Julep was flying high. Founded in 2007 as a physical retail concept, the Seattle startup quickly grew into a multi-channel online cosmetics brand, launching 300 new products each year. As e-commerce revenue tripled in 2013, top investors such as Andreessen Horowitz and Madrona Venture Group poured more than $50 million into the company. The startup even garnered praise from Oprah, who included a Julep product on her annual list of favorite things.

But the company’s circumstances changed dramatically in 2016 — initially, it seemed, for the better — when private equity giant Warburg Pincus came calling. The New York-based private equity firm paid a total of more than $120 million to acquire Julep and two other cosmetics brands, rolling them up into a new company called Glansaol. (GeekWire learned the previously unreported purchase price in the course of reporting this story.)

Two years later, Glansaol filed for Chapter 11 bankruptcy. Its assets sold for less than $18 million in a fire sale this month. Julep laid off more than 100 people, closed its parlors and shut down its Seattle headquarters.

So what happened? Court documents and interviews with former Julep employees, including Julep founder and former CEO Jane Park, reveal how one of Seattle’s top consumer startups quickly went from acquisition to bankruptcy to an unknown future in the hands of new owner AS Beauty, which sparked controversy earlier this month for abruptly shutting down Julep’s popular Maven subscription program.

Community and customers

There wasn’t a good place for women to connect with each other. Jane Park decided to build one.

The first-generation Korean immigrant and Yale Law graduate was director of new ventures at Starbucks in 2007 when she found inspiration to launch Julep. The nail parlors were designed to be a unique “third place” where women could hang out together and try new nail polish. It was different than the golf course, the sports bar, or even the day spas that required “spa voices” during a bridal shower Park hosted.

Julep soon began creating its own cosmetics, using feedback from customers at the parlors to inspire new product development. To grow the brand, it launched an e-commerce business and an online subscription box service that helped propel Julep to new heights.

“I haven’t thought about this for years, but that was insane,” Park told GeekWire in an interview this week. “No entrepreneur has a four-unit physical retail business and then adds a huge online business on top of that. Executionally, that should not have even been possible. I don’t even know how we did it.”

Julep was a pioneer in the online cosmetics industry and became one of the leading beauty brands with a full-stack business model fueled by online engagement and social media. It created innovative products, released never-before-seen colors, and used cleaner ingredients. The company sold inventory across a variety of channels, including at Sephora, Nordstrom, ULTA, and on QVC.

Community remained a core tenant of the company — with customers at the parlors, among the growing online fanbase, and inside Julep’s culture.

“I don’t think in all of my years of working with Fortune 50 companies and big brands that any company talked about the customer and to the customer as much as we did, from the very beginning,” said Park, who did her undergraduate studies at Princeton and worked at Boston Consulting Group.

I don’t think in all of my years of working with Fortune 50 companies and big brands that any company talked about the customer and to the customer as much as we did, from the very beginning.

Julep encountered some rough patches in recent years, receiving an “F” rating from the Better Business Bureau, laying off staff in 2015 and publicly blasting the Washington State Attorney General’s characterization of a settlement related to alleged deceptive business practices at the company.

Park was “reading the tea leaves” when Glansaol came along. She sensed less interest among venture capital firms for consumer products. The acquisition provided an opportunity for Julep to sustain growth while being able to control its own destiny.

“Glansaol seemed like a good hybrid of not being totally on your own but not being owned by Estée Lauder,” Park said, referencing the 73-year-old industry behemoth.

The acquired companies — Julep, Laura Geller, and Clark’s Botanicals — also saw advantages in partnering with each other.

“For me, it was about connecting with other founders and using shared resources to get Clark’s to the next level,” said Francesco Clark, founder and CEO of Clark’s Botanicals.

But not long after the sale to Glansaol, Park stepped away from Julep’s day-to-day operations.

“We just had different priorities,” the former CEO said.

Park’s absence caused a culture shift within Julep — and former employees say it wasn’t for the better. One described Park as the “heart and soul of the brand.” Key marketing and product executives later departed. Budget issues and other problems would follow.

A mismanaged ‘jewel’

Led by former Revlon CEO Alan Ennis, Glansaol — which means “pure life” in Irish — wanted to gobble up more prestige beauty brands across various segments, channels, and geographies. The ambitious plan was to create a portfolio of global beauty and personal care brands alongside high-growth competitors such as Glossier and Kylie Cosmetics.

“We are excited to support the acquisition of these three strong and growing brands with diversified demographics, and believe they will benefit from enhanced scale, marketing and distribution capabilities as part of the Glansaol platform,” Annette Rodriguez, managing director at Warburg Pincus, said in a statement when Glansaol launched.

But that diversification strategy ended up backfiring not long after the company was formed.

Glansaol invested heavily in a new consolidated back-end system that would integrate Julep, Laura Geller, and Clark’s Botanicals across a shared supply chain, senior management, administrative support, accounting, and other services. But due in part to their differences, that never came to fruition. Laura Geller targeted older consumers through wholesale retailers and broadcast TV, for example, while Julep catered to a younger generation online and at nail salons.

“Instead, the Company is saddled with a substantial legacy investment in a new ERP system, which was put into place ahead of cross-organizational efficiency initiatives and right-sizing functionality,” wrote Nancy Berardini, who replaced Ennis as Glansaol CEO in April 2018, in bankruptcy documents. “Accordingly, the costs savings attributed to synergies, which had been a pillar of the Debtors’ original business model, were never realized.”

Business performance also “significantly declined” due to macro retail market trends including the shift away from brick-and-mortar shopping and evolving consumer demographics, according to the documents. The decline in sales caused an oversupply of inventory, forcing Glansaol to destroy products or sell goods at steep markdowns, while also increasing warehouse costs and payments to third-party logistics providers. Bernardini noted a “reoccurring scenario” when product kit packages would fail to sell and need to be manually uncoupled.

Former Julep employees say the past year was clouded with slashed budgets that stalled or ended ongoing creative projects. Its customer service team also shrank.

Yet the business continued to hum along, posting revenue of $25 million in 2017 and $21.7 million in 2018, according to court filings.

In an interview with GeekWire in December, Berardini described Julep as “a jewel in our portfolio.” She said Julep more than tripled its retail sales in the past two years.

Sources say that a struggling Laura Geller business was largely responsible for Glanasol’s demise. Its CEO, Elana Drell Szyfer, left in 2017.

In June 2018, shortly after taking over as Glansaol CEO, Berardini “identified the need for a significant capital injection, and by the end of August I had met with ten different potential funding sources, who each signed confidentiality agreements, but ultimately declined the opportunity,” according to bankruptcy documents. Glansaol then initiated a sales process that included reaching out to more than 300 potential interested acquirers, but wasn’t able to land a deal.

You have two fantastic beauty assets that were mismanaged through its [previous] owner.

That led to the Chapter 11 bankruptcy sale, which wrapped up earlier this month. It’s unclear why Glansaol didn’t keep looking for potential buyers or investment.

Warburg Pincus declined to comment for this story. The New York City-based firm, which has invested more than $72 billion since 1966, has a number of healthcare and consumer investments but Glansaol was its first big move into the beauty industry.

“I believe that our unique long-term view of building the next great beauty company, is appealing to both brand owners and the capital markets,” Ennis said in a statement when Glansaol was formed.

In an interview with GeekWire earlier this month, AS Beauty co-founder Joey Shamah said his company, which employs about 50 people in New York City, plans to keep the Julep brand alive, but it’s unclear what other changes will be made in the future. He said one of the biggest pain points for Julep was not having a “seasoned sales team to really get it out to the market and get consumers access to it.”

“Continuing to put a strong sales team behind it and getting it into more points of distribution with a clarifying message of what the brand stands for will enable it to thrive,” Shamah said.

Shamah and his father previously co-founded e.l.f. Cosmetics, which was acquired by TPG Growth in 2014 and on Tuesday announced the closure of all 22 of its physical stores. They teamed up with the Azrak family, which previously ran a pajama business, to start AS Beauty.

AS Beauty sold Clark’s Botanicals back to its owners. It will operate and manage Julep and Laura Geller.

“You have two fantastic beauty assets that were mismanaged through its [previous] owner,” Shamah said. “We have a track record of proven success in operating businesses and brands in beauty and other spaces. We look forward to bringing that expertise to run the Julep and Laura Geller brands.”

‘Hold onto your sense of gratitude’

Park addressed Julep employees two weeks ago, just before the office closed for good. She encouraged them to not let recent events take away from what they achieved.

“It’s really important to hold onto your sense of gratitude about the amazing time we had together,” she told employees.

For now, Park is gearing up to launch a new initiative called “Check First,” which encourages women to ask tough questions about women’s equality. She’s also working on a book about entrepreneurship.

Park encouraged other founders to establish their company values and mission from day one.

“The gift that I had when I ran Julep up on my own was that I got to set the culture for the employees and the customers,” she said. “That was something that was really important to me and that’s the thing I’m proudest of, frankly.”

Park this week posted a lengthy letter to “Beloved Mavens” on her Instagram, thanking customers for “all your engagement over the years that we built Julep together.” She expressed disappointment with the Maven program shutdown, as well as the closure of the Seattle-area parlors and headquarters.

“What I have learned through this experience is that while we don’t ever get to choose the hand we are dealt, we do get to choose how we play these hands,” Park wrote. “So I choose to play this unexpected hand with gratitude. I choose to be grateful for learning from you and with you. I am profoundly grateful that you believed in me and trusted me with your care. I feel humbled by the stories you have shared with me in our Maven Meetups and online.

She added, “I am inspired by all the ways you venture outside your comfort zone each day. Thank you for giving me that inspiration for the last ten years at Julep — and know that I will pay it forward in the years, relationships and endeavors ahead.”

For more about Park’s entrepreneurial story, listen to her recent discussion below with Shauna Swerland of Fuel Talent, whose new podcast, What Fuels You, features discussions with business leaders.