The Businessmakers Radio Show

Entrepreneurial resources & interviews
presented by Comcast Business.

Janet Gurwitch of Laura Mercier Cosmetics & Skincare

The story behind Laura Mercier cosmetics.

Janet Gurwitch

Listen Now

This text will be replaced

Extras:

Share:

Summary:

In 1996 Janet Gurwitch was one step away from her goal of being CEO of Neiman Marcus when she left to start her own cosmetics company. To be the real thing, she attracted the “make up artist to the stars,” Laura Mercier, to be the face of her company. She systematically grew the brand, and in 2006, with her high-end cosmetics available in 600 stores in over 20 countries, she sold the company to Alticor Inc.

Full Interview text

Russ: This is The Business Makers show, heard here and online at thebusinessmakers.com, and it's featured guest time on The Business Makers, and I'm very pleased to have Janet Gurwitch, the co-founder and former CEO of luxury cosmetic and skin care company Laura Mercier. Janet, welcome to The Business Makers show.

Janet: Thank you, Russ.

Russ: Let's start by you telling us about the company, Laura Mercier.

Janet: Laura Mercier is a global cosmetics company that sells in the upscale niche of 25 countries. We sell cosmetics, color cosmetics, skin care, and bathroom body products.

Russ: From what I understand, the company started in 1996?

Janet: That's correct.

Russ: Isn't that kind of bold to break into that world in 1996? I mean-weren't there Estee Lauder and Channel, and all those guys sort of had that market wrapped up?

Janet: Unbelievably competitive marketplace, but I did see there was a niche and an opportunity, and I decided to take it.

Russ: Okay, where were you that you saw this niche?

Janet: At the time, I was executive vice president of Neiman Marcus. My background's been retail, and at Neiman Marcus you could see so many businesses beginning. Like you would look for the next Armani or the next Channel, and I could tell that there would be an opportunity for new names behind great brands in the millennium we're now in, and I had never had an entrepreneurial thought before that, and I had it, and I decided at the age of 40 to go for it.

Russ: Well, okay, now, being executive vice president at Neiman Marcus, that's kind of pretty high up the corporate ladder there, isn't it?

Janet: It's very high up the corporate ladder, and it was a very glamorous job. When Princess Diana gave a reception for ten top U.S. retailers at the Kensington Palace, I attended.

Russ: Whoa.

Janet: I was sat on the front row of the Channel and Armani shows. It's a very glamorous job, and I loved it, but I thought I wanted it to be my business, not Neiman Marcus and decided to take this chance.

Russ: Okay. Who did you report to as executive vice president at Neiman's?

Janet: To Burt Tansky, who is the CEO of Neiman Marcus.

Russ: Whoa. How long were you at Neiman's before you got that position?

Janet: I was at Foleys, actually, Foleys Department Store for 17 years, was senior vice president of Foleys, and then moved to Neiman's as executive vice president.

Russ: Okay. Before you decided to just dive out there and do your own thing were you thinking that the world was great, and your career was exactly what you wanted it to be?

Janet: To be honest with you, my goal was to be the first woman's CEO of Neiman Marcus.

Russ: Okay.

Janet: And for me to leave this idea, I was so confident in this idea, that I decided to leave, and Karen Katz, she is the first woman CEO of Neiman Marcus, but that was my goal. I was very happy until I-I just had such a drive to build a business.

Russ: So, this drive, did this happen over a two or three-year span, or was it just like all of a sudden?

Janet: Well, I'd say it'd be about two or three years. We had a brand named Bobby Brown which I don't know many of your female listeners will know about. And Bobby was doing what I was so impressed with. Her name was not well known like Estee Lauder or Channel, but every month I would notice how strong her business was in all the Neiman's across the country, and so my first idea actually was to buy Bobby Brown. She was doing about $20 million dollars, and I had some investors with me in Dallas, and we were going to buy Bobby Brown, only to find out that Leonard Lauder, CEO of Estee Lauder, heard what I was doing, and I always say, he took her to dinner and bought her by dessert, and so I thought. He'd never bought a company before, and I'd never wanted a company before, decided I was on the right track, and decided to do my own Bobby Brown.

Russ: Wow, so his interest and acquisition in this company that you were watching confirmed that you had a great idea, right?

Janet: It did. It gave me even more confidence, and I knew that the marketplace did not need another Bobby Brown, but I think as an entrepreneur you don't always have to be first. A quick second is not bad, and so we did it differently.

Russ: Okay. Just so our listeners know, Janet grew this company very successfully and sold it two or three years ago?

Janet: We sold it in August, 2006.

Russ: Okay. We've had quite a few entrepreneurs on this show talk about the trials and tribulations. Was Laura Mercier, was it a piece of cake the whole way, or did you have any challenges?

Janet: I often thought I could write a book, How Not To Start a Cosmetics Company, because we had so many challenges. I really would say I had three great challenges, and that is one, insufficient capital. Two, I undervalued the importance of packaging in a luxury cosmetics business.

Russ: Well, and I've got to say, that's real important, isn't it?

Janet: So important.

Russ: Okay.

Janet: And, and then three, I sold initially everyone who came to the door, so I sold Macy's and Neiman's at the same time, and in the upscale tier, that's a no-no.

Russ: Okay, wow. Well, I want to get into those a little bit in detail, but I have to ask you, when you were dealing with those three challenges, were you thinking, my God, what have I gotten myself into? I had that great job and look where I am now?

Janet: To be honest with you, I was always confident. I was nervous. I was scared, but I was always confident that we would make it. I was so certain of our product quality, the store relationships that we had, and I knew our timing was right.

Russ: Okay, I want to talk about those three challenges, and I also want to talk about there's this other person, Laura Mercier, which plays a key role in your formula?

Janet: Laura Mercier is a French-born artist, who when I met her was doing the makeup for all the covers of Vogue magazine. She was Madonna's main makeup artist, and Julia Roberts, as well, and later became Sarah Jessica-Parker's main makeup artist.

Russ: Wow, and you know her well, and your company carried her name, right?

Janet: That's right. I licensed the name, Laura Mercier, and Laura was an integral part and still is an important part, of the brand.

Russ: Well, we're going to be back with more with the founder of Laura Mercier, Janet Gurwitch-after this. You're listening to The Business Makers Show, heard here and online at thebusinessmakers.com.

[Aflac Commercial]

Russ: This is The Business Makers Show, heard here and online at thebusinessmakers.com, and continuing on with our guest this morning, Janet Gurwitch, the founder of Laura Mercier. Well, what a story that you were able to go and attract a top makeup artist, Laura Mercier, to be part of your company. And you said she was actually the makeup artist for Madonna, Julia Roberts, and Sarah Jessica Parker?

Janet: That's right. The way I found Laura Mercier-and I did not know her name-I called the beauty editors of Vogue magazine, Harpers Bazaar, and Allure magazine, and asked them, who were the world's top makeup artists? They were all men, with the exception of Laura and one other woman, and I truly pictured a woman to build my business around.

Russ: Okay.

Janet: So, I met Laura. She had this unbelievable portfolio because she was Madonna's main makeup artist, and at that time Madonna was doing lots of videos and Laura was getting tremendous experience. She was Julia Robert's artist, and really she was called the "artist to the stars."

Russ: Now, a makeup artist is different than somebody I would see if I was walking through Neiman's or Saks?

Janet: Totally different. Laura has an agent. The agent represents models, photographers, and makeup artists, and she goes on shoots, and she does like the Sports Illustrated cover, she's doing the makeup.

Russ: Wow, so, how did you even know that building a business with one of these makeup artists was going to be part of your formula?

Janet: Well, I wanted my business to be the real thing. In cosmetics a lot of it's marketing, and I wanted mine to be the real thing, so I wanted it built around someone who was very talented, who knew what would make the top quality makeup, and so I wanted an artist, someone who worked with cosmetics professionally.

Russ: Okay, when you say work with her, what all did you do? Did she even get involved in actual, the make up of your products?

Janet: She did. Laura and I went to a lab together. I hired a cosmetic chemist, and she cooked it up right there. We would actually build the formulas. We would test it on people in the lab. It started from scratch. We tested on humans.

Russ: Okay. Your arrangement with her-I mean-it was still your company, in her name. What sort of business arrangement was that?

Janet: It was a licensing agreement.

Russ: Okay.

Janet: I licensed the rights to Laura's name for perpetuity, and for that, she obviously got compensated well, and she had to do so many personal appearances a year, a tremendous amount of publicity for our company, and work in the lab and help us develop products.

Russ: Okay, and so you would often be there when she was doing the personal appearances, as well?

Janet: In the beginning, I was with her a great deal. She did about 30 appearances a year, and then as we grew internationally, she went internationally, and I was excited to be with her the day we opened in Heralds in London, and the day we opened in Easytown in Japan.

Russ: Okay, well, that is a real interesting strategy that apparently paid very well for the company?

Janet: That's right. It worked well for all of us.

Russ: Okay, so let's go back and address these three challenges that you had. The first one that you mentioned was capital, and that's a rather common challenge with startups, so what did you do about it?

Janet: Initially, I invested with my partner, Gary Kusen (sp). We put in our own money, and that is one way, obviously, some people can start, and we put in several million dollars to start the company. We thought it would be adequate, and by the end of the second year, we knew it was inadequate, and although we already had a winner. We knew the product was selling. The customer was responding, but inadequate capital.

Russ: Okay.

Janet: Tried to raise money from the banks, venture capitalists. I didn't know how to do it. I tried, and cosmetics was not like on the tip of anybody's tongue, so my first investors were the Stephens Group from Little Rock, Arkansas.

Russ: Interesting.

Janet: A billionaire family from Little Rock. They were terrific. They invested $2.5 million in our company, so they were my first partners.

Russ: Great.

Janet: And then two years later I realized I needed more money than that, and I went to Neiman Marcus group and asked if they would get me to Wall Street.

Russ: Wow.

Janet: Their response was, "We'll invest in you."

Russ: Wow, so you were asking for their help, and instead they said can we be your partner and invest in the company?

Janet: They did and I was shocked, actually because it would be weird. They were my customer, although I also sold Sacs and Nordstrom, and Bloomingdale's.

Russ: They're competitors.

Janet: They're competitors, and they of course, carried Channel, and Estee Lauder, and L'Oreal, so I didn't know how it was going to work, but they did insist on owning 51%, and I think that's a great challenge entrepreneurs have.

Russ: Right.

Janet: You want to own 100% or as much as you can, and sometimes you can't survive without the help of additional monies.

Russ: Absolutely, but it ultimately worked out very well for you, right?

Janet: It worked terrifically well. First of all, they gave me a great deal of autonomy which was very nice. I knew them. I trusted them, and if you go into any Neiman Marcus or Bergdorf Goodman, which they own, the real estate for Laura Mercier is outstanding, and that gave us great credibility worldwide.

Russ: Okay, so challenge number two, packaging. Even I know that packaging in that world is just enormously important, so you think that you didn't exactly do it right in the beginning?

Janet: I would say that was my single greatest mistake, was undervaluing the importance of packaging because I put all my money into going to the most impressive laboratories, and insuring that Laura got the top quality product. And I thought that would be adequate, because actually we were in a time that kind of anti-packaging had become in, in certain areas of cosmetics.

Russ: Anti packaging meaning you didn't want to over do it?

Janet: Not overdo it.

Russ: Okay.

Janet: You know-and people that are into the green movement and a lot of things. Some things were so over packaged and too glitzy, but I went too far, so I had to reverse it, and that was probably the biggest single decision I made as a young entrepreneur is that I was going to totally redo the packaging, redo the logo. I had to hire someone. Originally, I just used Laura Mercier's signature. None of that worked. It looked old school. She's from Europe. It looked old, so I hired someone in New York, a great designer, and we totally redid our packaging.

Russ: So, I assume you've had product out there in the process. What did you do with that?

Janet: Again, I think this is an amazing decision that we made, and that was we totally redid our packaging in May of 1998. Two years after we had launched our line, we had all of our staff go into the stores when-over a five-night period-when the stores closed, take out the old packaging, totally replace it with new packaging. It looked like a new line, and our business within three months had tripled.

Russ: Oh, so you just sort of ate what you had out there already?

Janet: That is true.

Russ: Did you have the option to repackage it, or is that just impossible?

Janet: Impossible, and so this is why I needed the Stephens Group to kick in. This is why initially I had to sell part of my company to make such an important decision.

Russ: Okay, but you had positive feedback within three months?

Janet: Well, immediately I had positive support for our change, but within three months our business was tripling.

Russ: Okay, we're going to be back with more with Janet, talking about selling the product and how the distribution could've been done better after this. This is The Business Makers Show, heard here and online at thebusinessmakers.com.

[Aflac Commercial]

Russ: This it The Business Makers Show, heard here and online at thebusinessmakers.com, and continuing on with Janet Gurwitch, the co-founder and former CEO of Laura Mercier, the luxury cosmetic company. So, we made it through two of your big challenges. I think that third one was, if you had it to do over again, you would've distributed and sold the product a little bit differently in the beginning?

Janet: Russ, I would've sold it more selectively. Initially, you have a new company, you sell whoever calls.

Russ: Absolutely.

Janet: And we sold Macy's and Neiman's, and really that's not the way to launch a luxury business, so we actually pulled it from Macys-

Russ: Wow.

Janet: -in the second year.

Russ: How did that go over with them?

Janet: Well, not well, but in the end, it was the right thing for the brand.

Russ: Okay, once you made that shift, things turned out better for you.

Janet: They turned out better, but internationally if a country called, we went, and we also called that flag planting. We decided that unless it was a country that could do really large business, it wasn't a good decision, and so we corrected that as well.

Russ: Okay, well I know in addition to these challenges, you had some highlights along the way too. Share some of those with us.

Janet: I would say one of the first highlights was when we went international. We opened in the UK, and we opened at Heralds, and that was very exciting.

Russ: Okay, were you there?

Janet: I was there with Laura Mercier. We cut a ribbon. It was a very exciting time, and to this day, Heralds is one of our largest stores.

Russ: Wow, cool.

Janet: Secondly, is when we launched LauraMercier.com on the web, which was December, 1998.

Russ: Wow, did you have high expectations or did it surprise you?

Janet: It surprised me how quickly it caught on. I was just learning myself the importance of doing business on the web, and today at Laura Mercier, in the top ten doors worldwide, three of the doors are dot coms, so it was very exciting, great learning experience. It was our way to relate to the ultimate customer.

Russ: Okay, now you said the top ten doors?

Janet: Yeah.

Russ: Is that like a cosmetic term or something?

Janet: It is a cosmetic term. A door would be, like in Houston we sell in three doors. Nordstrom's would be a door. Sacs would be a door, and Neiman's would be a door.

Russ: Okay, I also understand that you built a team and had a operation where you kept product in this part of the country. Is that right?

Janet: That's right. We're actually in Stafford, Texas, 50,000 square foot warehouse, a fabulous team that I've had from the beginning that helped build and continues to run Laura Mercier.

Russ: Okay, in fact, speaking of that, I think one of the highlights also of you building this company and watching it grow is actually selling it, which you did how long ago?

Janet: We sold in August 2006.

Russ: Okay, was a big time, big day for you?

Janet: It was a very exciting experience selling a company, and Neiman Marcus was my partner, and they had sold Neiman Marcus in January, 2006, so I have to credit them for the great timing in the economy. But we sold in August 2006 to ALTACOR, a privately based company from Grand Rapids, Michigan, and it was a great experience for the company and for me personally.

Russ: Okay, and the brand goes on to this day, correct?

Janet: The brand is very strong, opening now in three or four more countries, but one of the top brands in the upscale tier in the United States as well.

Russ: Okay, and you were with the acquirer for a year or two after the acquisition, right?

Janet: That's right, I did stay.

Russ: Okay, what do you think is in store for the future for Janet Gurwitch?

Janet: I'm in a transition right now where I do palaties and I take art history class, and I'm enjoying it, but I also would love to be on the board of directors of two major companies, and possibly an advisor to a private equity group.

Russ: Wow, so these are to specific companies?

Janet: That's true, yes.

Russ: Okay, and a private equity firm, a specific one?

Janet: Yes.

Russ: Can I take it that you don't want to tell us who that is, right?

Janet: Not today. Next interview.

Russ: Okay, cool, so before I let you go, got to ask you this. Say we have an aspiring entrepreneur out there that's totally fascinated by your story and really would like to have some advice, so what kind of advice would you give to somebody that's young that thinks they want to start their own company.

Janet: I think first you have to believe in yourself and in your idea. For example, myself, when I told people that I was going to start a cosmetics company based in Houston, everyone raised their eyebrows. You have to believe in yourself and your idea, and then you must persevere, persevere, persevere.

Russ: Okay, I think we've heard that before here on The Business Makers Show. Well, Janet, I really appreciate you giving us some time and sharing your story.

Janet: Thank you so much. It was fun.

Russ: You bet. We've been talking with Janet Gurwitch, the co-founder and former CEO of Laura Mercier, the luxury cosmetic company, and you're listening to The Business Makers Show, heard here and online at thebusinessmakers.com.

Comments and Opinions

blog comments powered by Disqus