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By the time the women left campus, they were already profitable and VC firms started clamoring to get in on the action. Today, they've raised $11.9 million in funding led by Accel Partners and First Round Capital, which helped them expand to 53 employees. "We grew much faster than we ever expected," says Beauchamp. "We hit year three goals in month seven." And the customers keep coming. Birchbox has over 100,000 subscribers today, more than double its subscriber base of 45,000 six months ago. "Who doesn't like to get nice mail?" says Katherine Barna, 27, of Manhattan who signed up for Birchbox six months ago when her dad sent her an article about the women founders, one of whom shares her last name (there's no relation). "I got a subscription for my mom and I'll ask her what she got in the box and when she mentions what she likes I can easily go on the website and order it as a gift."
The success of Birchbox has encouraged a flood of other subscription startups to follow suit with this model, including the cleverly named BarkBox, a kind of Birchbox for dogs. (The Birchbox founders are currently serving as advisors to the two-month-old startup.) For $25 a month, your beloved pooch will receive hand-selected gifts such as hygiene necessities, all-natural treats, bones and innovative gadgets. And 10% of each sale is donated to a local rescue organization or cause they're sponsoring. "It's a lifestyle product for people who want to spoil their dogs," says Carly Strife, CEO, co-founder, and proud owner of a Puggle named Cooper and a Pitbull named Roxy.
Subscription services are catering to babies, beauty and Beagles, but what about addressing your morning caffeine habit? Michael Horn started Craft Coffee to do just that. His passion for coffee started ten years ago when he attended law school at Cornell and found that Ithaca didn't have a Starbucks. He began frequenting Gimme! Coffee, a local shop that roasts its own beans, and loved it. Years later, after working on Wall Street as a corporate attorney, Horn created an e-commerce site to make it easier to buy from different roasters.
His first attempt was a disaster, however. "No one bought anything," says Horn. "Literally nothing." So he sat in a coffee shop for 12 hours giving away free cappuccinos in return for people's time, asking what would make them buy coffee online. "People said they were intimidated and wanted more guidance and the ability to sample the product," he says. That's when he thought of doing a monthly subscription service. For $24.99 a month ($19.99 a month for a year subscription; including shipping) Craft Coffee delivers a tasting box of three 4-ounce bags of coffee from small roasters around the world.
Horn's experts evaluate the coffee in a blind taste test, selecting their favorites from the 30 to 40 coffees they are sent each month to evaluate. (Ithaca's Give Me Coffee made it into the first box sent out this past May.) Craft Coffee has over 600 customers and ships to 48 states and nine countries. It was named best new product of the year by Sprudge.com, a coffee industry blog. "It's not an exaggeration to say it has changed how I think of coffee," says Christopher Bliss a Craft Coffee subscriber from New York. "Now most of the other coffees seem burnt and unpalatable."
As Subscription startups gain traction, there's even a new company that automates the process for you on the front end: Memberly helps entrepreneurs run their own subscription programs, or "of-the-month" clubs, by offering a platform to build a website in minutes (no programming skills required), compile and format orders and easily contact customers, bill subscribers, collect money and print out shipping labels. "We do everything up until the point of sourcing and sending out the products," says Jack Cheng, co-founder of Memberly. Currently 24 companies use the beta version, which launched in July. "Where we see subscriptions start to gain traction is when they capture some of the qualities of small, local businesses you love that have a story and relationships," says Cheng.
Lauren Thorp, founder and CEO of the three-month old Umba Box, a site that delivers curated, handmade goods each month for $26, was able to launch her subscription business in about a month thanks to Memberly. ("Umba" means "to create" in Swahili.) "It's pretty turn-key — just start and go," she says. "I don't have to spend a lot of my time on the tech side so I can spend it growing the business." Still, making the startup process fast and easy has a downside too. "Because the barrier to entry is so low with Memberly," says Thorp, "who knows what kind of competition can creep up."