Upending The Beauty Industry With Customized Hair Formulations Based On Algorithms
Function of Beauty's CEO and co-founder Zahir Dossa in New York City. Photo: Nina Roberts
Published in Forbes on November 7, 2017
Function of Beauty is a startup that formulates custom shampoos and conditioners for consumers. Its CEO and co-founder Zahir Dossa, originally from Canada, pads around their new office, a minimalist duplex flooded with light in Manhattan’s Soho neighborhood. Random bottles of shampoos and conditioners in pastel colors dot the long, central table and tumble out of cardboard boxes.
“We don’t test on animals,” assures 31-year-old Dossa, wearing jeans, a t-shirt and blue sneakers, “but we do on family and friends,” he laughs. Function of Beauty officially launched in October 2016, it sells its haircare products through its website; the bespoke shampoos and conditioners are shipped directly to the customer.
Prospective customers answer a simple hair quiz on the Function of Beauty website, which then feeds an algorithm to formulate the special concoctions. Is your hair wavy, coily, fine? Do your “hair goals” include “lengthen” or “fix split ends” or “curl definition”? Colors, bottle sizes, luscious fragrances and smell strengths are all customizable. Formulas can be named and printed on the bottle.
The products are not exactly cheap, two 8 oz. bottles of shampoo and conditioner costs $36; the 16 oz. pair is $46. After the purchase is made, products are formulated and then shipped from their Pennsylvania facility. “We have a very low return rate,” says Dossa, “less than one percent.”
How did a former, self-proclaimed “Head and Shoulders guy” and MIT alum—from undergrad to PhD (funding offered by the Gates Scholarship, National Science Foundation and the Paul and Daisy Soros Fellowships)—get way beyond skin deep into the beauty business?
“I actually passionately hate the beauty industry,” confesses Dossa. He doesn’t like how products are formulated and wildly marked up. “I hate the way current beauty companies espouse themselves and champion what beauty looks like,” he adds. “All those factors,” continues Dossa, “is why I basically like to transform and disrupt.” Dossa underscores that he’s passionate about Function of Beauty, as all startup founders must be, but his passion is fueled from “the complete opposite angle.”
Despite claims of hating the beauty business, Function of Beauty is in fact Dossa’s second successful beauty company. His first was The Argan Tree, a line of argan oil infused beauty products, now defunct. He launched The Argan Tree in 2009 as a result of studying value chains in various industries while at MIT. It scaled so quickly, products soon sold on the shelves of Whole Foods and Sprouts. While the average entrepreneur might feel as though they'd arrived at this point, something didn’t sit right with Dossa. “That’s when I took a step back,” recalls Dossa, “and said, ‘wait a minute, we are starting to look like every other beauty company.’”
Dossa, along with Function of Beauty co-founders Josh Maciejewski, a fellow MIT student who he'd met and chemist Hien Nguyen, re-imagined the entire concept of what a beauty company could be. As Dossa began shutting down The Argan Tree, he asked customers how he could make the perfect product; each person had a slightly different answer according to their hair. These answers planted the seed of custom formulation, bottle by bottle. “Give us all this information,” says Dossa of the online hair questionnaire (all data is kept internal), “we can destroy the current product that you’re using and be a lot better.”
They cut out all middlemen. Function of Beauty doesn’t use manufacturers, distributors or retailers. All aspects of the business are done in-house, with the exception of occasional consultants. Dossa oversees the user experience and design while Maciejewski who the COO and also a U.S. Navy veteran, manages the engineering and operational aspects of the Pennsylvania facility. Nguyen created the formulations. The company has created 52 primarily full time jobs.
Personalized beauty products is an emerging market, however Function of Beauty is cornering the market on bespoke hair products formulated from scratch. “I think CPG [consumer packaged goods] have yet to be transformed to their full potential,” says Dossa.
Currently the Bite Lip Lab stores allow customers to create their own lipstick if they are physically in a shop; Lancôme offers Le Teint Particulier, a custom foundation makeup available to those who visit the counter.
Virtual-only personalized beauty products include Prescriptives’s Custom Blend foundation and powder and Match Co’s foundation makeup. All customers have to do is submit photos of their skin for color matching—what could go wrong? Colorists at eSalon in Los Angeles create customized hair color including highlights for customers via an online questionnaire. Singapore-based Skin Inc blends custom skin serums based on an algorithms created through their online questionnaires.
From its inception, Function of Beauty attracted eager investors. “I guess their rationale was, ‘If two MIT kids are going to make shampoo and conditioner versus all the other options that they have at their fingertips, then something magical and awesome can probably happen,’” reflects Dossa. It was accepted into Silicon Valley’s Y Combinator; Dossa attended the winter of 2015 -2016 as did Maciejewski and Nguyen when they could. Dossa estimates receiving $1.4 in from Y Combinator angel investors, nearly all YC founders.
While Function of Beauty doesn’t make their earnings or sales public, Dossa notes that in early spring of 2017, “We raised our series A round at a $110 million valuation.”
Dossa moved from outside Toronto, Canada to Dallas, Texas, with his family as a 10-year-old. His mother had applied for the Diversity Visa Lottery, known as the green card lottery—which recently came under scrutiny after the October 31 terror attack in New York City—and was accepted. His parents had been looking for a change ever since Blockbuster had moved to town, as his father owned a video store and saw a grim, unsustainable future. “No one in the world is happier about the fall of Blockbuster than my father!” laughs Dossa.
They chose Dallas because they are Ismaili, a sect of the Shia branch of Islam; Dallas has a large Ismaili community. Dossa describes Ismailism as progressive. “There’s a huge emphasis on education and social development,” explains Dossa, “you commit your life to getting super smart and then giving back to community.”
Dossa doesn’t particularly feel like a Canadian immigrant living in the U.S., but rather, an immigrant as a part of a larger family story of three generations born on three different continents. His parents were born in Africa, in Tanzania where there was a sizable Indian population, and his grandparents in India.
Dossa believes there are benefits to being an immigrant in business, many of whom end up being entrepreneurial by default. “There is just this notion of, ‘How do you make money?’ “How do you get by?’” Another benefit is the desire to succeed, “there’s this very big thirst,” observes Dossa, “to prove yourself.”