Birchbox: Katia Beauchamp

When Katia Beauchamp and Hayley Barna launched Birchbox from business school in 2010, they set out to disrupt the beauty industry by delivering monthly samples in a box. Even though people told them the idea would never work, Birchbox attracted hundreds of thousands of subscribers and enthusiastic buzz as a subscription pioneer. But the speedy success was overwhelming for Katia; over the years the company endured plenty of growing pains as it found its distinctive voice in the beauty industry. PLUS in our postscript "How You Built That," after noticing that many of her female friends hated buying cars, Athena Staton launched SheCar, a personalized online service for used car buyers. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

  Hey, it's Guy here. So before we start the show today, we are all following the news really closely, as I'm sure you are. And over the next few weeks and maybe beyond, our team will be working remotely to make sure everyone is as safe as possible. Meantime, bear with us as we work through a new reality for the time being, including figuring out new ways to do remote interviews. Now, some of the interviews you'll hear over the next few weeks were done long before anyone even heard of coronavirus, including this one today with Katya Bicham of Birchbox. And as we record new interviews in the days and weeks ahead, I'll be asking founders about how they're coping with everything that's happening right now, with the hope of hearing creative ideas that might help all of us make some sense of it. For now,

• 0:45Guy Raz?

  if you've decided to stay home, or if you have to, we will work extra hard to bring you great stories, not only on How I Built This, but on all of NPR's excellent podcasts, including Planet Money, Hidden Brain, Throughline, and Visibilia. And if you've got kids, check out our kids' science podcast, Wow in the World. Okay, now on to today's show.

• 1:09Speaker 01

  Every day, I was just constantly met with these logistical challenges, mostly. And also, I think, some resentment of people that we were just outsiders, thinking we were so smart.

• 1:20Guy Raz?

  Who was resentful?

• 1:21Speaker 01

  Some of the brands. I think we'd come in, you know, just so optimistic and so naive, basically saying, "We got this." And some people looked at us and were basically like, "You know nothing. This isn't going to work, you silly little girls."

• 1:42Guy Raz?

  From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 1:54Guy Raz?

  I'm Guy Raz, and on today's show, how Katya Bicham put some beauty samples into a box and made monthly subscriptions a multimillion-dollar industry with Birchbox.

• 2:13Guy Raz?

  So remember when it seemed like almost everything came in a subscription box? And I'm not just talking about Stitch Fix, or Dollar Shave Club, or Blue Apron. I'm talking about the pickles, or peanut butter and jelly, or the artisanally butchered meat that you can still get delivered to your door on a monthly basis. There is no item that is too weird or too niche. You can sign up for subscription magic kits, subscription air fresheners, subscription succulent plants, even subscription skulls. Yes, look it up. Anyway, for a time, investors threw millions of dollars at subscription boxes, kind of like how they're throwing money at podcasts right now. But eventually, of course, interest died off,

• 2:56Guy Raz?

  and so did dozens, if not hundreds, of subscription companies. But one that's still very much with us, and perhaps one of the best known, is Birchbox, which Katya Beauchamp and her partner Haley Barner started in business school. And their idea to put beauty samples, the ones most people throw away, into a subscription box was the first of its kind. And it basically took off right away. Within four years, Birchbox catapulted to a million subscribers. And at its height, the company was valued at nearly half a billion dollars. And you might think that would have been a time for high fives and celebration. But actually, behind the scenes, Katya Beauchamp was quietly freaking out.

• 3:39Guy Raz?

  Despite being told how successful she was, she just didn't feel it. In fact, she felt like the company could spin out of control at any minute. And as we get into her story, we'll find out what was behind all of that. But first, let's start in El Paso, Texas, where Katya grew up. Her mom was Mexican-American, and her dad was Greek. And when Katya was about four years old, her parents split up. And one of her earliest memories was flying back and forth between her dad in Europe and her mom in El Paso.

• 4:10Speaker 01

  I saw my dad in the summers, pretty much every summer since I was four. I would fly, he lived in Germany. That's where they split up and he stayed there. And I would fly there with my older brother. You know, you fly alone and they-

• 4:24Guy Raz?

  Yeah, they put like a ticket around your neck.

• 4:26Speaker 01

  Yeah, they put a ticket around your neck. And back in the day, I mean, I still remember they smoked on the airplanes that were transatlantic still.

• 4:32Guy Raz?

  Yeah.

• 4:32Speaker 01

  It was crazy. But we flew there every summer. And then we spent most of the time in Germany and then usually like a month with our grandparents and uncle in Greece, too.

• 4:42Guy Raz?

  And did you like those summers?

• 4:44Speaker 01

  I did almost always more in retrospect. Definitely was always anxious going because I really missed my mom and I really never wanted her to feel like alone, you know? I was so aware of her emotional state, even when I was really little. But when I was there, yes, I definitely saw how magical it was to have such a different reality in front of me. And that was just a very eye-opening and wonderful thing to get early on.

• 5:15Guy Raz?

  So what do you, what do you remember about being a kid in El Paso? Were you a pretty good student?

• 5:22Speaker 01

  Yes, I mean, I cared so much about getting straight A's and being a great student. It was very important to me that my mom and I agreed in sixth grade that I would just start signing my own report cards because it meant so much more to me than her, that I get straight A's. It just, she always described like just never having to push me to study or to try. So I really, really wanted to get the best grades. I wanted to have perfect attendance. I wanted to be the president of the clubs. I wanted to be the captain. I cared about all of that a lot.

• 5:52Guy Raz?

  What do you think drove that?

• 5:55Speaker 01

  I don't know. I've always felt just very ambitious, just inside wanting to achieve was always felt really important to me. Because, I mean, when you're very young, I think if you're attracted to success or you think that that matters to you, I assume it just means you want control, you know? You want to be the one setting the rules, not the one just kind of living someone else's reality.

• 6:20Guy Raz?

  When you were a kid, did you think, I can't wait to get out of El Paso? Or did you think, yeah, this is gonna be like, or I'm gonna, you know, make it happen?

• 6:29Speaker 01

  I never considered staying to the point that I didn't even have that monologue that was like, I can't wait to get out. I was like, obviously, I'm not gonna live here.

• 6:38Guy Raz?

  Wow. And you went to Vassar College, which is in upstate New York. And that was the first time you'd ever been on the East Coast.

• 6:44Speaker 01

  Yes.

• 6:45Guy Raz?

  Was it like disorienting? There was a...

• 6:48Speaker 01

  It's extremely disorienting going from the desert, where you can see everything, to the woods, where you can't see anything. You know, like, all the trees. I remember just feeling like, how do people get around? Because in El Paso, you can almost see where you're going from any point. You can see where the mountains are. You can always see your orientation in the world, almost, it felt like. And I remember just feeling just closed with all the trees and without being able to see the horizon every day. It definitely felt very different.

• 7:18Guy Raz?

  What did you think of your experience there? Did you like college?

• 7:21Speaker 01

  Yes, I loved college. I was intimidated kind of right away because I'd gone to public schools and I felt ill-equipped at first. You know, the first year, I was, I felt like I was just treading water. So I spent pretty much every waking hour at the library when I wasn't working or in class. But eventually, I started to get more comfortable and confident and feel like I could keep up enough.

• 7:47Guy Raz?

  I read that your first internship was at Estee Lauder, that you got this internship to work for this massive cosmetics company in, was that in New York?

• 7:56Speaker 01

  Actually, it was at Vassar. So they had this training program for their executives, where their top executives would go to a college for the summer. And they hired college students to work at. I think they gave two positions to Vassar students. And frankly, that was the reason I wanted it. I was, like I said, just so motivated to win things and ambitious about if something was coveted, then it must be great. And that's what drew me to it. I knew that it was gonna be highly competitive, very selective. And so I decided that I wanted to do that.

• 8:32Guy Raz?

  But you weren't necessarily interested in cosmetics?

• 8:35Speaker 01

  No, I would not say I was necessarily interested in cosmetics.

• 8:39Guy Raz?

  Did you think that you were gonna go and, like, what did you think you were gonna do? Were you thinking... I think I went into business or finance, or did you not really know?

• 8:49Speaker 01

  Well, I loved economics. I mean, economics has a lot about human behavior. And I found that to be really interesting, to think about business but through the eyes of actual behavior of people. And it felt practical. So I knew that I wasn't leaving college and going to have a helping hand. I didn't have anyone to support me. And it seemed smart for me to focus on getting a job where I could support myself.

• 9:16Guy Raz?

  So you graduate. And I guess your first job out of school is in finance at an investment bank in New York.

• 9:23Speaker 01

  Yes.

• 9:23Guy Raz?

  And then you do that for a few years and decide to go to business school in 2008, to Harvard Business School.

• 9:29Speaker 01

  Yeah.

• 9:30Guy Raz?

  And what did you think when you got there?

• 9:34Speaker 01

  Well, it was hard. I mean, it was hard to stay on top of everything and catch up with other people who already knew about what careers existed in the world, as well as careers they wanted. But I loved it immediately. I can say that.

• 9:48Guy Raz?

  Yeah. So I guess in the first year, they sort of have everyone take a class on entrepreneurship. It's a requirement, right?

• 9:55Speaker 01

  It's called the entrepreneurial manager.

• 9:58Guy Raz?

  So you take this class. And what did you think?

• 10:01Speaker 01

  I think that I had the opposite reaction of most people because the current chair of the department will tell you that it was the professor I had because I was talking to him about this. But he really gave a very honest account of entrepreneurship. So he'd read the cases. And I guess he would add the color around the struggles that these entrepreneurs were facing, whether they were financial struggles or actual struggles in their personal lives as a result of it. And he really painted a picture of, this is like heartbreak. This is the most challenging, the most roller coaster filled career you could ever have. And I just found myself leaning in thinking, I like found it.

• 10:44Speaker 01

  This is what I've been searching for is, nothing would be harder than this.

• 10:50Guy Raz?

  Wow. Basically, you come out of that thinking, that's what I want. I want that roller coaster ride. I want the thrill. I want the triumph and the heartbreak and the joy. I want it all.

• 11:01Speaker 01

  I just remember thinking, this is the way I'm going to find out what I'm capable of.

• 11:08Guy Raz?

  I mean, that's remarkable. I mean, where do you think that came from? Like, was there someone or something that you felt like you wanted to prove yourself to? Was it yourself?

• 11:17Speaker 01

  It felt like it was myself. I mean, I think it always felt like it was inside. I'd say there's probably like a little bit of me wanting to prove something to my dad that didn't, you know, wasn't around and wanting to prove that I was worth it and something he missed out on, I'm sure was a little bit of it. But I don't think I consciously was visiting that thought. It was much, it felt much more me. I've told myself the story that a lot of my ability to do this is because I wasn't ever encumbered by the expectations. You know, I never had the pressure of, of you must do this and this is what success looks like and you will only be loved when.

• 12:01Speaker 01

  I kind of was so free. You know, people would say all the time, like, why, you know, why aren't you afraid of starting? And I didn't even relate to the question. I couldn't relate, like, what was so scary about starting? I mean, the worst thing that happens is that you fail. And I didn't understand why that was scary. I mean, I was like, what a scary life to not know what you're capable of. That is terrifying.

• 12:25Guy Raz?

  You know, this is an important point because I do, I think that you can train and teach yourself to kind of be comfortable with failure. But there are some people who just, that fight or flight instinct, like, some people just don't have it when it comes to failure. And you probably just don't have it.

• 12:42Speaker 01

  I mean, I think I hated failure, too. It's just what you interpret failure as. You know, I think my conscious told me that I had already won this game. I had gotten into a great business school. And now getting to try to do something was a win. So I thought, like, what's next? How do you go from being interested in entrepreneurship to learning some of the hard skills?

• 13:05Guy Raz?

  Right. So I guess at Harvard Business School, you meet a woman named Haley Barna, who will eventually become your co-founder. Did you guys, like, connect right away?

• 13:16Speaker 01

  Totally. Really close friends within the first few days. We were in the same section and we had started doing things together. Like we had written a couple of papers together for classes that were, you know, intended to be projects. And then Thanksgiving of 2009, we were recognizing, you know, we're graduating in six months. We should learn how to write a business plan. And that's really where everything started is we decided, let's write a business plan together.

• 13:43Guy Raz?

  And what'd you come up with?

• 13:45Speaker 01

  So from there, we started talking about different ideas and we pretty quickly landed on, well, we landed on this question about why nobody was talking about disrupting the beauty industry. That was just on our minds, like kind of this glaring industry that was massive. And everybody seemed to be tackling a lot of the other industries and no one was touching beauty. And we got excited and we basically came up with the idea for Birchbox that didn't have a name within two days, the full model.

• 14:18Guy Raz?

  And how did the conversation even start around this idea?

• 14:22Speaker 01

  Well, we were very interested that it was a moment where female entrepreneurs were starting to start businesses for consumers that they could relate to. So it seemed like something was happening. People were talking about finally like women starting businesses for women or predominantly focused on a female consumer, a female buyer. And then that led us to, well, what aren't they talking about that we could relate to?

• 14:46Guy Raz?

  Was beauty something that you were particularly interested in?

• 14:49Speaker 01

  No, definitely not particularly interested in as a consumer. But I had become really interested in it from a business perspective, from that little window into it I had in my internship from Vassar at Estee Lauder. And we saw that basically no beauty was sold on the internet and it was almost 2010. It's like 2%. And that was almost like a jaw dropping moment to us, just this idea that an industry that was so big, such a huge and important industry, was not yet online.

• 15:23Speaker 01

  It was like a switch went off in us where we were so excited and motivated to think about why and how we could change that.

• 15:31Guy Raz?

  It's so interesting, and we've told a lot of these stories on the show, but there was a period, I think roughly like 2007 to 2010. Harvard Business School produced some incredibly successful women founders. Jennifer Hyman and Jennifer Fleiss were at the runway. Katrina Lake of Stitch Fix, Alexa Montobel, who dropped out, who started Learn Best. And I think in some of those other stories, there was a similar approach, like where can we be disruptive? And it sounds like in your case, it wasn't like you and Haley were sitting around saying, I love makeup. Makeup's amazing. I mean, maybe you liked it, or you were interested in cosmetics, but it was more like this is an opportunity.

• 16:09Speaker 01

  Yeah, it was actually almost that we related on the fact that we used it, and we didn't feel smart when we used it.

• 16:17Guy Raz?

  What do you mean?

• 16:18Speaker 01

  We felt like in order to buy beauty better, in order to invest in something, we would have to do a lot of work. We would have to spend so much time to become smart consumers in beauty, and that wasn't where our passion was, that wasn't where our interest was, so we weren't going to allocate the time. So we were just going to be stuck, consuming badly. That just seemed like a bad outcome.

• 16:39Guy Raz?

  Was it just an overwhelming amount of choice?

• 16:40Speaker 01

  Yes, there's so much choice. It's just never-ending aisles in a store, and actually impossible to even quantify on the internet. And also, you know, we didn't talk about this, but Haley, one of the parts of the story that was very real was I would go to her apartment all the time, and she had a very limited, but really lovely, selection of beauty products. Not very many, but everything she had, she was using. She didn't have this like counter or these shelves of unused product. And as we got to know each other, she explained to me when I asked her about it, that her best friend was a beauty editor at Conde Nast, and she would go into the beauty closet,

• 17:22Speaker 01

  hand choose things for Haley, and then show her how to use it. So when we came up with this idea, or when we identified the problem, we designed the experience to feel like we were your beauty editor best friend. That was what we were trying to create.

• 17:39Guy Raz?

  And this, I think we should remind people, this is early days. Like now, of course, you can go to a million websites and answer some questions and then you get a curated box or an article of clothing or something. But then it was still, this was still pretty new. And you guys were going to be the curators. You and Haley were going to be like the curators for your subscribers.

• 18:02Speaker 01

  Yes, but the idea was that we would curate kind of the infinite world of beauty, but then we would personalize it. So it wasn't about our tastes for everybody. It was, you know, our tastes would help set the parameters of how far we'd go into different brands. But then you, the individual, would get it based on your beauty profile and your needs.

• 18:23Guy Raz?

  Yeah. So just to get an understanding, was the business exactly what it became? Like, we will send out subscription boxes to people with samples of different cosmetics and then they can go and buy them from us if they want a larger size?

• 18:37Speaker 01

  Yes, it was exactly that. It was, how can we help people buy beauty better and online? So we realized that the issue was that there was so much to discover in beauty that it made most people opt out in general. So we realized we had to make the options that small and kind of doable at a time, but eventually get you in front of a fair amount of product for you to be really informed as a consumer. And that led us to thinking, okay, monthly, sending you four or five feels like doable. You will have time to try them all. And eventually, within a year, you know, you'll have 60 products or so.

• 19:16Guy Raz?

  So if you, if you go into Bloomingdale's or Macy's or Sephora and then you buy something like Lancome or Clinique or something, you buy it and you spend 100 bucks and they pop a couple of like smaller tubes in your bag. And that is the sample, but it's like a gift that you get.

• 19:34Speaker 01

  Right.

• 19:35Guy Raz?

  So you knew that that existed, that was out there. And you thought, what if instead of it being like this special gift, we, we gather all these samples, we curate a box, we send it to people, and then they're exposed to the samples and then... That will be the way to get them into the product, to be a consumer of that product.

• 19:54Speaker 01

  Yeah, and you missed an important layer to it, which is we sold it to them.

• 19:58Guy Raz?

  You would sell it to them, right? You wouldn't just give it to them.

• 20:00Speaker 01

  We'd sell it to them versus give it to them for free. And we were economics majors and nerds, and we realized that if people paid for it, the actual chance of them using it would go up. Because one of the things we revealed when we started talking to brands in the early days was that they estimated most samples were never even being opened.

• 20:19Guy Raz?

  So when you started to talk about this idea, was it like, did it all of a sudden just become an obsession for both of you? Were you guys just like, oh, my God, this is it?

• 20:29Speaker 01

  It was a nonstop conversation between us. We were super excited. I think I was a little bit more ready, like immediately, you know, naive and ready.

• 20:39Guy Raz?

  You were like, let's do this. Let's go form an LLC and do it.

• 20:43Speaker 01

  Yes, I was so naive. And I think because Haley was raised around entrepreneurship, she was more, OK, well, let's see how our beta test goes. And, you know, which helped me kind of slow down a little bit in the early days to see, like, did we actually have product market fit? But I was still sure.

• 21:03Guy Raz?

  You were sure that this was going to work?

• 21:05Speaker 01

  Yeah.

• 21:05Guy Raz?

  And what's the next step? Do you present it to any professors at Harvard Business School?

• 21:11Speaker 01

  I mean, we told everybody.

• 21:12Guy Raz?

  You told everybody. You did not keep this a secret. OK.

• 21:15Speaker 01

  But most people thought it was a bad idea.

• 21:18Guy Raz?

  Most people thought it was a bad idea. Because of why?

• 21:21Speaker 01

  Because they didn't think consumers would pay for samples, because it was such a dramatic change in behavior. Consumers were used to samples being free. This idea that people would pay for them, that they would give your credit card for rebilling. Most, I mean, a lot of the professors we spoke to were men, and they didn't obviously relate to how women were buying beauty products. So we tried to explain how much waste there was in purchasing beauty, that all of us had what we called like a product graveyard, and that most of us felt like that was a really inefficient use of our time and our money, and that we felt we would pay if we could bypass the waste and actually start investing in things that were Worth it.

• 22:04Guy Raz?

  Where were you finding out your information? Where were you doing your research? Because it sounds like you guys really dove into this, right? You were finding out statistics and numbers and data. Where were you going to get that, to get that info?

• 22:15Speaker 01

  We got some from the library, just from having access to industry reports. And then we did a few surveys, too. We're just asking people about their behavior.

• 22:25Guy Raz?

  To who? To fellow students?

• 22:26Speaker 01

  Yes. And then eventually, we started branching out to networks off of campus of people who didn't know us.

• 22:34Guy Raz?

  And what would you ask them?

• 22:36Speaker 01

  Well, we needed to price the product. And that was one of the first things that we tried to figure out, was the willingness to pay, since this was something that had never existed. So we described the product and we basically asked, you know, would you pay one, two, three, four, I think, to $30? And we really wanted to price it at about 10. So when we saw that the drop off was there, that kind of validated that price point.

• 22:59Guy Raz?

  So you were able to figure out that $10 was probably the right price point. In the meantime, were you, did you start to contact major cosmetics companies and say, hey, we're starting a business? Or did you say, we're students at Harvard Business School? Like, what was your approach?

• 23:17Speaker 01

  I reached out to brands and I, he said, dear so-and-so, I'm a student, HBS, and I'm starting a company that's going to change the beauty industry forever.

• 23:27Guy Raz?

  Wow. That's, that was, that was the email you sent?

• 23:31Speaker 01

  Yes. He said, I'm going to change the beauty industry forever. And do you have 10 minutes to hear the idea and to give me advice?

• 23:39Guy Raz?

  And who were you emailing? Or who were you cold pitching?

• 23:42Speaker 01

  I was emailing the CEOs and the presidents of brands I could think of and recognize.

• 23:48Guy Raz?

  And you got their email addresses from where?

• 23:51Speaker 01

  From just guessing, which I still do a lot.

• 23:55Speaker 01

  I tried like eight email addresses.

• 23:57Guy Raz?

  You know, people do not do this enough. I know. It's not that hard to figure out someone's email address.

• 24:01Speaker 01

  It's usually really straightforward. If you don't want to be found, we should make it harder, right?

• 24:04Guy Raz?

  All right. So you've figured out who the CEOs were or the top executives and you just started sending out emails. And did most of the people you emailed get back to you?

• 24:14Speaker 01

  Yes.

• 24:14Guy Raz?

  They did.

• 24:15Speaker 01

  Almost everybody got back quickly. It was over the holidays and I remember being shocked because I was getting emails back on like the 26th of December. And then I was asking my sister-in-law, well, now sister-in-law at the time, my fiance's sister to design logos. And we were, you know, pasting samples. And one of Haley's sister-in-law was a sample hoarder. So she had all these samples that we could use in our presentations. And we tried to make a really short pitch deck and we were in meeting rooms in January.

• 24:46Guy Raz?

  This is January of 2010.

• 24:48Speaker 01

  Yes. Yeah.

• 24:50Guy Raz?

  Your second year, second or final year of your MBA. And you have a name already. It's hard. You decide you're going to call it Birchbox.

• 24:56Speaker 01

  Mm-hmm.

• 24:56Guy Raz?

  By the way, how'd you come up with that name?

• 24:58Speaker 01

  So we basically had a criteria that it was gender neutral name that had beautiful imagery and sounded high-end. We ended up saying, okay, well, let's look at trees because trees have no gender. They could have some beautiful imagery associated with them. And we found birch really quickly and we loved it visually. It's really striking and beautiful. And then when we learned more about it, you might have seen its sheds, its skin, kind of exfoliates itself. It likes to grow with other birch trees.

• 25:30Guy Raz?

  Right.

• 25:30Speaker 01

  So it grows better together. We really loved it right away. And we landed on Birchbox as the first name. And then we said, well, we can't choose the first name. We have to make a list of names and we made a list of horrible other names. And then basically we got a response back from one of the brands we were trying to meet with. And they said, this is interesting. What's the name of your company? And Haley was out of town and unreachable in Nepal. And I... You know, looked to try to see if I could buy Birchbox.com. Obviously, course, already then, somebody had purchased it. So I'm negotiating the purchase of it, hoping Haley will still love the name. And I was able to buy it.

• 26:12Speaker 01

  And it was very stressful because I had so little money that spending money on it was scary.

• 26:18Guy Raz?

  How much did it cost you?

• 26:19Speaker 01

  I think it cost like $700. I can remember feeling shaky that I was putting $700 there. And when Haley landed, I was just like, I bought Birchbox.com. I hope you still love it, you know? And she's like, oh, it's the best name for sure.

• 26:33Guy Raz?

  So you secure the first meeting already in January. What company was it?

• 26:38Speaker 01

  Well, the first call was with Benefit Cosmetics, who's owned by LVMH. And I remember that call so vividly. I was like pacing around and it was so exhilarating and so exciting. And at the end of about what ended up being a 30-minute call, he was like, OK, I'm in.

• 26:55Guy Raz?

  He said, I'm in?

• 26:56Speaker 01

  Yes. It was for the test for 200 samples, but, you know, it wasn't lost on us that they were going to let us put their logo on our really janky website. And they were already a pretty big and important brand.

• 27:10Guy Raz?

  They were going to let you put their logo on to say, this is one of the companies, one of the brands we carry. So you're basically gathering samples for your first beta test, which is going to be 200 boxes you're sending out to who, by the way, who were your 200 people?

• 27:25Speaker 01

  So we emailed people that we knew and we basically said, we can't have you sign up because you know us and you'll skew the data, but will you forward this along to people? And it was just a short description and a link to a PayPal that would allow you to pay for two months $20. And it just described what people would get.

• 27:43Guy Raz?

  All right. So you get 200 people to sign up. Benefit's in. Anyone else?

• 27:49Speaker 01

  Yes. So because of Benefit, it was a lot easier to close other brands. We were able to work with Keels, who you might have heard of.

• 27:58Guy Raz?

  Sure.

• 27:59Speaker 01

  And Nars. But it's kind of like raising money. You need the first person to say yes to get someone to come with you. So for the most part, most brands thought this wouldn't work.

• 28:10Guy Raz?

  You had to educate them. You had to go to them and say, listen, this is actually, the way you're doing samples is all wrong. It's all backwards. You're just giving this out after people have bought your products. We are going to use this as an entry point, a way to introduce people to your products.

• 28:26Speaker 01

  Right. I mean, that is exactly what we said. They were all basically in a similar place as a lot of consumers had said, which is, no one's going to pay for samples, but you seem like we could trust you with our brand. And if we're wrong, we'd like to be there for that.

• 28:43Guy Raz?

  Did they give you the samples for free? Did they charge you?

• 28:46Speaker 01

  No, they gave us the samples. And then we would purchase the full size because it was, from the very beginning, it was the full model, which was sampling as the appetizer. And then you can purchase anything you sampled directly from us.

• 28:57Guy Raz?

  Yeah. So this is 2010, and you have to assemble 200 boxes. And is that what you and Haley do? Do you start to assemble the boxes by hand?

• 29:06Speaker 01

  Yeah. We found boxes online that would fit in the flat rate mailers, the ones that look like old school VHS size, almost.

• 29:13Guy Raz?

  And how many things were in that, in those first two boxes? Like five?

• 29:17Speaker 01

  Four things.

• 29:17Guy Raz?

  Four samples, okay.

• 29:18Speaker 01

  Yes. We would have one makeup, one hair, one skin, and then maybe a body product or a nail product.

• 29:24Guy Raz?

  Was it fairly inexpensive to do this? Because you're buying some cardboard boxes. You get the samples for free, and then you're paying US postage. So it doesn't sound like this was a, you guys had to pour a whole lot of money into this.

• 29:35Speaker 01

  No. So we did invest money, both of us, about $5,000 each.

• 29:41Guy Raz?

  And that was probably money that you had saved up from your finance job?

• 29:45Speaker 01

  It was my entire life savings.

• 29:47Guy Raz?

  Wow.

• 29:49Guy Raz?

  And this is all happening like in early spring 2010?

• 29:53Speaker 01

  Yes.

• 29:53Guy Raz?

  When you sent out the first boxes?

• 29:54Speaker 01

  Mm-hmm.

• 29:54Guy Raz?

  Okay. So you're still students. You guys are still like doing your exams and writing your papers, but also running this business.

• 30:01Speaker 01

  We're bad students at this point.

• 30:02Guy Raz?

  I see. Okay. Barely making it into class.

• 30:05Speaker 01

  We're in class and running out to take calls and yes.

• 30:09Guy Raz?

  And you do this beta and what do you find out?

• 30:14Speaker 01

  We gleaned that it was a smashing success. We had 200 people participate in the beta. And at that point, we amassed over 1,000 people on a waitlist.

• 30:23Guy Raz?

  And they found out about it just through word of mouth?

• 30:26Speaker 01

  Yes, just through word of mouth. And then the sample to full-size conversion was really high. It was like 25% of people were purchasing full-size.

• 30:34Guy Raz?

  25% of people were going to a website that the two of you had set up?

• 30:38Speaker 01

  Yes, and it was so, it just did not look secure.

• 30:41Guy Raz?

  Was it like a Squarespace or just something like that?

• 30:44Speaker 01

  No, that didn't exist. I mean, your best bet was WordPress, and that's what we had. And we had a lot of really great clip art type of stock images.

• 30:53Guy Raz?

  Yeah.

• 30:54Speaker 01

  And PayPal, that's all we took.

• 30:56Guy Raz?

  All right, so the first two months, the beta test goes great, and you're about to graduate. And I mean, what do you need to do now? Because I'm assuming you guys are going to graduate and launch this thing for real, but you probably need money to do that, right?

• 31:10Speaker 01

  Yes.

• 31:11Guy Raz?

  And did you have any money at that point?

• 31:13Speaker 01

  No, I had a lot of debt, so negative money.

• 31:16Guy Raz?

  Yeah, you just spent $60,000, $70,000 a year on an MBA.

• 31:22Speaker 01

  Oh, but it gets really better. I also was getting married that summer.

• 31:25Guy Raz?

  Oh, right, okay. So you are about to get married. You're graduating. You've got a massive amount of debt.

• 31:32Speaker 01

  Yeah.

• 31:33Guy Raz?

  From doing an MBA. And you want to start a business, and you've got no money to start the business.

• 31:37Speaker 01

  Yep.

• 31:38Guy Raz?

  Who did you even approach?

• 31:40Speaker 01

  Haley and I had decided that we didn't want venture capital money in the first round. We really wanted angel money. So we basically said no to venture capital when we were on campus.

• 31:52Guy Raz?

  And so were you going to people who were particularly interested in cosmetics and subscription models?

• 31:58Speaker 01

  That seems logical. But we weren't getting connected to people. And people were just saying, oh, I know somebody who likes to angel invest. And they would introduce us. And we took every single meeting.

• 32:11Guy Raz?

  How many meetings?

• 32:12Speaker 01

  It had to be over 60.

• 32:14Guy Raz?

  And like, describe what a meeting would be like. You'd show up and you would sort of describe this thing and the person would say, oh, that's so cool. You know, I generally, I generally invest in, you know, semiconductors.

• 32:26Speaker 01

  Yeah.

• 32:27Guy Raz?

  Yeah.

• 32:28Speaker 01

  Basically. It was, you're, you know, you found these conversations were. It was a lot of people saying, well, this would be the first time I did a consumer, non-software, or not, you know, technology play, but I'm interested. Basically, most people had a fair amount of critical feedback, but they would leave the door open.

• 32:46Guy Raz?

  Right.

• 32:47Speaker 01

  And after about a dozen times, we were pattern recognizing this and saying, OK, well, no one seems to close the door, but no one seems to be willing to lead around.

• 32:57Guy Raz?

  You were not walking out with checks?

• 32:58Speaker 01

  No, not even close to that. I mean, we were inexperienced, having a direct conversation and just saying, like, are you in, are you out, how much? You know, we were just dancing around this, like, potential interest.

• 33:12Guy Raz?

  And so you were probably going to these meetings thinking, we're graduates of HBS. Like, we've done a beta test. It's been wildly successful. We have a 25% conversion rate.

• 33:20Speaker 01

  Totally.

• 33:21Guy Raz?

  Like, you were probably, at the beginning, feeling that way. And then, I guess, after 12 or 15 meetings, what, where you've just-

• 33:27Speaker 01

  Crushed, so crushed. I mean, it was so upsetting. But I also just remember thinking, we must not be saying it right. Like, I just remember thinking, there's no way that we're wrong. So we're just not saying it right.

• 33:44Guy Raz?

  When we come back in just a moment, how Birchbox took off much more quickly than anyone expected, and why, to Katya, that felt less like a blessing and more like a curse. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

• 34:09Speaker 02

  Change is hard. Transitions can be even harder. But they're also an opportunity to explore and discover and reimagine things you thought you knew. I'm Manoush Zamirodi, the new host of NPR's TED Radio Hour. And with all this in mind, we've decided to make my entire first episode about reinvention. Subscribe or listen right now.

• 34:34Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2010, and Katya and Haley are having trouble getting angel investors to buy into their vision for Birchbox. They're walking away empty-handed from dozens of meetings. But when they decide to change their strategy and start pitching to venture capitalists, their luck changes practically overnight.

• 34:57Speaker 01

  When we moved to venture capitalists from angel investors, it was a lot less friction because, obviously, people were looking to deploy capital. And what we did was we started meeting with people and talking to them about our plans and when we would launch and what the next steps were. And we were on track, exceeding our targets for when we were going to launch. So we were showing that we were executing.

• 35:21Guy Raz?

  And by the way, how much money were you looking for?

• 35:23Speaker 01

  When we were looking at angels, we were looking at about half a million. And then, once we decided to go to venture capitalists, we were looking at about a million. And we ended up raising a million four. And then we basically started taking payments, I think about three weeks before the first box shipped, we just opened up a splash page. And with that, we had enough traction where I think it tipped the conversations over. And then we had a competitive process with a few options.

• 35:51Guy Raz?

  So you opened up a splash page and you went to your existing customer list?

• 35:55Speaker 01

  Yes, to that list that had participated, but also the people who were on a waitlist. We went back to them and basically said, we're here, we're launching.

• 36:05Guy Raz?

  And at this point, everybody got the same thing in those first few boxes?

• 36:09Speaker 01

  Mm-hmm. Everyone got the same thing.

• 36:11Guy Raz?

  And same process, you get pretty much the same companies are participating in Keels and Benefit and NARs and maybe a couple others?

• 36:19Speaker 01

  Actually, it was... I wish. It was so much harder than that. Basically, after the beta test, everybody said, this is interesting. You know, yes, like theoretically, we would participate in this. And when we were getting ready to launch, we got a lot of feedback from the big brands. That was basically, you know, you're really small and this is interesting, but come back to us when you're bigger, when you have 10,000 subscribers, because we really can't allocate our energy to this at this scale. And we ended up focusing on more niche brands, I guess, like slightly more independent. Some of them well-known-ish, but still independent, and some of them really new.

• 37:02Speaker 01

  But basically, we got so big so fast that when we went back a few months later and we said, okay, now we have thousands of subscribers, we're ready to go. Now they, I was met with basically, you're too big now and we can't just pull 200 samples out of a drawer. This takes plans. We have to do this year in advance or years in advance. So it was a lot of learning on the supply side. And I spent so much time both trying to learn the supply side, but also trying to change it.

• 37:29Guy Raz?

  But it sounds like all of a sudden, there's more and more people signing up. What was going on? Were you getting press coverage?

• 37:38Speaker 01

  We were getting press coverage, definitely. And then people started seeing boxes come to places of work and to apartment buildings. And that coupled with press was really the catalyst of growth. Until we also kind of just were lucky enough to be launching around the time where vlogging started on YouTube. And that had a huge impact on our business.

• 38:04Guy Raz?

  This is like before people said influencers now, but no, it would just randomly happen.

• 38:09Speaker 01

  They just signed up, yeah.

• 38:10Guy Raz?

  Wow.

• 38:11Speaker 01

  So what we started to understand was that these bloggers were looking for content. And this was, once a month, something that was content. So they were signing up themselves, paying for it. We really had no involvement.

• 38:26Guy Raz?

  And the subscriptions just continued to grow just organically?

• 38:29Speaker 01

  Yes.

• 38:30Guy Raz?

  Because I guess you didn't have a marketing budget, right?

• 38:32Speaker 01

  No, we didn't have even time to think about it. It was growing so fast, we could barely handle it.

• 38:38Guy Raz?

  And meantime, that $1.4 million was not, it wasn't going to last that long, right?

• 38:44Speaker 01

  My gosh, it was lasting us forever. So that was, that was kind of the problem was our investors kept saying like, you're not spending any money. You guys need to hire people. And we were making money. We were selling free samples. We were making money. We were funding ourselves. And as we started working more and more hours, it became clear we had to hire some people to work at Birchbox.

• 39:06Guy Raz?

  But meantime, you were spending, it sounds like you were spending most of your time quite literally begging and pleading with cosmetics companies to get you samples.

• 39:15Speaker 01

  I was never in the office. I was just constantly meeting after meeting. We had to put up a waitlist after the first year. And it was every day, I just remember feeling so stressed out about supply. I mean, I cried so much about supply. I fantasized about breaking into department stores and stealing all the samples that were such a waste. You know, I felt like I was banging my head against walls, trying to show people that people were, trying to show brands that customers were willing to pay for samples. Like, how could anyone not want to participate? I couldn't believe it. But I was just constantly met with these logistical challenges mostly. And also, I think some resentment of people

• 39:57Speaker 01

  that we were just outsiders, thinking we were so smart, you know?

• 40:02Guy Raz?

  Who was resentful?

• 40:03Speaker 01

  Some of the brands. I think we'd come in, you know, probably just so optimistic and so naive, basically saying, we got this. And people, some people looked at us and were basically like, you know nothing. You've never worked in this industry. I've been in this industry for decades. And this isn't going to work, you, like silly little girls. So there was some of that. And I think learning how to overcome that, learning how to build relationships, and learning how to just show the humility and also come in to learn and come in to help our partners feel smart and successful was a big part of how we were

• 40:44Speaker 01

  able to get the relationships we needed. And without those, there is no way we would have been able to scale, we would have been able to get through any of this.

• 40:56Guy Raz?

  And I have to assume you had to hire quickly. You guys had to really just ramp up as you're getting 100,000, and 200,000, and 300,000 subscribers.

• 41:06Speaker 01

  Yeah.

• 41:08Guy Raz?

  By this point, 2011, this is a personalized service. You would send out a questionnaire and then people would get products based on their answers. I think your first full year in business, you did like $5.5 million in revenue, which is super impressive for a first-year company. Did that, the success of all that attention and getting in all these subscribers, make it easier to raise money? Because you did raise, I think, like $10.5 million. You did a Series A in 2011.

• 41:35Speaker 01

  I did.

• 41:35Guy Raz?

  Was it just much, much easier?

• 41:37Speaker 01

  You can always raise money when you don't need it. And I had to learn that the hard way. Whenever you really don't need money, there it is. And that's the situation we were in.

• 41:48Guy Raz?

  And why didn't you need money then?

• 41:50Speaker 01

  Because we were able to sell fund. You know, we were, we were growing organically and we were scrappy. We were just, we didn't need it. And obviously, that made us a really attractive candidate to take some.

• 42:04Guy Raz?

  So why did you take the money?

• 42:06Speaker 01

  Because we were really ambitious. From the very beginning, we felt like we could potentially expand beyond beauty. We felt like we had to go beyond the United States. We already were thinking about vertically integrating and creating some of our own product. We wanted to scale really big. We were so sure that it was a really big opportunity. We weren't doing something niche. And we felt we could really empower a lot of consumers to feel smart, to spend their money when they knew they wanted to and to see an ROI.

• 42:39Guy Raz?

  Do you remember feeling just overwhelmed by how quickly it was growing?

• 42:45Speaker 01

  Definitely. It was awful.

• 42:50Guy Raz?

  Huh. Well, yeah, what do you, I mean, because some people would hear that and think, oh, my God, it was amazing. It was growing, it was incredible, but awful.

• 42:59Speaker 01

  It started to be scary. This thing that had never scared me started to feel scary. You know, there was just every month this chance that we wouldn't close enough product and we were going to let down customers or let down the employees now that we were now counting on us for paychecks or let down partners. It started to just feel really overwhelming. You know, this like, the world was saying that we were so good. And I felt these questions about whether there was really substance to the work I was doing. You know, I felt like I was a first time manager. You know, I did not know how to manage and develop people.

• 43:41Speaker 01

  And getting all of that positive attention and not feeling like I deserved it, frankly. Now, I mean, I obviously am reflecting on it. I think that just created a lot of cognitive dissonance for me.

• 43:58Guy Raz?

  So here's what I'm trying to understand. At this point, right, 2012, 13, third full year of business, I think you did like 40 million in revenue. You've got venture capital firms just knocking down your door to invest and you're growing like crazy, but you're still having this challenge with the beauty companies, right? That not all of them were on board? Or did it become, did it start to become easier?

• 44:26Speaker 01

  I'd say a few things happened. I mean, companies started to really believe in what we were doing, the beauty companies did, but competitors that had launched in the market really changed the dynamic because they started offering money for samples. And brands could not just get the samples paid for, but they could make money on the samples, something that we had never done.

• 44:49Guy Raz?

  Oh, you're saying that competitors started to pay the cosmetics companies for the samples?

• 44:55Speaker 01

  Exactly.

• 44:56Guy Raz?

  So it was a new revenue stream for the cosmetics companies?

• 44:59Speaker 01

  Yes, and we had never done that. And I mean, obviously, they'd asked and we would just say no. But all of a sudden, there was a market for samples. So now we had trust from brands, trust from the industry, but they had this alternative where they could start to monetize samples.

• 45:14Guy Raz?

  As the competitors started to purchase samples, did it force you guys to do the same?

• 45:20Speaker 01

  Yes, it did. Not in the exact same way because our business model is different, but it forced us to start spending some money on sampling.

• 45:29Guy Raz?

  I mean, I can't imagine how you were sleeping at night. This like, you guys were the first ones, but then you got all these competitors and your business is growing and you now have raised all this money. And like, were you just up in the middle of the night a lot?

• 45:46Speaker 01

  I mean, I was up late working and then I was tired. But also, like I said, this cognitive dissonance of just really wanting to be great and kind of being celebrated as being great, but not yet feeling like I was great. Still feeling like I had a lot to learn to even be in that category, that I had to deliver on being great as a first time manager and entrepreneur and operator.

• 46:12Guy Raz?

  Did you feel under pressure, either real or imagined, because you had raised money from venture capital firms? And this has happened. We've had conversations like this on the show in the past with other founders who have said a version of this. But I'm wondering, did you feel pressure to grow fast and grow at all costs?

• 46:33Speaker 01

  Absolutely. But I think we were beyond complicit in that. We drank the Kool-Aid of excitement in it. We're like, absolutely, of course we will do this. Of course, that is like the cup we drank from. And we were excited, we're on that track. And I really wanted to please our venture capitalists. It's like an interesting thing, again, to reflect on. The allure of like pleasing them and being a favorite and being liked was so there.

• 47:01Guy Raz?

  It's interesting because you were such a confident student. You know, like even in your original pitch letter, like, we are going to change this industry, which you had done at this point. And yet, you still have that part of you. Because there, and that's another thing, right? There are people who really, it is important for them to be liked. And there are other people who just don't care what other people think about them.

• 47:21Speaker 01

  I mean, I really care about the relationships I have with people.

• 47:26Guy Raz?

  Yeah.

• 47:27Speaker 01

  And as strange as it sounds, like your first investors, you spend a lot of time together. And it felt like real relationships, you know? And in real relationships where you, you know, have like warm feelings towards people, you care about how they perceive you. You want to deliver for them. It didn't feel just like a transactional business. It felt like people that had invested in me and who I owed everything to.

• 47:54Guy Raz?

  You, there's a famous book by Peter Thiel, Zero to One. And you guys went from zero to a $485 million valuation just so quickly, like within three years of your launch. When you think about that, that three-year period, and it's just such a quick growth and the pressure, if you were to do it again, would you sort of say, we're actually going to space this out? Let's get to $500 million in like 10 years or 20 years from now? Or do you think you would have still pursued that three-year trajectory?

• 48:30Speaker 01

  That's a really interesting question. I mean, I think at this point, I understand how theoretical valuations are. I think if it's possible to get a great one, you should get it, you know, of course.

• 48:43Guy Raz?

  Yeah.

• 48:43Speaker 01

  But I think the bigger learning I've had since is that when you are coming out of business school, you think that basically the idea is the thing you should be spending all your time on. And I'd say that what I really have come to appreciate and understand is that the strategy of the business is as valuable as the financing strategy of the business. Like, being strategic and thoughtful about how you finance growth is just as important. So I think, you know, considering who you raise capital from, how you finance it, what valuation means, short-term and long-term, and being just really thoughtful about that, as thoughtful as you'd be about

• 49:27Speaker 01

  The evolution of the product, it's so critical.

• 49:31Guy Raz?

  Yeah. So you're growing and you opened a store in New York and eventually you hit a million subscribers. And 2015, Haley decides to step down. She went into, I think, venture capital. She's now an investor. Why did she go?

• 49:55Speaker 01

  I think we had talked about it for a while before the decision was final and just ultimately, she decided that was what was best for her, that was what was best for the company. And it was after a series of long conversations about building this business to be a forever company.

• 50:14Guy Raz?

  Did you sense it was coming? Were you surprised?

• 50:17Speaker 01

  I sensed it was coming. It was just such a hard experience going through that kind of growth. It took a toll. I think we were just both under an insane amount of stress and pressure to deliver. Every aspect of it felt so personal. We were so in the press. We were so exposed. And it was, I think, just exhausting to be constantly scrutinized, copied, feeling like we were on the defense for some of it, while also having these crazy,

• 50:55Speaker 01

  ambitious plans internally to keep growing and evolving and innovating. And I think ultimately, what we both cared most about was the inevitability of the company and our ability to obviously be happy as individuals. And that's where the decision came from.

• 51:16Guy Raz?

  Were you taking care of yourself?

• 51:17Speaker 01

  No.

• 51:17Guy Raz?

  Were you able to exercise? Were you able to?

• 51:19Speaker 01

  No. I was really, really not doing anything for myself. I had just had my twins at that point. I was literally being sucked to dry. But I was just spending so much time getting used to becoming a mother and then transitioning to being a single founder. It was a lot.

• 51:42Guy Raz?

  Yeah. So here's what I'm wondering about. I think somebody listening to this who may not understand the ins and outs of how this business or any business runs would be wondering, which is you had a million subscribers, which is a huge success, right? And a lot of attention and you really pioneered the subscription box model. You had already at this point disrupted the beauty industry, but the business was having challenges. You had to lay people off in 2016 and figure out how to get to profitability. Why is that? Is that because the boxes alone were not going to be enough to drive revenue, that you needed people to actually buy the full-sized product through you guys?

• 52:27Speaker 01

  No, it wasn't that. I mean, the unit economics were strong, but the market changed. I think that it was a perfect storm of there being some formidable competition and not having access to capital that was limitless. All of a sudden, it was just this question around direct-to-consumer businesses and how they would survive amongst competitors like Amazon. And there was no longer capital flowing into e-commerce. So we had to take things into our own hands before it was late, and that caused us to look at people. And that was a really hard reality to face and a really dark time, for sure.

• 53:12Guy Raz?

  Yeah.

• 53:13Speaker 01

  It just felt like this failure. I just hated myself for letting those people down.

• 53:19Guy Raz?

  It's so interesting because there's so many personality types. And there's some people who just, you know, they're very rational about things in ways that other people may see things differently. And when it comes to firing people or letting people go or lay off, it's fine. It's just part of the process. And there are other people, and I identify with you on this. It would be excruciating for me to have to do that. I would... I would feel sick to my stomach, even though that's part of business.

• 53:49Speaker 01

  And also that there was a part of me that was even ashamed of feeling that way, that was feeling like I didn't have the chops then to survive if I couldn't handle making these hard decisions.

• 54:00Guy Raz?

  And do you feel like because you went through those things and you may go through them again, that you are better equipped now to handle those challenges?

• 54:09Speaker 01

  Oh, my gosh. I'm so much happier because I feel like I'm good at this now. Not that I'm the best, not that I don't have so much more to learn, but I feel like I understand what it means to build and how hard it is to just stay in the game and to keep getting up.

• 54:32Guy Raz?

  So you get through that rough year of 2016 where there were layoffs, but you actually had a pretty good holiday season. And I guess you became profitable in 2017. But that year, there were lots of reports, and you know what I'm going to ask you about, that you were looking to find a buyer, somebody to buy or acquire Birchbox. And you did not sell the company in 2017 or get acquired, but you did sell a part of it to one of your investors in 2018 to Viking Global. I think they put in like $15 million and now they have a majority ownership of the company. But I think there's a bigger pivot

• 55:14Guy Raz?

  or strategy here, I think, which is that in the first three or four years, you and Haley did this insane sprint, right? It was just crazy, unstoppable.

• 55:23Speaker 01

  Yeah.

• 55:24Guy Raz?

  And now it seems like you're running like a marathon because you want to make this a company for the long haul, right? And you have to sort of slow down. I mean, is that fair?

• 55:33Speaker 01

  Yeah. I mean, I'd say we felt in the early days that we were sprinting a marathon because we just had so much ambition and not enough experience to know how valuable it would be to have fewer priorities and be more potent on achieving them. But learning how to be able to dream big, but still think about it as this linear thing where you cross milestones and that kind of opens up the next step and the next thing versus trying to do everything at the same time or a lot of it at the same time is, I think, a really important lesson. It's really helped me just manage and think through how do you create something that is operable?

• 56:15Guy Raz?

  And sustainable.

• 56:16Speaker 01

  And sustainable, yes. We very explicitly have told our customers now on numerous occasions this year that we are not a beauty box. We are not trying to sell samples to people. We're really trying to change your relationship with beauty and help you take the time you have and maximize that time. And I've been so, I don't know how to say it the right way, but proud of just people embracing that because there was a long time when I was afraid that people just wanted samples in a box.

• 56:46Guy Raz?

  You guys start a partnership with Walgreens where you are in Walgreens stores and this is cool. I mean, this is like, we've seen this with other brands, like Burt's Bees is in, you know, CBS and different brands have their like, display areas. So far, what do you think? I mean, are people, I mean, obviously great for brand awareness, right?

• 57:09Speaker 01

  Yes.

• 57:09Guy Raz?

  And what are you learning from that so far?

• 57:12Speaker 01

  I mean, so far, what we really wanted to know was whether customers would be excited to see us there. And so far, we're very excited by the early results and early signs that there's potential to really scale in-person selling subscriptions because in-person, someone can actually tell you what this is versus the two seconds we have to capture your attention on the internet.

• 57:38Guy Raz?

  I read that when you signed your agreement with Walgreens to feature your products there, you were on bedrest for 100 days because of a complicated pregnancy and you were running the company from your hospital bed.

• 57:53Speaker 01

  Yeah. That whole experience really shaped my entire outlook on all of this, I'd say. In addition to the hard things that happened, then being in the hospital away from my other three kids and my husband for 100 days and then having a very dramatic delivery. And I actually signed the paperwork right before I went under to deliver my daughter.

• 58:18Guy Raz?

  How's your daughter doing?

• 58:19Speaker 01

  She's wonderful.

• 58:22Guy Raz?

  I'm thinking about all of these women founders who were at HBS around the same time, 2007, 2010, who have had such a huge impact on the conversation around entrepreneurship. You're obviously prominent among them, Jen Hyman, and Alexa Von Tobel, and Katrina Lake. And I wonder, like, I have to assume that you take a lot of pride in that.

• 58:46Speaker 01

  Yeah, I mean, it is a very privileged position. I think maybe before feeling proud about it, I felt pretty shocked about it on two fronts, I'd say. When I realized what rare creatures we were as female founders, I wasn't as aware of that when we started. I was upset mostly, mostly recognizing how challenging it was to really get capital, particularly later-stage capital, as a female founder, to be seen as both visionary and a strong operator. So that was really disheartening to me, I'd say. But yes, I do feel privilege and responsibility for trying to change that trajectory.

• 59:32Guy Raz?

  When you think about your journey, how much of this do you attribute to just grinding away in your hard work? And how much do you think this had to do with luck?

• 59:43Speaker 01

  50/50. I think it's not just grinding, but I think resilience is underestimated, like, to endure kind of being kicked down a lot. So when you have headwind or when you have the challenges, what do you choose to do in those moments? And I think it would be tough to imagine not building. It would be tough to imagine not trying to invent reality, to be honest. It really excites me to imagine the world I want to exist and to try to create it.

• 1:00:21Guy Raz?

  Even though, like, some of the words you use are like awful, stressful, anxiety-riven.

• 1:00:28Speaker 01

  I mean, at the time, I'd say, like, nothing really rocks me now. The moments when it seemed the best are the moments that I equate with it being the worst. And

• 1:00:38Guy Raz?

  Yeah.

• 1:00:39Speaker 01

  feeling now that very little, frankly, can stress me out. Very little feels dramatic or awful. I have all of my faculties to attack the challenges. There still are always going to be many, but I don't feel disoriented. I don't feel drama. I don't feel desperate. I don't feel any of that anymore. I feel curious. I feel gratitude. I feel like I'm growing so much and I love it.

• 1:01:10Guy Raz?

  That's Katya Beauchamp. She's the co-founder of Birchbox. And since 2010, at least seven former Birchbox employees have gone on to start their own companies, including a makeup line called Live Tinted, the furniture brand Maiden Home, and a facial spa called Globar. And all seven of those founders have been nicknamed the Birchbox Mafia.

• 1:01:41Guy Raz?

  And please do stick around because in just a moment, we're going to hear from you about the things you're building.

• 1:01:51Speaker 03

  This week on NPR's Invisibilia, we take you to a summer program for teenagers with sleepovers, marshmallows, and racial confrontation.

• 1:02:00Speaker 04

  I want you to all line up by skin tone, lightest to darkest.

• 1:02:07Speaker 03

  That's up next on NPR's Invisibilia.

• 1:02:12Guy Raz?

  Hey, thanks so much for sticking around because it's time now for How You Built That. And today's story comes from Athena Staton, who grew up in South Florida, where her dad was a car dealer.

• 1:02:22Speaker 05

  So my first job was greeting customers as they came into the dealership and introducing them to a sense person.

• 1:02:31Guy Raz?

  And Athena actually loved the job, partly because she loved working with her dad.

• 1:02:36Speaker 05

  He taught me how to negotiate. He taught me how to talk to people. He taught me not to be afraid of the whole car-buying universe.

• 1:02:46Guy Raz?

  And as she got older, Athena was always surprised to hear friends tell her their horror stories about buying cars. And as it turned out, the loudest complaints came from women.

• 1:02:57Speaker 05

  They are not listened to. They're not looked at. And what they tell me, the common thread, is we expect to be taken advantage of, and we expect to overpay.

• 1:03:08Guy Raz?

  Sometimes Athena would actually go with her female friends to help them buy cars. It was fun for her. And then one night, about four years ago, she was out having a martini with her sister.

• 1:03:20Speaker 05

  And we were discussing how difficult car buying can be for people. So that very moment was when I decided to make this into something bigger than just a hobby.

• 1:03:32Guy Raz?

  Something that could help demystify the car-buying experience. So Athena decided to become, wait for it, a used car dealer. But not a traditional used car dealer, more like a scout, where she works with customers all over the country to help them find the right car.

• 1:03:49Speaker 05

  We get on the call, and I log in, share my screen with you, so you can take a look at what I see.

• 1:03:55Guy Raz?

  And what Athena sees and shares is a used car auction happening in real time. These car auctions take place all over the country, but usually only dealers get to go to them.

• 1:04:07Speaker 05

  And then a dealer is going to sell it for as much as possible. I've seen $800 cars retail for $3,700.

• 1:04:15Guy Raz?

  And of course, this is normal. There usually is a big markup in used car sales. But Athena decided she'd Didn't want to do that. Instead, she goes to these used car auctions with you, virtually. She helps you bid on the car you want, and then she charges you a flat fee, $1,500 max.

• 1:04:33Speaker 05

  Really, I've sold everything from Porsche Cayenne for under $70,000 to Ford Focus for $4,900.

• 1:04:44Guy Raz?

  Athena calls her business SheCar, and she also runs a charity called She Care, which gives cars away to women in need. But since she's launched, Athena's clientele has been pretty mixed.

• 1:04:55Speaker 05

  Almost 40% are men. And not one man has ever questioned the masculinity of buying a car from SheCar.

• 1:05:04Guy Raz?

  Athena says in the year and a half she's been in business, she's moved about 100 cars, which adds up to over $1 million in sales.

• 1:05:13Speaker 05

  There were some people that had such a great purchase experience that I still giggle because I know what a great deal they got. Like, you should giggle every time you get in your car.

• 1:05:25Guy Raz?

  If you want to find out more about SheCar or hear previous episodes, head to our podcast page, howibuiltthis.npr.org. And of course, if you want to tell us your story, go to build.npr.org. And thanks so much for listening to the show this week. You can subscribe wherever you get your podcasts, and while you're there, please do give us a review. You can also write to us at [email protected]. And if you want to send a tweet, it's at How I Built This or at Guy Raz. Our show was produced this week by Candace Lim, with music composed by Ramtin Arablouei. Thanks also to J.C. Howard, Julia Carney, Neve Grant, and Jeff Rogers. Our intern is Raini Toll.

• 1:06:06Guy Raz?

  I'm Guy Raz, and you've been listening to How I Built This. This is NPR.

• 1:06:41Speaker 06

  Your next great read is out there waiting for you, and NPR can help you find it. Visit npr.org/bookswe love to browse hundreds of books we loved, published this year, plus thousands in our archive. And, you know, books make great gifts for everyone on your holiday shopping list.