How Birchbox CEO Katia Beauchamp Evolved Along With Her Brand
In 2010, Katia Beauchamp changed the face of the beauty business. With cofounder Hayley Barna, she launched Birchbox, sending monthly boxes of beauty samples to customers who paid a small fee to try the industry’s latest products. More than a million subscribers signed up, and Birchbox expanded into men’s products as well as retail, launching multiple pop-up shops and opening stores in New York and Paris. But after six years, the industry changed. The subscription-box model felt more tired than novel, and some Birchbox customers complained about receiving products that didn’t suit their lifestyle. The company struggled to raise expansion capital and endured two rounds of layoffs. Beauchamp reportedly searched for buyers (Walmart was rumored to be one) to no avail.
Still, the company maintained a valuable, growing base and in November announced its next chapter: opening Birchbox boutiques within select Walgreens stores. Locations will continue to open throughout 2019. Beauchamp talked to Entrepreneur about what the partnership means for her company, where the brand can go from here, and the hard lessons that taught her to be a stronger CEO.
First things first: Why Walgreens?
We’d been talking to them for more than a year about this partnership. At Birchbox, our focus is on the casual beauty consumer -- the everyday woman, who isn’t a beauty expert. Walgreens is where the everyday consumer is already shopping. There was alignment and excitement about how we could come together to create a really unique experience for this customer, who is never made to feel like a priority in this industry.
What will that experience actually look like?
We want to contextualize every product in the store. Traditionally, beauty is merchandised by brand. When we opened our permanent Birchbox store in New York, we flipped that and organized it by product -- cleanser, or mascara. Now we’re taking it a step further: Here are our cleansers, but here are the hydrating cleansers. It’s adding vertical categories to those horizontal ones.
That sounds like a better experience than I’ve ever had in a drugstore.
I think it’s better than any experience out there in beauty, frankly. It allows the customer to understand why there’s so much selection, but it also allows the associates to help you better. We’ll have dedicated Walgreens employees who will serve as Birchbox consultants, trained by us and on our product and on this customer. What Birchbox has been able to do digitally in terms of building relationships is amazing, but it’s nothing like in real life.
What about retail has surprised you as you’ve built your own stores?
Before our own stores, I didn’t have much retail experience other than the eight years I spent working at the Gap part-time. I really underestimated how impactful the people who work in stores are. They’re everything. Almost nothing else matters. If you have people who are passionate about serving a consumer, it creates incredible relationships and brings those consumers back, not necessarily to see the same person but because they had an experience that surprised them, one where they felt heard and cared for.
As part of the Walgreens deal, the company has acquired a minority equity interest in Birchbox. You’d spent the past couple of years shopping around for partners and potential buyers. Was it important to you to maintain control of the brand?
I mean, it’d be naive to say no. But I would like to believe that more important to me, and to all of us at Birchbox, was finding a partner who can help us serve this customer well. We wanted a group of people who understood the kind of equity we’ve built with our consumers. We got consumers to trust us with a recurring-billing product -- that’s a next-level relationship, right? It’s a very different responsibility than just being an e-com company.
To that point, Birchbox was one of the first to launch a subscription-box model, which is almost ubiquitous these days. How do you avoid getting left behind?
Subscription is something that comes in many different flavors, and there are lots of companies utilizing subscription as part of their model. But for the most part, it’s still a business where a subscription is either about replenishment or the subscription itself is the product, like food of the month. I don’t think we fully understood it at the time, but Birchbox created a very powerful tool for the casual consumer. She can stay passive, and Birchbox is the active player, the mechanism that keeps her in the know. Passive consumption is very powerful, so we have to figure out how to keep doing the heavy lifting for her, whether she stays a monthly subscriber or not.
What’s the biggest challenge as you move into the next phase of the company?
I don’t think having great strategy or a great idea is difficult. It’s harder to operationalize new things within your organization, because the only way to stay relevant is to keep changing. And that makes execution hard. You’re not just making a new widget; you’re saying, “Widgets are done, and now we’re making something else completely!”
How have you and your team learned to keep up with that cycle?
We send culture surveys around at least every quarter, so it helps us understand what pain points exist and have an open dialogue about what’s working or what’s frustrating us. Our team is so badass -- I feel like all I have to do is move out of their way and let them create the next big disruption.
You’re very focused on staff development. What does that look like?
Every employee has a personal development plan, but I think it’s just a mentality. We ask people to work really hard. That’s part of the contract: Work really hard, talk to us about opportunities you want to be exposed to, and we’ll do everything we can to make that happen. Each year we celebrate our company anniversary with Birchbox Day, and we really challenge ourselves to think different, look at our big challenges and our big opportunities. We bring in speakers -- people from our board, investors, other entrepreneurs -- to speak to the fact that this work is going to be exceptionally hard and exceptionally awesome.
In 2015, your cofounder, Hayley Barna, stepped down as co-CEO. How did that change you as a leader?
One of the biggest benefits of having a cofounder is that it lets both of you lean into your strengths, and Hayley and I had really complementary strengths. But now I think more about my weaknesses and how I can build an organization that helps me lead successfully and makes use of other people’s strengths. I’m a different leader than I was four years ago. And I hope to be a very different leader four years from now.
The company went through a few rounds of layoffs before moving toward this next chapter with Walgreens. Over the years, how have you learned to communicate that hard, business-changing news?
It’s so scary. It’s the scariest thing ever, having to give really hard news to someone you love. But I think one of the biggest mistakes I made was believing that my job was to shelter the company, that it was my job to bear all the stress and expose people only to the sun all the time. It didn’t really allow people to develop and flourish in the way they probably came to Birchbox to develop. But when you go through that experience [with layoffs], I just couldn’t shelter anymore. I had to be honest and open about what got us to that point, and what we were going to do to change it and move on from it. It made me a much better leader to understand that people came here for both the sunshine and the storm. And that’s what we need: resilient people who understand that the sun will come out again. You just can’t be afraid to navigate through uncharted territory.