Michelle Phan Is Leaving Ipsy

Racked is no longer publishing. Thank you to everyone who read our work over the years. The archives will remain available here; for new stories, head over to Vox.com, where our staff is covering consumer culture for The Goods by Vox. You can also see what we’re up to by signing up here.

YouTube beauty tutorial pioneer Michelle Phan has had a tumultuous year. After “peacing out on” her huge YouTube audience and taking a break from her sampling box business, Ipsy, she traveled the world for several months to get herself out of a slump. When she came back, she bought back Em Cosmetics, the failed beauty brand L'Oréal started with her, and relaunched it independently a few months ago.

Her most recent move has her walking away from Ipsy permanently to focus on Em Cosmetics full-time. Em, which was part of Ipsy, is now the property of Phan’s new company, Divinium Labs, LLC. (TechCrunch characterized Ipsy as “divesting” Em Cosmetics.) Phan said in a statement, “Leading EM Cosmetics will allow me to realize my vision of building a global beauty brand with innovative R&D and increased vertical integration.” Em currently has a small assortment of eyeliners and liquid lipsticks that it sells on its own site, as well as more than 300,000 Instagram followers.

Ipsy was co-founded by Phan, CEO Marcelo Camberos, and current president Jennifer Goldfarb in 2011. It raised $100 million in Series B funding in 2015 and was valued at $500 million at that point. In addition to sending out $10 monthly sample boxes to its more than 3 million subscribers, it hosts a “creator” incubator called Ipsy Open Studios, and it hosts the Generation Beauty conferences, where beauty influencers, beauty fans, and brands collide. These latter two initiatives will continue without Phan on board. “Michelle was the original creator and inspired a generation. She was instrumental in bringing both ipsy Open Studios and ipsy Gen Beauty to life and those programs are now thriving and growing, with more than 8000 creators part of ipsy Open Studios and 4 successful Gen Beauty events each year, including one this weekend in NYC which will be our largest event ever. Ipsy will continue to invest in both programs to grow reach and engagement with our community and to further our mission of inspiring individuals to express their unique beauty,” writes Jennifer Goldfarb, Ipsy co-founder and president in an email.

Ipsy also has some news of its own: It’s launching an e-commerce platform called Ipsy Shopper. After years of only offering samples, Ipsy members will be able to buy full-sized products starting in November. To access Shopper, you have to be an Ipsy subscriber. Based on some scattered Reddit discussion, Ipsy apparently launched an app in beta several months ago for select users.

If you’re a subscriber, you get between 10 and 30 percent cash back when you buy things in the new marketplace. The catch is you can’t access that money until you earn $25. At that point, Ipsy will send you the cash via PayPal or a check, though a minimum of $10 has to be used toward more Ipsy products. And there are other caveats, according to the fine print on the website: You have to maintain your subscription or you lose the cash, and it’s redeemable for “eligible products until cash out date,” which sounds like there will be limits on what products you can spend it on and when. If you don’t redeem or cash out in six months, your cash “expires” and you’ll lose it. It will likely result in some confusion until subscribers get the hang of it. Goldfarb clarified, “Ipsy Cash will be paid out to you automatically in the form of cash back on the 10th of each month as long as you’re an active member and once you’ve racked up at least $5 in earnings. Cash back expires if your earnings balance remains below $5 for more than two years.”

This is a big step for Ipsy, as the company has previously directed subscribers to individual brands’ sites to purchase products. Ipsy will offer 30,000 different products for sale. Some of the available brands will include Ciate, Nyx, Nudestix, and Naked Cosmetics.

Update: September 22nd, 2017, 1:54 p.m.

This article has been updated to include comment from Ipsy co-founder and president Jennifer Goldfarb.