By Deena Malkina (Founder & CEO, BeautyBloc)
BeautyBloc was founded with the mission of connecting consumers to high quality beauty vendors through exceptional deals. We help our customers discover great new beauty brands, products, and services at a fraction of the cost while generating exposure and new business for our vendors. In August of 2011, BeautyBloc was acquired by Spaphile. More information is available at BeautyBloc and Spaphile.
The last year has been an incredible and exhilarating learning opportunity. In this post, I share ten of the most memorable lessons from my experience as a first-time entrepreneur.
What worked for BeautyBloc:
1. Staged investment
Whether bootstrapping or working with a generous amount of outside capital, the concept of staged investment will maximize the efficiency of your funds and curtail unnecessary losses. Think of your startup as a series of experiments, each building on the previous one’s results. Investing in experiment “C” before completing experiments “A” and “B” will prove wasteful, if the outcomes of “A” and “B” are unfavorable or prompt a pivot.
We applied this principle rigorously at BeautyBloc, and as a result, were able to maximize our return on investment during the sale of the company. One example of this was our negligible web development cost. Our “Phase I” website was built using open source and other third party solutions, avoiding a hefty upfront investment in technology.
2. Exit plan
Build your startup with the exit in mind. Knowing what your goal is will help you optimize your team and your strategy to position yourself for success.
Given that the daily deals space is crowded, our goal for BeautyBloc was to build a valuable company that could eventually be sold to a key competitor. We thus knew in advance that beating the industry user acquisition costs, for instance, was a high priority and developed our go-to-market strategy accordingly.
3. Constant networking
Networking is vital. Both prior to launch and as we grew BeautyBloc, we attended networking events virtually every night and leveraged online tools heavily. From key sales leads to strategic partnerships to, ultimately, offers from potential acquirers, networking was a bottomless trough of golden opportunity.
4. Meticulous validation
Validating every key aspect of your idea can save you a ton effort. Some of the items worth verifying thoroughly are customer demand, investor appetite, supplier availability, sales pitch effectiveness, marketing strategy, and technological feasibility.
Prior to beginning any work on BeautyBloc.com, I held over 50 informational interviews with folks in the beauty and wellness industry, and the insights I gained were instrumental in structuring the company.
5. Timely pivot or exit
If you’ve been diligent about conducting the appropriate experiments and validation, as described above, but the results are just not supporting your hypotheses, do not fall victim to “commitment bias” and know when to cut your losses.
One of the chief focus areas for BeautyBloc was procuring nationwide deals as opposed to just local ones. When the data showed that local deals resulted in significantly higher conversion rates, we reacted quickly to avoid losses.
What could have gone better for BeautyBloc:
1. Division of responsibility
The people on your team and the team’s structure are fundamental ingredients of success in a startup. I was fortunate enough to work with amazing people, however, I made a critical mistake in allocating responsibilities. Because I wanted to get to market quickly and had both a business and a technology background, I took on the duties of both the CEO and the CTO.
We did get to market swiftly, but the workload was unsustainable and the structure wasn’t scalable. At the same time, because I was already working 16-20 hours per day, I had minimal time to look for another CTO. Be sure to structure your team well up front and distribute key/high workload responsibilities. Being both the heart and the soul of an organization is not as glorious as it may sound.
2. Industry knowledge
Ensure that you’re getting into a game you know how to play. Industry experience will both save you time and increase your chances of success. I had no background in the beauty and wellness space, and paid for it with the scarcest resource of all –- time.
3. Target market empathy
It is incredibly important to empathize with your target market. The fact I chose our niche based purely on the existence of a market opportunity and that I wasn’t a frequent consumer of beauty products and services myself, resulted in more trial and error decisions and time-consuming research than would have been necessary otherwise.
4. Practical validation
Although a great deal of valuable information can be gleaned from meticulous validation via informational interviews, surveys, and other tools, nothing is quite as powerful as validating your offering in practice.
An example of this at BeautyBloc was our initial decision to prioritize nationwide deals. Despite the tremendous amount of positive customer feedback we received, our subscribers were not voting for this approach with their wallets. Testing this by asking prospective customers to buy, as opposed to whether they would buy, at the outset would have saved us time and resources.
5. Work-life balance
Work-life balance is not something most entrepreneurs expect to have and, yes, you do need to work hard. However, you must also ensure that you won’t run yourself into the ground, if you are interested in growing your company longer term. Even if you get everything in the foregoing sections right, when you’re passionate about building your business, it will be hard to draw boundaries and not work on it 24/7. It is critical that you make every effort to set these limits, so that you can do basic things to keep yourself healthy. Don’t take the risk of learning this lesson the hard way.
Editor’s note: Got a question for our guest blogger? Leave a message in the comments below.
About the guest blogger: Deena Malkina is the Founder and CEO of BeautyBloc and serves on the Advisory Board of its parent company, Spaphile. Deena has extensive experience in product management within the technology industry. Prior to founding BeautyBloc, she ran a senior PM team at Symantec, where she was the only female manager in her group. Deena holds a B.S. in Information Systems from University of Colorado at Boulder and an MBA from Harvard Business School.