[THE INVESTOR] When L’Oreal acquired NYX Cosmetics for US$500 million in 2014, it most likely was eyeing NYX’s large social media following.

NYX is well-known for its effective use of social media such as Facebook, YouTube and Instagram, to connect with consumers.

As of early June, NYX has over 7.3 million followers on Instagram while L’Oreal has 2.5 million followers. When L’Oreal acquired NYX, it did not even have 10,000 followers.

The person behind NYX Cosmetics’ success is its Korean-American founder Toni Ko.

Born in Daegu, South Korea, Ko immigrated to the US and settled down in Los Angeles with her parents in 1986 at the age of 13.

Fast forward 30 years and Ko is a successful millionaire businesswoman.

With a current net worth of US$260 million, Ko ranked No. 57 on Forbes’ 2016 America’s Richest Self-Made Women list. Of those with Korean ancestry, three including Ko made it on the list.

Ko’s interest in cosmetics from an early age allowed her to realize the potential of budget cosmetic brands and led to her success in the beauty industry.

From her early teens, Ko secretly wore makeup at school without her mother’s permission. She frequented department stores to look at expensive makeup products.

However, strapped for cash as a young teenager, she turned to drugstore cosmetics but was unsatisfied with the low quality of such items. This made her eventually want to provide cosmetics at reasonable prices for makeup lovers like herself.

In 1999, at 25 years old, Ko borrowed US$250,000 from her parents to rent a small office in Los Angeles and started a cosmetics company that is known today as NYX Cosmetics.

NYX’s first products were eyeliners and lip liners sold at US$1.99 each -- a fraction of the price of items sold by popular cosmetics brands such as Urban Decay. Gaining popularity for its quality products sold at reasonable prices, NYX recorded a revenue of US$4 million in the first year of its establishment.

With the introduction of NYX products at cosmetics stores such as Sephora and ULTA Beauty, the company continued to expand and ironically hit the jackpot during the economic recession of 2008, as consumers who previously bought high-end items turned to affordable NYX products instead.

Moreover, NYX was able to boost its sales due to its marketing strategy through social media.

Upon noticing beauty guru Michelle Phan’s popular makeup tutorials on YouTube, Ko started to promote NYX products through social media in 2008.

Ko sent YouTube beauty stars NYX items for free so that the YouTubers would test and use the products in their makeup videos, effectively promoting the company and its goods.

By reaching out to consumers through social media, NYX Cosmetics recorded a revenue of US$120 million back in 2014.

After selling the cosmetics company to L’Oreal in 2014, Toni started a new business centered on sunglasses.

Ko currently owns around 100 pairs of sunglasses, mostly those from famous luxury brands that cost around US$300 each.

Knowing that quality sunglasses can be sold at reasonable prices too, Ko established Perverse Sunglasses early this year. It is currently gaining popularity among consumers for its sunglasses that range in price from US$40 to US$60. Ko plans on expanding the business by opening 125 Perverse Sunglasses stores in the next five years. Whether this new business will be as successful as Ko’s former enterprise awaits to be seen.

By Lee Seo-young (seoyounglee@heraldcorp.com)