thecoolhunter.net - M.A.C Cosmetics - Two Franks are better than one

M.A.C Cosmetics - Two Franks are better than one

Tuesday, 24 April 2007

HOW A RANGE OF HOMEMADE MAKEUP BECAME A TRAILBLAZING global brand is the story of two Franks, partners in life and business: Frank Toskan, a fashion photographer/makeup artist and Frank Angelo, a successful hairdresser. Toskan was the makeup guru and Angelo the entrepreneur.

The flamboyant Angelo was running a successful chain of hairdressing salons in Toronto when he met Toskan. His first venture was a little movie business for neighborhood children that he ran when he was seven. The Franks met in the early 1970s. Their quest for better qualitymakeup for their fashion shoots sent Toskan into their kitchen at the back of Angelo’s hair salon in the Toronto suburb of Cabbage Town. “Commercial cosmetics weren’t working for me, so I had to develop my own,” he says. Toskan enlisted the help of future brother-in-law and nineteen-year-old chemist Vic Casale and they worked on a tiny range of lipsticks, eye pencils, bases, and powders.

Initially, the product was only distributed among friends in the fashion industry, but word soon got out about the dense pigment, the non-oily finish of the foundations, and the color range. The demand inspired Toskan and Angelo to liquidate their property assets and invest the proceeds in Makeup Artist Cosmetics. The business was formally
established in 1984, with Toskan as creative director and Angelo as marketing director. MAC moved out of the kitchen into a 10,000- foot manufacturing plant that they grew out of within twelve months.

From the very beginning, MAC took a very clear position in the marketplace. The buzz about MAC was built at fashion shows, through Madonna video clips, on the cutting edge of the arts. Originally for makeup professionals, the brand became even more desirable because of its real links to the fashion frontline. The brand also stood for diversity, with its extensive color ranges to suit “all sexes, all races, all ages.” Says Toskan: “I have always resented the image of the nineteen-year-old beautiful blonde, white model being shoved down people’s throats.” To prove the point, MAC’s
first spokesperson was 6’7” drag queen Ru Paul.

“MAC has broken the traditional industry way of selling product,” says Toskan. MAC’s radical approach also included going against the traditional cosmetic retailing strategy of high advertising spend and gift-with-purchase promotions. Toskan and Angelo’s business model relied on a formula of low prices and word of mouth, no advertising, and no gift with purchase promotions. “I always believed in earning your customer, not buying her,” says Toskan. MAC’s first big break was being offered space in a Toronto department store in 1984, albeit a very out-of-the-way counter. MAC
continued to retail differently, with its black-clad trained makeup artists as sales assistants who were, for the most part, not working on commission. Without this sales pressure, the MAC people could concentrate on giving service that would keep the customers coming back.

Apart from maple syrup, MAC is one of the few Canadian exports that has had success out of its homeland. MAC’s first U.S. sales were through the prestigious New York department store Henri Bendel, where women would wait in line for hours on weekends for the lip pencils. MAC opened its first store in New York’s Greenwich Village in 1991. Growth was exponential and caused serious problems for Toskan and Angelo. “We had created such a demand for the product that we were not able to respond,” says Toskan. MAC was also dealing with product being sold in North America only to be taken offshore and sold in other countries, particularly in Asia, and sold on the black market for three times the price. There were also the challenges of expanding globally and negotiating to open new stores in retail environments the Franks knew nothing about. All these business distractions meant less time for product development and marketing and more time on company infrastructure.

Enter one of the world’s biggest cosmetics companies, Estee Lauder, which had never distributed another company’s products before. William Lauder, a senior executive at Lauder, recognized the potential for growth in this cult brand. “They started a category that no one saw coming,” he says. In December 1994, Estee Lauder bought a 51 percent stake in MAC for $38 million with a view to outright acquisition. The deal was kept secret as Toskan and Angelo were terrified that an alliance with an industry giant might impact on the brand’s street credibility, that MAC would be
“Lauderized.” The deal went ahead with MAC continuing to drive its image and Lauder focusing on the business side.
The marriage between David and Goliath was initially a happy one. The Franks worked on their ranges, promoted the brand, and kept up MAC’s VIVA Glam AIDS campaign. Then came the shocking death of Angelo. In 1997, he died of a heart attack while having routine surgery in Florida. At the time, Toskan described Angelo as “the guy who pushed me out there. I was the more insecure one who wanted to stay in the background. He was my pedestal for many years.”
By then the company was turning over $250 million annually.

Toskan sold the whole company to Estee Lauder for an estimated $60 million in February 1998. In December 1998, Toskan resigned as creative director of MAC, no longer wanting to be a part of the company that he built. Estee Lauder has continued to drive sales globally with MAC now sold in forty-six countries with sales of more than $500 million. Viva Glam, the MAC range of lipsticks that donates all proceeds to AIDS research, has raised in excess of $32 million. Toskan still lives in the Toronto area. by Emily Ross & Angus Holland, exclusive online extract from 100 Great Businesses & the minds behind them. Buy Online

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