Katia Beauchamp, Birchbox’s CEO, has been on the road, trying to find a buyer for her company, hitting up everyone from Walmart to QVC. After months of talks, they each ultimately declined.

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This week, Recode reported that Viking–a global investment firm that manages $25 billion in capital and is one of Birchbox’s existing investors–has agreed to invest $15 million in the company, thereby acquiring a majority stake. With this deal, Viking will effectively wipe out Birchbox’s other investors, including top firms like Accel Partners and First Round Capital, which will now walk away with nothing. It’s a major turn for Birchbox, which launched to much fanfare in 2010, raised nearly $90 million in financing, and was once valued at half a billion dollars. Some of Birchbox’s struggles became apparent over the last two years, when the company conducted two rounds of layoffs, resulting in 15% of the staff being fired. At the time, Beauchamp said that these cuts were necessary because the company needed to become profitable, a goal she said Birchbox achieved last year. When Fast Company reached out to Birchbox for more insight, the company’s publicist shared prepared comments from Beauchamp, who framed the new investment as a valuable lifeline, especially since the other potential acquisitions would have resulted in Beauchamp losing control of the company. (Fast Company has asked whether Beauchamp is available for a more in-depth interview and will update if she agrees.) “Viking Global Investors, a longtime investor in Birchbox, has provided a growth equity investment in exchange for a majority interest in the company,” she said. “As an independent company with renewed investment, we are in a position to actively pursue plans that help further our mission and fuel our ambitious goals in the U.S. and in our global markets.” While Birchbox now has the funds to keep plugging away, it’s a very a different outcome than what many in the industry expected just a few years ago. So it’s worth asking: What went wrong? What does Birchbox’s fate signal for other digitally-native commerce startups? Business Model Problems Birchbox helped pioneer what would become known as the subscription economy. For $10 a month, Birchbox would send customers monthly boxes of beauty samples, tailored to their own particular needs. But even though it was a simple idea, Birchbox was solving a fairly big problem in the beauty industry. Until it came along, there was no way for women to experience the fun of discovering new products at home the way they would at a department store beauty counter.

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It was equally important that the experience of receiving the monthly box was delightful: Birchbox wrapped the samples in beautiful packaging, so customers would feel like they were opening a present. The novelty of this experience was exhilarating to many women, and this spurred a wave of other monthly boxes offering everything from socks to sex toys—a phenomenon I documented in a story from 2015. While consumers loved the experience of getting products delivered every month, it was never clear how the subscription model was a good way to make money. When I’ve spoken to Beauchamp in the past, she’s always emphasized that the boxes themselves were never the heart of the business. (Beauchamp has also addressed this in a Medium blog post.) After all, it was hard to make the kind of revenue that would entice investors on a $10 box, with only a sliver of a margin after accounting for the cost of shipping it to the customer. Beauchamp said the goal was to get customers to buy full-sized versions of the products on the Birchbox website or store. The problem with this was that there was no mechanism to make customers buy products directly from Birchbox when they could just as easily buy them from Sephora and Ulta. While Birchbox has been working to build out its retail experience, it is hard for the startup to compete with these giants, which have a much bigger footprint in malls around the country. Both Sephora and Ulta have also invested heavily in their omnichannel experience, boosting their e-commerce shopping experience and allowing customers to move seamlessly from shopping on the website and in store. In Sephora’s case, it also offers a $10 monthly box of samples called Play!, which mimics the Birchbox experience in every way. Other beauty subscription boxes have had more success by monetizing other aspects of the business. Take Ipsy, for instance: The brand was founded by YouTube influencer Michelle Phan, and works with other influencers with massive audiences to start conversations about the samples customers receive. Ipsy not only makes money from the subscriptions, but also from brands whose products they feature in the monthly bags, and from advertising revenue generated by Ipsy influencers. It’s unclear how Birchbox is going to start making money without radically changing its business model. In her statement, Beauchamp said that her goal is to use the infusion of cash to do more of what the brand has been doing already. “We are prioritizing product innovation, the evolution of our digital experience, and scaled partnership opportunities,” she says.

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The Decline Of The VC Darlings Birchbox isn’t alone in its struggles to stay afloat after taking on a lot of funding. Bonobos, which launched in 2007, was in much the same boat. The brand was founded by Stanford Business School students Brian Spaly and Andy Dunn, who wanted to disrupt the menswear space by selling well-designed chinos online. The company, which owned its own factories, was also a VC darling. Over the course of a decade, it raised $127.6 million in capital from some of the same investors that funded Birchbox, including Forerunner Ventures, Accel Partners, and Glynn Capital. This funding allowed Bonobos to invest in its supply chain and experiment with new concepts, like its Guideshops, where men could get styling advice and order products that would get shipped to their homes later. But this massive investment also saddled Bonobos with challenging–perhaps unrealistic–growth targets. Trying to scale quickly came with many pitfalls. Dunn tried to hire a new CEO, but she quit after three months because she couldn’t change the company’s culture during this period of high growth. In the end, Dunn ended up in the same place as Beauchamp: He needed to sell the company. Last year, Bonobos announced that it was being acquired by Walmart for $310 million. It was a move that many thought was strange given that the two companies have such different customers and values. Similar stories played out with other digitally native brands of this generation. Nasty Gal, founded in 2006, went bankrupt before being acquired by Boohoo for a fraction of the $65 million investors had poured into it. Gilt Groupe, founded in 2007, sold to Hudson’s Bay Company last year for $250 million, which was less than the $268 million taken from investors. The e-commerce player Fab, founded in 2010, landed $310 million in funding, but sold itself in 2015 to PCH International for an undisclosed sum. (It was rumored to be as little as $15 million.) No Free Lunch Boxes There were idiosyncratic reasons that each of these companies ended up where they did. But in many cases, the founders felt that the solution to their woes was to find investors who would pump in more money. It should now be clear that VC money comes with strings attached. With the pressure to grow as fast as possible, it can be hard to stop to rethink the fundamentals of the business model. Pivoting is hard because it often comes with short-term revenue losses.

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This is something that Beauchamp herself described in a Medium post she wrote last year. The article makes it clear that she was singularly focused on growth and getting out of the red. She describes the austerity measures the company took, including laying people off and removing tens of millions of dollars in operations and logistics overhead. “We went into 2016 deciding that we would have to make changes that made profitability our first priority,” she said. According to Beauchamp, these hard transitions worked. The company became profitable and had a record-breaking 2016 holiday season. “I’m proud to share that Birchbox is now profitable, self-funding accelerated growth and standing on our most solid ground ever,” she said. “This is our new reality.” But by 2017, Beauchamp was back to trying to sell off Birchbox. Multiple sources told Recode that if QVC had acquired Birchbox, it would have essentially been a fire sale. With the new infusion of $15 million from Viking, Birchbox has yet another opportunity to turn itself around. The question is whether the company will now have the time and freedom to consider new revenue models, or whether it will be forced to double down on its current strategy, which seems to be fundamentally broken.