Aug 18, 2025 · 1h 18m · how-i-built-this
Madison Reed: Amy Errett
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Amy Errett shares how she overcame severe career setbacks and leveraged decades of finance and operating experience to launch Madison Reed at age 56, disrupting the prestige hair color industry to build a profitable omnichannel brand.
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 36.4% of the talking time here. How this is scored →
Guy as informed peer 3.5 Guest teaching 2.9 Guest disagreement 0.8 Guy pushing back 0.4
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 10:03 Direct pushback on early retirement assumption
When Guy claims Amy probably had enough money to stop working after selling Spectrum, Amy bluntly interrupts and disagrees, clarifying that her earnings were insufficient for the lifestyle and scale she desired.
Hardest push from Guy ▶ 20:07 Pressing on why Amy sought 100-hour startup grindGuy pushes Amy to explain why someone with substantial wealth, an established VC career, and family flexibility would voluntarily choose to return to grinding 100-hour workweeks.
Biggest teaching moment ▶ 34:16 Schooling Guy on shade variety requirements vs ice cream flavorsAmy firmly rejects Guy's simplified ice cream flavor analogy, explaining the vast technical spectrum of blondes, brunettes, and reds necessary to achieve baseline credibility in hair color.
Guy holds their own ▶ 1:10:33 Guy analyzing consumer M&A valuation multiples and thresholdsGuy demonstrates strong financial fluency by detailing historical 6-7x revenue buyout multiples for $20M consumer brands versus the contemporary $100M threshold required by multinational conglomerates.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| Building Spectrum and Relocating to San Francisco | 3 | 1 | 1 | 0 | Guy asks Amy about scaling her consulting firm Spectrum and transitioning from New York's corporate culture to San Francisco in the 1990s. Amy details the cultural contrasts and the personal relief of coming out in a more welcoming community. | |
| Connecting with Glide Church and Spiritual Values | 3 | 1 | 0 | 0 | Guy inquires about Amy's involvement with Glide Church and meeting her wife Claire. Amy explains how dealing with her stepmother's illness led her to spiritual involvement despite growing up culturally Jewish. | |
| Acquisition of Spectrum and Chasing Financial Milestones | 4 | 4 | 4 | 2 | Guy assumes Amy was financially set and could have stopped working after selling Spectrum, which Amy immediately refutes, explaining she wanted a higher lifestyle tier. She then recounts being abruptly fired from travel company Olivia. | |
| The Lawsuit and Reevaluating Adversity | 3 | 3 | 1 | 1 | Amy discusses the intense shame and public fallout from the lawsuit following her termination at Olivia. She explains how therapy helped her take full personal accountability and shift from analytical thinking to following her intuition. | |
| Venture Capital at Maveron and Insights from Howard Schultz | 4 | 2 | 0 | 0 | Guy asks about Amy's venture capital experience at Maveron alongside Starbucks founder Howard Schultz. Amy shares Schultz's uncanny ability to spot macro retail shifts early in 2007 before the financial crisis. | |
| Confronting Ambition, Ego, and the Operator Itch | 4 | 3 | 1 | 1 | Amy candidly admits to Guy that watching startup founders pitch fueled her ambition and ego, driven by a working-class background and the psychological pressure to achieve a massive exit. | |
| Identifying the Untapped Hair Color Market Opportunity | 5 | 2 | 0 | 0 | Guy cites market figures around the $10B hair color space, and Amy details how passing on Dollar Shave Club sparked her interest in consumer products disrupted through direct-to-consumer recurring models. | |
| Retail Fieldwork and Validating the Concept with L'Oreal | 3 | 2 | 0 | 0 | Amy describes retail fieldwork at Whole Foods and Walgreens buying dozens of boxed hair dyes to analyze the subpar consumer experience, followed by cold outreach to a L'Oreal executive who validated her thesis. | |
| Launching a Venture-Backed Startup at Age 56 | 3 | 3 | 1 | 0 | Guy highlights the courage of starting a venture at age 56. Amy recounts visiting 13 Italian manufacturers where the first 10 laughed at the prospect of formulating shelf-stable dye without traditional harsh chemicals. | |
| Developing 19 Shades and Rigorous Product Testing | 3 | 5 | 3 | 2 | Guy questions the initial 19 shades by comparing the lineup to simple ice cream flavors. Amy firmly corrects the analogy, explaining the essential nuances required across brunettes, blondes, and reds for credibility. | |
| Developing the D2C Platform and Diagnostic Quiz | 4 | 3 | 1 | 0 | Amy details the formulation of an 18-question diagnostic algorithm to match hair colors accurately online. She clarifies Madison Reed's positioning around 'eight free' factual ingredients rather than meaningless marketing buzzwords like 'clean'. | |
| Series B Funding and the Official PR Launch | 3 | 2 | 0 | 0 | Guy reviews the Series A and B funding rounds. Amy outlines how they launched the brand with a splashy NYC influencer and salon PR campaign to generate organic credibility before scaling paid media. | |
| The Groupon Experiment and Transition to Targeted Digital Ads | 3 | 3 | 0 | 0 | Amy recounts a massive Groupon campaign that gave away 7,000 free boxes, only to yield dismal customer retention. This taught the company that discount deal-seekers were unprofitable compared to targeted Facebook ads. | |
| Overcoming Investor Skepticism During Series C Fundraising | 4 | 4 | 1 | 0 | Guy notes the large Series C round, and Amy explains that raising VC capital became significantly harder because male investors struggled to relate to female hair color routines and doubted 10x venture upside. | |
| Prototyping Physical Salons with the Flatiron Pop-up | 3 | 3 | 0 | 0 | Amy describes testing physical retail with a $75k pop-up in Manhattan's Flatiron district after professional stylists requested wholesale product, leading to rapid full capacity and a new service model. | |
| Expanding Omnichannel Distribution Through Ulta Beauty | 3 | 3 | 1 | 0 | Amy explains how Ulta reached out after an executive heard Madison Reed radio ads. She initially resisted omnichannel retail to stay pure D2C, until her head of product convinced her to embrace the partnership. | |
| Navigating the Painful Parting with Three Co-Founders | 3 | 4 | 0 | 0 | Amy shares a remarkably candid account of having to terminate all three original co-founders due to operational shortcomings as the business scaled, detailing the severe personal grief and lessons on executive hiring. | |
| Scaling Permanent Color Bars and Deploying Virtual Try-On AI | 4 | 3 | 1 | 1 | Guy asks about Madison Reed's proprietary AI try-on tools and specific ingredient formulation. Amy lists the eliminated chemicals and jokes about Guy's suggestions for marketing macros on the front of the packaging. | |
| Pivoting Through the COVID-19 Pandemic and Strategic Expansion | 4 | 3 | 0 | 0 | Amy explains navigating 2020 lockdowns by shipping Chromebooks to 300 salon colorists to handle 16,000 daily inbound digital inquiries, while locking in rock-bottom commercial real estate leases for expansion. | |
| Evaluating Acquisition Windows and the Consumer Landscape | 5 | 4 | 1 | 1 | Guy and Amy discuss the narrow M&A window for consumer brands. Guy articulates market multiples and revenue thresholds while Amy explains how outgrowing the sub-$100M acquisition bracket placed consumer brands in limbo. | |
| Reaching Profitability and Navigating Modern Market Challenges | 4 | 3 | 0 | 0 | Amy confirms Madison Reed achieved profitability while sustaining double-digit growth. She discusses consumer macro fatigue and the resilience of hair color as an essential, recession-proof category analogous to lipstick. | |
| Reflections on Hard Work, Luck, and Relentless Drive | 3 | 2 | 1 | 1 | Guy playfully suggests Amy will never retire and will start another company in her 70s. Amy jokes about ringing the NYSE bell with a walker and reflects on working tirelessly while cultivating internal peace. |
Statements from this episode (37)
Errett: Spectrum Was Profitable in Six Months and Never Raised More Capital
“We were a profitable company from the first six months and never became unprofitable, never needed to raise any more money.”
Errett: Spectrum acquisition did not provide enough wealth for desired lifestyle
“I made a good amount of money, but I didn't make enough money to live the lifestyle that I wanted.”
Errett: Fired as Olivia CEO blindsided in a hotel lobby
“I was fired in a hotel lobby on a Monday morning, completely blindsided.”
Errett: Howard Schultz urged Maveron to slow investments in fall 2007
“I will never forget it was the fall of 2007, and we had an investment meeting in Seattle, and he walked in and he said, we need to slow down our investments.”
Amy Errett: Comparison trap makes it hard to feel successful
“This is a game I can play my whole life. I can decide that no matter what happens at Madison Reed, it's not big enough. Because there will always be an AI company that's bigger. There will always be a SaaS platform that's bigger. And I have a hard time seeing …”
Errett: Maveron passed on an early investment in Dollar Shave Club
“We saw an investment at Maveron called Dollar Shave Club. And we passed.”
Errett: Dollar Shave Club founder Michael Dubin serves on Madison Reed's board
“Michael is now my independent board member at Madison Reed, so.”
Errett: Drugstore hair color in 2013 lacked differentiation and quality
“There is no, there's no product differentiation. It's all 10 dollars. It's just an inferior consumer experience.”
Errett: Madison Reed's first production run cost about $160,000 for 19 shades
“I think altogether it ended up being, like, maybe a 160,000 of US dollars, because remember, the first run was a limited, you know, minimum order quantity, and when we launched, we only had 19 shades.”
Amy Errett: Madison Reed now offers close to 100 hair color shades
“We have close to a hundred today.”
Errett: Madison Reed's Early Color-Matching Algorithm Delivered High Accuracy and Retention
“And we started to see very early on actually measuring customer satisfaction and net promoter score, whether or not this algorithm Because that's what we built. Machine learned algorithm worked. And that was the moment that we understood we had something here …”
Errett: The marketing buzzword 'clean' is completely meaningless in beauty
“We don't use the word clean, because that's a word that's a meaningless word. It's a meaningless word, but lots of people use it”
Errett: Subscription Beauty Brands Require Massive Pre-Launch Capital to Scale
“Yes, and the idea was since we knew that we wanted it to be a subscription-based business, that building the core of the subscriptions would scale the business faster. So you have to, you need a splash to get above the sort of noise for these women and figure …”
Errett: Free product trials drive poor retention compared to paying customers
“So we learned trial by free, not so good. If I pay for it, and I love the results, they stay. And that has been a hallmark of the company, high retention.”
Errett: Madison Reed struggled to raise capital starting with Series C
“The Series A was highly sought after for some of the reasons that you talked about. And then when we got to the Series C, not so much. And from that period on, it has been a difficult business to raise money for.”
Errett: Most investors only fund things they personally relate to
“Most people invest in things they can relate to.”
Errett: Hundreds of stylists asked to buy Madison Reed wholesale for salons
“One stylist started reaching out to us asking if they could buy our color directly from us to apply to their customers' hair in their salons. Like at a whole, at wholesale. Yeah. And that was like, oh, curious. That's curious to me. And it was not like three. …”
Errett: Madison Reed's $75K Flatiron pop-up was fully booked in five weeks
“And so they said you have 75,000 dollars. Go wild. See what you can do. So we opened a small pop-up in Flatiron. We spent 25,000 of the 75 for out-of-home advertising, like billboards on sides of the buses and phone booths, still phone booths in New York, and …”
Errett: Ulta Beauty initiated contact with Madison Reed in early 2017
“In the beginning of 17, Alta contacted us.”
Errett: A scaling business moves at the rate of its slowest executive
“Because when a business starts scaling, but the people that you have there can't scale with it, the business moves at the rate of the slowest senior person. That's what I've come to understand.”
Errett: Hiring co-founders for likability cost Madison Reed years of growth
“This was Amy's, ah, magical thinking, as I call it, to put something together with a group of people that I liked, which is a bias, by the way, that one hires for liking a lot, has a certain bias that I would suggest. Everyone start thinking about, it's not ju…”
Errett: Navigating departures requires identifying what motivates the person to be okay
“I think the key about someone's leaving is to figure out what they need, what motivates them to be okay.”
Amy Errett: Madison Reed virtual try-on boosts conversion by 30%
“When somebody uses that, they convert 30% more than any other customer that doesn't use it.”
Amy Errett: Madison Reed operates 95 Hair Color Bar locations
“We should allow you to go to any one of our 95 locations and have the same outcome.”
Amy Errett: Madison Reed removed eight ingredients no competitor has eliminated
“We talk about a better for you formula, and we are very factual about these eight things that we factually have taken out. That nobody else has taken out.”
Errett: Madison Reed received 16,000 inbound customer inquiries daily during COVID
“So our inbound, we were getting 16,000 inquiries a day.”
Errett: Madison Reed couldn't afford its current locations at new lease rates
“You're never going to get real estate in places that we have it today. We could never afford it today if these were brand new deals.”
Errett: Madison Reed never declined post-pandemic and grew every subsequent year
“So our numbers as a company never went down. We kept The doubling of the business and then have grown since then every year.”
Errett: Strategic acquirers prefer acquiring brands under $100M in revenue
“Many of these strategics buy things that are sub-one hundred million dollars in revenue. When something gets bigger, it becomes harder for them to get the board to approve it.”
Errett: Consumer investors now demand 20%+ growth alongside profitability
“Now, the world has shifted to wanting both. People want you to grow, you know, at least 20 plus percent top line, but they also require profitability.”
Errett: The IPO window is non-existent for consumer companies
“If you look at the IPO window, it's non-existent for consumer companies.”
Errett: Madison Reed uses identical hair color in salons and boxed kits
“Remember, we're using the same box of hair color in our hair color bars that we sell. It is not a different product. It's the same.”
Errett: Madison Reed reached corporate profitability in 2024
“We are a profitable company now. We crossed profitability last year.”
Errett: Hair color demand is recession-proof and pandemic-proof
“I also think that this is a good thing for us to prove that hair color is pandemic proof and recession proof, because that just means it's going to happen no matter what happens.”
Errett: Great venture capitalists position themselves to get lucky
“As I used to say in venture, a great venture capitalist position themselves to get lucky. You know, they hang around in the right places, and they talk to the right people, and they know enough relationships, and they have the capital, but most of the time the…”