When Mark Cuban invests in a company, it's usually because he or his NBA team, the Dallas Mavericks, could benefit from using the service or product.
In an episode of ABC's "Shark Tank," he made an exception to invest $400,000 in the San Francisco-based beauty company Youthforia on behalf of his two daughters and his wife.
A viral sensation, Youthforia has inspired many. The company's CEO, Fiona Co Chan, attributes the company's $2 million in revenue in just over a year since its April 2021 launch to her active use of social media, particularly TikTok.
But was $400,000 a wise investment on Cuban’s part?
The Potential Issues With Youthforia Makeup That Makes Mark Cuban's Investment Questionable
More than 140,000 people are following Youthforia on TikTok, where the company regularly shares videos showcasing how the company's color-changing oil blush blends into clients' skin.
The Dartmouth College alumna Fiona Co Chan, who quit the software industry to develop makeup that could be worn to bed, seemed to wow the Sharks with her business plan, but the product itself failed to win them over.
Robert Herjavec claimed that he didn't see the novelty of the product, while Lori Greiner said that she didn't wear oil-based cosmetics. Greiner certainly has credibility, as her forward-thinking and investment in Scrub Daddy paid off. Kevin O'Leary stepped in and told everyone that they didn't need to invest in the product, only in Co Chan.
“It’s a bet on the jockey on this deal,” O’Leary said. “You’re really impressive.”
O'Leary predicted that Co Chan would require inventory funding. He made an offer of $100,000 in exchange for 20% ownership of Youthforia and a $300,000 loan, stating that he would like a portion of distribution proceeds.
Co Chan wasn't completely sold on the idea of collaborating with O'Leary, so she informed the other investors that she was planning to provide other hues of blush, like the more traditional items on the market.
Nothing happened as a result of it. Both Mark Cuban and Barbara Corcoran, the two remaining investors, questioned why she needed more shades, given that her viral product automatically adjusted to the skin tone of the buyer. While Cuban makes the most money, Corcoran is the shark that makes the least on the show, so her apprehension is worth noting.
“When you have something that’s completely differentiated, you ride that, and you don’t do anything else because that just dilutes your efforts,” Cuban said. “Sometimes, you shouldn’t listen to your customers.”
Why Did Mark Cuban Invest In Youthforia?
Fiona Co Chan bargained with Kevin O'Leary since the investors weren't enthusiastic about the product. She proposed an arrangement wherein he would pay $400,000 and receive 5% ownership in Youthforia in exchange for a 50-cent royalty on each unit sold until he recouped $500,000.
O'Leary countered with 10% and a $1 royalty until he doubled his initial investment ($800,000) and made back his money.
At that point, Mark Cuban chimed in and said that because his children and wife would "understand" the product, he would offer $400,000 for 10% without a royalty agreement.
The millionaire TV personality, who also owns the Dallas Mavericks basketball franchise and has invested in a number of software businesses, said that his wife and kids have a strong sense of beauty, which led him to think about funding Youthforia. He even offered to perform "demos" while donning the blush that changes color.
Frustrated, O'Leary stated he would donate $400,000 for 7.5%, but he insisted on a 75-cent royalty until he reached $1 million. For 8% and no royalties, Cuban said he would do it "just to prove a point."
Co Chan agreed, exiting the program feeling happy and delighted. She wasn't alone in this. Herjavec and Corcoran both expressed their admiration for her negotiating abilities as she left.
Co Chan shared on Instagram after the broadcast that being a part of the program gave her exposure while growing the brand's retail presence. “A big reason why I decided to go on ‘Shark Tank’ is because when we filmed, it was right before we were launching nationwide in Ulta Beauty,” part of her caption read. This was all thanks to Cuban's open-mindedness with the women in his life.
Publicity from the show has boosted brands to success in the past, such as Coffee Meets Bagel, a dating app that didn’t exactly pack a punch on its episode but would eventually make a splash later on.
Co Chan founded Youthforia after realizing the pollutants from the places she visited for work as a salesperson at a software business were having an impact on her complexion.
“When I first started dating my husband, I used to always sleep in my makeup,” Chan told WWD in July 2021. “I’ve had experiences in the past where I’ve gone to the hospital with allergic reactions from sleeping in makeup and that’s when I came up with the idea of making makeup that works like skin care.”
Did Youthforia Make Mark Cuban Any Money?
The ideal venue for savvy marketers trying to gain attention is TikTok. One business that has mastered viral marketing is Youthforia, the sustainable makeup line that transformed the way we view beauty.
As of 2023, Youthforia is worth an estimated $5 million.
Fiona Co Chan intends to start with foundation and eye cosmetics when she expands her product range. Amazon, BeautyBay, Revolve, Credo Beauty, Ulta, and Youthforia.com all sell her products. It could take 5 to 14 days for your order to arrive, depending on where you reside.
Their best-selling item, BYO Blush, has a 4.9 average rating from 370 customer reviews on their website. A noteworthy Shark Tank bundle is also available for $92, which is sufficient to say she’s squeezing the publicity from everything it’s worth.
Co Chan identifies genZennials as Youthforia's primary clientele. She is technically inside the genZennial age range of around 20 to 30 years old at the age of 30.
Millennial and Gen Z customers are lured to a brasher look in contrast to the cosmetics industry's overabundance of millennial pink and minimalism. Youthforia isn't afraid to stand out with neon accents and a big, capital-letter logo.
Co Chan has the view that the environment shouldn't be harmed by the substances used in cosmetics. The USDA has recognized Youthforia's products as being made of bio-based materials through its BioPreferred program, which it defines as "renewable domestic agricultural materials, renewable chemicals, and forestry materials."
“I just love product development. I think I could do this forever,” said Co Chan in an interview. “I think our customer likes that we are doing things a little bit differently than what is already out there. We are going to look at different ways to do textures, ingredients or functions.”
Although the items are on the pricey side, Co Chan obviously did her homework, and Youthforia is only going to get better from here. Well done, Mark Cuban!
ncG1vNJzZmivp6x7tbTErZ%2Bippeoe6S7zGiuoZmkYra0edOhnGalkaCytryMnZyapF2strW0jKaYq6NdmMKjrc1mpqdlo52us7eMrZino12srrR5yK1kmmWjoq6zwIyipa%2Bdo6m6prrTaA%3D%3D