Tarte Cosmetics: A PhD Drop-Out Shakes Up the Beauty Biz

Natural ingredients like Amazonian clay are just part of Tarte's recent sucess, which includes a 50% jump in sales last year. The rest of its magic springs from young CEO Maureen Kelly, who possesses an uncanny sense of what young women want

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Joe Fornabaio

Maureen Kelly CEO of Tarte Cosmetics

In many ways, Maureen Kelly, the founder of the cheeky cosmetics line Tarte, seemed destined to makeup moguldom. When she was four she performed makeovers on her Holly Hobbie dolls, at six she concocted blush from shaving cream and red cough syrup, and as a teenager she gifted pots of homemade lip gloss for Christmas. But perhaps it’s the more unlikely traits — that she isn’t a makeup artist, that she has no business background, and that she’s the quintessential girl next door (she went swimming and didn’t wash her hair before her wedding) — that have enabled her to create a beauty company completely different from what’s out there.

It’s hardly an easy time to be a luxury cosmetics company. Some 59% of women cut back on cosmetics in 2008, according to a report by WSL Strategic Retail in New York. It’s a trend that’s continued. “Half of those customers discovered that the lower priced lines were fine,” says Candace Corlett, president of WSL. “The era of buying new colors every season is gone; pink is pink, who needs the latest pink?”

But while the $35.5 billion cosmetics industry saw retracting sales last year, New York-based Tarte, which has 51 employees, did $35.7 million in retail sales, up 50% from the year before. And it’s growing: the line was recently picked up by the beauty retail chain Ulta’s 390 stores and it’s going global. In it’s 10-year history, Tarte, which doesn’t spend any money on advertising, has gained a loyal following of evangelists. Its mineral powder bronzer is a staple of the beauty magazines’ “best” lists and its volumizing “lights, camera, lashes” mascara is one of the top selling products on QVC, where Kelly sometimes appears multiple times a day. Celebrities including Julianne Moore and Carrie Underwood wear it, and it was even endorsed by Oprah.

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Kelly’s knack for knowing what women want is credited for the line’s success. “She has such a prescient sense of what is going to be hot in the beauty industry,” says Polly Blitzer, the founder of online beauty magazine BeautyBlitz.com and a contributing editor at InStyle. From the way a shade of color is applied, to the use of antioxidants like acai berry to Swiss Army knife-approach (chap sticks with both an exfoliant and a creamy lip balm and a stealth pop up mirror built into the cap), Tarte always comes up with new ways to solve beauty issues, adds Blitzer.

Kelly, 38, was schooled in solving issues, albeit of a different variety. She was getting her doctorate in psychology at Columbia when she decided to ditch the PhD and pursue her long-held passion for cosmetics. A self-described make up junkie, she was constantly scoring goods at makeup counters and feeling great in the moment, only to be let down hours later when she couldn’t replicate the look at home. Her idea was to create a line that was easy to apply and she came up with new techniques, like “cheek stain,” a gel blush that comes in a push up stick.

She put $20,000 on her credit cards, and worked out of her rent-controlled apartment in New York City’s East Village. “When I look back, I think it’s crazy,” she says. Her family chipped in, working in an assembly line to fill the containers and pack items. She paid them with wine and pizza. But for all the support she received from her family and friends, there was little love from the industry: calls to beauty buyers went unanimously unreturned. A month in, with an apartment overflowing with inventory, and her Amex bill due, Kelly contacted the buyer at her favorite store, Henri Bendel, and bluffed her way in, saying she had a commitment from Bergdorf Goodman. The lie landed her first order, for $15,700, and a week later she caught the attention of beauty writers at a breakfast hosted by the department store. The products landed on the beauty pages, yielding the kind of advertising money can’t buy and Tarte quickly gained entry into other stores (including Bergdorf Goodman).

Still, the beauty business-even with its high-end department stores and glossy magazine pages-isn’t all glamour. Kelly would hide under baseball cap and deliver sample products to the mailrooms of magazine publishers herself. “I was hoping no one would recognize me,” she says. (No one did.) Days later she would be invited inside and upstairs to a meeting, and starred as herself. Sales grew every year, but Kelly took things slowly. She moved out of her apartment and into an office after several years in business and she declined offers from QVC and Sephora, thinking she couldn’t handle the volume. “I didn’t want to overpromise and under deliver,” she says. “Once you burn a bridge you don’t get a second chance.” In 2003 she launched in Sephora, where Tarte is now in its 255 stores; two years later she started with QVC, where she can be seen on air several times a month.

Kelly admits she’s guided by little more than instinct. She was interested in using natural ingredients, but was told that the natural ingredients would cost twice as much. She didn’t balk. In fact, she didn’t do any cost analysis. “I was not a business person. It was just what I personally believed in,” she says. While that attitude might have given a project manager or accountant an anxiety attack (if only she had such people on staff in the early days) the go-with-your-gut approach worked. Interest in natural cosmetics has been growing over the past decade and is now at a tipping point. “People are more aware of natural ingredients because more and more research is coming out with evidence of the hazardous effects of chemicals on the body and the environment, ” says Susie Wang, another cosmetics pioneer and the co-founder of Napa, Calif.-based 100% Pure. “Just as people have realized that trans fats or smoking is unhealthy, people are now making lifestyle changes when it comes to what they put on their skin.” With products that are already free of parabens, phthalates, sulfates and synthetic fragrances, Tarte doesn’t have to play catch-up.

At the same time, there’s confusion as well as a certain stigma around being a green line, with people thinking that the products won’t be long lasting or waterproof. In the same way that other hot growing environmentally conscious companies like Method don’t market themselves green (because people think the products won’t work), Tarte also touts efficacy. The company spends hundreds of thousands of dollars on clinical testing to back up their performance claims. For example, Tarte says its “ReCreate” foundation will give a 52.82% increase in moisture in 15 minutes; the mascara claims to yield a 424% increase in volume. “It’s like a push-up bra for your lashes,” exclaims Kelly. Tarte sells everything in fun and distinct packaging that marries the good-for-you aspects with glamour. Take the mascara, which contains healthy ingredients like rice bran wax and ProVitamin B5, but comes in a saucy purple faux snakeskin tube.

This is the kind of thing that delights customers-and therefore retailers. “Maureen Kelly is always looking to offer something unexpected,” says Jennifer Lucchese, Color Trend Merchant for Sephora. “Tarte is consistently one of the brands at Sephora that changes the beauty landscape with innovative products.” Tarte’s most current innovation is the use of Amazonian clay, which is an ingredient in its foundation, powders, eyeliners, and cheek stains. Kelly discovered it on an eco-vacation in Brazil. (She noticed the skin and hands of the local women and asked their secret to their youthful and soft skin. They pulled clay from the riverbank and sent her home with a jar of it.)

Kelly thinks Amazonian clay is the biggest thing she’s working on and Allen Burke, director of beauty & cosmetics at QVC agrees, calling it “groundbreaking.” QVC plans to make a big push around the line this year and next and has already given Kelly more airtime. “She’s already a star, but soon she’ll be a meteor,” says Burke.

Indeed, Kelly is already becoming known as the face behind the brand (albeit a face often with two different eyeliners or different foundations she’s testing): Recently she was getting a quote for insurance and the agent said, “I know you! I watch you on TV! I just bought your clay foundation!”

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