How I made the tough de­ci­sions to get into the black

Inc. (USA) - - LAUNCH -

in the mar­ket. There was less ven­ture cap­i­tal deal ac­tiv­ity, so it was cru­cial that we con­trol our des­tiny by get­ting to profit and reac­cel­er­at­ing growth. Be­sides mak­ing lay­offs, we re­duced the cost of putting to­gether a box of makeup. We de­vel­oped ma­chin­ery from an old French de­sign we found in one of our fac­to­ries. Tra­di­tion­ally, com­merce is a pick-and-pack op­er­a­tion, but you can au­to­mate that. We re­duced hu­man touches by more than half. We cut mil­lions from our monthly ex­penses.

We also stopped spend­ing on mar­ket­ing. We were still work­ing on so­cial me­dia and PR, but we turned off tele­vi­sion for al­most six months. That was painful, but it was the only way we were go­ing to learn what was re­ally driv­ing value, so we could con­trol our in­vest­ments. The most im­por­tant thing for an en­tre­pre­neur to know is how much halo ef­fect any mar­ket­ing ef­fort has.

At first, I tried to shel­ter the team from the things that were re­ally hard, be­cause I didn’t want them to be dis­tracted. I un­der­es­ti­mated how valu­able it is to have all staff mem­bers feel how im­por­tant their de­ci­sions are, and to let them share in the bad things. This maps onto what I be­lieve as a mother. Are you go­ing to be there every day to com­fort your kids, or are you go­ing to teach them how to com­fort them­selves? The re­al­ity of pur­su­ing some­thing ex­cep­tional is that it is al­ways hard. There is no other side of hard. It’s about re­fram­ing your per­spec­tive and loving the hard. Last year, we did more than $200 mil­lion in rev­enue, and in Jan­uary we turned a profit.

Emo­tion­ally, it was hor­ri­ble. The only thing that keeps you go­ing is that you love the busi­ness more than you love your­self.

Katia Beauchamp launched Birch­box, along with Har­vard B-school class­mate Hay­ley Barna, in New York City in 2010. They vaulted the beauty prod­uct sam­pling ser­vice to more than a mil­lion sub­scribers, and a re­ported $485 mil­lion val­u­a­tion, in just un­der four years. (Barna left in 2015, but re­mains a board mem­ber.) In 2016, un­der pres­sure to gen­er­ate prof­its, Beauchamp had to cut staff by 25 per­cent, to about 230, and scale back plans to open ad­di­tional re­tail stores. Beauchamp got Birch­box into the black, and in­vestors re­sponded, al­low­ing the com­pany to raise an­other $15 mil­lion. –As told to Zoë Henry

PROF­IT­ING Katia Beauchamp learned the beauty of be­ing in the black.

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