MIT Grad Built $110 Million Company in Less Than a Year

An emblem that reads "Massachusetts Institute of Technology."

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$110 million is a lot of dough… especially for a company that’s less than a year old. But believe it or not, that’s how much Function of Beauty is rumored to be worth.

Function of Beauty is an online, direct-to-consumer hair product company that creates customized shampoos and conditioners based on the client’s needs. They have a solution to combat nearly every type of hair care problem, including frizz, oily scalp, dry tresses, and dull color.

The New York-based startup has already raised $12 million in funding through Y Combinator. The company just launched in October of last year.

CEO and founder Zahir Dossa says he came up with the idea of creating tailor-made hair care products during his studies at MIT. The “aha” moment happened when he began researching different industries for his dissertation, which focused on ecommerce and value chain optimization.

“I saw that was the most bloated [industry] was beauty, and more interestingly, the value chain for beauty hadn’t really changed over the last 100 years,” Dossa said in an interview with Business Insider. “There were all these middlemen in the way.”

He quickly saw an opportunity in hair care due to the various different problems that people are trying to address. From a business standpoint, that makes for a near endless amount of solutions—well, almost endless. According to Business Insider, Function of Beauty can generate 12 billion different formulas.

“If we know what a person’s hair profile is and how they’d like their hair to behave or look or feel, then basically we can combine those two data points to be able to come up with a unique base for each person based on their profile, and then various performance blends that we can add that appeal to each hair goal that they fill out,” Dossa stated. “And then there are other various ways to personalize it, like the fragrance or the color.”

Better yet? If the client doesn’t like the product, they can return it and receive a new formula, free of charge.

It’s easy to see why Function of Beauty is doing so well, given how focused the company is on the consumer’s needs.

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Using Export Complexity to Explain Income Inequality

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Researchers from MIT have developed a new method for predicting the economic success of countries around the world: the complexity of that country’s export economy. For the last decade or so, Professor César Hidalgo and his colleagues have been doing research and writing papers to back up this idea. They argue that “not just [the] diversity but the expertise and technological infrastructure required to produce [exports] is a better predictor of future economic growth than factors economists have historically focused on, such as capital and education.”

And what’s more, the most recent research shows that this complexity can also say a lot about income equality in those countries as well. Basically, countries with greater export complexity have lower income inequality because there are more workers in more industries that are generating exports and, subsequently, income. Looking at data collected between 1963 and 2008, researchers found that “countries whose economic complexity increased, such as South Korea, saw reductions in income inequality, while countries whose economic complexity decreased, such as Norway, saw income inequality increase.”

This research comes at a time of renewed interest, both politically and scientifically, in the issue of income inequality in many parts of the world. There are a number of factors that can be used to determine the current or future success of an economy, but not all of those factors are equally important. Relying solely on GDP, which is often the case, is much less useful than combining it with export complexity, education, and population. However, relying just on export complexity seems to work almost as well as using all of the aforementioned methods.

This development could be extremely useful to both governments and businesses in the future, as they seek to do right by their citizens and employees, respectively. Essentially, finding a new niche isn’t just good for a company, but it can help the country as well.

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