2016 INC. 5000 RANK: 1
HEADQUARTERS: Los Angeles, CA
YEAR FOUNDED: 2012
2015 REVENUE: $116.2 Million
3-YEAR GROWTH: 66,789%
Chris Davis's geek love is as broad as it is deep: He binges on Pokémon Go, Harry Potter, and Game of Thrones with equal abandon. "My brother and I weren't allowed to have a video-game console until I was 14, but then we played an obscene amount," he says. "My fandom has always run the gamut."
Growing up in Southern California, Davis knew he wanted to run a business--just not what it might be. (His kindergarten yearbook lists his dream job as CEO of Disney.) He cut his teeth in college as a door-to-door meat salesman before launching a dorm-moving company. After graduation, he bounced between startups, ultimately trying to sell energy snacks to hardcore gamers (one variety: Cashews of Chaos). "The idea was destined to fail," he says, "but it meant two years learning about retail, product development, and the consumer space."
For his next endeavor, Davis decided, he needed something that would get geeks excited but also keep them talking. Subscription boxes were hot at the time, and Davis wanted to mail customers a monthly mystery box of collectibles, and then invite them to an online forum. He took the concept to a 2012 hackathon in Los Angeles, where he met co-founder Matthew Arevalo. "We started working together full time two weeks later," says Davis. "After we launched the site in 2012, we had 220 people signed up to receive the first crate within 30 days."
Four years later, Loot Crate is a $116 million, Los Angeles-based business, winning the No. 1 slot on the 2016 Inc. 500 list of America's fastest-growing private companies. In its 130,000-square-foot warehouse, a team of 300 employees packs up to 70,000 boxes a day, shipping monthly to 650,000 subscribers in 35 countries. On a wave of Matrix puzzles, Han Solo figurines, and Walking Dead soaps, Loot Crate has built a rabid community of geeks and gamers, who open their crates and dish about the contents--and anything else related to fandom--on the company's social sites. Half a million fans watch Loot Crate's Facebook live videos every month, and user-generated video views on YouTube top more than two billion. "We want to be where people with like interests hang out," says Arevalo.
For about $20, subscribers get a monthly box of half a dozen items. Rather than organize the crates around a single movie or comic book, Loot Crate picks broad themes, so there's something for everyone. The "Time" crate, for instance, included a Back to the Future hoverboard replica, a Bill and Ted's Excellent Adventure T-shirt, and a Doctor Who spork. "I'm a broader fan, and that mindset works well on the curation side," says Davis. "We want to make it compelling, even if you're not a superfan of a particular franchise."
Davis won't disclose customer-retention rates, other than to claim that the average new subscriber ponies up for more than a year. And those who do lapse tend to stick around the Loot Crate universe. "They may churn out of the subscription, but they still watch videos or participate on threads," says Davis. "And that creates a virtuous cycle, where some resubscribe to our service." It helps that Loot Crate has started pushing against the obvious parameters of geekdom, launching subscriptions tailored specifically to pet products and anime and, this summer, announcing a partnership with WWE to move into wrestling-themed crates.
Pulling together the perfect crate is easier now that Loot Crate is well known to manufacturers; more than 80 percent of the items it sends are made exclusively for subscribers. But the first small wave of customers left Davis and Arevalo scrambling to fulfill orders--Davis made a shopping trip to the L.A. toy district and called in every personal favor he could from product companies. The co-founders begged family and friends to come pack boxes.
In those early days, the timing of when the crates hit the mail was less of an issue. Today, it's a complicated, synchronized dance. "Part of the fun and excitement is the mystery," says Arevalo, who oversees fan engagement. "But digital sharing means that the mystery of what's in the crate is hard to safeguard. So the tighter the delivery window can be, the better."
Bootstrapping the business and growing their subscriber base also pushed the co-founders to cut it close more than once--until a port strike in December 2014 threatened to cancel their Christmas shipments and thus destroy their reputation entirely. "We used to have a lead time of three months, while the industry standard is closer to 12," says Davis. "When we finally got everything, we had just three days of pulling all-nighters to get it in the mail, and we had to pay for priority shipping, which was an outrageous amount of money."
Though Loot Crate launched at a time when subscription boxes were going gangbusters, Davis knew that longevity would likely go to those companies that could stretch their customers' joy beyond one day a month of receiving mail. So he set out to extend the brand: Loot Crate launched an app, seeded fan communities across Snapchat and Reddit, and built out an in-house team of designers, developers, and writers to create custom content. The company releases an interactive game each month, includes a 24-page magazine in each crate, and produces scripted, multicamera videos with geeky plots. "We think of ourselves now as more of a content and experience platform," says Davis. "Whether it's print or mobile or digital, we want to deliver this great experience to fans. That's bigger than subscription boxes."