Gwyneth Paltrow was recently profiled in the New York Times, and reading between the lines there seems to be some problems with her company, Goop. This is a brief Goop case study, analyzing the apparent issues at play and the options for a way forward.
First: say what you will about Goop’s product line and messaging, but I think Paltrow was very smart to build a brand outside of Hollywood considering the well-known agism that sidelines many talented female actresses. She also leveraged a personal interest and a blog she wrote as a young mom, which I thought was really cool and relevant to my own experience.
But 15 years later, is Goop a healthy business? I assumed it was, considering how powerful the brand is. I remember seeing video of a Goop store opening 5 or 6 years ago with hundreds of young women waiting to get it.
But several quotes from the New York Times profile stood out:
“She talked about her future in a manner that doesn’t seem to involve Goop. ”
“I think it would be nice to return my investors’ money, and I really want to do that. That’s important to me.”
“Goop declined to give The Times revenue or income figures and would not say if it is profitable.”
I suspect there are few things playing out with Goop:
- The company is probably losing money, or not making much.
- Investors are pressuring her to sell at a high multiple of their invested capital or go public so they can dump their holdings. The last investment in 2019 was for $53 million.
- Paltrow doesn’t like running a business and wants out, but can’t because she’s the face of the brand.
Goop probably haven’t received a high enough offer for an exit, and probably won’t because it’s not worth much as a business in its current state. And it can’t IPO until it has solid growth and promising income numbers to back it up. The recent trend in IPO land is for companies to wither away after opening, because they don’t have the numbers to support the IPO price and/or weren’t good businesses to take public.
Anyway. Next steps for Goop? I predict hiring a professional beauty industry CEO with Paltrow staying on as “brand ambassador” and/or figurehead board chair is in the cards.
This will likely mean cutting products and people, focusing on the core products and leveraging the brand in new ways, getting some meaningful growth indicators going, and then flipping or IPOing so the investors can get out.
I don’t have any special insights here, but this is a common playbook in the world of high-powered brands that plateau or hit a rough patch under the original founders.