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A hedge fund manager's unexpected, second act in cosmetics

Vbeaute products
Source: Vbeaute
Vbeaute products

It took a TSA run-in gone wrong for former hedge fund manager Julie Macklowe to take the leap and join the cosmetics world after leaving the financial industry.

After spending more than a decade in finance, at companies like JPMorgan and a unit of Steve Cohen's SAC Capital Advisors, Macklowe left her own $250 million hedge fund, Macklowe Asset Management, which was backed by Millennium Management, to become an entrepreneur in 2010.

"I always had this idea that I wanted to do something behind the numbers," Macklowe said.

At first, she toyed with the idea of buying an existing company before deciding to launch her own luxury anti-aging skincare line, named "vbeaute." Her inspiration came after airport security confiscated her skincare products and the replacement items that she bought led her to break out in lumps and bumps.

(Read more: Skin deep, big margins: betting on beauty growth)

Vbeaute officially launched in 2011 at luxury department store retailer Bergdorf Goodman. It's currently sold in about 44 stores, including several Walgreens and Duane Reade locations. Due to a confidentiality agreement, vbeaute does not share annual sales figures.

But there's no denying the category's growth. Sales of high-end beauty products in the department stores and at retailers like LVMH's Sephora, have shown strong growth in recent years. Last year, sales rose 7.8 percent to $10.27 billion, according to market research firm NPD Group.

Strategy shift

In keeping with its vision as affordable luxury anti-aging skin care, vbeaute's slashed its prices in June—a move that Macklowe admits was "risky," but broadens her audience. Price cuts were across the board: the anti-age serum fell to $45 from $145 while the eye cream, its most popular item, dropped to $43 from $95.

The small company also left Bergdorf, where plenty of staff are on hand to help customers, for the rough and tumble world of Walgreens, where consumers help themselves while shopping. vbeaute also cut advertising costs.

"There's not been another prestige line that's taken the same products and cut the prices by two-thirds," she said. "A lot of people thought we were nuts to do it, but time will tell."

To drum up buzz for the line, Macklowe, who is a founding advisory board member for Fashion Week at Lincoln Center, scheduled several events starting Tuesday at Duane Reade stores in New York.

Harder than Wall Street

Macklowe said her former career's helped her understand the business side and raise money. So far, the company's raised between $5 million and $10 million from several investors, including those with private equity and finance backgrounds.

(Read more: Lingerie for the 1 percent)

Macklowe is one of a growing number of women to make the switch into beauty start-ups, including Birchbox's Katia Beauchamp and Vensette's Lauren Remington Platt.

Although Macklowe spent 12 years on Wall Street, known for its long hours and cut-throat atmosphere, the switch hasn't been a walk in the park.

"Being entrepreneur is harder than anything I ever did in finance, and finance was very hard," she said. "You have to really want to do it and be extremely committed to it—you have to learn to have a thick skin in either career."

—By CNBC's Katie Little. Follow her on Twitter @KatieLittle.

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