Meet the ladies behind Birchbox: 2 Harvard MBAs, 1 brilliant business model

In the past few years, a rising number of female entrepreneurs have spawned lucrative fashion and beauty businesses in the halls of Harvard Business School. Alexandra Wilkis Wilson and Alexis Maybank launched online sample-sale site Gilt Groupe in 2007; the company is now worth close to $500 million.

Last year, Rent the Runway, like a “Netflix for dresses,” was founded by two Harvard Business School graduates. Also, FashionStake, a site where members invest in up-and-coming designer pieces and ChickRx, a site that gives women sex and relationship advice were both launched by Harvard alumni. The next to join the stellar cadre are Birchbox founders Katia Beauchamp and Hayley Barna, now 28 and 27, respectively. The two met while sitting next to each other during their first semester in Cambridge. Hayley describes herself as “makeup curious” and Katia as a “beauty junky.”

“Hayley always had awesome beauty products because her best friend Mollie [Chen] worked at Condé Nast,” says Katia. “I said, ‘everyone needs a Mollie’, and that became our business model.”

One year later, they launched Birchbox, an online service that sends coveted beauty samples to members’ doorsteps every month. It is a $10 monthly beauty subscription (shipping included, US only for now) that delivers 4-5 product samples of the top 43 brands like NARS, Benefit, Laura Mercier, Stila, Korres and Cargo. Since officially launching last September, Birchbox now has 20,000+ subscribers and customers in all 50 states with an average age of 31 and average income of  $90,000.

The samples themselves are a win: they’re brilliant to travel with and allow you to test out a number of high-end products without having a pushy sales person selling you a $50 bottle of moisturizer at Bloomingdale’s.

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The subscription is paired with a website featuring detailed brand and product information, engaging beauty tips and an online store to buy full-sized products. Every purchase earns users “Birchbox Points”, which can then be used to buy more products. The girls even convinced Mollie to leave Condé and become the editorial voice of The Haute Box, the main-stage for Birchbox’s prose.

Here’s why it’s brilliant.

Businesses know that the #1 reason a woman buys a beauty product is because she’s tried it before. But businesses still spend hundreds of millions of dollars in sampling every year, often giving out small samples as gifts with purchases or giving them away in the store. Then what happens?

“They cross their fingers and hope there’s a connection,” says Hayley. By bringing this process online, brands use Birchbox as a hybrid marketing and retail channel. BirchBox can track the ROI of the sample investment and provide customer data such as demographics and purchasing behavior.

It’s also very beneficial for consumers. Make-up consumers often feel like they’re in a rut or a ‘product graveyard’ because they either don’t feel inspired or don’t have time to shop for make-up. Birchbox created a discovery process that’s delightful.

For our a tour of their NYC digs and a chat with the girls, watch here:

The girls were profitable before they left campus and therefore had VCs knocking down their doors. They’ve since raised a $1.4 million seed round led by First Round Capital and Accel Partners and individual investors including Sam Lessin (drop.io), Dave Morin (Path), Michael Dearing (Harrison Metal), Kirsten Green (Forerunner Ventures), and Gary Vaynerchuk.

“The name Birchbox is gender and product neutral. We first gained our customers’ trust through beauty, but we always knew it wouldn’t be just beauty. While we’ll stay on the lifestyle side of the business, expect future boxes to hold chocolate tea and accessories,” says Katia. Also on the agenda is a Birchbox vYou channel, where users can ask the BirchBox ladies for make-up and beauty advice.

I write about a lot of services, and very rarely do I take out my credit card after doing so. But for $10 a month, a delightful package filled with goodies I’ll actually use? It’s a deal that Hayley and Katia are betting most women won’t refuse.