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As the company says, (oy: Birchbox: Leveraging the College Experience to Write a Business Plan and Launch aWinning Start-up + Web: www.birchbox.com + Facebook: Birchbox * Twitter: @birchbox Bruce R. Barringer, Oklahoma State University R. Duane Ireland, Texas A&M University Introduction Katie Beauchamp and Hayley Barna met on their first day at Harvard Business School. They volunteered to co-coordinate a spring holiday for themselves and 0 of their classmates. Through the experience they realized that they worked well together as a team, but at that time, they had no thought of co-founding a business. That all changed just over a year later, when Beauchamp and Barna launched Birchbox, a beauty samples sub- scription service that now has over 400,000 monthly subscribers. Birchbox Co-founders Hayley Barna and Katie Beauchamp The College Experience Beauchamp and Barna quickly became friends. They were also in the same MBA cohort and took many classes together. The idea for Birchbox emerged gradi ally. One class was particularly instrumental. It was a ass ‘on disruptive innovation taught by Harvard ete Clayton Christensen. The class challenged’ i to think of a big idea that’s an industry game Beauchamp and Barna's first idea concerned industry, which hadn't experienced significant for many years. A personal dynamic: 9 Scanned with CamScannerdr beauty products to ‘nem Pe Barna’s thoughts coalesced in the heir two-year MBA program. For the were thinking about starting a business have for buying beauty products without touch- ing and seeing them first, Beauchamp and Barna's idea was an online monthly subscription service that consisted of a small box of beauty product samples that qualified customers could try out. They would then offer full-sized versions of the samples on their website for sale. The major brands were already making sam- ‘ples that they handed out in stores. Beauchamp and Bama decided to call their business Birchbox, Last Semester at Harvard—A Testing Ground for Birchbox Rather than jet the clock run out on their college experi- ‘ence and then try to launch Birchbox, Beauchamp and Barna did everything they'could to leverage their college status, They negotiated with their professors so their final project in each class would be Birchbox. They also used their student status as a way of getting their foot in the door with suppliers and customers. For Birchbox to work, Beauchamp and Barna had to answer three fundamental questions. First, would beauty brands work With them, in regard to providing samples? Second, would women pay for curated boxes of samples? Anu third, would samples drive full-sized purchases? The only way, they figured, to answer these questions was to 90 TARR TT ght to the sources. Fist, they built a pr of the box in which they would send the mé bonlianlae t, so the customer ud learn more about them. They would then offer fll- zed versione ofthe products for sale. To get buy-in. they “cold-called” beauty and cosmetics companies. They never hid the fact that they were stil in college. Instead, they framed it as an advantage (they had a readymade ‘audience of their target market right in their classes). Incredibly, several of the companies, including Benefits, Nars, and Keih’s signed on. Second, they created a beta ‘version of their website and incented 200 subscribers to pay them $20 a month to test their concept. They used feedback from the users to improve the original Birchbox in several key areas. At this point, Beauchamp and Barna had more than an idea. They had suppliers, a preliminary list of potential customers, results, and data. ‘After completing these steps, Geauchamp and Barna entered Birchbox into the HBS business plan ‘competition. They won second place, which further bolstered their confidence. The competition provided tremendous exposure for box and for Beauchamp and Barna as nascent entrepreneurs. They met people ‘who became advisers and mentors. The competition was judged by venture capitalists, and several of thent offered the pair money. They passed on the offers, thinking it would be best to keep Birchbox lean. Birchbox officially launched in September 2010. At the outset, it remained lean and reflected a college stu- dent's lifestyle, After graduation, Beauchamp 2nd Barna moved Birchbox to Brooklyn to be closer to their suppli- ers. Their first office was unpretentious and had IKEA fur- niture. Beauchamp and Barna learned many lessons the hard, and sometimes fun, way. For example, when they made their first product video they tried to recruit volun- teers in Union Square (a popular area in Manhattan). They ‘soon found that it's impossible to get busy New Yorkers to volunteer, so they, along with a couple of early employ- ‘ees, dressed up and starred in the video themselves. By the end of 2010, Birchbox had 10,000 subscribers. Each monthly Birchbox for Women includes. a small collection of high-quality beauty, grooming, and lifestyle product samples, The product samples are similar to the ones shown here, (continued Scanned with CamScannerBirchbox Today Birchbox today is operating on all cylinders. The com- pany has 400,000 monthly subscribers. fts monthly subscription service for women, which costs $10 per month, is much the same as it was when the company originally launched, except that subscribers now fill out a beauty profile and several versions of the monthly box are sent out. In 2012, the company launched Birchbox Man, a $20 box filled with men’s grooming supplies and lifestyle products. It also started testing a limited edition “home box” for $58 a month that will include home dé- cor products and items such as Seasonal napkins and decorations. in September 2012, Birchbox acquired JolieBcx, a Paris-based competitor. The acquisition will allow Birchbox to more eftectively enter European markets. Along the way the company has grown to 140: employees and raised almost $12 million in funding. The company’s performance metrics are also inne with CamScanner