RPG, the New York-based retail design firm, has formed a venture with IMX Cosmetics, a personalization and customization technology company in the beauty space, WWD has exclusively learned, and as its first order of business is putting a portfolio of 75 patents up for auction.
The patents cover personalization and customization technology for every category of beauty products that IMX has developed over the past two decades, including color matching, palette selection, virtual augmentation, mobile applications and artificial intelligence.
The technology was designed for implementation across the gamut of traditional and experiential retail platforms, including remote locations, point of sale at retail, kiosk and pop-up locations and home devices. IMX utilizes artificial intelligence across its technology, incorporating color and product trends, demographics, inventory and customers’ unique biometric data.
The minimum opening bid for the patent portfolio is $500 million, said Bruce Teitelbaum, chief executive officer of RPG and RPG-IMX. He noted a third-party audit determined the portfolio’s valuation. Teitelbaum’s RPG, of which he is ceo, will remain a stand-alone company from the new joint venture.
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Teitelbaum asserted that the patent portfolio’s unique point of differentiation is two-pronged, the first being its use of artificial intelligence in customization technology. He likened the augmented-reality-based customization experiences available in today’s beauty market to “essentially advanced recommendation engines for existing products.” “Instead of recommending off-the-shelf products, imagine that a customer’s unique biometric data could be synthesized into fully customized products, delivered in real-time and through any channel,” said Teitelbaum. “This is the next chapter of true personalization.”
The portfolio’s second differentiator, according to Teitelbaum is that the patents are all interconnected and embedded with a web of protection that would “prevent most competitors from providing real-time delivery of customized cosmetics in the way they would want to.” IMX patents have been cited over 1,000 times to date from companies within and outside the beauty space, including L’Oréal, P&G and The Coca-Cola Company, said Teitelbaum. “Individually, each patent delivers discrete value,” he said, “but the real power of the patent portfolio is in the interconnectedness of the patents.
“These patents are the broadest, deepest and most comprehensive protection in the beauty personalization space,” said Julie Bartholomew, chief innovation technology officer of RPG-IMX and founder of IMX Cosmetics. She noted that the third-party valuation “indicates that within two to three years, leveraging these patents will conservatively yield billions of additional revenue for the portfolio holder.”
Bartholomew, a Midwest-based inventor, spent the last 18 years working on the patent portfolio. In the early Aughts, she operated IMX Cosmetics machines that dispensed customized cosmetics concoctions for shoppers on-the-spot in Fred Segal and Barneys New York stores. Sensing a future shift in the beauty space towards customization and personalization technology, Bartholomew backed off from retail and spent most of the next two decades developing her intellectual property assets. “When I started creating my portfolio, the beauty retail experience consisted mostly of shelves and displays of pre-made product,” said Bartholomew. “Today, personalization has become an integral part of the retail experience and the use of technology has become not only commonplace, but dictated by today’s consumer.”
Industry sources say the portfolio has garnered the attention of several major beauty industry players — and a few retail giants outside the space — and is coming to auction at a time when traditional beauty companies are shifting the way they think about acquisitions. Though still snapping up Indie brands, forward-looking firms are increasingly looking to acquire outside their core competencies of product marketing and manufacturing, particularly when it comes to innovative personalization and customization technology — consider Shiseido’s 2017 acquisition of MatchCo, as well as Giaran, an artificial intelligence company and JWalk, a creative agency, as well as ingredient technology from Olivo Labs. Coty is making acquisitions to quickly build acquisitions as well, such as Beamly, the digital agency it acquired in late 2015, and social-selling brand Younique in 2017. L’Oreal has invested in a number of partnerships with incubators and accelerators such as Station F in Paris and Founders Factory in London. In 2014, it acquired Sayuki Custom Cosmetics, the owner of several personalization technology patents, for $150 million.
The beauty industry is still in the early stages of the marriage between beauty and tech, said Vennette Ho, managing director at Financo, in a recent issue of WWD Beauty Inc. Going forward, she expects the scope of cross-pollination to only increase across manufacturing, media, technology and retail. “It’s the classic thing in M&A, where one person has something and the other doesn’t. All of the big companies have the audiences. On the other side, everyone has the new technologies and the new ways of reaching people. Everyone is figuring out how to bring those things together.”