Outside the Box

Fresh off their $80M raise, the Broukhim brothers share how a deep knowledge of their customers turned a lifestyle blog into a unicorn business

If you’ve spent time on social media, chances are you’ve come across at least one famous face, such as Khloe Kardashian, Tori Spelling, or Lisa Rinna, feverishly unveiling an oversized box labeled “FabFitFun” and exclaiming over the products inside, like a child opening a gift on Christmas morning.

Brothers Daniel and Michael Broukhim and former TV producer and journalist ­Katie Rosen Kitchens felt that excitement when they received swag bags at the VIP events they attended while running a digital media agency and online lifestyle blog called FabFitFun. Launched in 2010, it focused on health, beauty, fitness, and home products for the ­contemporary woman.

“We took what we were learning from our readers at the time and the combination of the swag bag concept and took the business in a new direction,” Daniel says.

In 2012, they launched the FabFitFun box to their 130,000 readers that included more than $200 worth of full-sized products for beauty, fashion, fitness, and wellness. Now, in addition to receiving highly anticipated boxes four times per year, FabFitFun members have access to year-round perks like FabFitFun TV, a streaming video service that offers on-­demand workouts, daily lifestyle content, access to the online community, and members-only shopping experiences.

Michael Broukhim, Co-founder & Co-CEO (left), Daniel Broukhim, Co-founder & Co-CEO (middle), Katie Rosen Kitchens, Co-founder & Editor-In-Chief (right)

The Art and Science of Customer Satisfaction

To say the expansion has been a success is an understatement. Thanks in part to partnerships with celebrities such as tennis star Venus Williams and actress Brooke Burke, the boxes have sold out every season, and turned a small business of 25 employees into an international company with more than 450 employees globally. Additionally, Forbes recently reported the company’s more than 1M subscribers are now generating an estimated $300M in revenue.

When asked the secret of FabFitFun’s success, Michael says, “We focus relentlessly on the customer and delivering as much value as possible. I think that’s the hallmark of a good consumer company.”

Meeting customer needs is, Michael says, “part art, part science.” For FabFitFun that means developing more than 500 variations of the boxes per season for their customers, with help from Kitchens’ merchandising team’s ongoing surveys and a consumer insight and data science effort.

“When we’re talking to a brand, we actually have a good sense of whether or not a certain product is going to work within our ecosystem,” Michael says.

L.A. has a really great storytelling DNA and a lot of what we are as a brand and as a company is about storytelling around our products and our experiences

Daniel says good old-fashioned smart spending has also helped the company thrive in a competitive environment. “We’re not cheap, but we’re disciplined about our capital allocation,” Daniel says.

The trio recently raised $80M in Series A funding from Kleiner Perkins to help take their vision to the next level with a 600,000-square-foot fulfillment center in Chino Hills, Calif., new products, an online store with members-only deals, and more.

“We want to be positioned next to Amazon Prime, Netflix, Spotify, Costco as one of the handful of indispensable memberships that deliver the most value possible,” Michael says.

The Los Angeles Effect

Positioning FabFitFun in the heart of Los Angeles the entertainment capital of the world, was another power move for Michael, Daniel and Katie that’s helped boost its success. The city has become a hub for tech startups earning the name ‘silicon beach’. Much like Visionary of the Year Chris DeWolfe, CEO of Jam City, Daniel cites some of the same LA based successful companies that he admires including Tinder (the top dating site in the world) and Bird (a dockless scooter-share service).

“L.A. has a really great storytelling DNA and a lot of what we are as a brand and as a company is about storytelling around our products and our experiences,” Daniel says. “That drives a lot of what we do.”

More than just a business

Raised by Iranian immigrants who moved to the U.S. in the late 1970s after leaving eve­rything they owned behind them, Daniel and Michael say their parents have been their inspiration. Their father was an ob-gyn who became an entrepreneur, and their maternal uncles, who owned a fabric company, have served as mentors over the years. The brothers also inherited a spirit of serving others.

“My parents and I and Dan are manifestations of the American dream and I want to give back to make sure that that stays alive for my children and for future generations,” Michael says.

Philanthropy has become a part of FabFitFun’s DNA. Every season FabFitFun features a nonprofit and raises $30,000 to $50,000 for that organization. Moreover, all three co-founders have made it a point to underscore the importance of uplifting women at the company.

“We’re really proud of being a women-first company,” Michael says. “We feel really happy that we’re part of this movement of women affirming their place in the business world. We take pride in not only cultivating women leaders in the company but also to highlight women founders in the products that are in the boxes every season.”

Looking ahead, the brothers only see potential.

“Just like getting on Oprah’s Favorite Things list or being featured in a Super Bowl commercial, we hope that being featured in FabFitFun is that kind of change moment for small companies,” Michael says.