Marla Malcolm Beck CEO and Founder bluemercury, inc. HOW TO BUILD A BRAND, RAISE PRIVATE EQUITY, AND GET A RETURN

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- Exclusive Collaboration

Studied Political Economy UC Berkeley McKinsey Business Analyst Class of 1998 Harvard Business School Harvard Kennedy School of Govt Summer 1996 Jakarta, Indonesia Small Bus Dev Summer 1997 U.S. Office Products Life Changing Summer Job Worked for USOP Founder, HBS class of 1983 –Financier/Entrepreneur – “Anything is Possible” –1 st 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

1998 Tech Boom 1999 Internet Frenzy 2000 Bubble Bursts September 1998 Ebay goes public June 30, IPOs for internet companies YTD including ivillage.com, priceline.com, barnesandnoble.com March 10, 2000 NASDAQ Peaks at 5132 January 11, 2000 AOL acquires Time Warner 1998 Graduate HBS May 14, 1999 Start bluemercury as internet company with $1MM in Seed Capital September 1999 Acquire store, switch to clicks and bricks strategy Summer e-commerce beauty sites launch Eve.com, beauty.com, gloss.com October 20, 2000 Eve.com shuts down after raising >$30 MM in capital THE FOUNDING THE INTERNET CRAZE

CHANGING THE WAY COSMETICS ARE PURCHASED

BUSINESS MODEL Sephora Trendy Superstore bluemercury Friendly, expert, honest service Neiman Marcus/Saks Highest end luxury products FormatSelf-service 6-10,000 square feet Assisted open-sell 2,000 square feet Counter by counter 2-5,000 square feet Staffing ModelPart-timeFull-time career driven product junkies By brand Clientele50% under age 25Average age 38 Average income 130K Affluent Aspirational MerchandisingYoung and fun Kit driven Technical skincare Makeup artistry driven brands Niche imports Well-known brands Point of DifferenceSelectionExpert advice Spa services Exclusive luxury brands

2001 Feb 2001 Store #3 opened #4 Opened #5 Opened #6, 7, 8 Opened #10, 11, 12 Opened Raised $900K Angel Capital Raised $1.6MM in Angel Capital Equity Recapitalization June 14, Key Success Factors 1.Angel capital = strategic, operational and financial control 2.Extremely low overhead 3.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 ’ 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 Recapitalization June 14, October 6, 2002 Wedding June 18, 2003 Daughter Born May 16, 2005 Daughter Born June 2007 Son Born Feb 2001 Store #3 opened #4 Opened #5 Opened #6, 7, 8 Opened #10, 11, 12 Opened

WHAT’S NEXT…

GO FOR IT “No try. Only do or not do.” -YODA

THE WHOLE STORY