Barry and Marla Malcolm Beck had an "eye for disrupting" the beauty business with their luxury beauty retail chain, Bluemercury.
The pair had a plan to problem solve the beauty buying journey, Barry Beck told attendees at the forum in New York. Beck, an entrepreneur since his early days, had recently sold a business and was looking to start another one.
"When I was 10 years old, I was shoveling snow and had contracts with every house in the neighborhood," he said. Years later, "I had an urge for my next big opportunity, and with the advent of the Internet, I knew the world was poised for change."
He and Marla developed a plan for a luxury beauty e-commerce site, and raised $1 million from investors. Then they found out that there were two other competing sites in the works, and that those start-ups had reached raised $10 million. Then the Nasdaq crashed, venture capital dried up, and Bluemercury was left with $150,000 in the bank.
"As our Internet company continued to burn money…we realized our only way to achieve a return for our investors was to combine our online business with a store," Beck said. So, the couple bought a store called EFX in Georgetown and decided to venture into brick-and-mortar retail.
"Just when things were looking bright, we learned a company named Sephora…they were entering the U.S., and one of their first five stores was landing right next to us," Beck said.
That added element of competition forced Bluemercury to define and differentiate itself early, he noted. The business gradually began expanding, and after its third store became a "smashing success" it went out to raise more money.
Beck brought his best spreadsheets to the pitch, where one investor told him he was "boring him to death" with the details. But the group decided to invest, and Bluemercury "took as much money as we could get," haunted by the time the company had almost gone broke in its early days. The company took on more investors, the Invus Group, in 2006, and used the money to expand its retail business across the U.S. and develop its private label lines, Lune & Aster and M-61.
In 2015, Macy's acquired the business, but it is still run out of Georgetown, Beck said.
He provided eight brand-building lessons:
1: Get in the game. "It's never a bad time to start a company," Beck said. "You start, you fail and you pivot to the next strategy.
2: Solve a problem. "No problem, no solution, no company," Beck said. "Nobody will pay you to solve a non-problem."
3: DROOM (Don't Run Out of Money). "Raise money when you can get it, be scrappy and focus on keeping your costs low to drive revenue," Beck said.
4: The first year is the hardest. Going from zero to one is hard, but going to one to two is less hard, Beck noted. He also suggested assembling a team of trusted advisers.
5: Break the rules. Bluemercury, for example, hired a full-time staff for its stores. Those employees are now "basically human Googles for beauty products," Beck said.
6: Try to find a partner. Barry has Marla, but suggests that most great businesses have two people at the helm.
7: Nothing's great forever. Rebalancing the risk equation — including taking money off the table — should always be in play, Beck said.
8: You can't do it all, but you can have it all. "Your family will increase your likelihood of success and stabilize you," Beck said.
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