Jun 29, 2026 · 1h 14m · how-i-built-this
e.l.f. Cosmetics: Joey Shamah. The Dollar Store Formula That Built a Cosmetics Giant
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of How I Built This, Joey Shamah details how he disrupted the beauty industry by founding e.l.f. Cosmetics, scaling a one-dollar makeup concept from scrappy e-commerce beginnings into a multi-billion-dollar global enterprise.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 38% of the talking time here. How this is scored →
Guy as informed peer 2.9 Guest teaching 3.2 Guest disagreement 1.1 Guy pushing back 1.3
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 5:54 Debunking the party origin myth
Shamah directly shuts down the host's premise about meeting Scott Borba at an LA party, calling it an inaccurate myth and asserting the true background.
Hardest push from Guy ▶ 11:00 Pressing on 35-cent product marginsRaz refuses to accept that full cosmetic componentry and packaging could cost under 50 cents, pressing Shamah repeatedly on the exact unit math.
Biggest teaching moment ▶ 36:25 Explaining incrementality to retailersShamah educates Raz on the core retail breakthrough: H-E-B discovered dollar cosmetics were additive and impulsive rather than cannibalizing legacy brands.
Guy holds their own ▶ 14:27 Citing historical cosmetic margin modelsRaz leverages his deep archive of interviews to contextualize how cosmetic industry margins operate and why high-end brands price up to signal luxury.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| Joey Shamah's Brooklyn Upbringing and Merchant Heritage | 3 | 2 | 1 | 1 | Guy Raz sets up Joey Shamah's background and merchant upbringing in Brooklyn. The dynamic is collaborative biographical exposition with minimal friction. | |
| Partnering with Scott Borba to Target Dollar Stores | 3 | 3 | 2 | 2 | Shamah politely debunks the urban myth about meeting Scott Borba at an LA party, clarifying the actual mutual introduction and their dollar store strategy. | |
| Sourcing in China and the Economics of Inexpensive Cosmetics | 4 | 5 | 2 | 3 | Raz presses on how a cosmetic item could possibly be manufactured for under 50 cents, prompting Shamah to break down overhead economics and 35-cent baseline COGS. | |
| Formulating the Eyes Lips Face Lineup and Retail Barriers | 4 | 3 | 1 | 2 | Raz draws parallels to brand positioning and marketing overhead from previous show interviews, which Shamah confirms from the merchant apparel viewpoint. | |
| Rejection from Dollar Chains and Discovering Public Relations | 2 | 4 | 1 | 1 | Shamah explains initial rejections from Family Dollar and Dollar General, and describes hearing about PR via an A-Rod underwear stunt. | |
| Pitching Beauty Editors and Glamour's E-Commerce Ultimatum | 3 | 4 | 1 | 1 | Shamah recounts desk-side appointments with editors and Glamour's ultimatum demanding either Walgreens or an e-commerce website. | |
| Mid-Episode Break: Teasing the Critical Target Retail Meeting | 1 | 1 | 0 | 0 | Mid-roll break teaser where Raz introduces the upcoming Target buyer interaction. | |
| Media Features Drive Immediate Direct-to-Consumer Growth | 3 | 3 | 1 | 1 | Shamah explains the early clunky e-commerce setup, handling manual fulfillment, and the immediate surge of 400 orders following Glamour's blurb. | |
| Financial Struggles, High Targets, and Target's Travel Section | 3 | 4 | 1 | 2 | Shamah details monthly sales pressure, paternal backing, and getting a blunt initial rejection from a Target buyer before landing in trial and travel. | |
| H-E-B Spinner Racks Prove Product Incrementality | 4 | 5 | 1 | 2 | Shamah explains how H-E-B proved elf products were incremental and impulsive rather than cannibalizing existing higher-priced makeup brands. | |
| Managing High Volume Demand and Reinvesting Company Profits | 3 | 3 | 1 | 1 | Discussion of unit volume math on dollar cosmetics and Joey's father teaching him to reinvest early profits back into the company. | |
| Viral Bloomingdale's Rumor Creates an Operational Crisis | 3 | 4 | 2 | 2 | Raz asks if the viral Bloomingdale's acquisition rumor was manufactured, which Shamah denies before recounting the massive order spike and China factory trip. | |
| Mid-Episode Break: Anticipating Growth and Future Equity Deals | 1 | 1 | 0 | 0 | Standard mid-roll transition segment previewing financing and dealmaking. | |
| Introducing e.l.f. Studio and Navigating the 2008 Recession | 4 | 4 | 1 | 2 | Discussion of Target end caps, the creation of elf Studio, and why the 2008 financial crisis accelerated discount cosmetics demand over premium drugstore bets. | |
| Reaching Thirty Million in Sales and Minority Sale to TSG | 3 | 3 | 1 | 1 | Shamah explains scaling to thirty million in revenue and doing a minority deal with TSG to secure financial stability and reduce personal stress. | |
| TSG Partnership Dynamics and Scott Borba's Priesthood Path | 2 | 3 | 1 | 1 | Shamah reflects on not regretting the early sale and describes Scott Borba's departure into the Borba beverage venture and eventual priesthood. | |
| L'Oreal's Abrupt Exit from the 225 Million Buyout Deal | 3 | 4 | 1 | 1 | Shamah recounts how L'Oreal suddenly pulled out of a 225 million dollar acquisition at the finish line to buy Urban Decay instead. | |
| Selling Majority to TPG and Transitioning to Tarang Amin | 3 | 3 | 1 | 1 | Shamah describes selling majority control to TPG, bringing in Tarang Amin as CEO, and learning corporate governance methods during the transition. | |
| Retirement Boredom and Launching Fit for Life Licensing | 2 | 3 | 1 | 1 | Shamah describes growing bored with early retirement and launching Fit for Life to license fitness equipment for brands like Reebok and Gaiam. | |
| Founding AS Beauty and Acquiring Distressed Cosmetic Assets | 3 | 3 | 1 | 1 | Shamah outlines the playbook of AS Beauty, acquiring distressed cosmetic assets through bankruptcy to rebuild established brands like Laura Geller. | |
| Reflections on Modern Digital Retail, Tenacity, and Luck | 3 | 3 | 1 | 1 | Shamah reflects on whether the playbook could work today with modern digital retail dynamics, concluding that opportunism and luck must meet relentless execution. |
Statements from this episode (28)
Cosmetic formulations are cheap; packaging determines $1 makeup viability, says Shamah
“Basically what we learned really early on is when you break down the cosmetics to formulations and componentry, formulations, yes, you can hit that price point. The real artistry, if you may, is in the componentry, where we couldn't afford metal, we had to go …”
Shamah: e.l.f. Cosmetics targeted 35-cent COGS and 59-cent wholesale price
“So it's about, it was about half of that, because our target goods cost was about 35 cents. I think back to the simplicity angle, everything we sold it for 59 cents, so they could retail it for a dollar.”
Basic cosmetics manufacturing costs 35 cents across the industry, says Shamah
“Well, that's what it, is what I'm trying to say. That's what it costs. Like, that's how much it costs everybody. Now, yes, you can put active ingredients, and yes, this was 25 years ago, and yes, there are more expensive componentry and finishes and all that, …”
e.l.f. co-founder Scott Borba developed products while employed by competitors
“Scott was, in, in full disclosure, still working for other cosmetic companies, but working for us on the nights and weekends. He was doing the product development. So, yes, we did use my father's apparel office.”
Retail makeup shelf space was locked up by five conglomerates, says Shamah
“That was the problem in the early days, that you had a few incumbents that owned a bunch of brands and controlled all the space at retail. So you had L'Oreal, which was L'Oreal and Maybelline. You had P and G, which owned cover girl at the time. So there was n…”
Retailers resisted $1 e.l.f. makeup fearing customers would trade down, says Shamah
“One of our biggest obstacles in the early years was retailers afraid to put our product on shelves. Cause they didn't want to trade the customer down. If they're selling a six dollar lip gloss and I'm selling a dollar lip gloss and they customer buys mine over…”
e.l.f.'s initial inventory order cost $150,000 for 600,000 cosmetic pieces
“We, it was a 150,000 dollar order. ... We bought the goods. It was one container. It was about 600,000 pieces.”
Glamour magazine forced e.l.f. to launch an e-commerce website to get featured
“They said, either you're in all Walgreens by next month, highly unlikely, or open a website so that the customer can get you.”
A web developer rejected e.l.f. equity for $5,000 cash in 2004
“I go, how about I give you some equity in my company? He said, I don't think so. I think we really need the 5000 dollars. So we gave him 5000 dollars.”
e.l.f. received 400 website orders on launch day following Glamour feature
“So all of a sudden, we walked in day one, and we had 400 orders.”
e.l.f. generated approximately $400,000 in sales during its first year
“I want to say about 400,000.”
Early e.l.f. sales of $125,000 monthly barely broke even, requiring outside capital
“So I'm saying we, even you put all those together, I think we were able to hit maybe a 125,000 dollars a month, but I think it was barely to cover costs. There was no growth. Any new inventory had to be funded by my father's capital.”
Placing e.l.f. items in Target's trial section was a game changer
“In what they call the trial and travel section, so we were able to put two or three different items there, the same item, different colors, and we had a bin, and that really was ended up being a game changer for us.”
Retailers realized $1 e.l.f. makeup drove incremental sales, not cannibalization
“The best thing that happened with HEB is we get an email from the buyer the next morning saying, I was wrong, this brand is incremental and impulsive. Because they saw that because of the price, I wasn't buying one or the other. I wasn't not buying CoverGirl f…”
A 2006 viral rumor drove e.l.f. orders from 300 weekly to 18,000 daily
“We went from getting 300 orders a week to 18,000 orders a day for the next six weeks.”
e.l.f. shipped 192,000 direct-to-consumer orders from China to fulfill 2006 spike
“And it took about six to eight weeks, and I, we shipped a 192,000 orders from China, direct to customers in the U.S., and then that really, you know, that year we were projected to do two million dollars for the year.”
e.l.f. reached profitability and $8 million in revenue following a 2006 spike
“After this spike, we did about eight million dollars. We were profitable.”
Customers accept higher prices if extreme relative value is maintained, says Shamah
“One of my buyers told me a long time ago something that really stuck with me. Price is what you pay, and value is what you get. And as long as we're committed to continuing to offer our customer extreme value, she doesn't want us to be stuck to the one dollar …”
e.l.f. generated $100 per linear foot weekly at its Target launch
“So when Elf first launched in Target, they were forecasted to do 60 dollars per linear foot per store per week. Out of the gate, we were at a hundred dollars per store per week.”
Failed premium drugstore lines from Revlon and L'Oreal enabled e.l.f.'s retail expansion
“Revlon launched a brand called Vital Radiance. Now you probably don't remember, ever heard of it. And L'Oreal launched a brand called Hip to compete with Mac. And the major premise of both those brands was we are going to sell more expensive cosmetics in the d…”
e.l.f. Cosmetics reached approximately $30 million in sales by the end of 2010
“I remember at the end of 2010, we were doing about thirty million dollars in sales.”
e.l.f. Cosmetics was valued at approximately $70 million in 2010
“The valuation of the company was probably, it was about seventy million dollars.”
e.l.f. founders received over $15 million in a 2010 minority stake sale
“More than that, but correct.”
L'Oreal offered $225 million to acquire e.l.f. Cosmetics in 2013
“L'Oreal came through with the best offer. They offered us about two hundred and twenty five million dollars for the whole company, and we were very excited at that point, and we were ready to sign, and now this is lock, stock, and barrel.”
Fitness equipment has slower repurchase velocity and less M&A than beauty
“The fitness business is a good business, but it's not nearly as exciting as the beauty business. Beauty business is trendy. It's quick. There's virality. There's a lot of excitement. There's a lot of M&A deal. Like there's a lot going on. The fitness business …”
Modern brand building centers on digital attention rather than retail shelf space
“I think when we created the brand in 2002 and three and four, our biggest obstacle was how are we going to get space in a retail environment controlled by four guys? I think today, now it's how are you going to own the most amount of attention from the consume…”