Entrepreneurship Starting and Operating a Small Business (4th Edition): Steve Mariotti and Caroline Glackin, Publisher: Pearson, ISBN: 9780133934458 Case Study- "Urban Decay: Finding an Entrepreneurial Opportunity" Page 30
Sandy Lerner cofounded Cisco Systems in 1984 with her former husband, Leonard Bosack. It be- came a world leader in sales of computer routers. When she was ousted from the company in 1990, Lerner had the time and financial resources to focus on charitable activities and other business opportunities. By 1995, she was ready to start another company that would fill a market void. Lerner believed that there was an opportunity in the beauty market for quality, nontraditional products. According to the Urban Decay Web site, “Our story opens 15 years ago, when pink, red and beige enslaved the prestige beauty market. Heaven forbid you wanted purple or green nails, because you’d either have to whip out a marker, or risk life and limb with that back alley drugstore junk.” Lerner had seen a Chanel polish that was a deep red color, nearly black, but found little else in high-end products that met the need she identified. Lerner’s business manager introduced her to a creative businesswoman and self-described makeup addict, Wende Zomnir, and the business began to take shape. “Over high tea, the two forged a pact that led to renegade nail polish mixing sessions in Wende’s Laguna Beach bungalow.” Urban Decay launched in 1996 with 12 nail enamels and 10 lipsticks. “Inspired by seedier facets of the urban landscape, they bore groundbreaking names like Roach, Smog, Rust, Oil Slick, and Acid Rain. The first magazine ad queried ‘Does Pink Make You Puke?,’ fueling the revolution as cosmetics industry executives scrambled to keep up.” Today, the company describes itself this way: “Urban Decay is beauty with an edge. It is feminine, dangerous and fun . . . appealing to anyone who relishes her individuality and dares to ex- press it.” Even after the ’90s grunge style faded, Urban Decay thrived. The company became a global organization; it is a popular full cosmetic line at major retailers such as Sephora, Macy’s, and Ulta and is found on the Internet through Beauty.com. Urban Decay is sold by retailers in the Middle East, the United Kingdom, Italy, Canada, France, Singapore, and Spain. After several transitions, it is currently owned by L’Oreal Cosmetics, and Zomnir continues to work at the company. Urban Decay notes factors contributing to its success: “And although UD fans around the Alamy world might approach our products in wildly different ways, we’ve noticed they share an independent spirit that unites them. Maybe this hunger for something unique explains the passionate support we’ve received over the years.” Clearly, Lerner and her cofounders saw opportunity in beauty.
QUESTIONS
1. What unmet needs of the consumer contributed to the success of Urban Decay?
2. Was founding Urban Decay an expected next step after leaving Cisco Systems for Sandy Lerner? Why or why not?
3. What characteristics made Urban Decay an opportunity rather than simply an idea? Which of the five roots of opportunity apply here?
4. Is there a future for Urban Decay? Assess what that future might look like.