Janet Gurwitch Operating Partner, CastaneaFounder, Laura Mercier Cosmetics
Janet Gurwitch is an operating partner with Castanea, a Boston-based private equity firm, with focus on the beauty consumer space. Gurwitch is the founder and former CEO of Laura Mercier Cosmetics & Skincare, a global brand of high-end niche cosmetics. Gurwitch managed and oversaw Laura Mercier’s day-to-day business operations, strategy development, and retail negotiations. Gurwitch joined forces with famed makeup artist Laura Mercier in 1996 after realizing the imminent paradigm shift in the beauty industry that was propelling niche lines to the forefront of the cosmetics business. The combination of Gurwitch’s business savvy and foresight coupled with Mercier’s talent provided a solid foundation for a strong, growing business based on technique and a high-quality product. She sold Laura Mercier in 2008, and it’s now owned by Shiseido Corporation in Japan. Prior to founding Laura Mercier, Janet Gurwitch was the Executive Vice President of Neiman Marcus, where she established the merchandising strategy from 1992-1995. Today, Gurwitch is an investor in and on the boards of Drybar and Tatcha. She formerly served on the boards of Dollar Shave Club, Urban Decay Cosmetics, and First Aid Beauty. Gurwitch’s personal community involvement includes supporting the Menil Collection, Houston Symphony, Houston Grand Opera, and Hermann Park Conservancy. She is also an investor in and on the Board of Directors of the Houston Astros baseball team.
BY SARAH BROWN
Brand builder and investor Janet Gurwitch shares advice on choosing the right channel and the power of packaging.
Janet Gurwitch may well be the only beauty brand founder with a World Series ring. The Houston Astros board member and investor (the baseball team’s only female investor, she noted) started her career in retail. As executive vice president of Neiman Marcus in 1993, her goal was to be the company’s first female chief executive. “And I was one step away, but then I met Bobbi Brown who was doing such a great job at our store,” said Gurwitch.
Up until then, “beauty had seemed so formulaic — ‘here are the colours for spring,’” she recalled. “I loved that Bobbi had a different approach: ‘I want to make you look the best you can, and it’s not going to look like the cover of a magazine.’”
The beauty business, Gurwitch realised, was reaching a new inflection point.
“I gave up my chance to be the first woman CEO of Neiman Marcus — which Karen Katz became — and started my own company,” she said. “I knew nothing, really, about the beauty industry.” Because she didn’t think her name “had any ring to it,” she started interviewing makeup artists: accomplished pros who were known within the magazine and celebrity worlds, but not necessarily to the outside.
I gave up my chance to be the first woman CEO of Neiman Marcus and started my own company.
With French editorial star Laura Mercier on board and a licensing agreement in hand, she went to a lab, hired a chemist “and within a year and a half, the three of us built a brand.” The focus — spot on for late-90s minimalist glamour — was the idea of the flawless face. The brand launched with a blockbuster quartet — a primer (“Laura was using one professionally as an artist but they weren’t available to the average person”), foundation, “Secret Camouflage” concealer and translucent powder — which remain top-sellers two decades later.
In her fourth year in business, Gurwitch accepted investment from Neiman Marcus. “I needed more money. Today there’s all this private equity — but not in 1999, interested in beauty. And I lived in Houston, where everyone was looking for oil.” When Neiman Marcus sold to Texas Pacific Group and Warburg Pincus in 2005, Mercier was forced to sell as well (originally acquired by Alticor, the brand would be sold once more in 2016 to Shisiedo).
“We had gone from zero to $100 million by the time we sold,” said Gurwitch. “I’m so proud.”
These days, Gurwitch is focused on supporting other founders, bringing her brand-building experience and keen market intuition to the world of private equity.
“It’s so different today,” she reflected. “It cost me millions to start Laura Mercier. Now you can do it online and go to Sephora; it’s a totally different model. That’s why you have so many entrepreneurs, which is great.”
Best Decision: Keep Trusting Yourself — and Working
In addition to her Houston Astros, Gurwitch has privately invested in Sugarfina — the luxury candy company known for Dom Pérignon-laced gummy bears — but her best bet, thus far, has certainly been Dollar Shave Club.
We had gone from zero to $100 million by the time we sold … I’m so proud.
In 2014, “I heard [co-founder] Michael Dubin speak at a conference. I did not know of him or his story but after his talk I could not get to him fast enough,” recalled Gurwitch. “I said, ‘you’re only selling razor blades; I can help you do a brand around this.’ I became a personal investor and sat on the advisory board, and in 20 months he sold it to Unilever for one billion dollars.”
In addition to making personal investments, Gurwitch also serves as an operating partner with Massachusetts-based Castanea Partners. “I originally thought that after selling Laura Mercier and exiting in 2008, I would not work again; maybe I’d serve on boards,” said Gurwitch. “I took a year sabbatical and I found I love working. And I feel so fortunate that Castanea gave me a chance to be in private equity.”
Gurwitch and partner Steve Berg have looked at between 50 and 60 brands over the last ten years, pulling the trigger on four. They bought Urban Decay for around $40 million from the Falic Group in 2009, and sold it to L’Oréal for approximately $350 million three years later. They made significant minority investments in First Aid Beauty — which sold to P&G for an estimated $250 million this past July — as well as Drybar and Tatcha.
“All female founders,” she noted. “It’s not a pre-requisite, but it has been so exciting for me. I learn from each one.”
Gurwitch credits much of the Urban Decay success to the team of founder Wende Zomnir and chief executive Tim Warner (now at Drunk Elephant) that was already in place. “Oftentimes, you have a great product, but you need the underpinnings of finance and logistics,” she explained. During its incubation with Castanea, the brand saw a major lift from the Naked palette, created by Zomnir as a special edition for holiday and eventually developed as a franchise itself.
All female founders … It’s not a pre-requisite, but it has been so exciting for me. I learn from each one.
For Drybar, Gurwitch encouraged founder Alli Webb to expand into a product line — separate from the salon business — which is now generating upwards of $60 million for the company. Under the new leadership of LVMH and Shiseido veteran Jean-Marc Plisson, Japanese-inspired Tatcha — currently available stateside at just Sephora, QVC, and via the band’s website — is prepping for a big push into Asia.
Biggest Mistake: Flag Planting & Not Investing in Image
“On building Laura Mercier, the big mistake was flag-planting. I sold to too many stores and to too many countries to start,” Gurwitch said. “It’s such a drain on your team, and you can’t maximize your business anywhere. In the US, I should have chosen my channel and stuck with it. It’s key when you’re a new brand and everyone’s calling; you have to choose where you want to be the master and really build your business.”
Another misstep: underestimating the power of packaging. “The way we started Laura Mercier was with my own money, about $3.5 million, and it was all I had. I put everything into the product quality — we really wanted the best product. I undervalued how important a good logo and packaging would be. Originally, I used Laura’s signature, which was pretty, but was not who we were. We were clean, we were modern and we needed to have an identity that matched,” recalled Gurwitch.
“In our second year, I took a tremendous financial risk and redid it all. It didn’t have to be expensive, but it had to have a cool factor. When we did that, we thought for the first time that the packaging equaled the product,” she said. “I had to bring in a partner because of it and I’m so glad I did because no one remembers that original packaging. When you’re starting out you have such limited funds; you’ve got to know which levers to push.”