Julep’s new owner is already making changes, and customers aren’t happy.
It’s been a whirlwind past several months for Julep, once a high-flying Seattle-based online cosmetics startup that was acquired by Glansaol in 2016 and then sold off this month after the Warburg Pincus-backed company filed for Chapter 11 bankruptcy protection in December.
This past Friday, the company decided to shut down Julep’s popular beauty box subscription program called Maven and also nixed the value of “Jules,” which were rewards points that Julep customers could collect.
Customers expressed their frustration with the decision on social media. Those who had prepaid for boxes said they received store credit. Julep said it would offer 25 percent discounts and free shipping to existing Maven subscribers.
— Nadine (@limadean) February 15, 2019
So agree with you on this – no warning period to use up the Jules I've accrued. They're just gone, as of today, with no warning. I had 4,000 Jules! Shame on Julep for doing this to loyal customers.
— Jennifer Sloan (@JenSloan212) February 15, 2019
@JulepBeauty the sudden cancellation of Maven with no heads up and no opportunity to actually use our points is shady af. I’ve been part of the Maven program since 2013, promoted Julep endlessly on my social channels and now all of those rewards are gone. ??
— Jessie Barber (@minipennyblog) February 20, 2019
In an interview with GeekWire on Tuesday, Shamah said the Maven program was “very, very complicated” operationally, based on what he and his colleagues at AS Beauty examined.
“We very much want to cultivate the Maven subscribers and keep them loyal to the brand, and we’re going to figure out how to do that over time,” he said.
In an Instagram post on Julep’s account, AS Beauty addressed the complaints and said “we are also working through a mix of emotions regarding the end of our monthly Maven subscription.”
“Although we know it will take time to rebuild trust, we hope you know our Mavens are still at the heart of our decision-making process,” the caption reads. “We are working through our next steps and appreciate your feedback, patience, and understanding as we head into this uncharted territory, in search of finding our next adventure.”
This is not the only change Julep has gone through in recent weeks. As part of the bankruptcy agreement, Julep’s Seattle office shut down last week as more than 100 employees were laid off. AS Beauty retained a handful of Julep employees as “go forward consultants” to help with the transition, Shamah said.
Shamah said AS Beauty, which employs about 50 people, 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.
Founded in 2007 by Jane Park, a former Starbucks and Boston Consulting Group executive, Julep was a pioneer in the online cosmetics industry, selling lipstick and other beauty products on the internet as part of monthly subscription boxes, in addition to its brick-and-mortar parlor salons in the Seattle area. It raised more than $50 million from backers such as Azure Capital, Madrona Venture Group, Altimeter Capital, Maveron, Andreessen Horowitz, Zillow Group CEO Spencer Rascoff, Skullcandy founder Jeff Kearl, and entertainment celebrities such as Will Smith and Jay-Z.
But Julep encountered some rough patches in recent years, 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.
About two years ago, Julep was acquired by Glansaol, a newly-formed cosmetics company backed by Warburg Pincus that also swooped up Laura Geller and Clark’s Botanicals at the same time. The deals were part of a strategy to “operate an integrated portfolio of global beauty and personal care brands, diversified across segments, channels and geographies,” Glansaol said in December 2016.
Bankruptcy court documents reveal that Glansaol was “never able to achieve significant cost savings related to shared services among their brands.” Business performance also declined due to macro retail market trends including the shift away from brick-and-mortar shopping and evolving consumer demographics, according to the documents.
Nancy Bernardini, who took over as CEO of Glansaol in April 2018, called Julep “a jewel in our portfolio” during an interview with GeekWire in December. She said Julep had tripled retail sales in the past two years.
Park, meanwhile, has not been involved in the day-to-day business since Glansaol acquired her startup in 2016. We’ve reached out to Park for comment and will update this story when we hear back.
Shamah and his father previously co-founded e.l.f. Cosmetics, which was acquired by TPG Growth in 2014. They teamed up with the Azrak family, which previously ran a pajama business, to start AS Beauty.
Shamah said that AS Beauty sold Clark’s Botanicals back its founder Francesco Clark.
“You have two fantastic beauty assets that were mismanaged through its [previous] owner,” he 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.”
Other independent makeup brands such as Glossier and Kylie Cosmetics have seen explosive growth in recent years as traditional beauty companies are struggling to keep up.