How Madison Reed’s founder uncovered an overlooked customer

“If you’re scared of making mistakes, you could never innovate,” Amy Errett told Founder Brew.

Errett found that mindset after a career as a venture capitalist and three-time entrepreneur. That experience gave her what she considered a strong understanding of “what it took to raise money, build a team, build a product, and launch to the consumer market.”

When she looked at the beauty industry, she saw an established category with an overlooked customer: women over 38 who were starting to color their hair. She also saw an opportunity to rethink an experience that had frustrated her friends, from ingredients to cost and convenience.

In 2014, that opportunity launched as Madison Reed, a beauty brand named after Errett’s daughter. The company is best known for its direct-to-consumer hair dye products delivered to customers’ homes, and also operates storefront hair coloring salons across the country.

Errett spoke with Founder Brew about spotting a consumer gap, getting close to customers, and why founders can’t be afraid to get things wrong.

This interview has been edited for length and clarity

You identified Gen X women as an underserved beauty consumer early on. Was there a specific moment that convinced you this was a market worth building around?

When I was a venture capitalist, I saw a company called Dollar Shave Club, and we didn’t invest. That ended up being something that intrigued me because I saw that the consumer packaged goods area, like shaving, was being disrupted by direct-to-consumer brands.

I started thinking about what would be the woman’s analog to shaving: What is repetitive, and what does she do on an every four to six week basis? Where, frankly, I’m not teaching her to color her hair, the act of it. I need to have her use our product. I liked the repetitive nature of the business, that there was an embedded reorder, replenishment, and so I saw that as a big opportunity.

All of my friends were coloring their hair all the time, and they were complaining about ingredients, but they were also complaining about cost and they were complaining about time, the convenience factor of how long it took, and how it was hard to get in to see a stylist. We started the company as a direct-to-consumer brand.

Before launching Madison Reed, what did you see as broken about the consumer experience, and how did you figure out what customers wanted?

The big takeaway was we needed to spend time with customers to get feedback in focus groups. We spent a lot of time in the beginning meeting monthly focus groups…hearing why they would use the product, why they wouldn’t use the product, what did they like.

The other piece of it that seems kind of trivial now, but it isn’t, is that we videotaped about 55 women in their bathroom using other boxes of color. We were able to see the mistakes they made with the user experience.

We noticed nobody was reading instructions, and we were like, “This seems like a very risky thing to do.” The reason, when you asked them, was: They were very small font, 10 different languages, and just not very user-friendly.

We decided that our instructions would have pictures on them and be large and very prescriptive, with a QR code that you could actually watch a video. We became very user-centric in making this simple for people.

Looking back, what was the hardest decision you made in building Madison Reed that ultimately had the biggest impact on the company?

Definitely going into the services business. That was counter to what everybody else told me.

During Covid…I had everybody, every investor in the world tell me, “Amy, don’t open more stores because the world has changed. Everyone’s going to do everything online.” I’m like, “No. As soon as she can, she’s going to get out of her house and get her nails done and her hair done and go shopping and see human beings and go to restaurants.”

The world operates in an and world, not an or world. You all remember the time where the internet was going to replace everything, and no one was ever going to walk into a store. Well, we know that you sometimes go to stores, you sometimes do it online, and I knew that a woman was not going to not go back to a salon if they chose to have somebody else do their hair.

That was a really hard decision because we throttled during Covid. We opened a lot of stores and took leases that were at a more advantageous lease rate, really expanded while everybody else was contracting four walls. We hit the gas pedal while everybody else was contracting. Everyone thought I was nuts.

This is not your first company you founded. What’s been the most valuable lesson that you’ve learned that you’ve applied to Madison Reed?

It’s always about the people, 1,000%. This could be a completely different product and our success or failure will be attributed to the quality of the team, the culture in the company, the trust and belief we have in each other, and the ability to create a culture that isn’t afraid to take chances, risks, and make mistakes.

I’ve gotten a lot better about making faster decisions. When I know, I know. When I think about something three times, I’m like, “Oh, yeah, there it is.” It’s uncomfortable because sometimes you’re doing it about-face, making a decision that other people don’t like or disagree with. Sometimes you’re going to be unpopular because you have to.

The gravitational pull is to go safer. Gravitational pull isn’t to keep pushing the edge of the envelope and make changes, but we always have to. If not, we just become a stagnated company that somebody else will revolutionize.