One Job Loss That Transformed the Hair Color Market into a $200M Phenomenon

Getting fired can destroy your confidence or become the catalyst that changes everything. For Amy Errett, it sparked a beauty revolution.

Key Takeaways

• Getting fired forced Amy Errett to confront her biggest weakness: working for others
• Madison Reed emerged from research into the women's equivalent of Dollar Shave Club's market
• The hair color industry had massive addressable market potential with no dominant online player
• Amy raised $240 million by making investors personally research the problem with their families
• The company now generates $200 million in revenue while staying profitable and growing 20% annually
• Madison Reed's mission extends beyond hair color to empowering women financially through better-paying jobs
• Company culture centers on five core values: love, trust, responsibility, courage, and joy
• The pandemic accelerated growth dramatically, with the company selling hair color every five seconds
• Strategic consulting with Bain identified "salon realists" as the key customer segment for physical stores

Timeline Overview

• Pre-2007 — Amy's career in various roles, struggling with working for others
• 2007-2013 — Six and a half years at Maveron as entrepreneur in residence; Dollar Shave Club pitch rejection; summer intern Rebecca's market research reveals hair color opportunity
• 2013 — Madison Reed founded; initial product development in Italy with private label manufacturers
• 2013-2019 — Company growth, multiple funding rounds, development of omnichannel strategy
• 2020 — Pandemic hits; physical stores close but online sales explode; Bain consulting engagement provides strategic clarity
• 2021-Present — Continued growth as profitable $200 million business with expanding retail presence

The Firing That Changed Everything

• Amy Errett experienced her first and only termination on a beautiful Monday morning in the Bay Area, driving away in her convertible with a severance package and complete disbelief about what had just happened. The immediate aftermath involved telling her four-year-old daughter Madison (whose name would later grace the company) about mommy's new work-from-home situation. Her wife Claire's wisdom in framing the news positively demonstrated the supportive foundation that would prove crucial for Amy's entrepreneurial journey ahead.
• The termination sent Amy into therapy to understand the deeper patterns behind this career setback, leading to a profound realization about her fundamental incompatibility with traditional employment structures. Through professional guidance, she discovered that her repeated struggles weren't personal failures but indicators of a deeper truth about her work style and leadership needs. This self-reflection period became the foundation for understanding both her strengths and limitations as a professional.
• Amy's therapeutic journey revealed her core insight: "I really suck at working for someone like that was the big thing that came out." The therapist helped her recognize that putting herself in subordinate positions consistently set her up for failure, regardless of the company or role. This wasn't about blame or personal inadequacy but about accepting fundamental truths about how she operates best in professional environments.
• The discovery process led to Amy's philosophy that "everybody has a genius inside of them and I think life's path might be to find what that is." Her genius involved taking complex, seemingly impossible problems and building mission-driven teams to solve them, particularly in areas that mattered to her personally like women's empowerment. She realized she thrived on building teams and rallying people around shared purposes rather than working as an individual contributor.
• Amy's experience taught her the importance of understanding both strengths and blind spots in professional development, emphasizing curiosity over self-blame when confronting personal limitations. She learned to make decisions from places of clarity rather than being clouded by personal trip-ups or emotional reactions. This self-awareness became crucial for her later success as a founder and CEO.
• The firing ultimately provided the push Amy needed to stop avoiding her true calling as an entrepreneur and team builder. Without this catalyst, she might have continued trying to fit into traditional corporate structures that fundamentally didn't align with her leadership style and professional needs. The experience transformed from a career setback into the launching pad for building Madison Reed.

The Maveron Years and Market Discovery

• Amy joined Maveron as an entrepreneur in residence, tasked with establishing their Bay Area presence and identifying investment opportunities in early-stage companies. The role combined her interest in venture capital with her entrepreneurial instincts, giving her exposure to the challenges and patterns of successful startup development. She spent six and a half years building deal flow and establishing the firm's brand in a region where they previously had no representation.
• The Dollar Shave Club pitch became a pivotal moment, though Maveron ultimately passed on the investment opportunity due to concerns about market size, competition, and direct-to-consumer viability at that time. Mike Dubin's presentation didn't convince the partnership, reflecting the conventional wisdom about subscription razor businesses and consumer purchasing behavior. The decision wasn't necessarily wrong given the information available, but it planted seeds for Amy's future thinking about consumer product opportunities.
• Amy maintained her relationship with Mike Dubin after the pitch, recognizing his entrepreneurial talent even though Maveron didn't invest in his company. This relationship proved valuable later when he joined Madison Reed's board as a mentor and advisor. The connection demonstrated Amy's ability to separate business decisions from personal relationships and her instinct for identifying talented entrepreneurs.
• Inspired by Dollar Shave Club's approach, Amy assigned summer intern Rebecca to research potential women's equivalents to the men's shaving market. The analytical scan looked for categories with similar characteristics: frequent repeat purchases, large addressable markets, and limited online competition. Rebecca's research methodology involved analyzing market data, consumer behavior patterns, and competitive landscapes across multiple product categories.
• Hair color emerged as the top opportunity from Rebecca's analysis, with numbers so compelling that Amy initially questioned their accuracy. The market size data showed massive addressable market potential with high frequency repeat purchases, similar to shaving but with even larger revenue potential per customer. The research revealed that no major brand dominated the online hair color space, creating a significant opportunity for disruption.
• The research findings aligned perfectly with Amy's personal knowledge of the hair color market through her wife Claire's experiences as someone who started graying at 22 and needed color treatments every two and a half to three weeks. This combination of market data and personal pain point understanding provided the foundation for what would become Madison Reed's business model and value proposition.

Product Development and Innovation Journey

• Amy's first step involved leveraging her venture capital connections to validate the hair color opportunity, including a two-hour phone conversation with a L'Oreal executive who offered to invest if she pursued the business. This validation from someone running adjacent hair color operations at a major beauty company confirmed the significance of the market opportunity. The executive also provided connections to three consultant scientists who specialized in hair color formulation for emerging brands.
• The product development journey led Amy and her chosen consultant to Italy, where most private label hair color manufacturing occurs under strict EU regulatory requirements. The European Union's stringent personal care regulations provided an opportunity to create cleaner formulations by removing harmful ingredients that were still permitted in other markets. This regulatory environment gave Amy confidence that developing better ingredients was both possible and commercially viable.
• Amy met with thirteen private label manufacturers during her Italian trip, with the first ten completely dismissing her concept of online hair color sales with cleaner ingredients and color-matching technology. These manufacturers operated traditional business models focused on standard formulations with brand labeling for retail distribution. They couldn't envision the viability of direct-to-consumer sales or the demand for premium ingredients in hair color products.
• The eleventh manufacturer, whose owner remains Madison Reed's partner today, listened carefully to Amy's complete vision before agreeing to work together under specific conditions. He required full upfront payment in euros for the first production run, demonstrating both his skepticism and willingness to take calculated risks. Amy agreed immediately without hesitation, recognizing this as her path forward for product development.
• The first production run cost approximately $80,000, which Amy funded personally, and resulted in nineteen different hair color shades that she smuggled back to San Francisco in her suitcase. This initial investment represented a significant personal financial commitment to testing her product concept. The decision to self-fund demonstrated her confidence in the market opportunity and willingness to assume personal risk for her vision.
• Amy arranged a testing session at a famous San Francisco salon, convincing the stylist to participate in exchange for equity in the future company and providing wine and cheese for volunteers. Eighteen of the nineteen women were thrilled with their results, while one (Amy's college friend) experienced a problematic outcome that required professional correction. This real-world testing provided crucial validation of both the product quality and the importance of perfecting the formulation before broader market launch.

Building Culture and Empowering Women

• Madison Reed operates on five core values established from day two of the business: love, trust, responsibility, courage, and joy, which translate into consistent actions rather than empty corporate speak. Amy emphasizes that cultures can be words or actions, and Madison Reed chooses actions through specific traditions and practices that reinforce these values. The company maintains these values through systematic approaches to team building, communication, and employee recognition that create genuine community rather than superficial corporate culture.
• Every Wednesday at 12:15 PM Pacific, Amy hosts a mandatory company-wide lunch that has maintained the same format for ten years with only a handful of missed sessions. The lunch begins with welcoming new people through "two truths and a lie" where the entire company votes on identifying the lie, complete with balloons and celebration on Zoom calls. This tradition creates consistent community building and ensures every employee feels seen and welcomed into the Madison Reed family.
• Amy's philosophy centers on seeing team members as complete human beings who want recognition for their contributions, acknowledgment of areas for improvement, and validation of their meaningful impact on the business. She believes that when people feel truly seen by leadership, their productivity becomes extraordinary, making it incomprehensible why businesses wouldn't prioritize seeing their people. This approach creates a foundation of trust and engagement that drives performance throughout the organization.
• The company's mission extends beyond hair color to addressing income inequality in the beauty industry, where the average colorist in the United States makes less than $35,000 annually. Amy targets women of color coming out of cosmetology school with $25,000 in debt, living below the poverty line while working at chains like SuperCuts or Fantastic Sams. Madison Reed provides these women opportunities to earn $80,000 annually with full medical benefits, enabling them to purchase their first homes and model financial success for their children.

Amy receives regular Slack messages from employees sharing major life achievements enabled by their Madison Reed income, from home purchases to educational opportunities for their children. These personal success stories validate her mission of creating economic empowerment through better employment opportunities. The ripple effects extend beyond individual employees to their families and communities, demonstrating how business decisions can create positive social impact.

• Amy considers herself serving three distinct customer groups: product purchasers, investors and shareholders, and her team members, with employees being equally important to business success. She believes she serves at the pleasure of her team because without their buy-in, the business cannot succeed regardless of product quality or market opportunity. This philosophy drives decision-making processes and resource allocation throughout the organization, ensuring employee needs receive equal consideration with traditional business metrics.

Strategic Growth and Funding Success

• Amy's venture capital background provided significant advantages during Madison Reed's funding process, including knowledge of what investors wanted to see and relationships within the investment community. She had competing term sheets and could choose investors who aligned with her vision rather than accepting whatever funding was available. Her experience also taught her to be strategic about timing and positioning during fundraising cycles.
• Before allowing any Series A investors to commit, Amy required them to research the hair color market by asking their wives, partners, children, and extended family members about the problem and market size. She wanted to prevent half-hearted commitments that could lead to misaligned goals and boardroom conflicts later. This approach ensured that investors understood the market opportunity through personal research rather than just believing her presentations.
• The company has raised $240 million across multiple funding rounds while maintaining profitability and consistent growth rates above 20% annually. Madison Reed now operates as a $200 million topline business with omnichannel distribution including both direct-to-consumer online sales and physical retail presence. The financial success demonstrates the viability of Amy's original market thesis and execution strategy.
• Amy made a critical mistake by not having a technical co-founder, which cost the company 18 to 24 months of optimal digital product and commerce development. She also started with four co-founders, which proved too many as the business scaled and required people who could operate at both strategic and granular levels simultaneously. These co-founders eventually left amicably, teaching Amy important lessons about equity distribution and team composition.
• The company's funding success came partly from timing during the direct-to-consumer explosion when Amy's unique approach to hair color seemed particularly innovative to investors. Having a tested product with demonstrated color-matching technology made the investment opportunity more compelling than purely conceptual businesses. The combination of large addressable market, product differentiation, and experienced team checked all the boxes that early-stage investors prioritize.
• Amy's board composition reflects her strategic approach to investor relationships, maintaining supportive partnerships even during disagreements about business direction. She leads board meetings by discussing what isn't going well first, treating board members as allies who should help solve problems rather than impress with positive metrics. This transparency creates stronger working relationships and more effective governance for navigating challenges.

Pandemic Pivot and Strategic Consulting

• When the pandemic hit, Madison Reed had nine physical hair color bar locations that were forced to close while online demand exploded to unprecedented levels. The company was selling a box of hair color every five seconds for months during lockdown periods when people couldn't access traditional salons. This dramatic shift in purchasing behavior validated the direct-to-consumer model while creating operational challenges around inventory management and fulfillment.
• Six months into the pandemic, Amy realized she no longer understood who Madison Reed's customers were due to massive changes in purchasing behavior and market dynamics. She brought this uncertainty to her board, acknowledging that despite explosive growth, she lacked strategic clarity about future direction. This admission led to exploring strategic consulting options to better understand the evolved customer base and market opportunities.
• Amy engaged Bain & Company for a comprehensive market study and customer segmentation analysis, with Bain taking 50% of their fee in equity to align interests with Madison Reed's success. The consulting engagement represented a significant investment in strategic clarity during a period of unprecedented market volatility. Bain's willingness to take equity demonstrated their confidence in both the business opportunity and Amy's leadership.
• Bain's research identified two distinct customer segments: "Salon Lovers" who enjoyed the traditional salon experience and socialization but skewed toward older demographics, and emerging "Salon Realists" who prioritized convenience, fair pricing, ingredient transparency, and efficient service. The Salon Realists wanted same-day appointments, mobile booking, strong Wi-Fi, USB ports, and quick service without traditional salon amenities like mirrors or extensive consultation time.

The segmentation analysis provided crucial direction for Madison Reed's physical store strategy and marketing messaging, focusing on the Salon Realist demographic that aligned with the company's value proposition. This insight enabled targeted expansion of hair color bars with appropriate service models and customer experience design. The research validated Amy's instincts about accelerating physical store growth while providing data-driven support for strategic decisions.

• The Bain engagement exemplified Amy's approach to acknowledging blind spots and seeking expert help when facing strategic uncertainty, rather than trying to figure everything out internally. "they're going to have all the fun" had initially motivated her entrepreneurial journey, but she learned that building a successful business requires balancing independence with strategic partnerships. The consulting relationship provided objectivity and analytical rigor that complemented Amy's operational expertise and market intuition.

Madison Reed's ability to navigate the pandemic successfully while gaining strategic clarity demonstrates the importance of maintaining financial flexibility and being willing to invest in strategic guidance during uncertain periods. The company emerged stronger with better customer understanding and clearer direction for future growth initiatives. Amy's willingness to admit uncertainty and seek help ultimately strengthened the business foundation for continued expansion.

Amy Errett's journey from fired executive to beauty entrepreneur demonstrates how personal setbacks can become catalysts for building meaningful businesses that create value for multiple stakeholders. Madison Reed's success stems from combining market opportunity recognition with authentic commitment to employee empowerment and customer problem-solving.