Summary

Rhode’s $1B sale to e.l.f. Beauty confirmed that celebrity beauty brands can grow from attention businesses into acquisition targets. Founded only in 2022 and still without physical stores, the brand used a handful of hits, including its lip balm phone case, to generate a social-media frenzy; e.l.f.’s CEO called it a business with rocket-ship growth potential. But both guests repeatedly stressed that celebrity aura is only the starting point: sustained success still depends on product innovation, a cultural point of view, and continued founder involvement.
Fenty Beauty, Rare Beauty, and Rhode represent three distinct forms of innovation: creating a category, launching a cultural movement, and turning makeup into a fashion accessory. Fenty made dozens of foundation shades the industry standard for shade inclusivity; Rare built a community around Selena Gomez’s experiences with illness and mental health, and directs 1% of revenue to related funds; Rhode embedded lip balm into phone cases and shrank cream blush into a portable accessory. “A good brand can create a category; a truly exceptional brand can create a culture”（好的品牌能创造品类，非常优秀的品牌能创造一种文化）.
Gen Z buys makeup as a form of identity, making authenticity, affordability, and sustainability more loyalty-building than generic “love yourself” messaging. Gong Yiliu’s US campus research identified these as the attributes young consumers value most; veganism, cruelty-free production, minority ownership, mental health, and shade inclusivity can all determine brand choice. In this consumption context, “all consumption is voting”（所有的消费行为都是在投票）, so brands must help users express their values and identity.
Makeup is not a cheaper version of skincare; it is a higher-volatility business closer to apparel and accessories. It has low ticket prices, low decision barriers, and low repeat purchase rates, and depends on many SKUs, frequent launches, and impulse buying; skincare carries a higher trust cost and has longer repurchase cycles and lifecycles. Neko does not call makeup purchases repurchases, but “stacking”: consumers do not need to finish the old product, so brands must constantly provide a new fashionable reason to buy.
Short video and livestreaming turn celebrity attention directly into a channel advantage, while $20-$30 affordable luxury creates room to monetize it. As content moved from long-form graphics and articles to short video, information density fell while reach expanded: a dozen seconds can show makeup results but cannot accommodate complex ingredient explanations. Selena Gomez’s more than 400M Instagram followers therefore became “the biggest microphone in social-media distribution.” Celebrities now serve as content, marketing, and channel simultaneously, but the story must be authentic and consistent over time; otherwise JLo’s olive-oil explanation for her long-term appearance runs into skincare’s high trust barrier.
Celebrity brands are more likely to squeeze out faceless mass-market channel brands than fully replace luxury names. Based on an earlier database recollection, Neko said Maybelline’s North American share once fell from around 20% to around 7%, while Fenty Beauty, Jeffree Star’s makeup brand, and other personal-IP brands entered the top 10; she explicitly noted that she had not checked the past two years of data. Luxury makeup still serves gifting, prestige, and identity functions, making LVMH’s investment in Fenty look more like a defensive bet to lock in a segment and prevent brand aging.
Capital exits and long-term operations are two different models, and sustained founder involvement determines whether a brand loses its soul after acquisition. Brands built for PE need to drive GMV through marketing, enter Sephora or Ulta, and, according to industry practitioners, prepare at least $20M in the 1 to 2 years before entering major channels. An indie brand may instead support itself with a 100K-follower Instagram account and high engagement. China’s market adds price downtrading, manufacturing capacity that exceeds consumption capacity, and low-cost copying; with long-term marketing spending in color cosmetics starting at roughly 30%, building for the capital markets is difficult to avoid, and the success of overseas celebrity brands is hard to replicate directly.

Deep dive

1. Three Celebrity Brands Rewrote the Rules on Shades, Community, and Product Context

Gong Yiliu’s first example is Rare Beauty: its bright, vivid makeup looks are paired with Selena Gomez’s public connection to bipolar disorder, lupus, and a kidney transplant, taking makeup beyond aesthetics and into the public conversation around mental health awareness.
Earlier, Fenty Beauty used dozens of foundation shades to address long-unsatisfied demand among Black consumers. Gong Yiliu argues that Fenty did more than expand its SKU count: it rewrote the standard for shade inclusivity and converted personal entertainment influence into commercial and cultural influence.
Rhode demonstrates a different kind of efficiency: neither its lip balm phone case nor its pocket blush represents a major technological iteration. Instead, each embeds an existing product into the contexts of a phone, a pocket, or a bag charm. Founded in 2022 and sold for $1B without physical stores, the brand shows how a handful of hits can create enormous asset value.

2. Fenty’s Inclusivity Was Commercially “Counterintuitive”

From a secondary-market perspective, Neko points out that traditional complexion products relied on 3 or 4 shades and 2 textures to control inventory. Fenty pushed complexion SKU complexity closer to that of the color-cosmetics category. Inclusivity creates cultural value while simultaneously amplifying demand-forecasting and inventory-turnover risk.
China’s consumption environment has been deflationary for years, making analysts more risk-averse. They tend to learn to take a punch before they learn to throw one: even when a brand has 50 shades, they want management to explain which are core volume drivers and which are simply branding costs.
That is also why secondary-market analysts remain cautious about the durability of pure color cosmetics. When discussing groups such as Estée Lauder and Shiseido, they often conclude that many color products do not make money; the primary market can capture a short-term dividend, but the secondary market needs a brand to remain robust and predictable after listing.
Yiwen adds that Rare Beauty also prepared 48 foundation shades when it launched complexion products during the pandemic, and recruited people with 48 different skin tones for testing. A broad shade range is therefore no longer just a functional choice; it has become an important signal of inclusivity for new Western brands.

3. Makeup Behaves Like Apparel; Skincare More Like Healthcare

Gong Yiliu draws a clear industry boundary: makeup has low ticket prices, low decision barriers, and low repurchase rates, and relies on many SKUs, frequent launches, seasonal shifts, and impulse buying. Foundation and other complexion products may require more replenishment and have greater staying power, while skincare can sustain a 10-year lifecycle with a small number of SKUs.
Makeup is difficult because of fashion judgment and inventory management, not simply because of product development. Liquid or cream blush may be popular today, while tomorrow brings a different color palette and finish. “Makeup is closer to apparel,” and consumer loyalty can move quickly with the trend cycle.
Skincare carries a higher trust cost. Once consumers believe in a product’s efficacy, they may repurchase it for years. That makes it much harder for a celebrity to explain ingredients through image alone than to demonstrate a makeup effect visible within a dozen seconds.

4. Gen Z Needs Brands to Express Identity on Its Behalf

Gong Yiliu’s work with UC Berkeley and other US campuses led to a clear conclusion: Gen Z cares most about authenticity, affordability, and sustainability—whether a brand is genuine, whether its prices are accessible, and whether it can express sustainability and social value.
In the data from her brand, around 25% of purchasing accounts are registered to men, while overseas consumers have even more diverse gender identities. As an outward-facing fashion category, makeup expresses identity, values, and brand affiliation—not simply a male-female divide.
Vegans may demand vegan products, animal-rights advocates may demand cruelty-free products, and feminists may prefer brands founded by minority groups. Latino consumers may support Selena Gomez, while Asian consumers may actively seek brands founded by Asians. Consumption thus becomes voting and political action.
By contrast, Gong Yiliu believes domestic brands increasingly emphasize being female-friendly but often narrow their stance into the inoffensive “love yourself.” That differs from the sharper positions and community expression emphasized by overseas users.

5. Rare Beauty Turned Founder Vulnerability into a Consistent Long-Term Brand Asset

Gong Yiliu’s definition is simple: “A brand does not become a brand by running one online campaign or hiring one celebrity endorser.” What works is high-quality content that repeats the same theme over time; repetition and consistency are both essential.
From day one, Selena Gomez openly discussed illness, her experience as a child star, and her mental-health struggles. The brand launched during the pandemic, when users needed more online emotional support, and her admission that she was not always glamorous made vulnerability a credible connection rather than a packaged advertising concept.
That point of view reached into the product details: shades were named Hope, Joy, and other positive states. Beauty was no longer framed as covering flaws, but as caring for mind and body, sharing love, and then “glowing from within.”
Rare Beauty’s management team and Selena herself held hundreds of user conversations over Zoom, continued to reinforce the theme through campus outreach, and directed 1% of revenue to mental-health funds. Gong Yiliu emphasizes that a single online conversation costs nothing; what is expensive is the sustained time invested by executives and the team.

6. Community Is Not a Distribution Channel but a Source of Both Product and Loyalty

Rare Beauty CMO Kitty once shared that the early team watched every video under the Rare Beauty hashtag. Gong Yiliu therefore makes community the first priority in international expansion: understand how members express themselves before deciding what content and products the brand should create.
Her ideal path is “from the community, back to the community”（从社区中来，再到社区中去）. When a brand consistently works around issues the community cares about, users can test whether it truly supports the mission, converting emotional intensity into purchase loyalty and a longer lifecycle.
This community-oriented strategy also explains the room for US niche brands. They do not need to cover the mainstream market; serving a group of highly committed users and maintaining engagement can be enough to build a stable business.

7. The Shorter the Medium, the Stronger the Fit Between Makeup and Celebrity IP

Neko connects brand generations to their content formats. Before 2017 to 2018, long-form graphics on Weibo and official accounts could explain targets, ingredients, pathways, transdermal absorption, and efficacy, giving rise to the first generation of ingredient obsessives and raw-material brands.
With the rise of short video and livestreaming, content became thinner while reach broadened. A dozen seconds is enough to show makeup, sports bras, or body results, and does not even require users to read, but it cannot carry a long argument about ingredients.
Using Rare Beauty as an example, Neko points out that Selena Gomez has more than 400M Instagram followers, “the biggest microphone” in social-media distribution. He also considers Selena Gomez and Hailey Bieber internet natives of the social-media era. Makeup is highly visual and carries built-in themes of shade inclusivity and reconciliation with one’s appearance.

8. $20-$30 Affordable Luxury Leaves Room for the Story to Generate Margin

Neko sees Rare Beauty first as a $20-$30 affordable-luxury impulse purchase. North American upper-middle- and middle-class consumers can accept that price without continually trading down to substitutes. “The story is not a pejorative”; it works as long as it consistently carries the brand’s values.
US manufacturing has relatively little overcapacity, leaving brands more room to price. China faces manufacturing capacity greater than consumption capacity, price downtrading, and low-cost copying, all of which compress pricing power and the room for long-term operations.
Gong Yiliu adds that Western celebrities are almost always either already running their own brand or on the way to doing so, with categories expanding from makeup into skincare, supplements, haircare, and personal care. But the trend itself does not guarantee success: the market will still eliminate projects with attention but no product or cultural foundation.

9. The Strongest Innovation Is Not a New Formula but a New Industry Standard

Gong Yiliu distinguishes 3 levels: a single functional demand can open a small category, a good brand can create and establish a category, and the strongest brands create culture and trends. Fenty turned multiple shades from a single selling point into an industry consensus; later entrants with insufficient shades would be challenged by consumers.
Rhode’s phone-case lip balm combines 2 universal needs into a new use case, while its pocket blush turns liquid or cream blush into a portable fashion accessory. The product is similar to the trend of hanging Labubu on a bag: it sells a combination of function, displayability, and social imitation.
Host Yiwen’s question gets to the point: do these designs really increase stickiness? Gong Yiliu’s answer is that the product alone is not enough. Fenty’s cultural movement, Rare’s community, and Rhode’s fashion context jointly provide reasons for repeat purchase—or for “stacking.”

10. JLo’s Olive-Oil Story Failed on Authenticity and Skincare’s Trust Barrier

Gong Yiliu uses JLo Beauty as a counterexample: JLo attributed her years of radiant appearance to olive oil and put it into a skincare product. Consumers know she also works out regularly, eats carefully, uses high-end skincare, and may undergo aesthetic procedures, so the story does not feel authentic.
Neko is more cautious: the issue is not only insincerity but also skincare’s unusually high barrier. It is difficult for a celebrity claiming that her long-term appearance comes from olive oil to overcome consumer doubts about efficacy, lifestyle, and factors such as Botox.
Both guests believe a more viable direction for celebrity skincare is an Aesop-style narrative around organic products, healing, and mind-body-spirit wellness, or the clean and personal-care positioning associated with brands related to Jessieca Abeleda. The strategy is to talk less about high-tech efficacy and focus more on clean ingredients and lifestyle needs.

11. Clean Beauty Works in North America but Struggles to Become East Asia’s Second Growth Curve

Neko believes North America, Europe, and Oceania are more receptive to organic, environmentally friendly, and clean narratives, while East Asia remains a niche market. Gong Yiliu sees the closure of Aesop’s first China store as one signal.
Chinese skincare is shifting from affordable luxury toward FMCG-style efficacy competition. Estée Lauder’s Little Brown Bottle has iterated 7 times over roughly 45 years, while domestic brands may iterate at least once a year, testing efficacy, launching quickly, and using heavy-duty actives in the roughly RMB200 price band.
After China’s 2021 cosmetics-regulation revision, efficacy claims and verification became more important. Combined with synthetic-biology applications involving hyaluronic acid and peptides, this makes it harder for brands to charge a high premium based only on environmentalism, minimalism, and mind-body-spirit wellness. East Asian consumers care more about “how others see me,” while Western consumers are more receptive to clean narratives centered on “how I feel.”
The age gap in aesthetic medicine is further reshaping skincare logic. Neko’s figures show that first-time non-surgical aesthetic procedures in North America generally occur after age 45 and mainly involve Botox for wrinkles; in China, consumers may begin around age 25 with skin boosters, hyaluronic acid, or energy-based procedures. Younger consumers may therefore reduce spending on daily skincare and redirect the budget to aesthetic medicine.

12. New Brands Mainly Take Share from Channel Brands; Major Names Retain Gifting and Identity Functions

Gong Yiliu observes that elementary- and middle-school students now line up at Sephora in North America, while light makeup is increasingly common on campuses. Celebrity brands may therefore be doing more than taking share: by lowering the age at which people start wearing makeup, they may also be creating incremental demand.
Young consumers may choose new brands that express identity for personal use, but still buy prestige names for gifts. Mass brands such as e.l.f., NYX, and ColourPop meet straightforward functional needs at half or even one-third the price of Sephora products.
Recalling earlier Euromonitor data, Neko says Maybelline’s North American mass-color-cosmetics share once approached 20% and fell to around 7% in the streaming era, while Fenty Beauty and Jeffree Star’s makeup brand at one point entered the top 10. She explicitly says she has not reviewed the past two years of data, so the more important point is the direction: concentration has declined and personal-IP brands have entered the rankings.
Her conclusion is that the first brands to be displaced are those with relatively indistinct identities and channel positioning. Once a consumer’s blush or lipstick budget goes to a niche brand, the slot is occupied. Luxury lines such as Chanel, whose social and identity value is stronger, are more likely to be supplemented than fully replaced.

13. PE Brands, Indie Brands, and Post-Acquisition Brands Follow Three Different Paths

The first question Gong Yiliu hears from the US investment community is whether a brand is “for PE” or “for its own profit.” The former must grow GMV through marketing, enter Sephora or Ulta, and prepare at least $20M in the 1 to 2 years before entering major channels to prove it is an established brand and pursue an exit.
An indie brand does not need to pursue an acquisition; it only needs to serve its niche community well. The industry saying she cites is that “an Instagram account with 100K followers can support a brand.” The condition is high follower loyalty and sustained interaction, rather than buying a one-time burst of traffic.
Rare Beauty’s lack of major investment or acquisition news has surprised the US beauty-investing community, and neither guest has a definite answer. After Kylie Cosmetics sold a majority stake, Gong Yiliu felt that the team and Kylie herself may have promoted it less on Instagram and invested less time in new-product development. Her conclusion is that capital can add channels and resources, but it cannot replace the core IP’s continued role as the brand’s “soul figure.”

14. Chinese Makeup Has a Harder Time Protecting Margins but Benefits from a Single Large Market

Neko points out that major global beauty groups operate with long-term marketing expenses starting at roughly 30% of revenue; even at L’Oréal’s scale, they cannot stop defensive marketing. Makeup is also not a typical repeat-purchase business but a “stacking” business: like nail polish, earrings, and accessories, consumers have no functional gap to fill, so brands must constantly create fashionable and expressive reasons to buy.
Yatsen invested heavily in traffic and rapidly pushed GMV in its early years. After the traffic dividend faded, it had to acquire mid- and high-end brands, reorganize channels, and force an upgrade amid consumption downgrading. Neko sees this as the conflict that arises when a “to PE” model enters the public markets: after an IPO, the company must answer to public shareholders even as its original growth path becomes difficult to sustain.
Rhode-style product innovation also faces China’s extremely low copying costs. Android’s fragmented handset models create phone-case model and SKU-management problems, while Yiwu and major channels can copy or customize products cheaply, compete directly, and cut prices. Mao Geping’s repeated emphasis before listing that more than half of its revenue came from skincare also reflects investors’ conservative view of the durability of pure makeup.
China’s advantage is equally clear: language, aesthetics, and demand are relatively concentrated, and 70%-80% of consumers may even choose the lightest foundation shade, without the need to manage extreme size ranges, ethnic skin tones, and multiple cultural contexts simultaneously. Neko closes with a regional joke about brand recognition: if a supposed Western brand’s website shows only uniformly slim, young, white models, it must be a Chinese brand; a real Western market will talk about diversity and include Black models.

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