- AMDP Investment

To: Clark Hansen, CEO, AMDP
From: Niki Zareh, Research and Development Analyst
Date: March 8, 2019
Subject: Proposed AMDP Investment in Glossier.

As the research and development analyst here at AMDP, after extensive research, I have concluded that Glossier should be your number one choice as an investment opportunity. As two companies that have values based in the Triple Bottom Line, AMDP and Glossier match up perfectly together. Before describing the company’s sustainable strategies and financials, let me first explain AMDP’s standards. These include: Triple Bottom Line, Corporate Social Responsibility, Social Enterprise, and Carbon Footprint.

Triple Bottom Line

Three P’s: Profit, People, and Planet

First coined by John Elkington, a world authority on corporate responsibility, Triple Bottom Line means that a company should prepare three distinct “bottom lines.” Besides focusing on the company’s profits alone as a traditional bottom line, a business should pay attention to “people” and to “planet” accounts. The “people” account is a measure of how socially responsible a company is when conducting business, while the “planet” account measures the degree of environmental responsibility. Thus, a company needs to take into account what its economic, social, and environmental impact is.

Corporate Social Responsibility

When a company evidences Corporate Social Responsibility, it means that the company is not only committed to contributing to its economic development, but also to improving the quality of life of its workforce, community, and society at large.

Social Enterprise

A Social Enterprise is a business that improves human and environmental well-being rather than having the maximizing of profits as its major goal.

Carbon Footprint

The carbon footprint is the total amount of greenhouse gas emissions generated by the company which adversely impacts the environment. Today, there are many ways to calculate carbon footprint, from traditional to online methods. The traditional method, “lifecycle assessment,” involves adding up as many of the emission pathways as possible. Another approach uses “input-output” analysis where the company takes the total emissions of a country or region and divides it by sectors. There are also many online calculators; however, most of them do not produce identical results because of the various methods used.

Glossier is a back-to-basics, digitally native beauty brand that has built a cult following, particularly among millennials. Emily Weiss is the Founder of the cosmetics company Glossier. In 2013, Weiss started approaching venture capitalists with ideas for expansion. Weiss eventually raised $2 million in seed funding, with the help of venture capitalist. Weiss used the initial investment to hire a small team. In October 2014, Weiss unveiled the brand’s first four products on her blog. Six weeks after the first product launch, Glossier announced $8.4 million in Series A funding led by Thrive Capital. Glossier has since gone through three rounds of funding and raised $86,400,000. In February 2018, Weiss released that Glossier had successfully raised an additional $52 million in a Series C round of funding (Danziger).

Glossier grew 600% between 2015 and 2016 (Fastcompany). Glossier, which has raised 86 million dollars since its launch in 2014, is a phenom in the beauty world, and Weiss’ success is both hard to come by and hard to ignore (Lewis).

Co-creating products

Unlike traditional beauty brands where products are developed first, after which the brands must figure out how to sell them, Glossier puts the specific consumer product need out front, thus simplifying the sales and marketing process. In this way, Glossier co-creates its product offerings (Danziger).

Customers first

Glossier is powered by a fierce and loyal dedication to its customers, their needs and wants. It all starts with its direct and intimate customer relationships (Danziger).

Community

Through its relentless focus on the customers, delivering content that connects and generates two-way conversations to facilitate co-created products, Glossier has built a true community among and between Glossier users. Today, Glossier is still sold mostly online, but it does have two stores (Wischhover). but to support and further build its community, Glossier has moved into physical retail with two permanent locations, including a newly-expanded Soho flagship in New York City and Los Angeles’ Melrose Place, as well as various popup shops with one planted in Chicago through the holidays (Walton).

Revenue and Profit

Glossier's business strategy for 2019 is to drive revenue and profit by maintaining a competitive advantage and offering products that appeal to a larger segmentation. Glossier will increase the amount of foundation shades available for current customer and target more millennials who range in melanin content and skin tone pigmentation. Glossier will take a two-prong approach, focus on acquiring new customers with increasing offerings and focus on their “Lifetime” customers by offering an automatic renewal product program. The focus of the automatic service is to gain knowledge of popular products and how many “Lifetime” customers are engaging with the brand. More importantly, Glossier will learn from goals met and/or unmet, how to generate brand growth and customer development for upcoming years.

In the past three years since Glossier’s launch in 2014, Glossier has evolved offering millennial woman a minimalistic real look with products available only online. Glossier has grown exponentially since launch with distribution in four markets (United States, Canada, Puerto Rico and UK) increasing revenue in 2016 by 2000% (PrivCo). Glossier has continued to grow in consumer purchasing spending and unit volume. Brand growth also includes brand profitability through seed and round a series investments during 2016 which accumulated to 34.5M in funding (Owler). Based on Glossier’s past revenue and market share, forecasted revenue for 2017 was to increase by 100% totaling to 45.6M in revenue. Glossier’s dynamic and fast growth has suggested a goal of 100% revenue growth for 2019 totaling to 91.2M in revenue from products sold which will include the creation of the “Lifetime” customer who subscribes to the automatic renewal product program monitoring number of units sold and purchases per customer for 2018 than in previous years.

Glossier will continue with expected revenue growth at a fast pace. Glossier will continue crowdsourcing ideas from our customers, maintaining core brand values and fulfilling the ever-changing needs of woman through product development and services.

The annual sales of the company is estimated at $16.93 million according to the Hoovers Database (Hoover). The revenue of the company was reported to grow to 600% in 2016 which became true. Glossier expects to grow several hundred percent in 2019 (owler). Additionally, Glossier has garnered $40 million in venture capital funding since its launch which shows that the company has a potential to grow even bigger.

My Recommendation

I highly recommend Glossier as an investment opportunity. As a privately held company, complete financial data for Glossier is not available to the public. However, it was reported that in 2016, Glossier had revenue of $22.8 million. This shows that the company, with the support of investors, was able to significantly increase its sales and profits. For financial projections, Glossier is believed to continue to have significant growth, especially with the additions of more inclusive color palate and renewal program.

Sincierly,

Niki Zareh