Up-scaling Happiness with Rasmus Schmiegelow

NB. This interview was made before the COVID-19 pandemic, thus, the company’s business strategies as explained in this interview might not be in accordance with current strategies. However, this interview is truly inspirational and we simply could not keep such thing from our readers. So, enjoy reading this interview with Rasmus Smiegelow.

We had the great pleasure to steal some of entrepreneur Rasmus Schmiegelow’s time for an interview about entrepreneurship, happiness, and success. Rasmus Schmiegelow is together with Nikolaj Leonhard-Hjorth co-founder of the Danish start-up, Goodiebox. A subscription-based start-up that on a monthly basis provides its more than 100,000 members with a box full of beauty products.

Goodiebox is fast-paced and has grown from start-up to scale-up in no time. The company was founded in 2012 in Copenhagen. Today Goodiebox count five offices, 170 employees and availability in 8 countries. They just entered the Swiss market and are not planning on stopping there.
As a start-up ourselves we live for learning from other successful entrepreneurs, and we want to share the great stories of these very inspiring people with you.

This is the story of Rasmus Schmiegelow and Goodiebox. Enjoy.

What did you do before you became an entrepreneur?
I used to be a lawyer, working in big law firms in Copenhagen and London, focusing on mergers and acquisitions. Pretty far from being a cosmetics entrepreneur and selling happiness as I do now. Therefore it was a big step coming from a super traditional set-up – as law firms typically are – and going into the startup world.

What made you take the plunge and create your own business?
I have always had a drive and I am very competitive, and as I got older and got to know more about myself I think I realized that I definitely wanted to create something myself. The drive and the ambition, from Nikolaj and I, was to create a company that we would have loved to be working in ourselves. We wanted to have full influence on making people happy. That was the core ambition when we started and that is still the core ambition today. We do not see Goodiebox as a beauty or cosmetics company, we are a happiness company, both towards our members, investors, brand partners and so forth, but most definitely towards our employees.

What do you consider the best and the worst part about being an entrepreneur?
The best is definitely to feel that you have an impact. Even though I considered myself a brilliant lawyer, in reality, you could not see it on the stock market price if I went to work that day or not. Today, I do have some more impact. If I am not going to work tomorrow – I at least tend to fool myself and say that – it would have an impact on the company.
[Being an entrepreneur] is super flexible or dynamic, some might even call it chaotic. It can be hard to predict everything that will happen today, tomorrow or next week. You can try to make plans, but it will always shift, so you should be good at embracing change. I love that myself, but having a positive attitude towards an ever-changing environment is necessary because it can be stressful, you never really have any time to settle in.
It requires pretty hard prioritization and being okay with making these choices, which can be a bit difficult. It is about finding your way and knowing you can not be the best at everything at the same time. Besides being an entrepreneur I am also a parent and married to Therese. But it is impossible to be the best parents, husband, owner of Goodiebox, colleague and friend all at once. Maybe it is old-school to talk about work-life balance, today it is much more popular to talk about finding your purpose, but in the end, it is about priority.
It can be difficult having to make these tough choices, but we have to adapt to the current reality. Goodiebox today is a completely different company compared to what it was one year ago and with the current growth. Probably in 12 months’ time, it will be a completely different company again. Therefore, I constantly need to look at the organization, what worked six months ago probably won’t work in six months. To adapt I always have to be ready to make the necessary changes to the organization. Also with colleagues that we are super happy about, they might not be in the right place just because Goodiebox is growing so much and so fast.

What is your greatest failure? What did you learn from it?
There are several – we probably spend several hours discussing my failures. But one thing I have learned is that it is super important for us as a start-up or scale-up not to have a zero-tolerance towards failure. Because it is a necessary part of running a start-up, you need so much momentum that it is inevitable that we will make several failures.
Another thing that other entrepreneurs can learn from is not hiring experienced people fast enough. That has been a mistake for me. The learning is to just be even more bullish than you think you have to be in regard to the quality of the people you take in. Try to hire two years in advance, get people in that might be too expensive for the current state of the business. There are only two things that can stop Goodiebox from reaching its full potential, one is running out of money and the second is not having the right people on board. 
I am still afraid of being too corporate, and maybe we are taking that too far, not investing enough in getting the right systems and processes in place as we scale.
A recent example of this is from a week or two ago, one of our local Marketing Teams was running a Facebook campaign and they could see it was going well so they wanted to increase the budget. The original budget for that campaign was 19.000 € and they just wanted to bump it up with 5.000 €. So it would go from 19.000 € to 24.000 €. However, because we did not have the right processes in place, a human mistake meant that we went from 19.000 € to 2.4 million €. Luckily, we realized after an hour, but in the last part of that hour, we were spending 2.000 € per minute. Meaning that we ended up spending 39.000 € in that hour alone.
A good learning experience – also a really expensive one. In this case, my fear of being too corporate probably meant that this mistake was possible. We are 160 -170 people now, compared to 50 people a year ago – so we scaled the organization really fast – and we still need to be really agile and nimble, but we also need to have the right processes in place as we scale.

Where did the idea for Goodiebox come from?
From a financial point of view, beauty is a super interesting category. In 2019 the market capitalization was 600+ billion $ globally, with only 7% being digital. The industry is dominated by older legacy players like Estee Lauder, L’oreal and Shiseidobut also P&G, Unilever and so forth.
It is a category with high involvement, which is important if you want to sell happiness. Beauty taps into something where people are engaged, as most women and more and more men have strong feelings with their cosmetics. So what we saw was a hole in the market with high involvement, massive potential and underserved by digital. Moreover, the predictions for this category are that the global beauty market capital will grow to 850 billion $ in 2023, and within those years the digital scope will go from 7% to 15%. So, it is a market with high growth and an even higher digital growth – that was a good place to start.

But to be honest, we do not have a specific love for cosmetics. Eight years ago, we were testing out a lot of stuff and right now we are doing great beauty products, but in reality, it could be anything. The real drive was that we wanted to start a company where the people could fulfill their full potential and develop as employees because we identified that this is a big part of feeling happy. Going to work should not be a necessary evil just to have a paycheck, but something that could support our employee’s professional and personal purpose, while at the same time bringing happiness to our members. That is the core DNA.
We know that none of our colleagues will retire with Goodiebox. Statistics show that you will have 19 different employers during your professional career. Therefore, we are completely transparent with our employees; we need to know what they can use Goodiebox as a stepping stone, to make their time with us worth it. When a new person starts with Goodiebox we make a development plan that enables them to go from A to wherever they want to go. Meaning that when they leave Goodiebox in five years’ time, Goodiebox will have gone from a market capitalization of X to a market capitalization of 10X – but so will they; their market capital will also have increased 10X in that period of time where we worked together. The thought is that whatever their ambition might be, the time with Goodiebox should help take our employees closer to their ambitions.

What is the secret to up-scaling a start-up like you have done with Goodiebox?
I think the core when you scale-up is that you have the right team and the right systems and processes regarding the team in place. Getting skilled people on board as fast as possible and making sure that they develop as much as possible. I would never be able to do this alone – neither would Nikolaj. Having the right team in place from the students working part-time to the leadership teams and making sure we scale the organization fast enough and ensure that we hire the right people, that is what it is all about.
In Goodiebox we are of course making sure we have full customer experience in place, from the top of the funnel, spreading awareness down to conversion, that is important. But it is also important that we have the same with employees. Having a full employee experience in place. Including how we recruit, how we do employee branding, how we do onboarding of new team members and how we make sure we have the right talent program in place so that everyone can develop within the organization. But just as equally important, people will also leave us, which is perfectly okay, but then we also look at how we can do offboarding in the best possible way. Making sure that these people continue being Goodiebox ambassadors even though they move on to work at a different place.
To make sure of this we have our own in-house mental coach who is heading our people’s team so that we are constantly working with the personal development plan of each of our employees. Taking good care of our team has been a core part of going from 50 to 170 people in one year, I think only 11 people left us at that time.

Why do you think that Goodiebox has become such a great success?
If we are just looking at selling a box with beauty products, everybody can do it. The entry barrier is actually pretty low and it is easy to start. So, our success is very much due to the fact that we see ourselves as a happiness company and not a beauty company.
We want to create ‘wow’ for our members every day. We treat them as our best friends, they expect a lot from us, but we still want to do more. This might mean that we need to make a really high investment in the short-term: The current record in Team Happiness (Customer Care) is 4 hours and 48 min., which was spent on one phone call with a member. The return on investment on that specific member I could never make sense of – but it tells the right story to our organization because this is just how we treat our members and we must always take time to do so. This is also why we do not have Customer Service, instead, we have Team Happiness. In Team Happiness there work no Agents but instead Happiness Heroes. Lastly, we do not have Tickets – you would never treat your friend as a Ticket – instead, we have Happy Moments. Happiness is just a penetrating factor in everything we do and that is also why we differentiate from our competitors and that is really also a crucial part of our success.

You have been saying a lot that “Goodiebox is a happiness company powered by beauty”, but I sense it is more than that, it is the whole company culture that revolves around this theme of happiness. Why is it so important to emphasize happiness both internally and externally Goodiebox?
That is spot on. We have scaled the organization with more than 100 people in one year. Our headquarter is still in Copenhagen, but we also have offices in Amsterdam, Berlin, London, and Helsinki, and across the company, we have 18 or 19 different nationalities. So, making sure that we all run in the same direction, knowing what we are aiming for and that is everything we do is powered by happiness. Therefore, communicating happiness – all the time – is just important.
The ambition is to be 300 people by the end of 2020, if we want to achieve this, making sure that we are all on the same page boils down to good communication throughout the whole team. I might be repeating myself talking about happiness all the time, but this is really essential for us.

You have recently expanded to Switzerland, what is the biggest challenge about starting up in a new country?
There are several challenges in starting up in a new country, and as I probably mentioned we sell happiness, but we also have found that happiness is different from country to country. What works in Denmark does not directly translate into other countries that is why we started doing anthropology studies in all the different markets. Our studies told us that in for example Denmark women feel that they just deserve happiness, the danish women do not need a reason for deserving happiness. In the Netherlands, we found that women need to feel that they have done something to deserve this happiness or special me-time. This is, of course, a bit generalizing because it is an anthropology study that tells us about the median of the general Danish or Netherlandish women. So, this approach is a big part of our strategy to set up in a new country and it has proven to have a pretty positive impact on conversion when we tailor our content to a specific location. 
For this reason, we also need to have local employees, in our new market in Switzerland we need Swiss employees to make sure that the content we are creating on a group level is localized to the right audience. That is really important and always a challenge when we start a new market. For that, we also have a New Market Launch Team, which is only responsible for Goodibox opening up new markets. They own the new market six days prior to launch and 90 days after, they then hand over the keys to a country manager. Moreover, this New Market Launch Team has a playbook, including instructions on everything from setting up the right payment gateways to an indexation model that looks at demographics, digital spend, GDP, media cast, competitor situation, and so on. This whole indexation sums up the total value that is a guideline for where to launch next.

So, what is up next for you and Goodiebox?
We have seen that our ability to take what we are doing well in Denmark and replicate it to new markets is actually working. In 2018, we launched in two new markets, in 2019, we launched in six new markets and this land grabbing will definitely continue in 2020. So far, we have launched in countries that are very similar to Denmark in size, such as the Netherlands, or in culture, such as Sweden. In November 2019, we launched in Germany, which is the biggest beauty market in Europe. Continuing this focus on the bigger markets is our goal for 2020 and we will launch in France and the UK.

Lastly, what is one piece of advice you would give to a young start-up/entrepreneur?
Whatever you do it is a people business. You might think that now you are in fintech or something that might not directly involve people, but regardless of that everything is a people business. It is all about the people you get on board, your employees are what stops you or enables your success. You cannot do everything yourself, even if you think you are the smartest person in the world – you are not – which is why it is so crucial that you hire people that are smarter than you are. If you cannot hire these people right away, then hook up with them or make sure that you learn other entrepreneurs and their experiences. Have mentors. Spend time on building your own network. You do not have time to reinvent the wheel or make all the mistakes that they have already made. That is my best advice.

© Goodiebox

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