Stowaway Cosmetics

Julie Frederick brought deep brand management experience from roles at Ann Taylor and Equinox, plus agency work on major brands like Pepsi, Nike, and Gap. But a market insight changed everything: 75% of women don't finish the cosmetics they buy. Not because they expire—they literally abandon them. Julie realized that women carry 6-7 products daily but own 40+ cosmetics total, creating waste and wasted purse space. The thesis was simple: create prestige-quality makeup at half the size and half the price, designed for the mobile, on-the-go lifestyle women actually live.

In January 2014, Julie and her co-founder left their jobs to pursue the idea full-time. They spent six months on product development to get something "production ready," then fundraised. By August 2014, they'd closed a $1.5M seed round led by Gary Vaynerchuk's Vayner Capital and Metamorphic Ventures. Notably, Julie negotiated a priced equity round rather than a SAFE or convertible note—giving them stability and a clear valuation to work from. The round also included Brad Feld as an LP through a Jason Calcanis syndicate, though neither led. Julie's prior exit (Couture, an affiliate marketing network acquired by PopSugar in 2007) lent credibility and helped with valuation negotiations.

They launched in February 2015 with products designed like credit cards—their signature eyeshadow palette is comparable to the Urban Decay Naked Palette (which costs $60-200) but smaller, more portable, and $25. Operating DTC meant 80-90% gross margins compared to ~50% for traditional CPG companies that must leave room for retail partners.

Stowaway grew without paid acquisition initially, relying on word-of-mouth and brand fit with mobile-first women. By the time of this interview (18 months post-launch), they'd surpassed 100,000 units sold across all products, with lipstick being their breakthrough unit. They tested paid ads early—setting a CAC goal of $40-50 (payable on a $75 average order value on first purchase) and spent roughly $100K total on paid experiments. But in January of the interview timeline, they stopped paid acquisition entirely. Growth sustained itself, suggesting strong product-market fit and organic momentum.

The repeat purchase metrics became their north star. Their most mature cohort (month-one customers) achieved a 40% repeat purchase rate, with the average customer making three total purchases. Julie emphasized that women typically need 3-6 months to finish products, so they measured cohorts monthly but analyzed patterns in 90-day windows. The 40% repeat rate reflected their shift from pure growth (30% MoM) to sustainable growth (15-20% MoM) when market conditions shifted. They also stopped paid acquisition, proving that organic word-of-mouth could sustain momentum.

What didn't work: treating cosmetics as a volume play like incumbents do. Traditional brands launch new products with celebrity endorsements and rely on high CAC. Stowaway's bet was that women wanted actual relationships with brands, not endless new SKUs. They proved this by building a business on repeat customers and finished products—not vanity metrics like total customer count.

At 18 months, Stowaway had passed 100,000 units sold and was generating strong repeat revenue (40% of last month's revenue came from repeat customers). They'd built a lean operation using Google Sheets, Zapier, and Stripe to create a real-time business intelligence dashboard. Julie was 32, engaged, sleeping eight hours nightly—and had already de-prioritized vanity metrics in favor of lifetime value and cohort health. Gary Vaynerchuk sat on their three-person board alongside other investors. Julie's philosophy: women are unsatisfied with current solutions, and that insight alone, combined with DTC margins and repeat purchase models, could take on the $60B entrenched beauty industry.