December 29, 2019 12 min read

This story appears in the January 2019 issue of Entrepreneur. Subscribe »

“Excuse me, where did you get that?” A very polite teenage girl taps me on the shoulder and points to the large eyeshadow palette I’m holding. “They’re handing them out at the Target booth,” I reply — and before I can ask her about what she is doing here, at one of the most curious events I’ve ever attended, she’s off, literally running through a convention center in search of coveted free makeup samples. 

Welcome to Beautycon. For the uninitiated (or perhaps anyone over 35), Beautycon is a two-day festival that celebrates all things beauty and makeup — almost like a trade show turned carnival, where enthusiastic fans come to shop their favorite brands, get their hair done, take countless Instagram-worthy selfies, attend talks with Kim Kardashian and Laverne Cox, get face time with beloved YouTube influencers, and, of course, collect countless free samples. Cities from Dallas to London have hosted.

Beautycon has become a frequent topic among style-industry insiders, bloggers, and entertainment-focused publications like Bustle and The Hollywood Reporter. Almost always, the conversation is about its massive cultural footprint — the rabid fans, the ecstatic beauty companies, the spectacle of it all. Over the past five years, Beautycon blossomed into a business that brings in more than $10 million a year, has grown 40 percent year over year, and still sees opportunity in a global cosmetics market on its way to $806 billion by 2023.

I see this myself when, in April, I attend Beautycon in New York City, where the typically drab Jacob K. Javits Convention Center is transformed into a vibrant destination permeated with bass-heavy music and packed with more than 90 brands including Target, MAC, Lime Crime, and Floss Gloss, all of which have set up shoppable, interactive installations. (For Target, a floral-themed secret garden; for MAC, a party atmosphere with shirtless hunks slathered in body paint. Social media is its own currency: Samples are often distributed only if the attendee can show a brand they recently posted about them on Instagram.) To access all this, Beautycon New York’s 15,000 attendees paid anywhere from $50 to $2,000, and Beautycon festivals report an additional $4,288 in sales per square foot. (The average among storefront retailers is just $325.)

But the lasting impact of Beautycon may not be in beauty at all. It may be in what the company calls “pivotals,” its name for the kind of attendees who arrive at Beautycon. They are diverse in gender, ethnicity, and style. They’re primarily ages 13 to 34 — which is to say, Generation Z with some young millennials thrown in. They’ve been raised on the internet and are perhaps more informed than any consumer group before them. They watch up to four hours of digital content and pick up their phones more than 160 times a day, and have an aggregate income of more than $480 billion. They are, in sum, the next generation of consumer. And Beautycon is one of the earliest companies to noticeably get them — to understand how to court and serve and excite them.

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That means Beautycon CEO Moj Mahdara is holding an insight that every company wants. And they’re calling her regularly to ask for it. Beautycon created an analytics arm, and Mahdara is now helping everyone from Nike to T-Mobile to publishing giant Condé Nast understand exactly what this new consumer wants — not just from beauty brands, but from all brands.

The answer, she says, goes beyond any marketing message or product development. “[This generation] self-educates through content consumption,” says Mahdara. “They’re the driving influence in household decision-making. They have more information, more expertise, more insight.”

What does that mean? It means pivotals want to know everything about a brand. And they’d better like what they hear.

Image Credit: Sharon Suh

To appreciate how unique pivotals are, someone needs only to hang around the Trèstique booth at Beautycon New York. Trèstique is a three-year-old cosmetics startup, and this is its first appearance at the event. Good timing: The company’s products have just been certified by PETA for being cruelty-free, which turns out to be a hot subject.

“It was by far the number one thing people wanted to talk about,” says Jennifer Kapahi, Trèstique’s cofounder and co-CEO. “No one over 29 wanted to, but all the girls in their teens and 20s were very, very particular about only buying cruelty-free product. I’ve been in beauty for more than a decade, and I’ve never seen a consumer wanting to be so educated on a brand’s position.”

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That’s the pattern: Pivotals are involved. They want to know what a brand stands for and whom it stands with. Authentic commitment to equality, acceptance, and ethics is cheered, while a misstep can trigger outright hostility. This can be jarring for companies, especially more-established ones. Victoria’s Secret discovered this in November when, ahead of its annual fashion show, chief marketing officer Ed Razek made disparaging remarks about body inclusivity and transgender models. Shortly after, the company’s CEO resigned. That same month, Dolce & Gabbana triggered an international firestorm after releasing videos that many saw as racist, featuring a Chinese model struggling to eat pasta with chopsticks. 

“Brands got used to a millennial audience that was lax about holding them accountable,” Mahdara says. “Now they’re having to get used to Gen Z, which is absolutely going to hold them accountable.” 

Businesses are grappling with how to engage young shoppers who use their dollars to send a message, and they’re turning to Mahdara and Beautycon, who regularly consult on how to handle the shift. They currently work with 300 partners, 20 percent of which have absolutely nothing to do with beauty, and many of which are blue chip companies. “We help them understand content, publishing, talent, influencers, culture, diversity, ethnicity, gender fluidity, and what spirituality means to this audience,” Mahdara rattles off.

Beautycon cemented its insight in 2017, when it produced a report called “FOMO (Fear of Missing Out)” in collaboration with the research agency Culture Co-op. Its goal was to take a holistic, data-based look at the way pivotals think, both about themselves and the world around them. Key findings include that 52 percent of males and 27 percent of females reject gender labels. Forty-four percent of this generation draws from two or more cultures to create what it sees as its own unique culture. Eighty-seven percent is tired of “everything looking so perfect on social media.”  

The report’s concluding recommendations sound simple: Don’t just target consumers; you must recognize, include, and feature them. 

These insights have helped shift brand messaging. After Mahdara presented FOMO to the T-Mobile team in Seattle in early 2018, the carrier shared versions of its upcoming 2018 Super Bowl ad with her. The year prior, T-Mobile ran celeb-heavy spots featuring Justin Bieber, Snoop Dogg, and Martha Stewart. Now it had prepared a spot called “Little Ones,” a video of nine babies of different genders and ethnicities. In a voice-over, Kerry Washington says: “Some people may see your differences and be threatened by them, but you are unstoppable. You’ll love who you want. You’ll demand fair and equal pay. You will not allow where you come from to dictate where you’re going.”

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T-Mobile wanted to know what Mahdara thought. Do the babies reach their customers better than another Drake video? Yes, Mahdara said. “Think of Gen Z — this is a group of people that organized the March for Our Lives on social media. They’re powerful, and they don’t want to see another celebrity-driven ad,” she says.

She was right. The ad was a hit, and it signaled a new direction for T-Mobile. Last summer, the company doubled down on Beautycon, sponsoring the main stage lounge at the Los Angeles festival, giving fans a space to relax, charge their phones, get their makeup done — and buy exclusive T-Mobile product. “Partnering with Beautycon just made sense,” says Nick Drake, executive VP of marketing and digital experience at T-Mobile. “It’s a platform that shines a light on gender equality, breaks down traditional beauty standards, and encourages everyone to be their authentic selves — things that are built into our DNA.”

Image Credit: Courtesy of Beautycon

How does someone like Mahdara come to understand an audience this well? She is, after all, a full generation or two older — squarely Generation X, at age 40. But she shares this younger generation’s desire to be seen and heard for who they really are. It’s something she struggled with while growing up in Erie, Penn., as the first-­generation, gay daughter of Iranian parents. “They wanted me to conform to a super heteronormative life, and I tried my damnedest to do that,” she says. “It was a total failure.” 

At 16, she left home and eventually settled in Santa Ana, Calif., where she had some relatives. She worked countless jobs to pay her rent while putting herself through two years of college, but she dropped out under the stress of mounting student loans. Still, a class on digital media and communication stuck with her. “I just realized the internet was going to eat the world,” she says.

She talked her way into an internship with the music festival Lollapalooza and then spent the early 2000s bouncing between digital media and live events. She launched two startups, served as CEO of a creative agency, and counted Apple, Coca-Cola, and Warby Parker as clients. Through all this, she began thinking about the difference between brands and individual people. “Brands are these very rigid organisms, and they want to be a part of a popular culture that’s totally fluid,” she says. “It struck me as similar to being a part of my family — this rigid structure that was trying to be a part of this country. When you’re a half-breed, you can see things from a lot of different perspectives that you couldn’t see if you were just one thing.” 

Among the things she saw: Entertainment was going to change. The polished, untouchable celebrities of before would lose their appeal and be replaced by people who seemed more raw and transparent. “Jennifer Aniston won’t move millions of bottles of Smartwater forever,” she says. “Younger, digitally native entertainers are ultimately becoming more potent to a brand partnership and brand development than any traditional celebrity.” (She’s right: According to the FOMO report, 73 percent of her audience said they are more influenced by people they follow on social media than traditional celebrities.)

In 2014, she got a chance to prove her theory when she became CEO of Beautycon. It had existed for three years prior as an exclusive gathering for YouTube influencers. Mahdara had the idea to make the event consumer-facing, with an attitude that ran counter to industry norms. “Beauty isn’t about a cosmetic experience anymore,” she says. “It’s about community, self-definition, expression. It’s not just a push against traditional beauty standards, it’s a humongous shove: Get off of me; we’re going to start to define who we are and how we live.”

At first, that could seem threatening to older brands. But soon, they learned just how valuable it was to arrive in person and meet their new generation of fans. “You have to be where the consumer is,” says Larissa Jensen, executive director and beauty-industry analyst with NPD Group. By associating themselves with Beautycon, brands discovered a shortcut to a consumer they struggled to understand. They could arrive and say: We’re here — because we get it.

Mahdara may be a leader of a movement of sorts, but as she walks throughout her New York festival, she goes mostly unnoticed. She’s wearing a nondescript red hoodie and sporting her signature, somewhat ironic beauty look: no makeup. Attendees whiz around her, running to and from their preferred booths, activations, and meet-ups, ignorant that she’s to thank for their weekend of impassioned consumerism. 

Like Beautycon’s partners, Mahdara knows her own company has a lot to learn. “We’re a young company, and we can still be clumsy in our execution, and we’re still figuring a lot of things out,” Mahdara says. But she’s working to smooth them out. She’s already grown the operation beyond festivals to include consumer products, a content studio, a brick-and-mortar retail arm called Beautycon POP that spotlights female-founded companies, and, of course, a data-and-­analytics operation. She’s also raised $20 million in funding and is exploring additional investment and larger strategic partnerships.

And critically, a new volume of its generation-defining FOMO report will be released in the near future, along with additional data studies on the evolution of this consumer group. She hopes the insights will continue to shift how brands think about and treat young people — because that, she says, is ultimately more meaningful than any one brand. Including hers.

“We are a brand and we are a for-profit company, but when you represent a massively young audience, you have a responsibility to create and produce outcomes of change,” she says. “Gen Z is an audience I honestly believe will go on to save us. They don’t get caught up in the shoulda, coulda, woulda. They just do it. So Beautycon can’t sit on its hands.”