Gwyneth Paltrow is already famous as an Oscar-winning actor, lifestyle guru and cookbook author. Now, she can add makeup maven to the list.
In February, Paltrow signed on as creative director of Juice Beauty, an organic cosmetics maker. She also became a shareholder in the company, which in turn invested in Goop, the lifestyle website that Paltrow is trying to turn into a media and e-commerce empire. In addition to helping Juice develop their own products, she is currently collaborating with the company to develop a branded line of skin care to sell on her site.
One of Paltrow’s latest missions is to land Goop its first round of venture capital funding, a process that is now in its final stages. She already has a lot of the business lingo down pat, peppering her conversation with terms like “burn rate” and “term sheet.” Paltrow says she has big plans to grow Goop and expand into new verticals. She doesn’t rule out an eventual IPO, though she does say that possibility “seems a little far off.”
Paltrow and Juice Beauty CEO Karen Behnke sat down in the cosmetic company’s San Francisco-area offices to talk to Fortune about their collaboration. In a wide ranging conversation, Paltrow touched on everything from the importance of organics, to her daily routine at Goop, to the internet fracas over her failed experiment with trying to live on the $29 a week allotted to families on Food Stamps.
This transcript has been edited for length and clarity.
Fortune: You are the creative director now for Juice Beauty. What does that entail?
Paltrow: The company is kind of my dream in terms of alignment. I feel so invested not only financially, but also because I really believe in what Karen is doing for the sustainability of the planet for our kids. Karen, she’s really the leader in these practices. It’s very important as a woman and as a mother and as someone who preaches a non-toxic lifestyle. It’s a dream partnership.
What are you going to be doing? Are you going to be chiming in every once in a while or will you go so far as to come up with scientific formulas for the makeup?
Paltrow: We’ll leave the scientific formulas to the chemists. I’m very involved in everything from textures, consistencies, color, palette. With the makeup, I’ve been very involved in everything – not the chemical formulations – but how the formulations will look and feel. All the way to the packaging and branding.
What is the advantage of organic makeup versus all the rest?
Paltrow: The whole cosmetics industry is totally unregulated. They’re using chemicals that are proven to be carcinogenic, they’re endocrine disrupting – really not good for you. Obviously, we’re living in an age where we’re all becoming more and more aware of a links between what we’re ingesting and adverse effects on our health. Ten or fifteen years ago with organic food, people didn’t understand it, and now we have this mass movement.
People are really understanding now how absorbent an organ the skin is — how when we put toxic chemicals on our skin, that it’s not good for you. And I think in the next 20 years, Juice will be referenced as, hopefully, the first mass-market organic high-performance makeup and skin care.
Karen, what do you hope to get from the partnership?
Behnke: I was very interested in authenticity. We were lucky to be approached by a lot of AAA List celebrities. What was important to me wasn’t just an endorsement… but also [the celebrity] be authentically interested, and authentically living that lifestyle.
Gwyneth, you’ve endorsed other makeup in the past.
Paltrow: I still have a contract with Max Factor in the rest of the world. But soon this will be the only one.
What’s the thinking behind you cutting back on your endorsements, in general?
Paltrow: I’m really trying with my e-commerce business – trying to narrow it down and be very strategic about it and mindful of the alignments I make. Juice is our first foray into our own label product. I don’t look at this as an endorsement, because I care so much about the ethos of the company and the product that they’re making.
How did the investment work?
Behnke: It’s an overall investment by Gwyneth in stock of Juice Beauty, and Juice Beauty has made an overall investment in Goop.
Can you quantify the size of Juice Beauty?
Behnke: We’re now at $25 million (in annual revenue). Our goal is to hit $100 million in sales. We’re growing very quickly. What it’s saying to us is that people in Louisville, Kentucky are buying, not just people on the coasts. People are ready. With Gwyneth joining us, we’ll be escalating that growth, and we’ll also be quadrupling our [products] — some 75 new [products] — which is a lot for us.
In what way is Juice going to be participating with Goop?
Paltrow: I’m working with the chemists at Juice to come up with a really beautiful line of skin care. There are things that I’m looking for in my skin care regime, kind of my dream products. We’re in the testing phase really, and it will be called Goop by Juice Beauty. [Fortune note: Goop by Juice Beauty will be available in 2016.]
How did you fund Goop?
Paltrow: We took a seed – a friends and family round that Juice is now part of. And now, we’re just in the midst of our Series A.
You’re talking to venture capitalists?
Paltrow: We found our partner and we’re just negotiating the term sheet. [Fortune note: Paltrow says she can’t reveal which VC funds she’s working with, or how large a round of funding she’s secured.]
How involved are you with Goop? Are you literally there at the office every day?
Paltrow: Every day. Right now I’m inextricably linked to the company. The company needs me and my presence. Until it’s a brand that doesn’t need me – which I hope will happen in the next five years – it’s important that I’m there and committed. I haven’t filmed anything in a year because I want to properly do this.
I’m doing edits all the time with my buyer, and we have a new ad sales team, and they’re bringing in partnerships there. It’s just a lot. It sounds trite to say I’m involved. It’s my company and I work there everyday. It requires a lot of me, and nothing happens without me being involved except coding.
How far do you want to take the company? Initial public offering?
Paltrow: Obviously, when you take VC money, they want an exit at some point. I’m open to whatever’s best for the business. I would like to see tremendous growth, and I know they do too. The reason why I chose this partner is because they don’t want to force me into doing something that would dilute the authenticity. I’ve spent eight years building the trust of my audience. I can’t do anything to destroy it. I would just like it to really flourish. An IPO..seems a little far off.
If we checked in a couple of years, what would it look like? What new areas would you have expanded into?
Paltrow: I think all the areas you would expect. By the end of the year, we’re projected to be up to 53 employees. I accidentally established a company across all these different verticals, so I would imagine we’ll be building each one out in the most robust way possible.
As a typical startup, I assume Goop isn’t profitable?
Paltrow: We make money. It surprises me when we look at the balance sheet. Our revenue is good. We don’t lose money. Our burn rate is pretty high. We have to hire people all the time. We don’t have any debt at all. We just hired this incredible ad sales team. We need to take money in order to grow.
How about Juice Beauty?
Behnke: Positive EBITDA (a measure of profitability that excludes certain costs) since year four.
Gwenyth, you recently tried an experiment of living off of $29 a week, the equivalent you’d get in Food Stamps. You made it to day four. Any thoughts?
Paltrow: The point of accepting Mario’s challenge [Fortune note: celebrity chef Mario Batali who invited her to undertake challenge), was to highlight the fact that, in America, it’s almost impossible for low-income families to eat fresh, real food. For $29 you’re talking about super-processed food, really low in nutrition.
People love to get hyper-involved in the decisions that I make. The point was to bring awareness to the fact that we have a really long way to go in this country, and that even eating fresh food is a luxury, and it really shouldn’t be. I found it really incredibly challenging. I’m really glad that I understood what millions of American families are trying to do. Like what I said on the website, the fact that women aren’t paid what men are paid just makes the problem worse. Because if women were paid an equal wage – certainly the choice to feed your family more nutritious food would be available.
