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Kylie Jenner’s cosmetics empire was recently featured on the cover of Forbes magazine, America’s most prolific monthly business publication.

While much controversy was raised over claims that his wealth was “self-made” (which it wasn’t), the bigger question was how this actually happened, and the numbers behind it.

Jenner’s “Kylie Cosmetics” business has grossed an estimated $660 million in sales over its three-year lifespan, with $330 million in 2017 alone.

While the business is private and therefore its numbers are not publicly available, even if these estimates were 50% off, the numbers would be staggering.

Also, the “company” only has 7 full-time employees. Everything from packaging to PR is outsourced, and the only way Jenner gets clients is by tapping into her 110 million Instagram followers.

This article examines how it was done.

Social Measures

The core of Jenner’s success has been the 110 million followers on Instagram.

The company does not advertise off-platform, has no stores or distributors, and generally only sells its products directly to its community.

While this sounds like a salesperson’s wet dream, the most important element was Jenner’s lips.

In 2017, precisely 2 years after registering the trademark of his brand, tabloids around the world began to publish reports on the size of them; with the help of fillers, he had managed to almost quadruple his size.

The point here is not so much what she looks like, but how she capitalized on the interest…she inadvertently discovered one of the biggest “trends” in the modern West: lustful women with full, youthful lips.

To this end, investing $250,000 of her modeling money in 15,000 lip kits, she created a page to sell them online. Almost instantly, they were sold out.

While this was a big step, the next process was Jenner’s omnipotent mother, Kris Kardashian, entering Shopify in February 2016 to make the business a full-fledged e-commerce operation.

A few months later, the company began selling six lip kit shades, all of which sold out very shortly after launch.

Exponential growth

While the store did well right away, it was its steady growth that spurred continued interest.

Instead of being a minor problem, where girls go and buy the latest product because it’s hot, the business continued to bring in buyers at an alarming rate.

This could be handled thanks to the way it had been set up. It is a “dropship” operation par excellence; All product development and sourcing was outsourced to a company called Spatz Cosmetics, which is estimated to have made ~$180 million from the company.

This figure represents the COGS (Cost of Goods Sold) of the business; a little known number that will help us determine the true value of what has been developed.

You see, when it comes to money, 99.9% of people are usually wrong. This is not me being disrespectful; they just don’t have enough experience/sanity to consider the facts of the hype.

Jenner’s “business” is not a real business. It is a marketing company that trades on attention.

Like all things “Kardashian,” that attention comes from multiple sources, but it’s ALL directed at family. The matriarch (Kris) then turns this attention into money.

Unfortunately, many people have confused Jenner’s attention with the value of her business. They are mutually exclusive and, in the investment world, it has led to Jenner’s pull “price” being “overhyped” (people thinking it’s worth more than it really is).

As mentioned, she doesn’t have a “business” because all product creation is outsourced. She has a website that sells outsourced lip gloss etc.

This means that if you are really looking at what is Really going on, you have to be able to consider what the business really is and, ultimately, whether it can be sustained (not).

Worth

When it comes to company valuations, the most important thing to consider is that almost the entire population of the world is wrong about which ones will win in the long run.

And although I am not a savant on the subject, I have worked enough to know which companies will sink and which will swim.

In Jenner’s case, I see a sparkle in the pan.

It has very little, if any, competitive advantage and is mostly based on a personality that is false.

It is my opinion that most purchases today (and yes, they are HUGE in volume) are primarily impulse purchases.

Curious teens, and even women in their twenties, are buying the products because of the promise of richer, fuller pouts. But without expensive filler injections, this is just a dream.

My own estimate is that Jenner is probably worth ~$20 million. His “business” is worth about 1/5 of his profits (which is probably closer to $100 million than $800 million). entry reported by Forbes), and thus it all reeks of a marketing gimmick.

On top of this, the actual metrics for the various products Jenner sells seem to indicate a slower growth curve: just 7% in 2017 after a meteoric rise in the first year.

This is not to overshadow your success. But labeling it a “self-made” success story is wrong, as well as inflating sales figures. With at least 50% of the proceeds going to Spatz (who also work for L’Oreal), they are the real winners of everything in my opinion.