GLOSSYBOX made €31 million in revenue in 2013 and forecast to reach the same amount in 2014. After growing fast, the company announced in November 2013 that it was shutting down operations in seven countries and is now back to ten offices with more than 160 employees. The company states that it is profitable from an operational point of view.
The Berlin-based startup mails out more than 200,000 boxes each month to 10 countries. The same number of boxes was previously delivered to 17 countries, the company explains.
VentureVillage spoke to the founder and the Global CEO Charles von Abercon about last years’ layoffs, the company’s transformation, Germany’s culture of failure, copycats and the startup industry.
VENTUREVILLAGE: How did you feel when shutting down the markets at the end of last year?
Von Abercon: I am the founder and CEO of GLOSSYBOX. How did you think I felt? Shitty obviously. I had to let go of people who were part of my company from the very start. And even though that was a hurtful experience, I knew it had to be done as long as I was holding the steering wheel of this company – for the benefit of the whole company.
What got me really angry during that period was the spiteful way some media portrayed GLOSSYBOX. For years now, it seems as if the entire German press tells us that we should handle “failure” differently. Failure should be accepted. And as soon as someone seems to be failing at something or it looks as if he/she is, the media starts attacking you with that same mockery. I was very frustrated with this in particular as it shows that we are still not ready to compete with Silicon Valley here in Germany. Capital is one thing and we are working on that. What we are still missing is the proper mindset. Germany is and always will be the place of spitefulness.
Most importantly, this tough time last November and December resulted in many learnings for GLOSSYBOX and me personally. That’s why this “stumbling” experience, rather than a failure, had something very cleansing about it – if you know how to extract the proper learnings from this experience.
VENTUREVILLAGE: What were the reasons for your shut down and selling in seven countries?
“left”]Von Abercon: There were several reasons. Generally speaking, it became clear that countries such as Germany, USA or Sweden grew and developed in an extremely successful manner. At the same time, we noticed that the economic development as well as the customer feedback remained below our expectations in certain countries. We decided to put our time, money and energy into the country destinations we saw the most potential in and believed we could continue our success or become even more successful.
I made this decision with a very clear conscience despite the fact that not everyone understood my way of thinking. We weren’t in trouble back in November and could have easily continued our old path. At the same time, we wouldn’t have had that much control over the situation and even more so, we wouldn’t be where we are today: We receive a much better customer feedback and grow faster in a healthy manner. Lastly: We become more and more attractive as an employer.
VENTUREVILLAGE: Traveling back in time: What are your learnings and what would you do differently?
Von Abercon: Hindsight is easier than foresight. One thing, however, is clear: In times of fast and necessary growth we have not handled our recruiting process the same as we do today.
We have always had talented and well-educated individuals wanting to work for us. From today’s perspective, we know that there are other factors that are just as important: Does the individual have the right personality? Does this person understand what makes GLOSSYBOX so special? And is this person willing to respect that?
Over the past few months, we had to decline a lot of potential candidates with great resumes as we didn’t feel that they were a great match for our company and most likely would have not been happy, and vice versa, to work with and for us. As a result, we spend more time for the recruiting and onboarding process knowing that this investment is crucial and does not come with an alternative.
VENTUREVILLAGE: GLOSSYBOX is not a small startup anymore. It’s a million-euro business. How is the relationship between the company and the investors (Rocket Internet, Kinnevik, Access Industries and Holtzbrinck)? And what was the reaction when markets were shut down?
Von Abercon: I am very thankful for the fact that they supported us unconditionally.
Our investors are not only financiers but also partners. Personally, I am very grateful for them and their ongoing support and advice and I believe that this is what makes an investor a good one: They see more than just the return on investment. They see the exciting journey of revolutionizing the beauty industry.
VENTUREVILLAGE: Looking at the situation now, how did the markets develop? Which market is the strongest, which is the fastest growing. And why?
Von Abercon: Our strongest market is still Germany, which is also the country we were founded in. Here, we test and brainstorm innovations that we execute globally if proven to be successful. Measured against the number of inhabitants, Sweden is our most thriving country. When talking about the country with the fastest growth the US ranks first.
VENTUREVILLAGE: You didn’t spend much marketing budget in the United States yet. How do customers hear about you?
Von Abercon: In the US, just like in our other countries, we rely on a mix of PR, social media and online marketing. Due to social media having a higher impact on the Americans, we focus slightly more on it.
The true key to our success in the US: We have a great team of people that live the mentioned values and especially the fixation on our customers. They work in great corporations with well-known partners such as Bergdorf Goodman and ensure that our boxes are constantly and quickly sold out.
[contentad2 keyword=”adsensegs2″ “left”]VENTUREVILLAGE: With your size, would you define GLOSSYBOX as a startup or as an established company? And how do you define the border?
Von Abercon: At this point, we could list quite a lot of criteria that match the definition of a startup company. I can also listen to my gut instincts to notice that that we are neither a startup business nor an established company. We are somewhere in between and I find that to be a super exciting journey. Over the past months, we have hired great and experienced personnel with a tremendous amount of beauty experience of over 20 years. They positively influence our company and help us mature – at the same time, these people are ambitious and want to drive innovation in a very young work environment.
VENTUREVILLAGE: Copy cats are not very high respected in the tech industry. How do you feel about it?
Von Abercon: In his book “The Art of the Start”, Guy Kawasaki, an icon in the global startup scene, conveyed the idea that success is not defined by reinventing the wheel but rather by making it rounder. And exactly this thought process is being applied to the tech-industry: on the basis of technology, innovation and brand, a company can be created that not only differentiates itself, but also offers its customers an added value. With this concept, it is capable of offering a variety of products and services for a variety of tastes.
VENTUREVILLAGE: Birchbox, the strongest competitor, has 800,000 subscribers and $96 m in annual sales. In March, a store in New York opened. Are you having similar plans?
Von Abercon: We are quite successful placing our primary focus on our customers and their needs. Our most important goal for the future is to provide our subscribers with an even better experience. As a result, the quality of customer recommendations is going to increase furthermore. In addition to that, we are going to expand our reach through targeted marketing efforts at a certain time. The appropriate plans to take these actions have been prepared and are ready to be rolled out. We will be talking about those initiatives once we have managed to enhance and improve the customer satisfaction.
VENTUREVILLAGE: How long do customers stay with you? How fast do they leave? And why?
Von Abercon: In Germany, we have a triple digit number of customers that have been with us from day one – so exactly for the three years that GLOSSYBOX already exists. They love the monthly surprise and “Christmassy” feeling – at least this is how one of our loyal subscribers described receiving the box. On average, our customers stay with us for over half a year, and this number has gone up in the past six months.
VENTUREVILLAGE: What is going to happen to GLOSSYBOX next? Where do you see GLOSSYBOX in three years from now?
Von Abercon: There is one thing we are not going to do: Declare reckless plans that only put us under a lot of stress and pressure. We want to focus on the ultimate customer experience, which currently works very well for us. We have a couple of innovative plans waiting to be executed. Nonetheless, as long as we have not accomplished perfection in our core business, these plans can wait.
VENTUREVILLAGE: What is going right, what is going wrong in the startup industry right now?
Von Abercon: Contrary to the naysayers who say that we have a bubble that is about to burst, I don’t see us at the peak yet. Berlin has not reached its full potential yet and there is still more room to grow. What I wish for is for the Berlin startup scene to become more professional and serious.
VENTUREVILLAGE: Thank you for your time and insights.