September marks the one-year anniversary for Birchbox.By now, its story is well-documented: Hayley Barna and Katia Beauchamp came up with the idea for Birchbox in December 2009 while students at Harvard Business School. They created a Netflix-for-beauty company that, for $10/mo. or $110/yr., sends subscribers sample designer beauty products, like Kiehl’s and Nars. They were inspired by Mollie Chen, a former beauty editor and now its director of content.
Before launching, they secured a $1.4 million seed round led by Accel Partners and First Round Capital, and recently closed a $10.5 million Series A round of financing.
We caught up with Katia briefly — she told us about life at Harvard, what it was like to pitch investors, and the biggest game-changing moment for Birchbox:
You came up with the idea when the economy was a mess. Were several of your classmates looking at launching businesses?
Not necessarily. Hayley and I were still recruiting. She was interviewing for product management roles at ecommerce companies; I was interviewing with content companies in digital distribution.
Though there were more applicants for Harvard’s business plan competition in 2010 — 95 applicants versus 50 or 60 in 2009.
So how’d you get Birchbox up and running?
We both put in a small sum, a few thousand dollars. That gave us enough money to buy boxes and stuff. Then we won second place in the Harvard Business School competition, which gave us $10,000 to launch, and $10,000 for legal and accounting.
We initially ran a beta test in spring 2010, which did really well — we had 3,000 people waiting to sign up. We then closed in June, July and August, and re-launched in September, more prepared to scale.
And it wasn’t long before you got investors.
It seemed like a long road. We were combing through a community of investors. Initially we were only talking to angel investors and entrepreneurs. But we realised we were just spending lots of time in meetings — and that was taking away from executing the product. We decided to stop all those meetings.
Then, people started talking about us in the New York investor community. There was quick interest.
So First Round Capital and Accel Parnters found you?
It was a conversation at first. But then we had to stand up and do a video conference in early August.
How was that?
What were investors looking for in those meetings?
It was like drinking out of a firehose.They wanted to know that we knew what we were doing. We were creating something that didn’t exist. But they wanted to know that we knew how to execute on it. Our eyes were wide open. We had a firm hypothesis.
How did Harvard prepare you for this?
We took an entrepreneurship class, where we were exposed to startup case studies where you’re constantly evaluating quantitative and qualitative data. You have to make decisions without perfect information. Now that we’re in the real world, at the end of the day, you’ve got to pull the trigger.
We also spent a lot of time in the Rock centre [for Entrepreneurship]. We got amazing support from professors. They’d take a look at our business plans.
Any inspiration from a particular business plan?
We were inspired by other companies doing similar things — Netflix and Zappos. Our goal was to change the way that consumers shop online.
You grew really fast. Was there a game-changing moment?
We waited way too long to start hiring people. When you’re running a company, every dollar extends another day.
Around December of last year, our investors said, you’re doing a great job, but you really need to hire. They said [our model] was unsustainable, and that we literally needed to spend 50% of our time hiring. We just ended up extending our days. Now we have around 35 employees.
We tried to sign up for Birchbox a year ago after you launched, but there was a glitch in the system.
Back then we didn’t have in-house tech. We hired consultants last February, and Liz, now our chief technology officer, was one of those consultants. She joined full-time in April.
Do you plan to go back to Harvard this fall?
Yes — we’re talking to some classes.The Harvard Business School curriculum is now changing to focus more on entrepreneurship.