How 2 hair stylists turned a costly failure into a business that’s making millions

In 2004, hair stylist and businesswoman Miko Branch created the wildly popular hair care line, Miss Jessie's, with her late sister Titi Branch. Their business launched at a time when few stores had hair products for women of color.

Now, the natural hair care industry is booming thanks in part to ethnic women embracing their natural hair as well as investments from retail heavy-hitters like Target, Walgreens and CVS who see the value in catering to a wider demographic.

In fact, according to market research firm Mintel, the black hair market is projected to hit $1.4 billion by 2020. "Women with textured hair are no longer the minority," Branch tells CNBC Make It. "And retailers now see this as a profitable market."

Today, Miss Jessie's, which was one of the pioneers in the ethnic hair care market and has won numerous beauty awards, has become a multimillion-dollar business with thousands of products in hundreds of retail stores worldwide. One of the most notable parts of the company's success is that its products have created a market for entrepreneurs to cater to the multicultural space.

However, it wasn't always smooth sailing for the creators of Miss Jessie's. Branch tells CNBC Make It that learning from a costly failure early on is why they were able to achieve such rapid success.

In 1997, the Branch sisters opened their first hair salon. The two had little to no formal training or mentors in the traditional sense, but they were hungry for success and knew that they loved hair. They used $8,000 to purchase a brownstone in Boerum Hill, Brooklyn, and quickly began to expand the business.

In 1999, their business failed. The sisters, who were in their mid-20s, had no job, an expensive mortgage payment on the brownstone, and Miko Branch had just given birth to a son whose father was no longer in the picture.

"We expanded too quickly. ... We were going too fast and didn't take into account inventory," Branch says. "[When the business failed] we had to think outside of the box. We had to think of the next opportunity."

That next opportunity came to her in her bathtub. Branch, who is of African American and Japanese descent, says she was chemically straightening her hair at the time.

Chemically straightened hair, also known as relaxed hair, should not be made wet. However, when Branch would take baths with her young son, her hair would often get wet and frizzy as he splashed around in the tub. So she decided to embrace her natural, curly hair texture.

The sisters took to their kitchen and began experimenting with various natural ingredients to help keep their curly hair healthy and conditioned. In the process, they created their first product: curly pudding.

"Curly pudding turned kinks to curls and had a pudding-like consistency," says Branch. "We realized that this information was way too important to keep to ourselves."

Branch says that this was all occurring at a time when European hair was the norm both in and out of the office. Ethnic woman as a whole believed that they had to have sleek, straight hair.

"We came out during the time that women with tighter curls were told that their hair was bad and not good," says Branch. There were also no hair product lines in the early 2000s that catered exclusively to natural hair for blacks, Jews, Latinas and other ethnic groups with tighter curls, says Branch.

The sisters began to share their discovery with other ethnic women and as they did, they realized something important: Minority women were so used to straightening their hair that they didn't even know how to take care of curly hair.

"It's not that women don't like their natural texture. It's about looking good," says Branch. "So we had to show these women that they have beautiful natural hair."

The sisters soon began to sell their products in small batches and named their burgeoning business, Miss Jessie's, after their grandmother. "She was a great delegator," says Branch. "She had standards, and her finished product was important. We learned quality control from her."

The business began to gain popularity, but the sisters were careful about how they expanded and spent their profits.

"We had to learn all our lessons and wisdom through trial and error," says Branch. "We had no real roadmap, but we created a clear understanding of what to avoid."

The main thing they agreed to avoid was moving their growing business into a more expensive space. In fact, Branch says that she still works out of the brownstone that they bought in the late '90s.

In 2009, the Branch sisters received a call from Target, which they ignored. "We didn't believe that Target would want a small business of two girls from Brooklyn," says Branch.

But Target was persistent in calling and emailing the women. The retail giant finally got in touch with the sisters and flew them out to their headquarters in Minneapolis the very next day.

Branch recalls that there were 10 people at the meeting and the "buyers ordered everything."

"The ethnic section was dimly lit for many years," she says. "Black women didn't have the proper tools to take care of their hair and saw only European images."

Branch believes that they received a call from Target because large retailers began to see a major decline in their meager ethnic sections as Miss Jessie's became more and more popular.

"We were keeping women away from chemicals that alter their hair," says Branch. "This was an epiphany and an introduction into what God gave [ethnic women] naturally. So we brought a higher price value for many retailers."

In March 2010, Miss Jessie's hit Target shelves in 200 to 400 stores, Branch says. But once again they refused to expand their offices or even push more products into other stores. "We wanted to get our footing and take our time in growing," she says. "We took manageable steps."

The sisters also turned down outside investments and partners. "We went into business to be our own bosses," Branch says. She explains that her African American father came from the civil rights era and believed that it was important for them to be independent.

"It wasn't about the money," she says. "With an infusion of cash from partners, even a minority stake, there's a trade-off."

But the most important reason for having full control of their business, says Branch, is that they stayed true to their brand values of having ethnic women and young girls fall in love with their hair.

Branch admits that there is still much more acceptance needed among all women when it comes to wearing natural hair in the workplace.

In fact, a recent study by the research firm Perception Institution found that black women still perceive a social stigma when wearing natural hair in the workplace.

The study also found that black women experience more anxiety related to their hair, greater social and financial burden of hair maintenance than white women. They are also twice as likely to report social pressure to straighten their hair at work compared with white women.

This hits particularly close to home for Branch, who grew up with a Japanese mother with "beautiful straight long hair."

As a child, she always wanted to look like her mother, as most young girls do, and she didn't know any other Asian-American kids in her Bed Stuy neighborhood. As she got older, she says, she also realized that the European styling standard was more acceptable for the workplace.

"I didn't want to look like a white woman, but if I had these products as a kid, I would have loved my hair," she says.

According to the Mintel research, 50 percent of black consumers agree their hair is an important part of their identity.

"Wearing their natural hair makes black women feel liberated, confident and different from others, giving them a tremendous sense of pride in being black while displaying their natural beauty," says Tonya Roberts, a multicultural analyst at Mintel, in the study. "The prominence of the market reflects the high price tag of many natural hair care products, but consumers appear willing to pay the price for a natural look."

Branch adds that her mother tried her best but like many moms of biracial children, she didn't know how to style more textured hair.

"All we had was grease and water and a hot comb. But if there was any rain it would puff up," she says.

However, Branch notes that times are changing as the natural hair movement progresses. She believes that it's because a growing number of ethnic women in high-power positions are no longer afraid of being seen in photos or television "rocking their natural hair."

The businesswoman points to women like Viola Davis, Issa Rae, Taraji Henson and most recently Michelle Obama, who received praise from black women for wearing her natural hair in its kinky state while on a family vacation.

Branch adds that wearing curly hair with a kink, compared to an afro or braids, is a happy medium in the workplace for many women because "it's not being talked about or looked at as a freak."

"We wanted to see women with a tighter coil rock their natural hair," she says. "We restored esteem among women with African ancestry and their hair, particularly at work."

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