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#LADYBOSS, #STARTUPSTORIES, Beauty, Interview, Shopping

Katia Beauchamp On How a Box Full Of Sample Sized Beauty Products Became A Billion Dollar Business

July 28, 2016

Subscriptions have definitely taken over the market, and with how convenient it has made our life, we are very happy about it. Together with her co-founder Hayley Barna, Katia Beauchamp has created Birchbox, a beauty editor approved box of samples delivered to your door every month. I mean, it’s basically like having a birthday every month. Who wouldn’t want a box full of beauty surprises to try 12 times a year? Read below to find our more about how this #LADYBOSS developed her addictive business.

What was the inspiration for Birchbox? How did you get started?

We started Birchbox while we were in business school. We had noticed there wasn’t a lot of activity happening in the beauty industry when it came to the internet, because beauty is so touch, try, and feel. So, we thought, how can we change that trajectory? The other inspiration was real life; my co-founder, Hayley, wasn’t the type of person to seek out beauty on her own, but she always had the best products because her best friend was a beauty editor. That crystallized the opportunity – we wanted to build a beauty company that could sell products online and serve as everyone’s beauty-editor best friend. We then developed the business model, which included personalized sampling for $10 a month, content to teach you about the products you received, and an e-commerce shop so you could purchase anything you really loved.

Who is the Birchbox customer and how are you able to identify the niche in market?

Our target customer is a woman we define as a “discerning multitasker”. She uses beauty in some way, shape or form, but has an average relationship with it – she’s not passionate about beauty. And she’s been underserved by the industry. Hayley and I represent this customer ourselves. We thought, why is beauty so hard? The majority of women don’t want to do the work of figuring it all out – we just want it to be as easy as possible to get the best things. So, we created a company for the majority of women, celebrating being your best self in an elevated, natural kind of way.

How has your business model changed since the beginning, how much of it focuses on the sample sizes in your boxes and how much of it is the full-sized products?

The biggest change is the growth of our e-commerce business, specifically sales of full-sized products. Our revenue split is 65% subscription and 35% full-sized product sales, which is the fastest-growing part of our company. Our goal is to become a new way to shop for beauty and to make it really fun and engaging; it’s not just about the discovery but being with the customers from the first touch all the way through the transaction. There have been other big changes such as international expansion, launching Birchbox Man, allowing customers to choose specific samples, and adapting our algorithm to personalize our boxes even further.

What was your experience like raising money? At what point did you decide to raise capital? And were there any specific markers that pointed out to you that there was a need to raise money?

We decided we were going to raise capital pretty early after we tested the concept. When we were in business school we launched a beta test to understand whether the model was viable or not. We invited 200 people to pay upfront for two months of Birchbox and had really great results. So, at that point we knew we wanted to raise some money but didn’t know if we were going to go the angel route or venture capitalist. We met with so many people and we decided to go venture capitalist, which was based on how big we thought the opportunity was. The more we realized this could be a massive company, we needed investors that could grow with us.

What do you think made Birchbox a good gamble for those investors?

A lot of it was timing – investors were looking at industries that had stagnated in terms of delivering a new customer experience. There wasn’t anyone else out there disrupting beauty retail online, and the market size and our unit economics were really strong. It wasn’t easy though until we had actual revenue and proof points to show that people would actually change their behavior and buy samples.

What are your day to day responsibilities as a founder of Birchbox?

That’s changed overtime. Hayley and I, plus our first and second and third employees did a lot of everything in the early days. I used to be the one, for several years, that was responsible for creating the relationships with beauty brands and negotiating deals. Today, my day-to-day is running and financing the business. I focus on what’s changing in the market and how to plan for that long term; continuing to make sure that our board is getting the right information that they need and to grow the board and add the right people to it. I’m more focused on longer term than I used to be.

“You have to take small steps and let the customer shape what product becomes. The sooner you can get a product to market and test it, the sooner you’ll know whether you have a product with purpose.”

What do you enjoy the most?

The people. From an internal perspective it’s so motivating to have such talented people of this caliber that really want to be here and want to work hard to build something together. It’s so inspiring. I also love rallying around our customer – the woman I spoke about earlier who has a more average relationship with beauty and has been an outsider in the category. We’re showing her that we respect her and are delivering the best experience in the most efficient way.

What are the marketing channels Birchbox is focusing on?

Mostly digital. Social is a really core place for us because it allows the customer to tell our story. We’ve also done some television and digital radio to get a wider reach.

You see everything as far as what’s out there in the beauty market, what’s your number one beauty product that you can’t live without?

Being able to get ready quickly is really important when you have so many other things to do, so dry shampoo, in my opinion, is a critical development for feminism. I don’t know what women did before it.

What tips would you give to young female entrepreneurs just starting out?

It’s important to test your idea and move from the business plan stage to actually getting real feedback from customers. To do this you need to understand and accept that, at first, it will not come close to your full vision. You have to take small steps and let the customer shape what product becomes. The sooner you can get a product to market and test it, the sooner you’ll know whether you have a product with purpose.

What were your early challenges with starting the company compared to the challenges you’re facing today?

Everything from getting brands to give us product and trust us as a marketing and retail partner to hiring and developing the team. Today, the biggest challenge is making sure we’re thinking long-term and that whatever we’re working on today is a step towards that long-term vision. Also, executing and investing in things at the right time and making sure we’re communicating effectively throughout the company so everyone is clear on the priorities.

You are extremely busy woman and a mom with twins, how do you make time for your family?

Becoming a mom made me more efficient, better at time-management and a better delegator. Before having kids it was hard to turn my brain off from work – it was always on my mind – but now I’m able to do that and it’s beneficial to the company and my life. I just try to think about what is really important and then make space for it.

What’s the company culture like? What’s it like to be a mom and work at Birchbox?

The company culture is really ambitious but also very supportive. There is a true appreciation here that new moms can be ambitious. The transition back to work is tough – it’s hard to come back those first few months and get readjusted as a working mom. Our employees understand and respect that needing more flexibility doesn’t mean they don’t have ambition.

How would you describe your leadership philosophy?

It has really changed as the company has needed it to change. The most important thing is that there is a willingness to put the company first and focus on making sure that the people working at Birchbox are getting the information and access they need to take the company to the next level. We’re the sum of our parts, so it’s important to make sure that everyone feels appreciated and empowered.

What are you looking for when you’re hiring people? Any tricks or questions?

How they problem-solve and their approach to challenges. People who have an optimistic perspective in their ability to solve problems. At the higher positions, we look for people who empower their team and give their team the support and access they need.

What are you excited about? What’s coming up on the horizon? Anything in the works you can share?

We are about to be six years old in September and anniversaries are always exciting. Plus the holidays are coming up before you know it so we’ve been working on that, and we also have several new brands and products launching in the months ahead. We’re really focused on continuing to evolve how we do things so we can surprise our customers and stay as relevant to them as possible.

Photos by Julia Elizabeth

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