Why We Invested in Hue: Powering the Future of Video Commerce

Hue Team

In 2020, Janvi Shah found herself online shopping for cosmetics. Like so many cosmetics buyers, she was scouring reviews seeking to uncover the right product and shade for her. With few people who look like her represented on beauty eCommerce sites, picking the right product was challenging. She made a purchase, and then an all-too-common return when the shade of the product wasn’t a match.

Janvi’s story mirrors countless others across online shopping categories. For beauty retailers in particular, it’s the reason for their less than 3% online conversion rate and a 10-15% return rate, despite increased digital marketing spending to acquire customers.

Lucky for ecommerce brands, Janvi came together with her Harvard Business School classmates, Nicole Clay and Sylvan Guo, to solve the problem. Today they’re the founders of Hue, which is supercharging sales and conversion through shoppable and authentic, user-generated videos embedded across ecommerce channels.

Having led Hue’s pre-Seed funding, we are excited to announce our re-investment into the team’s $4.5M Seed round co-led by Fika Ventures. With ‌this fresh funding, the Hue team is expertly harnessing the opportunity created by the evolution of commerce into experiences centered around organic and personalized discovery — what we call “Me-Commerce” internally at Underscore VC.

Driving Sales With User-Generated Video Technology

In 2024, user-generated, short-form video is the standard for how customers discover products and brands, especially in the beauty and fashion categories. And, while historically influence was derived primarily from those with a mega-following, a recent degradation in consumer trust has given rise to the power of microinfluencers. “Everyday people” are super-charging purchasing decisions through their authentic reviews. And brands are clamoring to capitalize on their influence. That’s where Hue comes in.

Hue helps brands and retailers to source and embed authentic short-form video reviews on their e-commerce websites to give customers confidence to add to cart. For shoppers, this means more accurate and trustworthy product recommendations that are not just text, but rich videos. For beauty brands and retailers, this means lower customer acquisition costs, increased conversion, and increased customer lifetime value. It also means valuable first-party data that will allow them to speak to their customers in more personalized ways.

 

Expanding Market Opportunity

Hue is creating a new category within the e-commerce space — authentic and diversified short-form video reviews — which is poised for massive growth in the years ahead. Early research into this space suggests that 88% of shoppers today seekout videos of a product pre-purchase.

Hue has been disciplined, and rightfully spent their early days earning customer love in a strong beachhead market segment: Cosmetics, which represents an $119B opportunity. But it’s easy to see the expansion opportunities for their platform: fashion, appliances, and ultimately, any product sold online. The company estimates the opportunity to be at least $750M in the enterprise market, $3.5B in the mid-market, and $50B in the SMB market for consumer products. Ultimately, we are talking about a commerce enabler on the order of email and SMS, which each have generated significant outcomes.

Founder Market Fit

We were introduced to the Hue team through one of our portfolio company founders, Charlotte Lawson, of Darby. Upon meeting the team, we were struck by their passion for the problem they’re solving and their unique combination of industry experience.

At Underscore, above all, we value “founder-market-fit.” A unique blend of attributes, expertise, and lived experiences that makes a founding team uniquely qualified to tackle a problem they’re passionate about solving. The co-founders of Hue, Janvi Shah, Nicole Clay, and Sylvan Guo, have the perfect blend of backgrounds in tech, beauty, and marketing. And, as three women of color who have personally struggled with representation in beauty, both their heads and their hearts are in the right place to bring to market user-generated content that prioratizes inclusion.

The three co-founders met at Harvard Business School and instantly connected over the purpose-driven mission of Hue. Hue CEO Janvi Shah came to HBS from Google, where she was a technical product manager with unique visual AI expertise from working on Google Search and Google Photos. Nicole Clay, Hue CMO, previously served as a Marketing Director & Chief of Staff at L’Oreal. Having worked on Lancome and Kiehl brands, she brings relevant industry knowledge to pursue the opportunity. Sylvan Guo, Hue COO, brings years of startup operating chops, serving previously as a Digital Growth and Analytics Manager at fast-growing startups Airbnb and Tubi.

If there is a team that deserves to win in this category, and has the lived experience and technical skills required to iterate to success — this is it.

Since our initial funding, the Hue team has brought on and benefitted from two Underscore Core Partners: Amory Wakefield, former product leader at Truefit and Hydrow, and Chris Hobson, President, CEO, and Board Director of Rare Beauty Brands. Additionally, the team has attracted great advisors inspired by their vision. David Lieb, Director of Product at Google; Dawn Dobras, former CEO of Credo Beauty; and Piya Newkirk, VP of Marketing at Armani Beauty, are all Hue champions.

Customers With A Shared Winning Vision

Since the early days of Hue, the team has attracted overwhelming interest from prospective customers and has been extremely capital-efficient in acquiring them. At Underscore, we’re often careful to advise companies to be thoughtful about the initial customer segments they select, as they can strongly influence the future direction of a product. In turn, we were impressed when Hue strategically chose to partner with the world’s largest clean beauty retailer Credo Beauty and Lawless Beauty given their leadership in driving diversity in the beauty industry.

Since then, the Hue team has continued to onboard an impressive roaster of beauty brands such as Tatcha, Exa Beauty, Patchology, and Live Tinted. They’ve also brought on pilot customers in the fashion space, including Serious Player Only and Crosty. The results of these partnerships speak volumes about the road ahead for Hue and the startup’s customers. Live Tinted, as just one example, drove a 45% increase in conversions with Hue customer video reviews. In turn, Hue was selected as a finalist for the Glossy Beauty Awards: Best E-Commerce Experience for their partnership with Live Tinted.

“Integrating Hue’s Video Technology has proven to enhance the client experience for Tatcha. Through an A/B test, we were able to see a substantial lift in conversion and sales. The customer journey has improved and we will continue to integrate Hue’s Video Technology to more touchpoints on the Tatcha website to support product discovery and education.”

– Andrea Carver, SVP DTC + Technology, Tatcha

What’s Next For The Hue Team

Now armed with a new infusion of capital, Hue is growing fast to meet the demand of new brand and retailer partners across categories. They’re onboarding more partners, expanding the engineering team, and strengthening their AI algorithm that generates recommendations, content, and information shoppers need to purchase with confidence.

Follow Hue on Instagram and Tiktok and check out their website at poweredbyhue.com