"Authenticity Is Everything": What Lady Gaga Does Right and Millie Bobby Brown Does Wrong With Their Beauty Brands

Lightspeed Venture Partners/Haus Laboratories
Lady Gaga

Rihanna and Michelle Pfeiffer also have learned the more involved, the better. "I turned a major deal down as I wouldn't have full control over ingredients," says Pfeiffer.

Even with an Oscar, nine Grammys and a reported net worth of $320 million, Lady Gaga still knows how to hustle. In late May, realizing that the shooting of a video for her beauty startup Haus Laboratories was about to run over schedule, the 33-year-old started to clean up around the models, film crew and makeup artist. "Everybody go home so I don't have to pay you overtime," she told the group of 20 people. "I'm going to pack up." Says Lightspeed Venture Partners' Nicole Quinn, whose firm invests in Haus: "We want that [kind of] involvement."

Following the success of Gwyneth Paltrow's Goop and Fenty Beauty by Rihanna, more and more stars have been developing, launching and marketing their own beauty brands. They're finding it hard to resist the allure of repeat sales, high profit margins (up to 90 percent for a fragrance) and word-of-mouth marketing among customers who already follow them (such as the 37.3 million on Gaga's Instagram). Based on launches headed up by 12 stars, here are today's six branding rules of celebrity beauty.

1. MAKE IT 'YOU'

With a stringent record of investing in only two of the 2,500 companies who pitch the Lightspeed venture capitalist every year, Quinn says she felt confident with Gaga because "authenticity is everything." It's the same approach that guided Lightspeed's investments in Goop and Jessica Alba's Honest Co. "Whatever it may be — beauty or any product — they have passion and want to build a company around it," Quinn says.

Goop's 15% Glycolic Overnight Glow Peel and Microderm Instant Glow Exfoliator emerged directly from Paltrow. "She was talking about what she'd like to do at a dermatologist, which is to get a laser peel or microdermabrasion. From that we created two products," says Erin Cotter, Goop's senior vp beauty. Once Paltrow posted a video of herself using the peel on Goop's site and Instagram page, it recorded the best first-day sales in Goop's profitable beauty division.

Products emphasizing inclusion propelled the growth of Rihanna's Fenty Beauty. In September 2017, the LVMH-backed brand premiered 40 shades of foundation, among 91 items, both online and in 1,620 stores in more than 17 countries. "I'm not the face of my brand, but I am the muse, and my DNA has to run all the way through it," she recently said to Vogue. The philosophy works: From its launch through 2018, the singer's business generated sales of about $550 million, according to LVMH. "Incredible success with Rihanna," LVMH chairman and CEO Bernard Arnault said during a January presentation detailing the French conglomerate's fiscal 2018 earnings.

2. IF IT'S NOT YOU, MOVE ON

Taking a different path, Michelle Pfeiffer has funded her own company, Henry Rose, which introduced fragrances made with non-toxic ingredients in April. "I came quite close to signing a major endorsement deal with a large beauty house but ultimately decided to turn it down as I wouldn't have full control over the safety of ingredients, which was a non-negotiable for me," she tells THR in a September email. The actress commissioned New York's International Flavors & Fragrances to develop her five-piece collection with only 10 percent of the ingredients it usually uses to ensure the scents were clean. "I would fly in for meetings with IFF, or IFF would send me lab samples, and I'd send back notes via email and phone," she continues. "[Entrepreneurship is] a challenge I'm still adjusting to, especially now that I'm beginning a press tour for Maleficent: Mistress of Evil. We have an office space in L.A. that I work out of daily with the team. We are not even six months old yet, so I'm still very involved in every aspect of the day-to-day."

3. KNOW THAT A MARQUEE NAME NO LONGER GUARANTEES SALES

Five years ago, Elizabeth Arden struggled with a significant drop in demand for its fragrances licensed with Justin Bieber and Taylor Swift. The slump hurt the beauty company's turnaround plan, and the once-iconic firm was acquired by rival Revlon. Artists who want to ride this entrepreneurial wave must have a point of view. "What doesn't work is saying, 'Here's a standard formula — I'm tossing it out to the world with my name on it,' " says perfumer Douglas Little, who crafted fragrances for Goop.

4. WINGING IT ISN'T THE BEST LOOK

Less than two weeks after launching Florence by Mills in August and selling out the $34 whale-shaped Swimming Under the Eye Gel Pads and other Gen Z-focused products on its website, Stranger Things actress Millie Bobby Brown, 15, posted a video of her nighttime skin-care routine … that didn't involve any products. She was spreading air on her face. In response to backlash, Brown wrote on Instagram: "I'm still learning the best way to share my routines … I'm not an expert. I thought doing a quick video replicating my personal process for that night was okay, but that's not what was conveyed."

5. MAKE A REAL COMMITMENT

Nowadays, a license deal requires time and energy from a star to guarantee success. Noreen Dodge, CMO at Luxe Brands in New York, met with Ariana Grande at the singer's L.A. home as well as her tour stops in Belgium, Germany and Brooklyn to collaborate on her fragrance franchise. Grande goes through 10 rounds of samples, wearing each scent for a week. Describing her vision for the bottle containing Thank U, Next, named after her hit song, Grande told Dodge, "I want to do this heart where the bottle is sitting inside, like a fractured heart." Adds Dodge, "She has a creative vision. It's not something that is presented to her."

Retailing from $22 to $62, Grande's perfumes have posted double-digit growth globally year-over-year. In less than four years, through five scents and one limited-edition perfume, Grande's franchise has exceeded sales of $300 million worldwide through retailers in the U.S. and 25 other countries. In the first four days after posting on Grande's YouTube channel, her one-minute video poking fun at how she made the Thank U, Next perfume racked up 6.2 million views. According to Dodge, Grande's brand is the fastest growing in Luxe's history.

Luxe hopes to replicate Grande's success with the new beauty brand it's developing with Jennifer Lopez (her current fragrance deal is with Designer Parfums). While Dodge couldn't share the timeline for the launch, she says Lopez will "be equally involved."

6. PROMOTE, PROMOTE, PROMOTE

Ryan Seacrest plugged men's skin-care line Polished — developed with his longtime dermatologist Harold Lancer — on his radio show, QVC and through his Twitter, Instagram and Facebook accounts to more than 21 million followers. As a result, the 50/50 joint venture "became profitable really fast," says Lancer. With social media supplanting the need to pay out "millions of dollars for a TV commercial," says Linda Levy, head of educational nonprofit The Fragrance Foundation, the pathway to profit is that much shorter.

At Haus Laboratories in the run-up to launch, Gaga stayed up until 4 a.m. tweaking images for her brand, interviewed all the executives, requested that financiers teach her how to read a balance sheet and brainstormed a dramatic curtain drop at her debut party to promote the moment sales went live at 9 p.m. Pacific on Sept. 16. Gaga's devotion to Haus instantly translated to sales surpassing expectations, Lightspeed's Quinn says. As the exclusive retailer outside of Haus' ecommerce site, "Amazon was very happy," Quinn adds. "We've been happy."

This story first appeared in the Oct. 16 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.