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Of-the-month gift clubs have been popular for years, but it took two Harvard Biz School entrepreneurs to (1) make the concept cool and (2) to completely disrupt the online beauty industry in the process.
After brainstorming over how to connect the world of e-commerce with the very personal realm of beauty shopping, classmates Katia Beauchamp and Hayley Barna came up with Birchbox. The duo launched the $10 monthly subscription service of personalized makeup products in September of 2010 and Beauchamp and Barna debuted a men's version later April of 2012.
The company offers a full video and editorial component, and rolled out to three other countries in 2012: France, England and Spain. Birchbox also has an e-commerce portal, where they say 50 percent of subscribers buy full-sized beauty products after receiving their Birchbox samples.
Racked caught up with Beauchamp and Barna to learn about how they became obsessed with beauty products, the grueling hours that come with the start-up culture, and what it's like to build such a fast-growing company from the bottom up.
The Birchbox box, a monthly beauty subscription.
What was the inspiration behind Birchbox?
Katia: "Hayley and I started thinking about Birchbox when we were in business school. We thought we'd work together and brainstormed for ideas for a business plan. We saw a big opportunity for online beauty. We recognized that consumers were shifting their time and spending online but beauty was a hard category for people to shop online because they want to try products before they buy them. We thought this was a big idea, it's what every beauty company was trying to figure out."
Hayley: "We were inspired as real-life consumers. In a cluttered market, there were so many great products but how do you know which one is right for you? Before business school, I lived with a college friend who was a beauty editor and she gave me beauty products and explained how to use them. That's how I got into beauty category."
How did you get major makeup companies to hop on board?
Katia: "The first thing we realized we needed to do was to see whether they'd work with us. We didn't have a brand anyone would recognize and customers need to love the brand. I liked to do the cold email. Neither of us had beauty background but one really great thing going was that we were students so we'd send out a dozen emails to our favorite brands. The ask was really simple, because we just told them the idea and asked for advice. Then we recognized we had a good idea and we were timing it really well because [beauty companies] were thinking about content, commerce, and the beauty community online. It wasn't the absolute easiest thing but when the ask was simplified, we got yeses quickly and we built the website."
Beauchamp and Barna of Birchbox.
What were the challenges you faced when starting the company?
Hayley: "Well, starting a business is hard. We faced challenges every day. First, with the big vision we had, we had to scope our idea down to what's the thing to do, one foot in front of the other. We needed to raise money. That took a lot of time and effort. It was a new challenge and we were pitching something that was female-focused in a time when e-commerce businesses with female-orientation weren't so common. It wasn't something people invested in; it was scary for them. But that helped us find the right investors. And once we did close funding and launched a business, we started growing fast so another challenge was finding time to hire when your company's growing so big. We were working around the clock so we needed help but didn't have time to get it. After exhausting months, we spoke about how it wasn't sustainable and so we put it on the calendar and spent hours a day to build a team that is close to 250 people now."
People must have been skeptical about shopping online for beauty. Why were you so sure you could prove them wrong?
Hayley: "We really felt like online beauty shopping left a lot to be desired, beauty being a category that is an emotional connection and aesthetic process. The industry is so focused on launches, and if 200,000 new products launch every year, only some stores are going to have them and inherently you'll be missing some of the product."
Katia: "We knew we had to take the products into the comfort of their own home. It had to have a first-person account, which is why we focus on editorial, video, and articles."
The men's Birchbox, launched in 2012.
There are a lot of box subscriptions out there now: do you see that as flattery or competition?
Hayley: "I'm tempted to say neither. What you see is a lot of companies doing a simple, subscription box, like month clubs. We believe that what we're doing at Birchbox is different. Yes, it's a subscription but it's more than that. The whole point is to make it easy to shop for beauty online. We love those subscription box companies but we're about getting stuff that you want, delivered to you."
Why did you decide to launch a man's box? Were you surprised by its success?
Katia: "We tested it first. That's part of the [company] DNA, we are very big on testing things before putting resources towards them. We had calls from customers saying the men in their lives were obsessed with Birchbox and wanted something like it. We did small, limited-edition boxes during the holidays in 2011, trying to figure out if men or women would buy them. We had to build a lot of confidence that there'd be a customer and there were so many. It really is a wide demographic."
Another sample of Birchbox products.
Were there any products you were surprised did really well?
Hayley: "Probably fragrance. We were surprised because it's supposed to be so polarizing and personal."
What's next for the company?
Katia: "We expanded internationally in 2012. That acquisition took us to France, the UK and Spain so that's been an exciting part of the journey. That's a big part of our growth, we want to grow internationally and we know that the model works. We're also looking twist things and change. Of course, we are always trying to do more but we also want to to make things more exciting for the customer. And then there's the aspect of keeping elements exciting for the team."
What advice would you give to budding entrepreneurs that are nervous to take the plunge?
Katia: "One key piece of advice is the simple idea to test as quickly as possible. Hayley and I are the biggest nonbelievers in stealth-mode. We think you should see if the concept resonates with people. People have a lot of good ideas but the execution is what is challenging. From there, gather a viable vision. We went to the full extent of testing beta boxes but you can think of it as doing surveys or focus groups, as long as you're testing the idea."
· Birchbox [Official Site]
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