, like, we don't as a black business owner, I don't want you to support my business. I want you to shop my products because you think that this is great. Exactly. Because we make it easy for you to understand what products work for your complexion, not because you feel bad about something.

1:14:54And like our goal is to have lifetime value, you know, with our customer and have this, this more than transactional relationship with our customer. Yeah. And I mean, you guys have have branched out into all kinds of makeup, like you do eyeshadow and foundation and concealer and even like the lipstick colors that you're doing now. I guess you're offering, I guess you'd say like more sort of mainstream colors as well so over time we've i mean we've of course evolved you know when we first launched we were really just trying to make a statement and we had to introduce some practicality so now we have you know we have everything we have like over 16 nudes because again we're really driving that whole like beauty for every single complexion and we have the best reds like michelle obama just wore our red which is our best seller in the whole company yes it's crazy but we we stayed true to who we are.

1:15:48We still have a black lipstick. We still have a blue lipstick. We have tons of purple. So it's a balance between like, how do we leave something for people to get creative or, you know, reimagine themselves, even if it's just for one night. So let's say you're sort of, I mean, you are obviously growing and growing fast and your brand awareness is growing really fast. Do you think, I mean, can you imagine, do you think you can grow So to, you know, at scale to become a huge brand independently, or do you think eventually, like other cosmetics brands like Benefit or, you know, other brands that were eventually became huge, that you would have to be purchased or partnered, you know, with a bigger company, a L 'Oreal or Revlon or LVMH or, you know, one of these huge multinationals?

1:16:38Do you think that, I mean, could you see a world where you would partner or you would, you know, become part of their portfolio if it meant that you would become like, you know, ubiquitous everywhere around the world and airports and duty free shops and so on? Yeah, I mean, I think if we had the opportunity to really become like this world renowned brand, then I think that that would be the perfect way to like cement the legacy and all of the hard work that that myself and my team has been doing over the last eight years. Because having all of these high and low moments, you know, they've come at the expensive of lots of things.

1:17:20There have been times where I've been, you know, a bad sister or a bad friend or a bad girlfriend or a bad daughter because I've been sacrificing for the business. So I think the ultimate way to say this was worth it is having this brand that really makes makeup more inclusive and makes makeup easier and really has this like landmark and this leaves its mark on the beauty industry. When you think of your journey, Melissa, how much of your success do you think has to do with the hard work that you put in and your intelligence? And how much do you think is because you just you got lucky at times?

1:18:05And of course, I know this question is coming, but it's a really tough question. I think earlier on, it was all hard work. And I think that hard work is still, you know, I'm still receiving the fruits of that labor. And nowadays, I'm thinking it's luck. So I don't think anyone can fully take credit. I think that sometimes the universe is just in alignment. And right now, I really feel good. That's Melissa Butler, founder and CEO of The Lip Bar. And by the way, after nearly a decade in the beauty business, Melissa says when it comes to putting on her own makeup. Yes, I'm a beauty founder, but no, I don't know how to do makeup.

1:18:49And people who I would meet, they would say, you shouldn't say that. And I'm like, why? It's true. I don't know how to do my makeup. And I've tried to do a YouTube video, and I came out looking like a fool. I looked nothing like that tutorial.

1:19:06Hey, thanks so much for listening to the show this week. please make sure to click the follow button on your podcast app. It's usually a plus right at the top, so you never miss a new episode of the show, and it's totally free. This episode was produced by James De La Housie with music composed by Ramtin Ereblewey. It was edited by Neva Grant with research help from Dareth Gales. Our production staff also includes J.C. Howard, Casey Herman, Carrie Thompson, Sam Paulson, Liz Metzger, Alex Chung, Elaine Coates, John Isabella, Chris Messini, and Carla Estevez. I'm Guy Raz, and you've been listening to How I Built This.

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