How to Build a $40M Subscription Business: An Interview With Michael Broukhim

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There’s something quite satisfying about coming home, after a long day at work, to find that your subscription box has been delivered.

Unboxing a subscription box is like opening a gift, and discovering what’s inside.  It’s no surprise that the subscription box industry is thriving!

Several entrepreneurs are launching various sized subscription box services, catering to an array of buyer personas, from pet owners to wine connoisseurs.

However, with the barriers to entry in the subscription box industry continuing to fall, these entrepreneurs are coming up with increasingly creative variations to this successful business model, and taking their services global.

Michael Broukhim is one such entrepreneur. As co-CEO/co-founder of FabFitFun, Michael has sold 2,000 beauty boxes in 2 days, and is continuing to see growth of 300% year on year.

This is extremely impressive, considering the nature of the industry.

Eric asked Michael 13 questions to reveal how he ensures that FabFitFun thrives where others fail, used social media influencers to find the voice of his company, how he works alongside his brother, and much  more.

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Here’s what he said…

1) Why don't you tell us a little bit about who you are, and what you do?

Absolutely. Along with my brother Daniel, who is co-CEO & co-founder, and Katie, our editor-in- chief, we run FabFitFun.

To give you a little bit about the company, we offer a box of products every season, it's actually beyond a beauty box, it’s a whole lifestyle experience. The boxes include products relating to: beauty, fashion, fitness, wellness, household and technology. It really can be anything.

It’s a happiness membership. Some of these different memberships might personify a person: the beauty boxes might be your make-up artist or your beauty shopper, and there are fashion products, which are your stylists. We think of ourselves as being your best friend. Showing you products to make your life better, to just brighten up your day, and inspire you to try new things and stretch a little beyond what you're thinking about in that given moment. We tend to be very busy, so this is a real treat yourself, take care of yourself type of product.

That's what we do at FabFitFun.

2) How do you guys make money?

The old fashioned way, our members pay us. The subscription is $49.99 per quarter, or $180 for an annual subscription where you pre-pay. Each box has products worth over $200 in retail value.

Then there's a whole slice of content and community features that members can access. There's a lot of value for our members and that's why they pay us for it. We also have a little bit of a heritage as a media business. Also, there are brand partners and sponsors that contribute to our revenues.

3) How did you come up with the idea originally?

I think FabFitFun, was in a lot of ways, a happy accident.

I don't want to take full credit for the idea. It has been a collaboration of myself, Daniel, Katie, and the rest of the team. There have been a lot of people around us who've helped us to figure out a lot of the nuances.

In 2009, We helped Zoe, our first entertainment client to come up with a concept, and launch ‘The Zoe Report’, her online media property. That set things in a new direction. We shifted gears fully into lifestyle and entertainment.

We launched FabFitFun as an internal experiment. Initially, it was just a media business producing editorial content across all of lifestyle. At some point we said we want to be more than just media, we wanted to actually have a product, we wanted to sell something. 

So we launched our subscription box service in 2013, and the rest is history.

4) At what point was it “we're going to go all-in on FabFitFun and do away with the agency”? Was there ever that transition?

To be honest it was gradual.

When we started FabFitFun, we didn't think this was going to be it. We didn't know, we just said: “this is interesting!”There was a lot of traction as a media business. Our agency clients helped us to pay the bills and we kept that up. It overlapped for a couple years.

Where there's smoke, there's fire, and the thing starts paying for itself and more. We saw that with FabFitFun. The potential was enormous, and at some point, it just naturally just sucked up more and more of our time to the point where there was nothing left.

5) In terms of subscriber’s revenues, what does it look like?

The number that we've shared, and are really proud of, is that we did over $ 40 million in revenue in last year, 2016.

In the fall, I believe we talked about our crossing the 200,000 subscriber number.

We've exceeded that now, but we're not sharing those numbers at this point. We're excited! We're seeing a tremendous amount of growth. Our members are really, really getting something out of their experience and I think there's just a tremendous amount word-of-mouth and excitement around it that has been propelling our growth.

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