Why the pout?

Kylie Jen­ner nears her first bil­lion

The Guardian - - FINANCIAL - Ru­pert Neate Wealth cor­re­spon­dent

Kylie Jen­ner is on track to be­come the world’s youngest-ever bil­lion­aire, and it will be a for­tune built al­most en­tirely from In­sta­gram – and her lips.

Jen­ner, 20, of the Kar­dashian-Jen­ner Amer­i­can re­al­ity-TV fam­ily, is the founder and sole owner of Kylie Cos­met­ics – a makeup com­pany she runs largely from her iPhone X, with the help of her mother, Kris.

Em­ploy­ing just seven full-time staff, Kylie Cos­met­ics has sold more than $630m (£480m) of lip­stick, lip liner, lip gloss and other makeup – with names like Kyshadow and Ky­lighter – since Jen­ner founded the busi­ness on Valen­tine’s Day in 2016.

Forbes magazine, which fea­tured Jen­ner on its cover this week as the face of “the era of ex­treme fame lever­age”, es­ti­mated her net worth at $900m. The magazine, which is known for its rich lists, said Kylie Cos­met­ics is grow­ing at such a rate that she is likely to be­come a bil­lion­aire by the time she is 22 – a year younger than Face­book’s Mark Zucker­berg was when he joined the “nine ze­ros” club in 2008.

Bil­lion­aires are get­ting younger. The leg­endary in­vestor War­ren Buf­fett, who is now the world’s third-rich­est per­son with an $83bn for­tune, did not make his first bil­lion un­til he was 56, back in 1986. Jeff Be­zos, founder of Ama­zon and now the world’s rich­est per­son with $145bn, be­came a bil­lion­aire at 35 in 1999. Larry Page, Google’s co-founder, made his first bil­lion at 30 in 2004, when the search en­gine was floated. More re­cently, Evan Spiegel, founder of Snapchat, be­came a bil­lion­aire in 2015 at 25.

Nearly all of Kylie Cos­met­ics’ sales come di­rectly from Jen­ner’s so­cial me­dia ac­counts. She has 111 mil­lion fol­low­ers on In­sta­gram (77% of whom are aged 18-24), is one of the most-viewed ac­counts on Snapchat, and is fol­lowed by 25 mil­lion peo­ple on Twit­ter. Such is the weight of her in­flu­ence that when she tweeted that she was “sooo over” Snapchat this year, more than $1bn was wiped off the firm’s stock mar­ket val­u­a­tion.

Sales are driven higher by Jen­ner spark­ing FOMO (fear of miss­ing out) among her fans with warn­ings that of very lim­ited quan­ti­ties of her prod­ucts. Her ini­tial stock of $29 “lip kits” – match­ing lip stick and lip liner – sold out in less than a minute, crash­ing the web­site.

Jen­ner, who has been in the pub­lic eye since she made her de­but on Keep­ing Up with the Kar­dashi­ans a decade ago when she was 10, said: “So­cial me­dia is an amaz­ing plat­form. I have such easy ac­cess to my fans and my cus­tomers.”

The busi­ness is al­most to­tally out­sourced. Jen­ner comes up with ideas for styles, but the prod­ucts are made by Seed Beauty, a pri­vate-la­bel man­u­fac­turer that also pro­duces makeup for the com­pany of Jen­ner’s half-sis­ter Kim Kar­dashian West, KKW Beauty. More than 500 peo­ple at Seed Beauty, which owns the cos­met­ics man­u­fac­turer Spatz Lab­o­ra­to­ries, work on the Jen­ner Kar­dashian brands.

Spatz, which is run by sib­lings John and Laura Nel­son, was sued by L’Oréal in 2016 over al­le­ga­tions that its patents were used in the cre­ation of Kylie Cos­met­ics’ lip prod­ucts.

Not only does Jen­ner not di­rectly make her prod­ucts, she does not sell them ei­ther. Kylie Cos­met­ics’ or­ders and sales are out­sourced to Shopify, a Cana­dian on­line com­pany that also runs shops for Drake and Justin Bieber. Shopify pro­motes its suc­cess with Jen­ner to en­cour­age other en­trepreneurs to skip the bor­ing things such as ful­fill­ing or­ders and lo­gis­tics by us­ing its ser­vices.

Shopify says on its site: “The reign­ing Queen of Snapchat. Re­al­ity TV dar­ling. Makeup mogul. She’s more than just a fa­mous face –the youngest of the Kar­dashian clan, Kylie Jen­ner, has hus­tled beyond her 19 years, mon­etis­ing her name

‘I kept call­ing my mom and said ,“Do you think it’s go­ing to sell? Be­cause I put all my money – I put every­thing into this”’ Kylie Jen­ner Kylie Cos­met­ics founder

and ex­plod­ing it into a mas­sive cos­met­ics brand. Kylie Cos­met­ics en­tered the IRL [in real life] space for the first time ever, driv­ing lip envy to a fever pitch.”

Jen­ner also doesn’t have to worry too much about the busi­ness’s fi­nances or day-to-day man­age­ment of her 12 staff (seven full-time, five part-time) as those mat­ters are out­sourced to her mother or “mo­mager”, Kris Jen­ner, who man­ages all her chil­dren’s fi­nan­cial op­er­a­tions – in re­turn for a 10% cut.

Jen­ner, who used her re­al­ity-TV ex­po­sure to se­cure mod­el­ling work with brands such as Top­Shop, said she had strug­gled to work out what she wanted to do with her life. Then her thoughts to turned to her most talked-about fea­ture: her lips.

Un­til she fi­nally ad­mit­ted us­ing in­jectable fillers for her lips, fans tried des­per­ately to ape her fuller lip look by suck­ing on bot­tles in the “Kylie Jen­ner lip chal­lenge” to in­crease blood flow to the lips, with of­ten un­pleas­ant re­sults. This week, how­ever, Jen­ner said she has had all filler re­moved, af­ter learn­ing to be com­fort­able with the nat­u­ral look while preg­nant with her daugh­ter, Stormi, who is now five months old.

Jen­ner trade­marked the phrase “Kylie Lip Kits ... for the per­fect pout” two years be­fore set­ting up her com­pany with $250,000 of money she had made through mod­el­ling and re­al­ity-TV work.

“Ever since I was prob­a­bly 15 I’ve been ob­sessed with lip­stick. I could never find a lip liner and a lip­stick that were the per­fect match. So that’s where I thought of the idea that I wanted to cre­ate my own prod­uct,” Jen­ner said in an in­ter­view with Shopify.

While she had a huge fan base, Jen­ner said she was scared about sales when the web­site first launched. “I kept call­ing my mom, be­ing like, ‘Mom, I’m so scared’,” Jen­ner said. She said she asked her mother: “Do you think it’s go­ing to sell?’ Be­cause I put all my money up­front. You know, it’s all my money – I put every­thing into this.”

Now the busi­ness is soar­ing, Jen­ner, who drives a black Bent­ley Ben­tayga (which starts at £162,700), is con­sid­er­ing turn­ing it into a fam­ily firm. “Maybe one day [I’ll] pass this on to Stormi, if she’s into it,” Jen­ner told Forbes. Though her mother said sell­ing up is “al­ways some­thing that we’re will­ing to ex­plore”.

Kylie Jen­ner’s mother and busi­ness part­ner, Kris – AKA the ‘mo­mager’

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