What if everyone had a friend who was a beauty editor—someone to sort through the gazillion products and tell you not just what’s best, but what's best for you and how to use it?
That was the inspiration for Birchbox.com, a company that sends four to five deluxe, curated samples to members, who pay $10 per month and can, of course, buy full-size version of any products they like. Subscriptions and product sales will earn the company over $7 million in revenue this year.
"I was overwhelmed by the Sephora experience," says co-founder Hayley Barna, 27. "If you're not someone who pays attention to beauty, it's just overwhelming." Barna, by the way, really did have a pal who was a beauty editor–something her Harvard Business School friend and Birchbox co-founder, Katia Beauchamp, envied.
Birchbox launched in September 2010, with 660 members, recruited through word of mouth. An initial e-mail to 40 friends for a beta test in March 2010 generated a waiting list of some 3,000, Beauchamp says. Today, at less than a year old, Birchbox has approximately 45,000 members and 25 employees. Their first hire: Barna's beauty editor friend, who oversees Birchbox's content, which includes a beauty trends blog.
The company has some serious people betting on it. In October, a month after its launch, Birchbox closed a $1.4 million seed round. Investors included First Round and Accel Partners. And then there's the support of some of the beauty industry's biggest players, who hand over free samples to Birchbox in exchange for data about customer purchasing behavior.
How did the pair engineer that? Beauchamp, who had worked at Estee Lauder in college, realized that free samples are the beauty world's equivalent of a dish of pennies near the cash register: Nice, but not making the companies any money, because they don't translate into sales.
So in December 2009, when Barna and Beauchamp had just finished tossing around company ideas (one rejected idea: leggings for men), Beauchamp fired off a three-sentence e-mail to ten top beauty CEOs. She didn’t know them personally; she says one her favorite games is guessing e-mail addresses. Subject line: "Reimagining beauty retail online." She got immediate responses from the CEO of Gurwitch Products, which distributes Laura Mercier, and the CEO of Benefit Cosmetics. Within days, Benefit became the first company to sign on.
Scrounging samples for mock up boxes to present to potential partners, Barna and Beauchamp got the first of many signs their idea was a good one. "Hayley's sister-in-law reached out from under her sink and pulled out a gallon plastic bag filled with samples," says Beauchamp with a laugh. "It was a case in point: People are just throwing away samples. You can’t just give them samples. You have to give them context."