Marla Malcolm BeckCEO and Founderbluemercury, inc.

HOW TO BUILD A BRAND, RAISE PRIVATE EQUITY, AND GET A RETURN

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ENTREPRENEURSHIP KEY FOR JOB GROWTH

“And so, my fellow Americans, ask not what your country can do for you - ask what you can do for your country.”

-President John F. Kennedy Inaugural Address

“Our research into the early years of business formation consistently shows how vital new firms are to our economy, and this data should give policy-makers and budding entrepreneurs alike great hope for how we can solve our current crisis — create and grow jobs through entrepreneurship.”

-The Kauffman Foundation

LUXURY COSMETICS AND SPA CHAIN

RETAIL STORES AND DIRECT BUSINESS

CULT FOLLOWING

THE START

New Innovative Marketing Drives Customer Connections-EMAIL

ExclusiveCollaboration

Studied Political Economy

UC Berkeley

1993 - 1995 McKinsey

Business Analyst

Class of 1998Harvard Business School

Harvard Kennedy School of Govt

Summer 1996Jakarta,

IndonesiaSmall Bus Dev

Summer 1997U.S.

Office Products

Life Changing Summer Job

• Worked for USOP Founder, HBS class of 1983

– Financier/Entrepreneur – “Anything is Possible”

– 1st public company, rolled up hundreds of office products companies

– To date has taken 10 companies public

• Met Managing Director from the Carlyle Group, USOP board member

• Met over 30 entrepreneurs who had founded and sold their companies

CAREER PATH

1998Tech Boom

1999Internet Frenzy

2000Bubble Bursts

September 1998 Ebay goes public June 30, 1999

59 IPOs for internet companies YTD including ivillage.com, priceline.com, barnesandnoble.com

March 10, 2000NASDAQ Peaksat 5132

January 11, 2000 AOL acquires Time Warner

1998 Graduate HBS

May 14, 1999Start bluemercury as internet company with $1MM in Seed Capital

September 1999 Acquire store, switch to clicks and bricks strategy

Summer 19993 e-commerce beauty sites launch Eve.com, beauty.com, gloss.com

October 20, 2000Eve.com shuts down after raising >$30 MM in capital

THE FOUNDING THE INTERNET CRAZE

CHANGING THE WAY COSMETICS ARE PURCHASED

BUSINESS MODEL

SephoraTrendy Superstore

bluemercuryFriendly, expert, honest service

Neiman Marcus/SaksHighest end luxury products

Format •Self-service•6-10,000 square feet

•Assisted open-sell •2,000 square feet

•Counter by counter•2-5,000 square feet

Staffing Model •Part-time •Full-time career driven product junkies

•By brand

Clientele •50% under age 25 •Average age 38•Average income 130K

•Affluent •Aspirational

Merchandising •Young and fun •Kit driven

•Technical skincare•Makeup artistry driven brands•Niche imports

•Well-known brands

Point of Difference •Selection •Expert advice •Spa services

•Exclusive luxury brands

2001

Feb 2001 Store

#3 opened

#4 Opened

#5 Opened

#6 ,

7, 8

Ope

ned

#10,

11,

12

Ope

ned

Raised $900K Angel Capital

Raised $1.6MM in Angel Capital

Equity RecapitalizationJune 14, 2006

2002 2003 2004 2005 2006

Key Success Factors1. Angel capital = strategic, operational and financial control2. Extremely low overhead3. Cash flow and EBITDA focus

STEADY STORE GROWTH

FAST PACED REVENUE GROWTH

2. Get in the game.

1. Experiment with your summer job.

3. “DROOM” - Jon Ledecky, HBS ’83

4. Do something you love. (Makes it easy to stick it out)

5. The first year is the hardest.

6. Avoid GBF mentality.

7. Angels are your friend.

8. Competition makes you stronger.

9. “Nothing’s good forever.” (Take $$$ off the table when you can) -Dick Darman, HBS ’67

10. You CAN have it all.

TOP 10 LESSONS FOR HARVARD MBAS

YOU CAN HAVE IT ALL!

2001

Raised $900K Angel Capital

Raised $1.6MM in Angel Capital

Equity RecapitalizationJune 14, 2006

2002 2003 2004 2005 2006

October 6, 2002Wedding

June 18, 2003Daughter Born

May 16, 2005Daughter Born

June 2007Son Born

Feb 2001 Store

#3 opened

#4 Opened

#5 Opened

#6 ,

7, 8

Ope

ned

#10,

11,

12

Opene

d

WHAT’S NEXT…

GO FOR IT

“No try. Only do or not do.”-YODA

THE WHOLE STORY