Liz Gannes

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YouTube Star Michelle Phan Launches Beauty Community Site Ipsy

YouTube beauty tutorial star Michelle Phan is publicly debuting today her own subscription make-up start-up, Ipsy.

Under the product name MyGlam, Ipsy is already well-known to her fans, more than 100,000 of whom have subscribed over the past year to receive bags of make-up samples for $10 per month.

If you think that sounds a lot like Birchbox, you’re right. But though Birchbox may have a bigger brand in tech and $12 million in VC funding, it’s latest public number of subscribers is also 100,000.

Phan started posting videos on YouTube in 2007 and they’ve been seen more than 635 million times, so she’s not the typical celebrity endorsement. Her star was made in social media.

“I’m homemade,” is how Phan put it in an interview this weekend. “I upload my videos in my living room, I edit everything, and I upload on my laptop. And my viewers love that about me and they get inspired and do it themselves.”

That’s the crux of Ipsy as well; it’s aiming to be a community, content site, sample subscription provider and product store (that last part isn’t live yet). The company has also started experimenting with including some of its own products in the bag, such as bright nail polishes.

Phan and a team of stylists pick products and post videos about how to use them. In the past, she said, “My fans may feel alienated because the products I’m using may be too expensive,” she said. But the small samples can be relatively affordable.

Then, subscribers are invited to participate in challenges where they post YouTube videos of themselves incorporating the Glam Bag sample products into their own make-up.

Phan said she wanted to create a culture of experimentation and inspiration on Ipsy.

“That’s the beauty about beauty; it’s not like a tattoo. You can just wash it right off and your skin is your canvas so you can do something new the next day,” she said.

Glam Bags are only available in the U.S., and there’s apparently a huge waitlist beyond the 100,000 subscribers, with many international fans wanting to join (as you can see in the comments of every MyGlam video).

San Mateo, Calif.-based Ipsy has raised $3.8 million from Crosscut Ventures, Amalfi Capital, 500 Startups, and angels associated with Facebook.

Phan’s partner in this venture is Marcelo Camberos, who previously led business development at Funny or Die and left a couple years ago to advise YouTube stars on business. He quickly saw Phan was the ultimate target — she’s young and tireless, gets more video views than Funny or Die per month, and covers subject matter that’s obviously monetizable. Plus, make-up is a $27 billion industry in the U.S. with 90 percent margins and six percent of business done online.

Camberos wasn’t the only one who wanted to snag Phan — she is also a spokesperson for Lancome, among many other projects — but he won her over with the promise of equity in the new company and creative control.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work