Click here to order the February 2016 issue in which this article appeared.
Company Profile
Founded: 2012
Headquarters: Peoria, Arizona
Co-Founders: Daniel McCarthy, CEO; Elexsis McCarthy, Chief Operations Officer; Tanya Anderson, Chief Compliance Officer
Products: Makeup removal cloths, facial cleansers and mascara
2015 Revenue: $10 million to $11 million
 Daniel McCarthy |
 Elexsis McCarthy |
It’s a common evening ritual: taking off the day’s makeup. There are plenty of cleansers, oils, creams, lotions and lubricants designed to make this messy job easier and to ensure that all of the many products that have been applied, from foundation to mascara and everything in between, are completely removed. Effective makeup removal helps skin stay healthy, avoids breakouts and provides a clean slate for the next day’s makeup canvas.
Enter MakeUp Eraser™, a product designed to vastly simplify this daily ritual down to a polyester cloth and water.
The Magic Cloth
The Original MakeUp Eraser™ was founded in 2012 by Daniel and Elexsis (Lexi) McCarthy. Prior to launching the company, the couple worked as brokers for a major retailer, and was experiencing a great deal of success, until the retailer decided to pull the plug on the project. “Because of the relationship with our partners we had established, we relinquished ownership and walked away from a lot of money,” Daniel says. At that point, he says, “I really didn’t know what to do. I was kind of in a deep, dark depression about what they had done.”
It was a critical point in the McCarthys’ lives, and their future. Fortuitously, at the point when they decided to wash their hands of what had become a soured relationship, they were poised to help new customers and connections wash their faces of unwanted makeup.
“We had this little miracle cloth that Lexi had been using for years inside her family,” Daniel recalls. “We had started the process of creating a company with it, but we didn’t think anything seriously of it.” It is, he says, precisely because their expectations were so low that they achieved the unexpected success they did.
“It was something I’d been using for about four years before we decided that we really wanted to introduce this as a makeup remover cloth,” Elexsis says. “It just took a little while for it to really wow me, and once it did I realized this is really great! Women need to be able to use this, and we need to share it with as many women as we can.” The cloth is toxin free and made of microfiber, with each fiber thinner than a strand of human hair. With the abundance of surface area, the cloth relies on the electrostatic attraction between ions to pull makeup away from the skin. “You can remove all of your makeup with just water and not have to use any harsh chemicals,” she says.
|
At MakeUp Eraser™, Tanya Anderson, Elexsis’ mother, is also Chief Compliance Officer, which makes it truly a family business. How the development of the cloth came about, Anderson recalls, was that “Lexi came across a material that kind of worked like the MakeUp Eraser™ does. She knew she had something and contacted me to ask if I wanted to be involved. Of course, I jumped on it and said, ‘Yes, I’ll do whatever you need.’ ” Anderson, who owned a car lot, auto repair shop and insurance company at the time, says: “I know a bit about business, and I’m not afraid of work.”
They built the business slowly, not taking on any investors. Instead, they worked hard and reinvested their own money into the company. “We worked for free for about a year and a half,” Daniel says. “We gave our hearts and souls to the company.”
A Turning Point
June 2013 was a critical time for the small company. It’s when the McCarthys met Betsy DeWit, who would later become Chief Marketing Officer of MakeUp Eraser. That June, the McCarthys decided to show their product at a bridal trade show in Phoenix. It was their first trade show, and DeWit’s as well.
“The gravitational pull to their booth was unbelievable,” DeWit recalls. “It was very tempting to see what it was all about.” She bought three MakeUp Erasers at the show before heading home to South Dakota; shortly after, she called to order 100 more.
“The first 100 went super-fast,” she says. “It just spread like crazy in South Dakota.”
Soon DeWit realized that the potential was beyond her ability to sell individually. “Daniel and I spent a lot of time on the phone talking about how we could do this. I couldn’t sell across the entire state of South Dakota; it was just too much to cover.” She committed to spending a year traveling around the country and attending trade shows to see what kind of interest she could generate among other potential distributors. “Within no time, we were in all 50 states,” she says.
In July 2015, the company formally became a direct sales organization, a move that was unexpected for DeWit and the McCarthys. None of them had prior direct sales experience, and yet, the move turned out to be the right one for them and for their growing team of distributors.
|
“We have had a lot of people just in this last three months who are seeing explosive growth on their teams,” DeWit says. “It’s been a lot of fun.”
The product really took off after the McCarthys and DeWit connected. Soon DeWit was recruiting other women to sell the cloths.
“Before we knew it, she had 22 women who wanted to sell the MakeUp Eraser,” Anderson says. “That’s when the wheels really started going, and we knew what direction we were headed. Before we knew it, we had some 1,500 affiliates and 600 to 700 distributors.”
Then there was another turning point: Sephora called.
|
Direct Sales—With a Twist
The company has patents pending on its MakeUp Eraser and is pursuing patents with its newer products, including AmpliLash, an amplifying mascara, and Pozz’D daily cleanser and power mist. The patents are important, but, Daniel says, “Our real power is in our brand.”
When interest and demand in the products began growing, the company founders recognized that they needed to capitalize on the interest and get their products out there as widely as possible to build the brand and prevent competitors from seizing an opportunity—and some of the market share. Daniel says that, early on, they reached out to Sephora because they felt it was a company that validated the MakeUp Eraser brand. When Sephora called back, he says he and the other co-founders were eager to see the true test of their distributor model, which included both retail and direct sales. Based on this model, Sephora is not in direct competition with distributors, as it sells MakeUp Eraser products at the same suggested retail price.
“We knew we needed to get it out to the masses as fast as we could in order to avoid knockoffs,” Anderson says. “We needed MakeUp Eraser to be the prominent name for removing makeup; Sephora gave us that ability to move quicker and faster, and it has actually helped our distributors,” she says. Distributors say that the ability to tell others that Sephora carries the brand adds credibility and builds demand.
Initially, Daniel says, the company was set up as an affiliate program. Then when it officially launched as a direct sales organization in 2015, the founders chose to take a different approach than the majority of organizations. “One thing we couldn’t figure out when we first launched is, ‘Why can’t our products be inside of retailers and be in the hands of distributors or consultants?’ ” Daniel says. So they created reseller relationships with distributors. “Our distributors can go to small retailers, like nail salons, hair salons, tanning salons, boutiques and doctors’ offices, and create relationships and receive commissions,” Daniel says.
Elexsis says, “The key is that our distributors have subsidiary sales channels that they can plug into. They can go small-, medium- or large-size reseller with corporate approval, and they will receive commission and qualify at four levels.”
Sephora is MakeUp Eraser’s largest retail distributor. “They’re very big in Europe and China,” says Daniel, who adds, “We’ve established relationships with about 26 countries around the globe. Some of them act as exclusive distributors, some of them act as large resellers.”
|
The arrangement, they both acknowledge, can be tough to sell, and they recognize that it’s not the norm in the direct sales industry. But once distributors understand how it works, and how they can benefit, they like the opportunities these relationships can offer.
“We’ve just achieved 5,000 independent contractors who have signed up to become distributors,” Daniel says, “and that number is continuing to grow quickly.”
Supporting Distributors
The company contracts with manufacturers to create their products, but everything else—including fulfillment—is done internally, Daniel says. “We do not outsource anything; customer service and fulfillment are in-house,” he says. “That goes along with the philosophy that it’s crucial to us that we treat our distributors as business owners. I can’t do that if I have a third-party fulfillment center or third-party customer service center. When a consultant has an issue and they call in, we hear about those issues as they’re coming in so we can immediately react.”
Distributors are supported in other ways as well. Because of their background in franchising, the McCarthys recognized the importance of detailed documentation to run a business effectively. “We invested a tremendous amount of capital in the internal documentation that comes with the distributor’s package,” Daniel says. That includes a website that distributors can customize, weekly live video webcasts, an unedited and authentic social media strategy monitored 24/7, sophisticated email software and a custom back office to communicate with the field. More than anything, he says, the company is working to bridge the gap in terms of direct communication between the decision-makers and distributors.
Much of Anderson’s focus is on supporting distributors, and it’s a role she loves. “You’re never working a day if you’re doing something you love,” she says. “I am so passionate about this and about our distributors. I take care of them; if they need something, they call me.” Anderson says she answers her phone at all hours of the day and night. Those on the East Coast might need something at 8 a.m. their time, 5 a.m. her time. “So I answer my phone at 5 a.m., and I answer it on Saturdays and Sundays, seven days a week.”
Resellers like Sephora, and the many smaller retail outlets that help to sell MakeUp Eraser, are important, but the company executives know that it is their distributors who drive the company’s growth.
“If you treat them well, they’re going to stay with you,” Anderson says. “We have a lot of ladies who came in on the ground floor and have not left us. They’ve been with us since day one.”
|
Moving Forward
MakeUp Eraser plans to continue its growth, but in a measured and strategic way. The co-founders will continue to invest in the company themselves, while avoiding debt. And they’ll continue to introduce new products to augment their produce lines and meet the needs of distributors and end users.
The newest product is a skincare line—Pozz’d—which will be released by the end of the year. The line features a cleanser, cream and mist.
Their products resonate, DeWit says, because they work. As she looks back on her early experiences selling MakeUp Eraser, she says, “I think the reason word-of-mouth spreads so quickly is that, initially, everybody is skeptical. When people are skeptical about something and it actually works, they end up telling their friends.” That, she says, along with the simplicity of the product, is what really helped to get the product into the hands of women around the globe.
A simple idea fueled by the passion of innovative leaders and the support of loyal distributors has proven, for MakeUp Eraser, to be a winning combination.
