Melissa Butler made 1,500 batches of lipstick in her kitchen, walked away from Shark Tank without a deal, and then built The Lip Bar into a nationwide beauty brand anyway. Find out how she did it.
Melissa Butler was working at Barclays when she started making lipstick in her New York apartment. 1,500+ batches later, her scrappiness paid off with a spot on Shark Tank. She didn’t get the deal, but she did leave with a powerful lesson in branding instead. Now, The Lip Bar is sold on Target shelves nationwide—the retailer’s largest Black-owned beauty brand.
In this episode, Melissa takes us through her incredible journey from the apartment kitchen to the CEO chair, including the advice from Mark Cuban that changed everything, how she landed a deal with a major retailer, knowing when it’s time to quit your job and go all-in, and much more.
➜ Follow Small Business Unscripted so you never miss a conversation.
3 Takeaways:
Chapters:
[00:25] Meet Melissa Butler
[02:47] From Detroit Roots to Wall Street
[04:20] Quitting Finance to Start a Lipstick Brand
[07:23] Learning Cosmetic Chemistry from Scratch
[11:09] When to Quit Your Job
[14:26] Shark Tank: What Really Happened
[23:44] Raising Capital & Landing Target
[32:38] Scaling the Brand: Retail, Marketing & Growth
[45:30] Final Advice for Founders
Melissa’s Highlights:
"I saw this group of women who felt like they were aging outside of their beauty—and this idea that beauty has a time limit. That's another box I don't appreciate and I don't want to play up."
"Beauty will happen wherever I choose."
"A lot of founders make the mistake of thinking they need dollars when they need efficiency, or they need creativity, or they need to build a better community."
Connect:
➜ Melissa Butler: https://www.linkedin.com/in/melissa-butler-4b7ba766/
➜ Everett Sands: www.linkedin.com/in/everettksands
Resources:
➜ Learn more about Lendistry: lendistry.com
➜ Learn more about The Lip Bar: thelipbar.com
0:00:00.1 Melissa Butler: I probably made a thousand batches before I got to a single good one. And when I felt like it was sufficient, I then passed it out to my friends and family.
0:00:07.9 Everett Sands: Okay. And they were like...
0:00:09.1 Melissa Butler: And they were like, this is terrible. So I started adding shea butter.
0:00:12.3 Everett Sands: Okay.
0:00:12.8 Melissa Butler: You know, things like that. And so it took me, I don't know, ultimately maybe 1500 batches before I got to a good one. And then for the first three years of the business, I made every single product with my bare hands.
0:00:25.7 Everett Sands: That's Melissa Butler, founder and CEO of The LIP Bar. Melissa went from Wall street financial analyst to beauty founder, making vegan lipstick in her kitchen while working a 9 to 5. Today, The LIP Bar is the largest black beauty brand in Target, proving that inclusive beauty isn't just the right thing to do. It's good business. I'm Everett Sands, your host and the CEO of Lendistry. This is Small Business Unscripted. Let's get into it. Melissa, welcome to Small Business Unscripted. So happy to have you here today.
0:01:03.0 Melissa Butler: Thank you for having me.
0:01:04.1 Everett Sands: Absolutely. So I always ask this of entrepreneurs. There's no special order, but I want to get kind of what you're thinking about right now. So I'm going to give you three things. You just put them in the order that you feel are more relevant to you right now. So career compensation or quality of life.
0:01:20.4 Melissa Butler: Ooh, quality of life, compensation...
0:01:25.9 Everett Sands: Career. And what's quality of life to you right now?
0:01:27.6 Melissa Butler: Quality of life is freedom.
0:01:29.1 Everett Sands: Okay.
0:01:29.6 Melissa Butler: I think that a lot of people start businesses because they want freedom, and then they very quickly realize that there is no freedom, that you're working harder than the standard 9 to 5. That even if you're the CEO, you have many bosses. Like, my bosses are my customers, my team members, my investors. So freedom. Not from the perspective of, like, I don't own my time because I do own my time, and I do have flexibility, but freedom, like, I get to take bigger risks.
0:02:00.4 Everett Sands: Right.
0:02:00.9 Melissa Butler: I get to take risks that don't necessarily make dollars and cents. And I think that when you're a small business owner, you are oftentimes having to take very calculated risk. Like, A plus B has to equal C.
0:02:14.1 Everett Sands: Totally, right.
0:02:14.3 Melissa Butler: And I need it to be where it's like, I can test into some things where it's like, A plus B might equal F. And F might, you know, might be a failure, but you get to learn from it. So I'm looking for freedom to test, freedom to choose, freedom to be.
0:02:32.5 Everett Sands: Yeah.
0:02:33.5 Melissa Butler: In my personal life for many years. I prioritize the business, and, you know, that can lead to burnout. That can lead to resentment. So also just making sure that I'm leaving a little bit of space for me.
0:02:46.4 Everett Sands: Awesome, awesome. So let's start not necessarily at the beginning. We don't have to be day one when you were born, but tell us where you're from and, you know, and give the audience a little bit more about you.
0:02:56.0 Melissa Butler: Yeah.
0:02:57.0 Everett Sands: On your journey.
0:02:57.7 Melissa Butler: I'm from Detroit. I love Detroit. It's a city that taught me so much grit. It taught me the beauty of diversity and that as a black woman, like, the media oftentimes will say that black people are a monolith and black people are in this way. And being a black woman from Detroit, I got to see black doctors and lawyers. I also got to see, you know, black people who are not doing the best. And so I quickly learned that my decisions would lead to my outcomes. Like, it was very individualistic, as opposed to, like, you're a black person. So this is your path. This is your route.
0:03:35.1 Everett Sands: Yeah.
0:03:35.6 Melissa Butler: And then I went to FAMU also life changing life.
0:03:39.6 Everett Sands: Were you part of the band?
0:03:41.0 Melissa Butler: I was not a part of the band.
0:03:42.4 Everett Sands: All right, all right. Well, let's...
0:03:43.3 Melissa Butler: I did pledge a sorority, though, so I'm a Delta.
0:03:45.5 Everett Sands: Awesome.
0:03:47.3 Melissa Butler: But while at FAMU, I learned even more diversity. So there I'm around... I'm surrounded by black people who are from the Caribbean and black people who may be from the African continent, which was really cool, because now I'm outside of my Detroit bubble, and now I'm really seeing the beauty of the diaspora.
0:04:07.5 Everett Sands: Yeah.
0:04:08.2 Melissa Butler: So those two things taught me that it was okay to be exactly me.
0:04:13.6 Everett Sands: That's cool.
0:04:14.2 Melissa Butler: That it was okay to show up exactly how I wanted to show up, and that it was ultimately okay to be different. So when I got to Wall street, because I started at Barclays in 2009, right after the crash, right after they bought Lehman Brothers, and that was a bit of a shit show. Yeah, it was a complete mess. But Wall street tends to operate in a very linear manner.
0:04:43.5 Everett Sands: Very much.
0:04:44.6 Melissa Butler: And so I found myself a bit frustrated because I just learned how to be an individual. I was just praising individuality and learning. Yeah. And they're like, this is the box, and stay in it.
0:04:56.6 Everett Sands: That's right.
0:04:57.2 Melissa Butler: And they're also putting me inside the box and expecting that, I think, in the box. And that became very frustrating. And that led me to making lipstick in my kitchen, which is so crazy, because who makes lipstick in their kitchen?
0:05:10.8 Everett Sands: Yeah, I mean, please tell me how...
0:05:12.9 Melissa Butler: No one knows how to make lipstick.
0:05:14.3 Everett Sands: So is it, like, are you headed out and, you know, you don't get the color you want or, you know, I'm simplistic in my thinking, so I know it's gonna be more than that. But, like, what even had you to say, let me think about this, because I'm... Unless you bought a company while you're at Barclays that had to do a CPG, I don't like what takes you...
0:05:33.4 Melissa Butler: No, I was so poor, I definitely didn't buy a company.
0:05:37.0 Everett Sands: Buy me a Barclays. You might have been in a transaction,
0:05:39.9 Melissa Butler: But I was just frustrated with the beauty industry and its lack of diversity, the excessive amounts of chemicals, the idea that beauty looked like one thing. So I was trying really hard to fight and get outside of the corporate box. But also, I'm realizing all of the boxes and all of the ways in which people keep themselves small or make themselves small. And for women, unfortunately, women are taught that beauty is, like, the pinnacle of our existence. Being beautiful, you know, being nurturing, being motherly. And so I saw this group of women who felt like they were aging outside of their beauty.
0:06:25.7 Everett Sands: Interesting.
0:06:26.3 Melissa Butler: This idea that, like, beauty has a term.
0:06:30.2 Everett Sands: Yeah. Like, time limit.
0:06:31.5 Melissa Butler: Yeah. This idea that beauty looked like one thing. And I was like, well, that's another box that I don't like. That's another box that I don't appreciate. I don't want to play up. And so I started just talking to my friends and family, and I find that the most successful businesses and the businesses that you're willing to stay in, even when it's hard, are the businesses that you find pursue, like, a deeper purpose.
0:06:58.0 Everett Sands: Sure.
0:06:58.7 Melissa Butler: And I started The LIP Bar. Yeah, I started The LIP Bar because I wanted people to have more confidence. Like, no one ultimately needs makeup. Like, makeup is fun. It's the cherry on top. But I saw the way that makeup gave women more confidence to be exactly who they were, because, again, I'm trying to tap into that individuality. I'm trying to remind people that they are good enough. And so it led me to researching, how do you make lipstick? And I chose lipstick because it was a low barrier to enter the market. It was more affordable, and I found that I could do it on my own.
0:07:34.9 Everett Sands: Yeah. So you don't have to give me all the top secrets. But, like, I can cook. Like, literally, I would burn toast. Like, just so you know who you're talking to.
0:07:42.1 Melissa Butler: Okay, okay.
0:07:42.7 Everett Sands: I mean, is it like, like, five ingredients? Are we talking 20 ingredients? Like, how when you say there's no YouTube university, right? There's no ChatGPT, like...
0:07:52.2 Melissa Butler: Yeah.
0:07:52.6 Everett Sands: Assuming.
0:07:53.2 Melissa Butler: Yeah. And in 2010, when I was thinking about it, this didn't exist. You couldn't just, like, start a business.
0:07:58.8 Everett Sands: Yeah.
0:07:59.4 Melissa Butler: And you're in your kitchen in that way. I started reading books on cosmetic chemistry.
0:08:03.2 Everett Sands: Okay.
0:08:03.7 Melissa Butler: I started reaching out to cosmetic chemists for advice.
0:08:07.6 Everett Sands: Was science your background at FAMU.
0:08:09.4 Melissa Butler: No, finance was.
0:08:10.8 Everett Sands: Okay, okay, okay. The story gets even crazier, but keep going.
0:08:14.9 Melissa Butler: But I think the beauty of FAMU is that they teach you that you can do anything and that everything is figureoutable. Like, figure it out. Like, it's up to you. There are no excuses. If you want to do something, do it. If you don't have the resources, that's fine. Many people don't have resources.
0:08:31.3 Everett Sands: Absolutely.
0:08:31.9 Melissa Butler: And I think that scrappy mentality is what allowed me to start the business, to stay in the business, because I never excited, expected any handouts. I never expected to fundraise. I never expected that I could get any help outside of myself, which in hindsight was probably a mistake. But in those early days, it really helped me to learn every part of the business.
0:08:55.5 Everett Sands: Okay. So...
0:08:56.1 Melissa Butler: And so for the ingredients.
0:08:57.3 Everett Sands: Yes. Well, you don't have too many ingredients because, again, I don't want to take away any of your IP, but I want to, like, but wasn't hard. Let's just start there first.
0:09:05.3 Melissa Butler: Yeah. I think everything is hard.
0:09:06.8 Everett Sands: Okay.
0:09:07.2 Melissa Butler: I think anything that's worthy is hard.
0:09:09.6 Everett Sands: Okay.
0:09:10.3 Melissa Butler: Yeah.
0:09:10.7 Everett Sands: So then what happens? You find... How do you know it's right? Like, do you... I mean, so I was pre med. Like, do you get, like, contact dermatitis? Like, does the lipstick, like, smear the wrong way? Like, how do you know when it's right?
0:09:25.3 Melissa Butler: Well, you test and learn.
0:09:26.4 Everett Sands: First time?
0:09:26.8 Melissa Butler: Yeah. You test and learn. I probably made a thousand batches before I got to a single good one.
0:09:31.2 Everett Sands: Okay.
0:09:31.7 Melissa Butler: And when I felt like it was sufficient.
0:09:34.2 Everett Sands: Okay.
0:09:34.8 Melissa Butler: I then passed it out to my friends and family.
0:09:36.5 Everett Sands: Okay. And they're like...
0:09:38.2 Melissa Butler: And they were like, this is terrible.
0:09:41.5 Everett Sands: See, I'm imagining, like, again, I'm correlating it to cooking. I don't know why, and I'm saying ingredients and stuff like that, but I imagine, you know, you hand them a pie and they taste it and they're like, oh, this is good, but this is lipstick. So I'm not, you know, I'm trying to...
0:09:56.3 Melissa Butler: Well, you know, girls are conditioned to want to play end product, whether it's a lip balm or a mascara. And I think even more so today. So luckily for me, I was entering an industry that I was acutely aware of just naturally being a woman.
0:10:13.1 Everett Sands: Yes.
0:10:13.7 Melissa Butler: And so me passing out the product to people, I didn't necessarily need to go and get experts.
0:10:19.7 Everett Sands: I gotcha.
0:10:20.4 Melissa Butler: I was just using my internal focus group.
0:10:24.2 Everett Sands: Yes, but your family focus group said, it's terrible. So then what happens?
0:10:28.3 Melissa Butler: And so I went back to the kitchen and I started... They told me that the product wasn't smooth enough. So I just needed to know why. Like, why don't you like it? I was collecting data. What would you like to be improved? And so then I started doing more research. How do I improve the slip? What ingredients do I need? So I start adding shea butter.
0:10:46.7 Everett Sands: Okay.
0:10:47.2 Melissa Butler: You know, things like that. And so it took me, I don't know, ultimately, maybe 1500 batches before I got to a good one. And then for the first three years of the business, I made every single product with my bare hands.
0:11:00.2 Everett Sands: So let's be clear. You're working in Wall Street.
0:11:03.9 Melissa Butler: Yeah.
0:11:04.6 Everett Sands: You're making 1500 batches for three years.
0:11:08.0 Melissa Butler: Yep.
0:11:08.8 Everett Sands: Wow. And you bring up an interesting point, because we get a lot of entrepreneurs for the audience. We do a tremendous amount of small business financing and educating. And one of the common questions that we get is, should I quit my job? And should I just... You know, I have this passion. I want to make lipstick. I'm going to leave Barclays. I'm going to just jump it. I'm going to do it. Maybe that's right, maybe that's wrong. But tell me what you were thinking and/Or what advice you might have.
0:11:36.0 Melissa Butler: I didn't quit my job immediately, but I think the answer to that is that, you know, when it's the time to quit your job, you know, your risk tolerance. No one knows that except you. And so at the time, I had very few responsibilities. I was living in New York. I had an apartment. All I had was student loans. But even still, I didn't quit my job until maybe two and a half years in.
0:12:01.2 Everett Sands: Yeah.
0:12:01.7 Melissa Butler: And when I quit my job, it's not like we were making so much money. I think we had made $56,000. But my logic was, you know, if I want my business to give me 100%, I have to give it 100%. Furthermore, I am going to change my lifestyle to support quitting my job. So there's no right answer to this. I think everyone has to decide their level of risk tolerance and ultimately, what is the plan to achieve whatever the results are that will then replace your salary. So at first, I was building a lifestyle business, and lifestyle businesses are beautiful. I think that people underestimate them. I think that everyone thinks that they have to build something big and beautiful. But the reality is small businesses are the backbone of America. Not every business has to be scalable. Not every business should fundraise. Like, fundraising is not for everyone, but I think that social media has confused people, and I think it has taken away some of the beauty of, like, an actual small mom and pop business.
0:13:06.3 Everett Sands: I totally get it. Look, if anybody told me how much I'd be fundraising, I'd probably be like, no way. I am not running this business. Not at all, I tell everybody I have hair. You can figure that out, whether that was true or not. But you know how it goes. I mean, you're making these boat molds. First of all, I can't imagine one, there was a lot of women at Barclays, and definitely not diverse women. Now then you decide to start your own business. And I don't know the fashion industry super well, but I got to imagine there's not a lot of women in it and not a lot of diverse women. Definitely not entrepreneurs. So two times you go into this journey of probably being the only.
0:13:40.1 Melissa Butler: Yeah, for sure.
0:13:40.8 Everett Sands: How is that working psychologically for you as you're starting this business or as you get into kind of year over year, because, you know, I gotta imagine the meetings are just, you know, it's not FAMU.
0:13:53.7 Melissa Butler: Yeah, yeah, for sure. I think one of the most important things for an entrepreneur to have is confidence. And so if you have confidence, if you know who you are and what you're capable of, which ultimately comes from experience.
0:14:06.9 Everett Sands: Sure.
0:14:08.0 Melissa Butler: Being the only doesn't bother you.
0:14:09.7 Everett Sands: Good stuff.
0:14:10.6 Melissa Butler: Being the only is, you know, just another hurdle. But you're comfortable with hurdles. You thrive in challenged environments. You thrive off of someone telling you that you can't and ultimately proving them wrong.
0:14:24.2 Everett Sands: Absolutely. I love it. I love it. We're at two and a half years. Businesses started. I know you eventually got the Shark Tank. So two things, one, when was that? Kind of give us a time frame. And then two, of course, how was it and what did it do for the business?
0:14:38.9 Melissa Butler: So we went on shark tank in 2015.
0:14:42.5 Everett Sands: Okay.
0:14:43.0 Melissa Butler: The business is three years old.
0:14:44.7 Everett Sands: Okay.
0:14:45.8 Melissa Butler: And the producers approached me, I didn't even know what Shark Tank was, but I was like, this sounds cool.
0:14:51.4 Everett Sands: What happened? Were you guys at a room... I mean, in a party together, friend to friend...
0:14:55.6 Melissa Butler: Like how we were vending at a vendor market for Harlem's Fashion Row during Fashion Week.
0:15:02.9 Everett Sands: Okay. Never know who you're gonna meet.
0:15:04.4 Melissa Butler: And someone came in and said, this sounds really cool. This sounds really interesting. I like the products. I like how poppy the colors are. And I said, okay, well, cool. Like, I'm trying to sell her product. I'm not knowing that there's a relationship coming from it. And we ended up going on the show, and they were so cruel to us. We did not get a deal.
0:15:27.3 Everett Sands: And they being the Sharks.
0:15:28.5 Melissa Butler: The Sharks, they were so cruel. They were like, you know, this business will never grow. Maybe you should sell dresses instead. This part didn't air, but they were like, your dresses are pretty. Maybe you should lean into that. Mark Cuban actually gave some very beneficial advice. He was like, you know, I understand what you're trying to do, but it's not standing out because you're not at the forefront of it, talking to me. I was not the face of The LIP Bar when we first launched.
0:15:57.4 Everett Sands: Interesting.
0:15:58.0 Melissa Butler: I was trying really hard to actually not be the face of it.
0:16:01.1 Everett Sands: So you are the product is basically what he's saying.
0:16:03.3 Melissa Butler: Yeah. He's like, you're the product. People want to hear from you. Like, I believe you when you speak. I don't care about the product. I want to buy from you.
0:16:12.9 Everett Sands: That's been told to me before, too.
0:16:15.2 Melissa Butler: And it can be painful because as a founder, you're like, I need you to care about the product, not me.
0:16:20.6 Everett Sands: That's right. And might not be comfortable, per se.
0:16:22.8 Melissa Butler: Yeah. And so I took that advice, and literally, that's when the brand started to grow. So even though we got a very painful and public rejection on Shark Tank, I was able to sift through, you know, the parts that are made for TV that don't feel good and say, was there anything that I could have done better?
0:16:43.3 Everett Sands: Yeah.
0:16:44.0 Melissa Butler: And so I realized in that moment that my pitch could have been more concise, that it could have been more clear. I could have had a better target audience and how we would serve that target audience. And ultimately, maybe there is something to the marketing of it. Maybe I should be at the forefront. And as soon as I put myself at the forefront, we started to grow.
0:17:04.4 Everett Sands: So, interesting one, I mean, one of the things I'm picking up on you, that I encourage entrepreneurs when I talk to them is about that self awareness, right? I mean, look, you could have obviously left there and anywhere from tears to frustration and maybe you have that even still. But the moment of going back and having the self awareness, I think is it's really important as you're trying to grow and be a small business owner, like your own growth and the business grows. So hats off to you to, you know, just to have that awareness. Okay, so now you jump into the front. I mean, what's that like? Are you nervous? Are you like, you know, that's not the original plan.
0:17:39.8 Melissa Butler: I'm nervous, but also I'm willing to do it. I'm willing because...
0:17:44.8 Everett Sands: Y you said you're giving 100%.
0:17:46.8 Melissa Butler: I'm giving it 100%. So I can test this too. I'm willing to test into anything and everything that allows me to pursue this purpose. Because again, it's not about the purpose product. It's about making sure that my niece grows up knowing that she's good enough, even if she's dark skinned.
0:18:04.2 Everett Sands: Yeah, I got you.
0:18:05.0 Melissa Butler: It's about understanding that the beauty industry at large was preying on a woman's self esteem as opposed to building it up. And I wanted to do something very different. And so I tried it.
0:18:17.3 Everett Sands: Right.
0:18:17.8 Melissa Butler: And it worked.
0:18:18.6 Everett Sands: Yeah.
0:18:19.3 Melissa Butler: And now, you know, The LIP Bar has been in business for 14 years and I find myself still trying to, like, back out of it. And my team is like, hey, we need that content from you. Like, personal brands are at the forefront right now. People again want to buy from people, and I think that'll continue to be true in this AI age. They want to know something that is real and authentic.
0:18:40.2 Everett Sands: That's interesting. My understanding is that all the manufacturing doesn't happen in your kitchen anymore.
0:18:45.4 Melissa Butler: No.
0:18:45.9 Everett Sands: Okay. I just want to check with that first because, I mean, maybe you got a big kitchen, I don't know. But you've now moved offshore. What's that journey like? I mean, obviously you cared about the product. Anyone that reinvents the product 1500 times, I already know. I can already get into your mind about your care of that product.
0:19:05.2 Melissa Butler: Yeah.
0:19:05.9 Everett Sands: So what's that like when you let your baby loose a little bit?
0:19:09.2 Melissa Butler: It's tough for sure. Because it requires trust.
0:19:12.1 Everett Sands: Yes.
0:19:12.8 Melissa Butler: But luckily that wasn't the first thing I did. The first thing I did was I started hiring people.
0:19:17.6 Everett Sands: Okay.
0:19:18.2 Melissa Butler: So when you learn to delegate.
0:19:19.9 Everett Sands: Yes.
0:19:20.6 Melissa Butler: And you let parts of the business go, that you decide that, you know, maybe someone else can do this better than me, it primes you for scalability.
0:19:29.0 Everett Sands: Yeah.
0:19:29.5 Melissa Butler: And so I knew that I couldn't scale making lipstick in my kitchen. So that was the first thing. It's like, okay, well how many people do you want to impact? How many people do you want to remind of their beauty and their self esteem? So I knew that in order to actually scale, I needed to outsource. And outsourcing is, is challenging because like, what's the right market? You know, you're so far away. I originally had the plans of building in Michigan. That's why I moved home. I also didn't have, you know, the cash to continue living in New York. But when I moved home, I'm like, Detroit is a city of makers. And you know, maybe we should manufacture there.
0:20:07.3 Everett Sands: Yeah.
0:20:07.8 Melissa Butler: But unfortunately we're not as good at making everything. Like, we're still pretty good at making cars.
0:20:14.5 Everett Sands: Yeah.
0:20:14.9 Melissa Butler: But we weren't, you know, we were worlds away from the industrial revolution. And so it was very challenging to stand up a warehouse in Detroit. And so I started finding other markets in which I felt like would be good, but also trustworthy.
0:20:30.6 Everett Sands: Yeah.
0:20:31.0 Melissa Butler: And we ultimately found manufacturing partners in Taiwan, in Italy, and then some in California. And so we started pursuing that.
0:20:39.4 Everett Sands: Yeah. So what's that journey like again? Is that... Do you visit these... Is it...
0:20:44.4 Melissa Butler: Oh, absolutely.
0:20:45.3 Everett Sands: Is it all word of mouth? Like how do you find kind of, I don't know, the first one. Is it trade shows?
0:20:50.5 Melissa Butler: Like how you go to trade shows, you ask other people, you Google it.
0:20:55.0 Everett Sands: Yeah.
0:20:55.7 Melissa Butler: And then you start visiting, you start visiting factories, you start learning about quality control, lead times, minimum order quantities. You know, we're still small business, so, you know, if you have a minimum order quantity that is smaller than our small business and that this doesn't help us scale. But we don't want to be overrun by inventory because that's cash.
0:21:16.7 Everett Sands: Sure.
0:21:17.0 Melissa Butler: And we need our cash and our accounts as opposed to sitting on our balance sheet as inventory. And so it's about finding the right partners. And so we go through a very extensive vetting process. But in the early days it was more so like finding partners. Do you want to grow with me? Are you able to grow with me? How are you treating your current partners? I am a big fan of getting referrals. Let me talk to some of your other partners. You know, I want to know their real life accounts of working with you. And that has served me incredibly well.
0:21:51.5 Everett Sands: Yeah. So you talked a little bit about this. Detroit might not necessarily be the best place for manufacturing, but it is home base.
0:21:58.9 Melissa Butler: Yeah.
0:21:59.9 Everett Sands: Personal home base, business home base.
0:22:02.0 Melissa Butler: Yep.
0:22:02.3 Everett Sands: What made you make the decision to stay there?
0:22:04.1 Melissa Butler: Everyone thought I was crazy.
0:22:05.4 Everett Sands: Okay.
0:22:06.1 Melissa Butler: Everyone said, why would you leave New York?
0:22:09.0 Everett Sands: It's not the fashion capital of the world.
0:22:10.6 Melissa Butler: Literally. That's what they said. Beauty doesn't happen in Detroit. It happens in New York. It happens in LA. Moving here is a mistake.
0:22:19.0 Everett Sands: Interesting.
0:22:19.5 Melissa Butler: And I said, beauty will happen wherever I choose. And, like, that's a very confident statement.
0:22:27.0 Everett Sands: Very powerful.
0:22:28.6 Melissa Butler: Because the industry isn't there. The beauty editors don't live in Detroit. You know, the manufacturing is not...
0:22:35.0 Everett Sands: You'll see them at the party, you're not gonna see them at the happy hour, you know.
0:22:39.0 Melissa Butler: Yeah. But we had social media and we had a story, and we figured that as long as we were telling relevant stories, as long as we were solving the problems of our customers, that we could still grow.
0:22:51.1 Everett Sands: Interesting.
0:22:52.4 Melissa Butler: And that's exactly what we did. So for our 10th anniversary, we actually ended up putting billboards up in all of our top markets to sort of poke fun at Shark Tank. Like, millions of units sold. And 10 years later, thanks, Mr. Wonderful. Which was fun. And our customers loved it. Because our customers are a community who... Of people who want to see us win because they remember when I was making lipstick in my kitchen, they remember watching the videos of Shark Tank. They remember when we first launched into Walmart or Target, and so they felt like they were along for the journey. And so I have to keep the curtain open.
0:23:32.9 Everett Sands: Yeah.
0:23:33.6 Melissa Butler: I have to keep it open for people who are coming behind me, but also for our customers who want to see us win.
0:23:39.5 Everett Sands: That's right. You're a good person. Tell me what that journey is like. So you mentioned Walmart, Target, but obviously before it gets there, in between kind of manufacturing, Walmart, Target, you obviously have to start learning about fundraising and you got a financial background. But just what was that journey like of raising capital? Either in the beginning or now, however you want to describe it.
0:24:01.6 Melissa Butler: Yeah. Raising capital is challenging, especially now. But it's challenging because you are convincing someone of the future vision.
0:24:14.1 Everett Sands: Yes.
0:24:14.6 Melissa Butler: How big it can get and the idea that you're the person that's gonna get it there. Luckily, I had been networking when I lived in New York, I started learning about Shea Moisture and their journey.
0:24:27.9 Everett Sands: Great story.
0:24:29.0 Melissa Butler: Yeah. And these incredible humans who were once selling soap on the streets of Harlem.
0:24:35.2 Everett Sands: That's right.
0:24:36.1 Melissa Butler: And I was so inspired by that. Also the stories of Lisa Price, who literally started Carol's Daughter in her kitchen and then ultimately sold to l' Oreal So I'm like, okay, there are examples of excellence that I can follow and frankly that I can learn from. How do I learn on someone else's dime is always my logic. And so I'm looking at the story of Rich Dennis. I'm looking at the story of Lisa Price. And I'm like, okay, what is the story of Melissa Butler gonna be? And I started forming relationships with them. Did I know them? Absolutely not. Did I stalk them? Absolutely. I just started reaching out via LinkedIn, emailing them, trying to ask my network, do you know them? And ultimately one day I was at a trade show and Rich Dennis walks by my booth.
0:25:27.9 Everett Sands: Wow.
0:25:28.6 Melissa Butler: I left my booth. I'm the only person there because I don't have money to pay people. I'm just manning my booth. And he walks by and I leave my booth and I beeline straight to him and I have my elevator speech ready.
0:25:41.7 Everett Sands: Right, right.
0:25:42.4 Melissa Butler: And I'm like, I'm Melissa Butler and da da, da, da, da. And I'm going a mile a minute. And he goes, I end by saying, and I've been stalking you for years. I've been emailing you. And he goes, well, which email address have you been using? Because I don't have any emails from you. And immediately introduces me to his assistant. And then he becomes my first investor.
0:26:02.2 Everett Sands: That's awesome.
0:26:03.1 Melissa Butler: And he became my first investor because this was like a year long incubation period where I'm just reaching out to his team for advice. He was so kind to keep the door open for people like me so that I could ask questions. When I launched in Target, we launched in a very small number of doors and we did incredibly well. Like 10x growth within 10 months.
0:26:24.3 Everett Sands: Wow.
0:26:25.1 Melissa Butler: And so I ended up telling him this, just sharing the good news, and he says, it sounds like you need money.
0:26:31.3 Everett Sands: Yeah.
0:26:31.7 Melissa Butler: So I didn't even... I had pitched many investors before Rich. I didn't even pitch Rich. But because of the relationship, and I was never actually asking him for anything. I was just... Well, I was asking questions, but I never asked him for money. But because he knew the relationship, he knew the vision, and the relationship allowed him to believe that I was the person to see that vision through. He just wrote me a check.
0:26:55.9 Everett Sands: Yeah. So so many things in there.
0:26:58.3 Melissa Butler: Yeah.
0:26:58.7 Everett Sands: Let me just try to break a little bit of this down for the audience and you can confirm, you know, disagree, whatever you feel. So first of all, it's the preparedness of studying others in the industry that you had in spades, I think. The second thing I heard was practicing, whether it be other pitches that will lead to, you know, call it the next pitch, which I will put Richard Dennison or just practicing in general. Because the way I try to explain it to business owners and even myself is, hey, this is preseason. You don't know when the actual game's gonna be in, but you gotta treat everything like it's preseason.
0:27:33.0 Melissa Butler: Yeah.
0:27:33.7 Everett Sands: And then I think the third thing is you got to Target, quite frankly, without the capital.
0:27:39.4 Melissa Butler: Totally.
0:27:40.0 Everett Sands: Right. And so there's a risk there that, you know, I appreciate and, you know, I hope our audience appreciates, because you have to go out on a limb because, look, that 10x could crush you. A 20x could crush you overnight, quite frankly. And especially a store like Target or any of the big, you know, Walmart, etcetera, because they could just add more stores or something that'll really take you out. What was it like the first time you got a contract with a big major retailer, was Target first?
0:28:06.3 Melissa Butler: Target was first. And the loop bar story, and my story is one of persistence and resilience, because the same way I got my first investor is how I landed my first retail partner. I decided that Target was the first place that we should launch. Why? Because we were selling affordable luxury. We were selling confidence that was within reach. So I could have easily made The LIP Bar a more expensive product. I mean, I was making it in my kitchen. Like, these hands have to... Like, someone has to pay for them.
0:28:39.0 Everett Sands: That's right.
0:28:39.7 Melissa Butler: But I decided that I wanted to go more mass because I wanted to be more within reach for the population that I was serving. So I was serving black women first and foremost. And when you look at the stats of black women, I'm like, okay, well, this group of people don't have a whole lot of discretionary income. And so how dare I then go and launch a product that's suitable for Sephora, which would certainly line my pockets and give me greater margin, but ultimately, am I serving this population if they can't afford it? And so our products were very affordable, so determining our price led to the place. So Target was a very clear answer for me as it relates to retail. I didn't pitch anyone else. I figured out who the beauty buyer was. I figured out her email, I sent her messages on LinkedIn, I sent her emails, and for a year, I got no responses. And then one day someone responded and said, oh, such and such is on maternity leave. This sounds cool, but, you know, I'm actually not the person to take new buys, so I know that. And I come back three months later like, okay, she's probably back from mat leave now.
0:29:54.4 Melissa Butler: She might be interested. And she answered the email. We came in, flew to Minneapolis, pitched in person and they were like, okay, we'll do an online test.
0:30:04.7 Everett Sands: Wow.
0:30:05.2 Melissa Butler: I said, okay, great. I didn't even need to be in store. I just wanted to do the test to prove to myself first and foremost that we could do it and then to prove to them. And we had this incredible strategy where we were like, we're going to launch a new and exclusive product that you can only get on target.com. Okay, so what were we doing? We were killing our own margins.
0:30:27.6 Everett Sands: Yeah.
0:30:28.2 Melissa Butler: Like we weren't... Target wasn't even buying the item from us. We were drop shipping.
0:30:32.7 Everett Sands: Wow.
0:30:32.9 Melissa Butler: But I was like, it's worth it because if we can pull this off, this can lead to an on shelf moment. This is probably in 2017, before it was cool to launch, you know, brands by founders of color, before people cared about body positivity and diversity. And so I knew that it was a risk that Target was taking and so I just asked my community to rally and rally they did. We launched and then we just continue to grow and grow and grow. And today we're the largest black owned makeup company in Target, which has been a blessing and more recently one of the largest challenges we've had to navigate.
0:31:11.3 Everett Sands: Awesome. All right, we're going to take a break. Thank you so much. And now we'll hear from Lendistry's boss, our customer.
0:31:21.9 Ariel Lawrence: My name is Ariel Lawrence. My company is Akin company based in Los Angeles. Akin is a vertically integrated design built company and we focus on everything from multifamily new construction to tenant improvement commercial projects. Before working with Lendistry, we were facing challenges that many business owners face, which is access to strategic capital at the right time. We had a really strong pipeline and we wanted to make meaningful community impact and that funding allowed us to be able to bother stabilize our operations and also keep continuation on our projects without slowing down our momentum.
0:31:58.3 Ariel Lawrence: The result of working with Lendistry really gave us the breathing room and flexibility to be able to scale with excellence. They understood the complexity of our work and appreciated the impact within communities we wanted to make. And so we were able to do both of those things. On a personal level Lendistry gave me just affirmation as a founder that while I believed in my own business, someone else could look at it from afar and believe in it as well. I would absolutely recommend Lendistry to other small business owners, they really showed up as a partner and not just a transaction, which you don't find often.
0:32:38.7 Everett Sands: We're back with Melissa. We're talking about a variety of different things. We just talked about products. I want to now convert a little bit, and I want to talk a little bit more to the entrepreneurs that are listening to us, especially those who not only would learn from your journey, but probably are just so amazed by your journey so far. You talked about this a little bit in terms of products, in terms of kind of the biggest mistake. Anything you would say to, you know, young Melissa saying, hey, you're sitting here at the kitchen, you're making 1500 examples of the new product. But what would you guide her a little bit differently or what would you tell her as she's going on this journey, about to go on a journey?
0:33:13.7 Melissa Butler: I would say to younger Melissa that leveling up is harder than she will expect and that she has to make sure she has the right talent in the room to do so.
0:33:30.7 Everett Sands: Okay.
0:33:31.7 Melissa Butler: Sometimes relationships get in the way of that. Sometimes comfort gets in the way of that. Like, you can be comfortable with the growth that you have. But one of the things that I've been pressure testing is like, well, how much growth could we have had if I would have swapped my talent or if I would have let go of this thing earlier?
0:33:51.5 Everett Sands: Totally agree.
0:33:52.3 Melissa Butler: So I think talent is the most important thing. You can do nothing alone. Like, nothing moves alone. Like, I can have a million ideas, but if I don't have the right people to execute it, then it's just an idea. And I'm looking for it to be the hurdle and ultimately the milestone. But one of the biggest mistakes I think, that entrepreneurs make, especially in the early days, is not being comfortable with their financials. Like, as an entrepreneur, you are a bit creative. You are the ideas person. And many people aren't starting businesses because they want to be in the weeds of the numbers. So if you're not in the weeds of the numbers, someone has to be.
0:34:34.0 Everett Sands: Yeah, absolutely.
0:34:34.9 Melissa Butler: But ultimately, you should still understand, even if you're not doing it, you need to understand your numbers. And by not understanding your numbers and pawning such an important part of your business off to someone else, it puts you at risk for bankruptcy or insolvency, frankly.
0:34:51.4 Everett Sands: Yeah. And when you think about that, I mean, because I'm finance guy, obviously I'm in the numbers every day, but I'm trying to educate people on what they should do. Is there any place you think they would start or that you would tell? I know young Melissa, like, hey, start here.
0:35:06.3 Melissa Butler: You just have to be curious. You know, be curious about your cost. Be curious about the things that impact your cost. Be curious about, you know, your expenses and if those expenses are worthy of your dollars. When you are thinking about fundraising, like, you really have to know your numbers, and you really need to be able to speak to the growth in your EBITDA or the growth in your top. And the only way you can actually do that is by understanding what are the things that allow you to get to the growth that you already have.
0:35:37.9 Everett Sands: Totally agree.
0:35:38.6 Melissa Butler: And how do you have a flywheel such that you can do it again? And by fundraising, when you put more money into it, you actually earn more money. Oftentimes, people fundraise and the dollars don't do what they need to do because the dollars are going to the wrong places. Well, why are they going to the wrong places? Because you weren't thoughtful about where the dollar should have gone in the first place. I firmly believe that fundraising should not be for working capital. I think it should be for growth capital.
0:36:10.3 Everett Sands: Interesting.
0:36:11.0 Melissa Butler: And so if it's working capital, it's very easy to stay, you know, where you are. You know, maybe there's a tiny bit of growth, but growth capital, when you are really trying to deploy growth capital, you can actually see step change growth.
0:36:27.1 Everett Sands: Yeah. I think it was one of the things I've seen from many of the small businesses that have VC money or early money, it's that having that initial money or having that money is the best time to leverage, right? And to your point, they're not thinking about growth or they have outsized growth, but they just have that money. And then they come to us, and it's like, I'm down to the last 10% of the money I had.
0:36:51.1 Melissa Butler: Totally.
0:36:51.5 Everett Sands: Like, whoa. Like, if we had just met you a little bit earlier, this would have been a completely different process.
0:36:56.5 Melissa Butler: So knowing you were running out of money seven months ago, like, what is your runway? And I'm not saying this from a glass house. Like, we raised our series A in 2022. We raised $8 million. And by Q3, 2023, we were almost out of money. So I am saying this from experience, and it's like, what happened? Well, we spent a lot of money on people. We spent a lot of money on testing into things that didn't have a true ROI. And so there always has to be a testing budget. I'm not saying that every dollar needs to equal another dollar, but the lion's share of the money that you're spending should be to growing the actual business. And then you have some money left over for testing. And so we had to claw our way back out of that because I wasn't going to go back to my investors and say, hey, we need a bridge. So we haven't raised since 2022. Now it's 2026. And I think capital is harder to come by, but it's less because we've been able to dig ourselves out of a ditch, grow the business, even though our largest retailer is upsetting our audience.
0:38:07.3 Melissa Butler: And so last year, we grew the business by 40% and doubled the EBITDA.
0:38:11.7 Everett Sands: Amazing.
0:38:12.3 Melissa Butler: And so I could... I'm very well positioned to go and fundraise today. But I'm like, oh, well, what if I did it? What if I just continue to force efficiency? And that's where we are. And so I think that a lot of founders make the mistake of thinking that they need dollars when they need efficiency or they need creativity or they need to build a better community.
0:38:34.5 Everett Sands: Yeah, makes sense. You talked a little bit about this in the large retailer, and we obviously all know what's happened there. But tell me, like, what you would talk to yourself about differently. Thinking about the retail business.
0:38:49.1 Melissa Butler: I would tell myself to focus on one retailer, which is dangerous because sometimes you can put your eggs in one basket, and that basket can be disappointing. But it is much harder to support multiple retailers unless you actually have the dollars to support them. And so what happens is by launching in a retail business, when you get on shelf, you get what I consider to be pipeline revenue. Like, you get a large chunk of revenue up front, and that's great. Maybe you needed that waterfall of cash, but you also need the retention. Because when you tell your fundraising story or when you're just looking at your own financials, you need to know that dollars will come the following year. You have to chase into that growth. So if I took an extra $3 million by launching into a retailer, okay, well, what happens the next year?
0:39:47.4 Everett Sands: Right.
0:39:47.8 Melissa Butler: Can I turn that 3 million into 6 million?
0:39:50.4 Everett Sands: Right.
0:39:50.8 Melissa Butler: And if not, you should not launch into retailer. And that says that you're not actually supporting a retailer.
0:39:56.2 Everett Sands: That's interesting. In finance, a lot of times we'll say, do they have an anchor institution? Right. And we do feel more comfortable when they have one. At least in the beginning, call it first 12 months. Because to your point, there's an adjustment that happens with that anchor institute. We've seen anchor institutions take companies down because they're not used to a Fortune 50 or Fortune 100 or Fortune 500 and the flow that those things can create. Everybody wants it.
0:40:21.5 Melissa Butler: Everyone wants it.
0:40:22.3 Everett Sands: But once you get it...
0:40:23.0 Melissa Butler: Retail is sexy.
0:40:24.1 Everett Sands: Yeah. It's like, once you get it, oh, boy.
0:40:25.6 Melissa Butler: So I would have focused on one for longer and took it to maximum strength before launching in another retailer. And I think when you launch, you know, second, third retailer, you should be doing it from a position of knowing that you can bring a new customer into that retailer and knowing that you have the ability to convert some of their customers in there.
0:40:47.9 Everett Sands: So if you're talking to the entrepreneur, do you say drop shipping first? Like, what should they study first? Assuming they're going into some type of consumer goods, where would you tell them at least start?
0:40:58.1 Melissa Butler: I would tell them to start their social media first.
0:41:01.7 Everett Sands: Okay.
0:41:02.9 Melissa Butler: Yeah, forget the product. Forget, you know, the retailer.
0:41:08.1 Everett Sands: Interesting.
0:41:08.7 Melissa Butler: Focus on the community.
0:41:10.2 Everett Sands: Okay.
0:41:10.9 Melissa Butler: Focus on building a community of people who have shared values whose problem you know that you will solve whenever you launch sales product. Build the community. Because once you have a community of people who are well versed in whatever you're looking to supply or serve, then it makes everything easier. It makes your unit economics easier because you now know what people like. You know what they're clicking, you know what they're engaged in. It makes your advertising easier because everything is, like, based on an algorithm. And so if people are already reacting to certain types of content, well, now you know what sort of ads to run. So I would absolutely suggest that you build a community first and then think about the product. This is why you see so many celebrity brands which aren't doing so well. But that's because inauthentic. But the influencer brands are crushing it. Why? Because they actually have communities, people who believe in them and believe that whatever product they're producing is going to be authentic.
0:42:20.0 Everett Sands: Now, did you learn this yourself? Did you have a partnership? Like, how did you learn to build your... I would say following. Tell your story. I mean, you're pretty authentic.
0:42:30.2 Melissa Butler: I built my plane in the sky. Like, a lot of it is testing and learning. I think that one of my gifts is transparency. Like, I'm very transparent with our audience. You know, sometimes they like it, sometimes they don't. I'm very transparent with my team. But ultimately you appreciate it.
0:42:47.5 Everett Sands: Yeah.
0:42:47.7 Melissa Butler: Whether you liked it or not, you appreciate it because it's like, okay, well, I didn't want to hear it, but at least she told me.
0:42:53.6 Everett Sands: Yeah.
0:42:54.2 Melissa Butler: And so I think that that has been one of the biggest gifts because, like, I don't like... I do a ton of speaking engagements and podcasts and things I don't prepare. I didn't read these questions. Why? Because it's my life, and, like, there's nothing that's going to stumble me.
0:43:08.2 Everett Sands: I do this every day.
0:43:09.0 Melissa Butler: I'm not trying to, like, strategically, you know, place ideas. I just want to tell people what's real and true.
0:43:16.3 Everett Sands: That's awesome. I appreciate that. So authentic. What's next? What's...
0:43:24.1 Melissa Butler: Well..
0:43:26.9 Everett Sands: That you can see...
0:43:27.6 Melissa Butler: This is one of the things that people won't like, but I'm going to say it anyway. I aspire to have a transaction with The LIP Bar. I think one of the things that people don't appreciate about entrepreneurship is that, you know, yes, Melissa Butler is wealthy on paper, but, like, I need it to be reflected in my bank account. So I hope that we have a transaction, but not a transaction for the sake of having one. Like, I want it to be with the right person, the right partner, and I'm not in a rush to do it. I think it needs to be, you know, when it's right. The right person, the right partners, the right timing, the right number. So we're going to just continue to... I don't plan on fundraising unless there's something really cool that I feel like we can build on. But right now, the goal is just to keep building.
0:44:22.3 Everett Sands: Yeah, that's great. So we have women entrepreneurs in our audience, and any advice you want to give them as we start to wrap this up.
0:44:32.9 Melissa Butler: I think my advice will be to not think of being a woman as a barrier.
0:44:42.5 Everett Sands: I agree.
0:44:43.1 Melissa Butler: Think of it as your superpower when you are in the room with men or you're pitching to men. Because oftentimes the VCs and the angels and the PE...
0:44:53.8 Everett Sands: Right.
0:44:54.1 Melissa Butler: They're typically men. Don't try to be them. You can never be them. Be yourself and teach them things. Teach them about your audience. Teach them why your community cares, and know that they're ultimately not a part of your community. This is one of our mistakes. On Shark Tank, I was trying to appeal to them, but it's not about them. They're not the customer. Tell them about the customer. Tell them about the community. Tell them about you and why you are so different. And I think that is your biggest superpower. Like, not trying to play someone else's game to play your own.
0:45:29.9 Everett Sands: Makes perfect sense. Melissa, this has been amazing, intriguing, and such a great conversation with you. Wishing you...
0:45:37.4 Melissa Butler: Thank you.
0:45:38.8 Everett Sands: Thanks for hanging out with us on Small Business Unscripted. Want more? Join us at smallbusinessunscripted.com for additional episodes, helpful resources, and to keep the conversation going. Make sure to follow Lindustry on all the major platforms. See you next time.