This story was originally part of the 2023 Glossy 50 feature. Click here to see all of this year’s honorees.
This year was difficult for the IPO market, given the economic uncertainty for consumer-facing public companies. But Oddity was the one pure-play beauty company that was able to successfully make its public market debut and sustain Wall Street’s initial enthusiasm. The 5-year-old DTC, e-commerce-only company, which operates both makeup brand Il Makiage and skin and wellness brand Spoiled Child, managed to grow its net revenue to $94 million in the third quarter ending September 30, marking a 37% year-over-year increase, according to its latest earnings report. The company’s 2023 guidance anticipates net revenue of $493 million to $497 million. But Oran Holtzman, CEO of Oddity, said the company’s real accomplishment was its acquisition of biotech firm Revela in April for $76 million, which helped to expand Oddity Labs. The 2-year-old lab consists of 20 people and uses AI to generate its molecule discovery process, which can be used in new beauty products. Holtzman spoke with Glossy about the acquisition and the additional projects Oddity has been cooking up.
What is the significance of Oddity Labs to Oddity’s future plans?
“Around 50% of the new molecules that we discover will go to both Il Makiage and Spoiled Child. And the other 50% will go toward new brands. Today, we have Il Makiage, which is still massively growing and on track to be a $1 billion brand. And then Spoiled Child, which we launched in early 2022, has already reached $100 million in revenue in its second year and is profitable. Brands No. 3 and No. 4 are already in development. Brand No.3 will be a medical-grade skin and body brand. We believe it will transform the dermatology market [by leveraging] our diagnostics powered by computer vision tools that we developed internally. I cannot share [more] on brand No. 4, but both brands already have strong teams working on developing them, and [both] will launch in the first half of 2025.”
How did you organize the company to achieve its successes?
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“When we launched Spoiled Child, I decided to split the brands completely. Each brand has its own leadership team, from the CEO role and down. The only thing that is shared is the technology backbone in Tel Aviv. Our tech team represents 40% of the headcount of Oddity. All brands also use our data science team, because we are using the same data for both brands — and the same will be [true] for brands No. 3 and 4. But finance, supply chain, product development and marketing are completely separated between the brands and duplicated across the organization.”
What’s the future of Oddity’s DTC focus?
“What allowed us to grow so fast, and to be profitable, was truly understanding consumers online and being able to leverage the consumer data to [facilitate] a great user experience and great product development. It allowed us to continue to grow fast without sacrificing margins. … There are [only] three reasons why a DTC company should consider heading into stores. No. 1 is that you cannot grow more. In that case, you need stores because they’re extending your audience. The second reason is that you’re unprofitable in the DTC channel — because user acquisition is difficult. We, however, have a strong repeat [purchase] rate and are profitable. And No. 3, you’re in an industry, like mattresses, where the shipping is challenging and requires more than a few fulfillment centers. Nothing against stores or retail, but we don’t need it yet.”
