Most founders are looking to hunker down during the pandemic, but serial founder Ning Li is busy expanding.
Li is the founder of Typology, a Paris-headquartered beauty brand that taps into the contemporary craze for ethical skincare for well-informed consumers.
Li previously cofounded and ran furniture site Made.com, and home decor company MyFab prior to that. Made.com has long been rumored to be on the brink of an IPO, while MyFab was partially sold for $4.3 million. He stepped down as Made.com's CEO in 2016, and spent the next two years dabbling with different projects including, briefly, training as a chef.
He founded Typology in 2018 and, while a newcomer to beauty, can boast strong direct-to-consumer credentials.
The startup offers beautifully packaged skin serums, oils, and hair care products and is now live in the UK after initially focusing on France and Belgium.
Typology's sell is that all its products are vegan and cruelty-free; you can see the (minimalist) key ingredients on the label; and the beautiful bottles fit through your letterbox.
It all looks very trendy, with its perfume bottle-like flacons and clear labeling of key ingredient percentages. Anyone who has bought products from brands like The Inkey List or The Ordinary will recognize the aesthetic.
And as with the competition, the price is another key selling point.
Typology's products look high-end without the high-end price tag. For example, a 15ml Typology bottle containing a 0.3% concentration of the anti-aging ingredient retinol costs £14.80 ($18). Browse through the website of cosmetics retailer Space NK however, and a similar 15ml bottle with an unspecified concentration of retinol costs up to £254 in the UK or $300 in the US.
Typology can afford to keep its prices low, Li said, because it currently only deals with consumers direct and has no partnerships with physical or online retailers who will take a slice of the sales.
Li says his goal is to demystify skincare. The entrepreneur is married to Roxane Varza, a former TechCrunch journalist and coding advocate who runs the biggest startup factory in Europe, France's Station F. The two have a baby girl, and Li was introduced to the mystifying world of cosmetic ingredients when he tried to buy some moisturizing cream for her.
"I'm a bit of a control freak as a person," he told Business Insider. "I'm also very skeptical ... one day I was buying a cream for my daughter, who's now two, and I started Googling — you look at the back of a cream and you start reading those long names, and most of the names I don't understand."
Mainstream branded cosmetics are not necessarily unsafe — the likes of L'Oreal, P&G, and other major brands have thousands of scientists who spend years working on formulations. But how companies concoct their formulations has not historically been especially transparent, partly because successful formulations are closely guarded trade secrets.
That frustrated Li, who went on a learning expedition and discovered that some ingredients don't necessarily provide any long-term benefits. One example is silicone, which can help a cream or product sit smoothly on your skin. A downside to silicone, Li notes, is that it may be toxic for the environment.
One Typology product range, Ten, consists of products with ten or fewer ingredients. "It's a very minimalist and pared-back approach to skincare," said Li.
Almost all the products are formulated by the company's own chemists and pharmacists and produced in partnership with labs in France. The startup raised a $10 million seed round in 2019 from backers including French telecoms billionaire Xavier Niel and the UK's Firstminute Capital, with most of the money going towards R&D in its first year.
For canny beauty fans, Typology's branding and positioning bears similarities to other disruptors and in some instances, its products are more expensive than, say, those offered by The Ordinary. Still, as the hardcore beauty fans on Reddit's r/SkinCareAddiction forum note, competition is good.
Typology launches in the UK as citizens continue to face furloughs and redundancies, and as the economy plunges into a recession.
But the lockdown has caused odd shifts in consumer behavior — makeup sales may be down, but skincare is up. According to a report from UK retailers Waitrose and John Lewis, skincare sales were up 183% through April.
Typology has felt the benefit, Li said, saying that orders had doubled since before the crisis. He pointed to Typology Raw, the startup's range of essential oils. "Pre-crisis we used to ship 300 [or] 400 a day," he said. "Now per day we ship over 1,000 Typology Raw products."
Since Typology's products fit through the letterbox, he added, the startup has so far been able to ship with France's national post service, which has remained reliable through the pandemic.
Another cost saving has been on marketing. The bulk of Typology's customers, Li said, come via word-of-mouth recommendations, but the remaining 20% come through expensive acquisition channels. With economic activity stalling and businesses closing, there are fewer firms bidding for online ad space and driving up the price. There isn't much point paying for online ads if no one can visit your store, or you can't ship products. But Typology, Li said, has been able to take advantage of the cheaper ad space.
That, Li said, has given the company runway even as other startups furlough employees, or seek government handouts to survive.
"Initially we thought we were going to need more capital," he said. "And the initial business plan was [that] it would be logical to raise a new round at the end of the year. But we are trading now at more than two times than before and costs actually went down.
"We're considering, that if the momentum stays, we could be in a situation where we don't need funding ever again because we are self-sustaining. It's too soon to tell ... but we are definitely positioning ourselves to grow aggressively but also profitably."
Brent Hoberman, an investor in Typology and the cofounder of Made.com alongside Li pointed to Li's history of building successful direct-to-consumer startups. Made.com, he noted, was built in the wake of the 2008 financial crash, and Typology may replicate its success.
"You've got existing businesses and incumbents being a bit deer in the headlights, and when you're younger, smaller, more agile, you can react quicker," he said. "This is a time you can go back to direct online marketing ... suddenly costs have tumbled. It's a moment to seize market share."