Lessons - Finding Product Market Fit & Scaling In A New Industry | Yosef Martin, CEO & Founder of Boxycharm

Welcome to the lessons episodes of Success Story. These lessons episodes will be shorter clips from past guests, accomplished value community members, and myself. In each short episode we'll feature concise and insightful actionable conversations and tactics providing you with real-world strategies and tips to help you achieve your personal and professional goals. If you're seeking a no-nonsense approach to growth and progress, you've come to the right spot. Settle in, take notes, and enjoy. When you started off, you didn't have any experience in beauty, and I want you to just comment on what a lot of people think is, find a way to monetize your passion or find a way to monetize the things that you know best. And even when you're talking before, when you work in an industry or a vertical for so long, it's really easy to start a business in that industry because you know it so well. You came in with nothing. When you're launching something and you're creating the category was somewhat defined but not really and you're creating a new product and a new category, how do you know that you're moving in the right direction? Because it's not intrinsically motivated because of a passion for makeup and beauty. You have to have external motivators and validators at the business moving in the right direction or you would give up. For sure you'd give up because you'd be like, I don't get this, it's not working. And you probably have a lot of self-doubt too because you're like, I'm probably not getting it because I don't know beauty and I'm missing the mark on something. You launch it. How did you keep it moving? You know, I think there's a plus and minus in both, right? The fact that I didn't understand the beauty industry, I see it more of a bigger plus than a minus. If I was a consumer, I would have been in another box, there were many boxes, I mean, 2014 was the year of the boxes and most of our competitors, at least their boxes were curated by women. And I had to be the one pushing it almost all the way to the end, eventually I found the right people to take over. But it was tough. The part where it's easy to understand that an outsider is going to be the trailblazer. I was the outsider. And I just did not think like the consumer that apply makeup, I thought as a person that want to understand what the consumer wants. And you find out that the consumer have different opinions and different days. And technically, when I would do it, I would just do focus groups and I would have my team there. At first, we had nothing but women working for me. And I would just have them all asking, what do you think about this? What do you think about that? What do you think? You'll figure it out fairly quickly at what works, what doesn't work. But one thing I did understand is that looking at the item right now, you understand very quickly what's trending. Okay, so you can say, okay, this category is trending, anything it's going to say holographic highlighter in 2017, that's the thing or 2016, that's the thing everybody wanted, right? Get it as soon as you can, it's a it's a fact, it's going to go away, but now don't buy it tomorrow because you can get stuck with this. So you understand the fight you've seen already enough and you know what's trending, right? But you also understand that it's only a particular consumer that's going to want to use it. But what you don't understand at first is that there is a difference between receiving the product and there's a difference between viewing the product on Instagram before people receive the product. And if you're a person who uses that, you would probably think mostly about, I like it and I don't like it. That is the end part of the of the logistic process. They received it and now they're going to give their opinion. You need to get them excited when they see the image on social media. That part is completely different than trying it. So at first I was asking the team to try the product and tell me what they think. And the results were not always great because they would love the product, but when you put it on social media, the product was too small and people didn't apply perceived value when they saw something small on social media when they received it. The comments were positive, but by then you already get trashed for selling them small items. So then you said, okay, and that's just one example for many things like, okay, we need to go and just have them look at the item and say, what would you think if you see this on social media? Okay, now get to try it. You have to break it down into two parts. And it was all trial and error based on, I mean, it was because of blood that was shed over mistakes that we made, right? We would buy an item that was very, very small, but very expensive because there was pearls from Europe to people and people hated that, but when they got it, they liked it, but it was too late. It gets me. So we had to learn through those, through those mistakes and that was, that was the thing. If you keep chasing the perfect kind of improving and exciting the consumer with a better product, then you're going to win. And Elmi understands something. So for the business model, when you're shipping out these boxes, is the, is the opportunity for the consumer because they get, rather, is the excitement for the consumer because they see it on social and they like getting something new and it's like exciting. Or is there actually like a dollar value? So is there a margin that you're taking advantage of when you put it in the market? Let me break it down a bit more about the concept, right? And how do you get more, more than a million members by the time we exit paying members? The reason you grow so much, this is one, it's a discovery concept. There are two types of subscriptions, physical subscriptions. One is replenishment, the other one is discovery. So replenishment is, I don't know, your vitamin supplements, you need a, my, my company. Yeah, exactly. So that's something that you know you're going to get and you're getting it and that's it. You're not going to take a screenshot. Look, I just got my razors again, you're not going to do it, right? You have to really create awareness by yourself every time. It's actually different because people don't know what to receive. And if they're happy, they're going to take a picture and they're going to go and post this and they're going to bring awareness for you for free. That happens in my case, that was a discovery. What we did was we went on the full size and we made sure that the price ratio was about four or four and a half to five times, sometimes six times. So you pay $25, but the retail value is about $150. So now there is that, there's the price, there is the, the surprise element and there is a matching with your personalization that works every time. And those are the reasons, it was a couple reasons why they get excited. It's kind of a surprise every month for themselves, awesome deal that they got. Now two reasons for them to brag and subscribe and bring more subscribers and build your awareness. It's kind of like the rich get richer. You have 10,000 subscribers, less pictures on Instagram, you have a million get more. And that was the reason we were able to scale consistently because we focused on the fact that they needed to get excited when they opened the box. And you architect it, you architected a little bit of that FOMO. So because you found bigger products that were Instagramable and I also love, we're going to talk about like your influencer marketing strategy and your growth strategy, but you architected a little bit that FOMO so that when people saw it on Instagram, then they're like, now I want to, I want to see what's coming and what's new and then you architected a little bit of virality and I know that you were doing lives at some point, but you were like, you were hyper focused on like influencer marketing on social. Did you run? I can't remember if you ran paid as well. Did you run a lot of paid? At the end before we sold, we started, I think we, not for the most, not for a lot of money. Most of those years, no, only at the end when we went through a process about to sell the business, it was time to start learning how to do performance, paid marketing on Facebook. We got to 100 million plus in sales close to 200 without really putting any money in marketing. That's insane. I mean, we did money marketing, but influencers not paid and it was working because again, your biggest piece of marketing is your product and if you can create millions of views, many millions of views through influencers and through your members, that's all it takes. If you didn't sell your product, it's because your product didn't sell itself. Then you get a work on everything else. So while we put, when we put the product, so our growth was as far as more like 20 million a year, 50 million a year, 100 million, 100 plus, 200 plus, 400 plus. That's how we, and then that's when we exit the company. And it was consistently growing because it was laser focused on the fact that we want to make sure that the experience is going to be great and the product would sell itself. And a set of influencer marketing that today everybody knows and do, what we, what I, what we actually were able to build was a tight community, but not a community in the terms of just saying, oh, we have a community. No, no, no, no, no, what does it really mean a community? A community is a group of people with the same interest in the same space activating together. When you take that and you said, okay, what is my space? Where is my space? We found that there, you can have your space say on your, on your IG page or your Facebook page, but we found, we found a much better space. We found a space that's actually their space that they gathered together already just to talk about us. That was on Facebook groups and they created, they created that themselves. Now, they, when I found out in 2017 that our Facebook groups, it's just something on Facebook, at the time they call it forms, it was, it was nice because I just wanted to hear the sentiment. So I joined them and they said, look, it's only women are allowed. And at that time, nobody knew who I was. I was private on my accounts and they told them, I'm the founder, a boxy chairman. I just want to hear the sentiment. They were really excited that I joined. And then they said, oh, listen, or the owner of boxy charm came and they were posting this and everyone wanted to hear me. So then I said, this is my super charmers. Those are the, those are the most advocated consumers. They call each other charmers on the forms. They said, we need another moderators. We need another two charmers to be moderators. Coming, I was saying, this is it. I didn't even know that happens. This is kind of like a, a backroom door to, to group of passionate people. Of those passionate people you have. Most passionate people. And then I hit me and said, the community is not about the size of your community. It's about the passion of your community. How can I amplify the passion? And then I'm going to amplify their numbers. So I said, here is my space. So I said, look, guys, you know what? I'm going to let you know before anybody else what's going to be next month in the box. It's going to be a sneak peak. We usually used to do on our platform sneak peak on the first of the month. I'm going to give you two weeks before that. Everyone wanted to join those groups. And I announced it on our pages on Instagram. You saw three forms turning to nearly 60 or 80 forms. Any so many other makeup forms and groups asking me to join them just to let them know what's there. No problem because there are many charmers over there. And then I ended up having at the end submitting information to about 100 forms every month. The largest boxy charm form at that time I noticed was more than 90,000 people. In one form and my goal was to gather them all together, all those passionate members. And make sure that they're going to be discussing together. That is their activation. That's where you activate them together. And I would say, well, check my Instagram. I would have them all moved to my Instagram page. Everything outside of the boxy charm page. Make sure that it's going to be kind of like the underground parts, not the regular channels. So they'll feel they're special. Come into my Instagram page. I'll show you something no one's going to see it. It's going to be behind my back. That's going to be a sneak peek. Go in and check it out. Now they connected on Instagram. So now those two friends that were talking on Facebook now they get to see each other's Instagram page. Now they're friends because of boxy charm because there's 12 of how that was creating kind of like it's a very tight community of people that became so close to each other over a boxy charm. That was the common denominator. And they were so passionate that you get to a point that the community was so solid that when I needed to launch a new product it was a quarterly back in subscription box. I announced it twice one time on on boxy charm Instagram page and one time on the forums. I told them in a month and a half there's going to be a new box. It's going to be quarterly coming. The site crashed. I expected about 40,000 buyers and I thought I'm going to sell 20,000 boxes. I wanted to sell out quick. We had about 200,000 people clicking the checkout page on the second we opened it up. We told them 9 a.m. September 1st, 200,000 people take my money. We added 30 million dollars just like that into a revenue stream in a second from two posts because there was an infrastructure. There was a community. Everyone spoke about that. And it was really important for me the momentum because we had a competitor coming at the same time with their innovation. I wanted to make sure that I'm going to take the entire conversation away from them. And I had to go and make sure that it's going to be on that date. So development team couldn't really complete the site testing to make sure the site crashed. But it's okay. Mission accomplished. All of them subscribed for the following box because we didn't have enough boxes for them. And no one heard about the other companies new innovation. We just took away the discussion in the space.