Meet the hair color startup that’s giving L’Oreal a run for its money

Madison Reed built a better box of hair dye—then a chain of salons, a wholesale business, and a devoted membership base. Now it’s coming for the incumbents.

Amy Errett, founder and CEO of Madison Reed [Photo: Madison Reed]

For decades, the millions of American women who dye their hair had two options: They could spend three hours and upwards of $300 in a salon or grab a $10 box off the drugstore shelf, squint at the ingredient list, and hope for the best. There was no middle ground.

Amy Errett thought that was absurd. “There was no prestige product that a woman could buy for at-home use,” the founder and CEO of hair color startup Madison Reed tells me. “Just because you color at home does not mean you can’t afford good color. That was, in my opinion, a very elitist viewpoint.”

Errett established Madison Reed in 2013, right as the direct-to-consumer wave was cresting. But while brands like Warby Parker and Dollar Shave Club were mostly rethinking distribution—taking existing product categories online and cutting out the middleman—Errett wanted to do something more fundamental. She wanted to reformulate hair color from the ground up, rethinking how it reaches consumers.

The result is a company that is profitable and has raised approximately $250 million in venture capital. Across the U.S. Madison Reed operates 98 Hair Color Bars—which exclusively offer hair coloring services—and sells through Ulta, Amazon, and its own website. The brand is now poised to take market share from competitors that have been around decades longer, like L’Oreal, Schwarzkopf, and Wella.

“A lot of the DTC models were picking off a very narrow aspect of something and trying to build a commerce brand,” says Jon Callaghan, cofounder and managing partner of True Ventures, which has backed Madison Reed since 2013, along with Norwest Venture Partners, Comcast Ventures, and Jay-Z’s Marcy Ventures. “Amy’s tackling something substantially larger—a fundamental activity in beauty and wellness that women do every four to six weeks.”

Callaghan describes Madison Reed as a classic disruption story. “The industry was dominated by large incumbents, very low innovation, poor-quality product,” he says. “Amy sort of flipped the script on every aspect of that.”

Anthropological research

Madison Reed’s origin story begins with a woman and a bathroom.

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