"Goodiebox is not a beauty company. Goodiebox is a happiness company powered by beauty. We are a people-to-people company with a clear ambition to help make our members happy. " -- Rasmus Schmiegelow, CEO and Co-founder of Goodiebox
In 2012, Rasmus Schmiegelow and Nikolaj Leonhard-Hjorth founded Goodiebox, a company focused on spreading joy. The founders sought to tap into the skyrocketing beauty and cosmetics industry, and develop a product that would continually delight and surprise their customers. The result became the Goodiebox, a subscription service that brings new, tailored offerings to their customers each month. The firm has since expanded into direct to consumer beauty products, made with the input of its members. Their strategy is certainly resonating, as seen through YouTube unboxing videos, and top reviews on Trustpilot and Facebook.
Over the past year, Goodiebox has scaled beyond the Nordics to nine countries today, and tripled their members to 150,000. Key to their scaling strategy is their "design anthropology" methodology, an approach that aims to understand key differences and preferences between consumers in each new market. I connected with Rasmus Schmiegelow, the CEO and Co-founder of Goodiebox to learn more about their scaling strategy, and what other European founders can learn from Goodiebox's growth over the past year.
Hi Rasmus! Thanks for sitting down to speak with us. First, can you tell us a little bit about Goodiebox? When were you founded, and why weren’t the existing solutions on the market working for consumers? How is Goodiebox different?
My pleasure - and many thanks for the invite to talk about Goodiebox. One of my favorite subjects.
Back in February 2012, we sent Goodiebox no. 1 to the first Danish members. My co-founder Nikolaj and I did everything ourselves - sourcing the right products, helping members in customer service (we call it Team Happiness), packing all the boxes, content on social media and marketing. I used to work as a lawyer, having worked with venture capital and especially M&A with big law firms in Copenhagen and London (DLA Piper and Moalem Weitemeyer Bendtsen) as well as big corporates (Maersk) so it was a big change for me.
The main goal of Goodiebox is to create as much happiness as possible; for our members, employees and partners. This has been the core of Goodiebox since day one, and with over 150 employees in 5 offices and over 150k members in 9 European countries, this is still the guiding principle in all we do. Nikolaj and I wanted to create a company that we ourselves would have done everything to get to work for. Back in 2012, we saw that a gigantic sector – beauty and cosmetics (now worth $560 billion globally) – was still controlled by a few legacy players and only approximately 7% of global sales were digital. The way to reach consumers was changing with social media and we could have European (and global) access to consumers (at Goodiebox we don’t have consumers we have “members”) much faster than before, when you also needed brick and mortar retail.
At Goodiebox we differentiate from our competitors in three ways:
- We are member-centric in everything we do. The members are really the starting point for all our activities and we have a very bold ambition of having the happiest members in the world. We really want to be best friends with our members. This is for example the reason why we don’t have customer service but Team Happiness, not agents but Happiness Heroes, not tickets, but conversations and KPIs for keeping the conversations as long as possible (the record for a phone call is 4 hours and 48 minutes). So our members really like our products but they love our insanely great service. Which is also reflected in our TrustScore on Trustpilot and NPS of over 70. We know that we got to earn this trust and dedication from our members and just because we did great with our Danish members yesterday we still need to prove ourselves for all our new members across Europe tomorrow and the day after tomorrow.
- We are born global but we have our roots in Denmark and Copenhagen with the proud Scandinavian design history. When you compare Goodiebox with our competitors you can definitely see that we are a Scandinavian brand. Just like S-beauty differs from the rest of the beauty brands.
- We decided from the start that we wanted to offer more value to our members. We are more expensive (EUR 20 per month were our competitors are EUR 14-16) but we also offer more full-size products and better brands. We can see our members really value this and we have much higher retention than our competitors.
The unit economics of subscription boxes can be quite challenging. How has Goodiebox been able to succeed, where so many others have failed? [I covered the subscription economy on the Tech.eu podcast #121]
As mentioned, we are a happiness company and not a beauty company and we are different in many ways but especially with our insane member-centric approach, our Danish design heritage and higher-value products. As a consequence of these differences, we have better gross margin, higher retention and thereby higher life-time-value than our competitors. And with a staple acquisition cost we also have a better CLV:CAC ratio than our competitors. We have been able to launch Goodiebox in 6 new European countries in 2019 with a 3x on members and revenue and still maintain a very healthy CLV:CAC ratio.
It seems like your strategy is working-- your company has had some incredible growth over the past year-- you’ve grown your team and you’ve scaled across Europe. When it comes to scaling outside your home market into other European countries, how do you know it is a good time to make the move? Is there a clear sign that you know you’re ready?
Scaling to new European markets can be really tricky and we have definitely had our fair share of failures. But we have also been able to fine-tune our playbook for entering into new countries and we have a super skilled and dedicated New Market Launch team. Our NML team “owns” a new country 60 days prior to launch and 90 days after launch before they hand over the keys to a country manager. And it is really impressive how our NML team has developed since our first launch in the Netherlands in March 2018. Before we decide on a new market, we use our own indexation model where we score many different aspects such as size of target audience, digital penetration, disposable income, competition, media price, logistics costs etc. And if the score is high enough, our NML team starts the planning.
"We have an all female country manager team (Mieke, Anna, Marita and Stine) in place in Copenhagen, Amsterdam, Berlin and Helsinki and our growth the last couple of years would not have been possible without them. They are insanely skilled and have been absolutely instrumental for Goodiebox and our ability to keep the Goodiebox culture while having grown our team from 50 to now +150 in less than a year." -- Rasmus Schmiegelow
What should other founders know when they’re looking to go abroad? When it comes to evaluating the options in different markets, what are some of the things that founders should consider?
As mentioned, it has really worked for us to have a dedicated NML team and a detailed indexation model to base our decisions on. Further, it has been absolutely crucial for us to have the right country managers as P&L owners in the countries and regions. This is not something we could have done from a desktop in our Copenhagen HQ. We have an all female country manager team (Mieke, Anna, Marita and Stine) in place in Copenhagen, Amsterdam, Berlin and Helsinki and our growth the last couple of years would not have been possible without them. They are insanely skilled and have been absolutely instrumental for Goodiebox and our ability to keep the Goodiebox culture while having grown our team from 50 to now +150 in less than a year.
Further, it has also been a real challenge for us to learn the cultural differences among members in Scandinavia, Benelux and DACH. The Goodiebox version of ‘happiness’ working in Denmark is not working 1:1 in Austria. Making sure that we on group level oversee what is working in the different markets so we can support local growth and content teams in the best possible way has been difficult and we have experimented a lot before we found the right scalable formula.
Goodiebox is not a beauty company. Goodiebox is a happiness company powered by beauty. We are a people-to-people company with a clear ambition to help make our members happy. To make this ambition and our brand claim credible and authentic we have invested and taken the time to use design-anthropology to deep dive into each and every one of our nine markets to fully understand what makes a German or Danish or Finnish women unique.
In this work we found much bigger differences than first anticipated and was surprised to learn that each country to such an extent is truly unique in its overall culture code and how women view the expectations towards women. Either from themselves or from the surrounding society. Our brand and our reason for being is consistent across all markets but we use behavioral design and anthropology to understand how to better articulate this in a meaningful way depending on the culture we see ourselves in. This was not easy. Neither solving the challenge and getting the insights, nor taking the time and investment to make this long-term investment and supporting our brand by really investing in our relationship with our members.
You’ve also scaled your team considerably over the last two years. How has Goodiebox been able to maintain your company culture while building the team so quickly?
"I dont want to sugarcoat this. Growing the organisation this fast has been a challenge, as Nikolaj and I have the ambition that Goodiebox should be the best place to work at. Making sure that we have the structures and processes in place have been very demanding and we are not 100% yet. Also, making sure that we have the same Goodiebox culture in the different offices and within the different teams have been challenging." -- -- Rasmus Schmiegelow
Keeping company culture can really be tricky when you scale your team and go into several markets at the same time. And our country managers have really been amazing in building Goodiebox culture in the new offices. So picking the right management for new markets cannot be underestimated. When I speak to other founders, we have been super lucky and fortunate to have Mieke, Anna, Marita and Stine running the local offices.
Further, we have a very detailed recruiting process where we do a lot of testing and screening. Not just for skills and experience but especially for personal and cultural fit. This screening process also helps with a very low employee churn and in 2019 only 7 people have left Goodiebox while +100 have joined us. Our Talent Acquisition team has been crazy busy. But I dont want to sugarcoat this. Growing the organisation this fast has been a challenge, as Nikolaj and I have the ambition that Goodiebox should be the best place to work at. Making sure that we have the structures and processes in place have been very demanding and we are not 100% yet. Also, making sure that we have the same Goodiebox culture in the different offices and within the different teams have been challenging. Therefore, I spend a lot of time traveling to our local offices making sure that we have one Goodiebox culture in all locations and that all new employees understand our purpose and what makes Goodiebox special. These days I spend all my time on people & culture, funding and trying to figure out where Goodiebox should be in three years.
This summer you successfully raised your series A. Can you talk a bit about your fundraising strategy and how this investment has supported your growth in Europe?
We have been quite effective with our capital. We have raised EUR 10m in equity and debt and we have just reached an important milestone with an ARR of EUR 30m (3x compared to end of 2018). We have raised money from a very skilled business angel with lots of consumer subscription experience (Morten Strunge) and from two well-known Danish family offices (inQvation and Lind & Risør).
We have really fine-tuned our growth machine and control our key metrics (especially CAC, Churn and CLV) and we are now in a position where we in a sustainable way can deploy much more money into our land grabbing strategy. So we have used our series A to prove that we can scale Goodiebox into several new markets in a very short time and actually penetrate our target audience better and better for each market launch. Launching Goodiebox in Germany - the biggest beauty market in Europe - on 7th November was a great milestone. And the launch has been even better than we dared hope for - in the first month we got +20% more new members than we had planned.
Therefore, we have just started raising our B round of approx. EUR 30m which will bring Goodiebox to a position as market leader in Europe by the end of 2020 with +300,000 members and an ARR of EUR +60m. We have the support of our current investors but we will most likely add 1-3 new investors with extensive experience in scaling consumer startup across Europe and North America.
What’s next on the horizon for Goodiebox? Where should we look to find you next? Any new product offerings we should be on the lookout for?
In five years Goodiebox will have over two million members across Europe, the US and Asia with personalised boxes based on AI and member preferences.
But Goodiebox is more than a great box with awesome beauty products. We really want to create an emotional connection with our members and give them happy moments not just when they receive their Goodiebox, but everyday. So in five years Goodiebox are creating great content (podcasts, videos, long-reads etc.) with members and other external partners. Not just on beauty but on all aspects of life making you happy.
Finally, over the last five years Goodiebox have created several beauty brands based on all the insights and learnings from our members. Our own Comme Deux is the first brand co-created with the members and the initial feedback is amazing. Utilizing tech and feedback from millions of members, we can create relevant products brands to every beauty consumer – taking DtC beauty to the next level. We call it DwC (direct-with-consumer) brands. You will see much more to Comme Deux in 2020 and we will also launch new DwC brands in 2020 and the years to come.