Team Analysis: Joe Martin

© Copyright 2020 Dileep Rao Joe Martin Boxycharm 1

From $375 To The Newest Unicorn In Beauty: How Joe Martin Built Boxycharm.com Without VC

Joe Martin started his first business in 2004 with $375 when he was an international student at a

community college in Florida. He built this business to more than $10 million in annual sales by

2012. He used $500,000 in profits from this business to start Boxycharm.com in 2013. Martin now

controls and leads a beauty company with sales of approximately $250 million in 2019, is on track

to hit $500 million in annual sales in 2020, and is considered to be the largest full-size beauty-box

business in the world. This is how he did it.

Martin fits the profile of unicorn-entrepreneurs who either avoided venture capital (VC) or delayed

it. Martin grew with internal financing, i.e. savings and sales, until 2016, when he raised a minimum

amount of private equity. Although his business was profitable and had annual sales of $20 million,

he wanted to raise capital for a rainy day. Since then, he has grown with cash flow.

Here are 10 lessons from Martin’s meteoric growth.

Get Inspired and Improve on an Emerging Trend: Innovation consultants and academics can

harp about first movers and innovation. The smartest entrepreneurs in the world are inspired by first

movers, but they improve on the first movers. They are inspired by the first-movers’ idea but go on

to improve the strategy and/or execution. This is much smarter than trying to come up with a perfect

product that investors will gush over. Leave that to shows like Shark Tank. No one can predict

success for your product unless you have cured cancer or the corona virus. Improving on an

emerging trend is what some of the world’s most successful entrepreneurs, including Jobs, Gates,

Zuckerberg Walton, and now Martin did. Martin was inspired by Birchbox and improved on the

strategy by offering full-sized products at great prices in a monthly- subscription strategy.

Get the Right Skills: 99% of unicorn-entrepreneurs take off with the right skills – not with venture

capital. The key differentiator between the first movers and the first dominators is the business

strategy, as noted above, and the skills to execute the strategy. For a previous venture, Martin spent

two years mastering the art of selling online. When the Boxycharm.com concept came along, he

was an expert at online sales and could execute it without VC.

Finance Growth with Control: Entrepreneurs who seek financing for their venture too early end

up losing control. To avoid losing control of the venture and the wealth created, take off without VC

and financiers are more likely to accept your leadership. This is what great unicorn-entrepreneurs,

including Jan Koum and Mark Zuckerberg, did. Unicorn-entrepreneurs who delay or avoid VC keep

100% to 500% more of the wealth they create (see The Truth About VC at www.dileeprao.com)

than entrepreneurs who seek and get VC early, and lose control to the VCs and hired CEOs. In his

first venture, Martin got financing from vendors who wanted to liquidate inventory. In Boxycharm,

he got financing from customers who wanted his beauty products and from cash flow. To control

his needs for cash, and grow with profits rather than with external capital, he also controlled his

growth rate.

© Copyright 2020 Dileep Rao Joe Martin Boxycharm 2

Use the Best Bootstrapping Sales Driver: To grow without VC, entrepreneurs need to master two

key variables that kill many new ventures – the cost of sales and marketing, and the level and timing

of sales. Spend too much on sales and marketing or get too little sales, and you will fail. With his

skills and experience in getting sales online, Martin was able to sell Boxycharm subscriptions with

minimal investment.

Make Customers Happier: Martin’s direct competitors primarily copied Birchbox and tried to sell

samples of products. Martin chose to sell the regular sized products of desirable brands, not a teaser

sample. His customers were happier and chose to stick with his company.

Keep Track of your Competitors: Many entrepreneurs often state that they have “no competition”

because they are so unique. Everyone has a competitor, whether direct or indirect. The best ones

learn from their competition and improve to beat them. Martin had quite a few competitors. He

analyzed his competitors to understand who they were targeting, how they targeted them, and how

he could make customers happier by offering better value. The problem is that when an industry is

emerging, everything is hazy and opaque, and it is not always clear what competitors are doing. No

war was ever won without intelligence. You need to know what your competitors are doing. Before

the Internet, companies would often invest thousands in industrial espionage rather than millions in

research and development. Today, we have the Internet and it can be used to track everything. Some

suggestions from Martin:

If a competitor opens a store, track traffic into the store

Track comments about the industry using sites such as Instagram and LinkedIn

Track competitors’ web sites, any changes, and web traffic

Look at who they hire and the implications

Look at competitors’ tactics to determine their strategy.

Try changes made by competitors. If it works, adopt it. If not, discard it. Do it quickly and move on.

Kill bad ideas to reduce loss of money and time. Adopt the good ideas.

Attend to Details: When you are shipping thousands of boxes, the cost of shipping is a key factor.

A few ounces can mean the difference between profit or loss. By keeping the total weight of his

package under control, Martin was able to keep his costs low and profits high. He also focused on

sales to countries where he could sell and ship easily, such as Canada, Mexico, and Puerto Rico.

Keep Cash Flow Positive: The major key to unicorn success, along with growth, is positive cash

flow. Martin was cash flow positive and profitable from the first month. That’s how you stay in

control of your venture. But to do so, you need skills. One strategy used by Martin was to outsource

each of his departments. He asked each department, such as his art department, to develop external

customers for increased revenues. By doing so, they increased both their experience and bonuses,

and Martin got more cash flow.

Grow Skills as your Venture Grows: As the venture grows you will need new skills. Otherwise,

your venture will stagnate or fail. As his business grew, Martin learned how to hire, how to control,

how to organize, and how to lead. These are skills you can learn.

© Copyright 2020 Dileep Rao Joe Martin Boxycharm 3

The Most Important Skill: Listening to Martin, I would conclude that his key skill is marketing –

and his key trait is continuous learning from everyone, including his customers, his competitors, and

his vendors. Some of his suggestions based on his experience include:

Look at the best marketers in your industry to understand their genius marketing ideas.

Find the next Rock-Star influencers and connect with them, especially before they make it to

the big time. After they make it, they won’t have time for you. But before they get there,

they will appreciate your help and insight, and (if they are decent human beings) be a

valuable connection. To do this, you have to know how to identify influencers who will

succeed, and to know your customers. Martin knew both.

Develop the right algorithm for your industry. Martin developed algorithms to determine the

best way to find new subscribers with low costs of sales and marketing.

Keep movement alive. Constantly change as the market changes and the industry changes,

especially in the ever-fickle beauty industry.

MY TAKE: There is a constant theme to unicorn success. It is nearly always in emerging industries.

It is nearly always based on strategic innovation and flawless execution. And it is nearly always

based on attaining the right skills