Out of the Kitchen and Into the Shopping Mall
The New York Times -- By TERRY PRISTIN
Published: October 25, 2006

Lisa Price was already a success by most measures before she met Steve Stoute, a marketing executive who teams up hip-hop stars like Jay-Z with brands like Reebok.

Only a few years after seeking personal bankruptcy protection, Ms. Price had parlayed a hobby of developing skin-care and hair products in her kitchen into a business called Carol?s Daughter, with $2 million in sales.

She had opened a store in the Fort Greene section of Brooklyn. She had told her inspirational story on ?The Oprah Winfrey Show.? She was about to publish a memoir, ?Success Never Smelled So Sweet.?

But by October 2003, when she was introduced to Mr. Stoute over lunch, Ms. Price had reached a plateau, she recalled recently. ?I knew that I?d done all that I could on my own,? she said. ?It was more important for the brand to become what it can become than for me to have control of it.?

Though he had no experience in cosmetics, Mr. Stoute became Ms. Price?s business partner and raised $10 million from a group of investors that included Jay-Z, the actors Jada Pinkett Smith and Will Smith and the record producer Tommy Mottola and his wife, the singer Thalia.

A year ago, Carol?s Daughter opened a sleek, eye-catching store in Harlem. This year, the brand began appearing in Sephora cosmetic stores. Prices range from $6 to $27.

And now, Carol?s Daughter has accomplished something that is rare for a homegrown business, and even more unusual for one started by an African-American entrepreneur. The company is about to open its first mall store, at Roosevelt Field in Garden City, N.Y. A second mall store will open next year at Newport Center in Jersey City. A Carol?s Daughter kiosk in the shape of a gazebo will be installed at Atlantic Terminal in Brooklyn this fall.

David Simon, the chief executive of the Simon Property Group, the giant shopping mall operator that owns Roosevelt Field and Newport Center, said Carol?s Daughter?s primary customers, African-American women, were underserved by malls.

?We thought they might have an opportunity to do good business in our centers,? he said. ?It?s not so much that this company is sponsored or owned by African-Americans. It?s the demographic they appeal to that is most important.?

But mall owners are generally reluctant to take chances, especially if a retailer does not have a long credit history. ?They are going to trust a Gap more than a start-up, even if the start-up is more exciting,? said Roger A. Lowenthal, a senior vice president at the Greenberg Group, a Hewlett, N.Y., brokerage company that represents Carol?s Daughter. ?They don?t know if the company will pay the rent on time or be around in 10 years, so there?s more of an element of risk.?

Unlike many start-ups, however, Carol?s Daughter had strong financial backing from the team that Mr. Stoute put together. ?It helped to give us some confidence, knowing they were going to stand behind the company,? Mr. Simon said.

It did not hurt that some of these backers were celebrities who were likely to bring traffic to the malls while promoting the Carol?s Daughter store. Mr. Stoute said the opening of the Roosevelt Field store would look like a movie premiere.

Mr. Stoute, who said he first learned about Carol?s Daughter from a friend, had no experience in the cosmetics business when he decided to form a partnership with Ms. Price. In their first meeting, he said, he was surprised to learn that she packaged her face and body butters in baby-food jars with hand-written labels not because she wanted her products to look homemade but rather because that was all she could afford.

?I?ve never been in the beauty business,? he said in a recent interview in his Times Square office. ?All I knew was this woman had a great story. And I knew as a businessman that she had an undervalued asset. It made no sense ? how could everybody know about this, and she had no money??

Mr. Stoute described his role in Carol?s Daughter as providing ?cash and access.? But in fact, the partnership with Mr. Stoute has transformed Ms. Price?s business in major ways. In 2004 he recruited Clarisa Wilson, a former general manager of Mizani, a division of L?Or?al USA that is geared to African-Americans, as company president.

He chose not to replicate the ?Afro-centric apothecary? look of the 750-square-foot Fort Greene store at the corner of South Elliott Place and DeKalb Avenue. Instead, Mr. Stoute wanted a more luxurious ? and more universal ? feel for the 1,100-square-foot Harlem store. ?You want everybody to feel that the store is for them,? he said.

Wedged between an H&R Block branch and a pawn shop, the light-filled store stands out on an as-yet- ungentrified stretch of 125th Street, between Fifth Avenue and Malcolm X Boulevard.

?We?re trying our best to provide a Madison Avenue mentality to 125th Street,? Mr. Stoute said. The overall design is modern and spare, but the store has some homey touches, including photographs of Ms. Price?s mother, Carol Frances Hutson, who died in 2003, and a kitchen meant to evoke the company?s origins.

These days, about 10 percent of Carol?s Daughter?s products are made in its Brooklyn warehouse, she said. The rest are farmed out to several manufacturers.

But although she is no longer working primarily out of her own kitchen, Ms. Price remains in charge of research and development. ?The formulas start with my recipe sheets,? she said.