By Kim Da-ye
On Dec. 1 last year, Ha Hyung-seok, a 28-year-old former PR official at luxury fashion brand Tom Ford and three others decided to set up a company that sells boxed beauty product samples on a subscription basis.
Two months later on Feb. 8, the company named Memebox was officially launched. In the next four months, the company expanded quickly by unveiling a different kind of shipment each month ― a box of skincare goods for babies and mothers in March, the same for men in April, and a similar one for clothing in May along with a regular delivery of shaving products in June.
On Sept. 7, the company will completely overhaul the website that will effectively turn a young startup from a marketing company to an online retailer.
The fast expansion is its strategy to survive the cut-throat competition.
“If start-ups do not grow fast, they will fall behind in an industry with many players that offer similar services,” said Ha during an interview in the firm’s office in southern Seoul.
“Our principle is to make decisions quickly and get through failures rather than making slow decisions we regret later.”
Memebox differentiates itself from competitors by selling more than just beauty products. As of early June, the firm had some 30,000 subscribers, which Ha claims to be the largest customer base in its industry.
From the beginning, speed was the startup’s focus.
When the four founding members chose a subscription service as their business model, Ha said they aimed to open the company in 50 days.
The first four weeks were spent in developing a proposal to beauty products brands, vital partners to companies like Memebox.
In a typical business model of a subscription service, brands provide samples of their products for free to subscription-service firms that package them nicely and send them out to subscribers who pay monthly fees. Brands are, in a way, outsourcing marketing activities.
Ha believed that this business model would be the next big thing after social commerce services that offer a large pool of consumer discounts on deals of the day.
The next two weeks were spent on calling and meeting brands. The team’s strategy was making as many calls as they can.
Without a network in the beauty industry, the four started from the basics _ making cold calls to customer services numbers of the brands. They later found relevant numbers at websites’ terms and conditions section.
Once brands showed interest in meetings, they began to develop a website. “We pressed the website developers to finish within a month. They were mad at us,” Ha said.
The first box that featured big-name brand products including a sample of Acqua Di Parma perfume and a L’Occitane facial mask pack was an instant hit although Memebox wasn’t the first subscription-service provider in Korea.
Since what’s inside the box is not revealed to consumers in advance, the success of the February box lead to mounting expectations over the next box. Subscriptions for the March box were sold out five days after its release.
A one-month subscription costs 16,500 won _ consumers receive a 5-percent discount on a six-month subscription and a 10-percent discount on a 12-month one.
In March, Ha made a decision that he regarded as the biggest factor that has helped the company to draw customers as well as talent.
The monthly rent for the office was 1 million won, and it cost 3 million won to build the website. The bold decision was to hire a PR firm that charges millions of won each month. News Communications, one of Korea’s leading PR agencies, was chosen.
After abundant media coverage, Memebox began receiving a lot of resumes, and it became a key tool for attracting talents.
The company holds three 30-minute meetings a week, encouraging employees to share opinions, but Ha makes most of the decisions.
By the entrance of the office, quotes related to the late Apple founder Steve Jobs are plastered on a glass wall. One says, “People judge you by your performance, so focus on the outcome.”
The CEO said that swift decisions have also resulted in many mistakes. After some 40 minutes of conversation, he said, “We’ve talked about good things only so far, but we made a lot of mistakes.”
For a start-up in both the IT and fashion and beauty industries, the most difficult part of the business was managing cash flow, Ha said. The company hasn’t received any investment from outside, and did not have enough resource to hire a financial person at the start.
For instance, a large portion of consumers purchase the subscription through mobile phone payment system. Ha said that it takes three months for the money to land in Memebox’s account and that getting no money for the sold goods for a while was challenging.
As the company expands, Ha is now concerned that some of its business will overlap with those of large corporations.
“I initially thought we should focus on our business, not external factors. As we grow, however, I often wonder, ‘Can I cross the line? Can I behave as I want?’” Ha said. For instance, he tries to avoid working with brands that already have shops in large department stores.
Make most out of internship opportunities
Many young entrepreneurs in Korea come from wealthy families and have graduated from prestigious schools in the United States.
Asked if he was born with a silver spoon in his mouth and benefited from “upper class” networks, he denied it, saying, “I wish I had that.”
After studying Environmental Engineering at Kyung Hee University and serving in the military, Ha chose to study at Parsons The New School of Design, a major design school in the U.S.
During his studies, Ha interned at eight companies and his last employer was Tom Ford, a luxury fashion brand, which he said had a very small team. As the brand’s first intern, he said he got to do more than what an average intern would be allowed to. He once delivered clothes to actor Brad Pitt. He was at last hired as the firm’s marketing and PR manager.
“In-house press officials in American luxury brands tend to be white with blond hair and have graduated from Ivy League universities. I was just the opposite of that,” he said.
Hands-on experiences from the internships have helped him immensely in his founding of Memebox, and that is why the company runs a massive internship program.
The firm now has some 20 full-time staff members and another 20 are interns. In the summer when university students are on break, the company had around 50 staff members.
Ha said the firm receives many applications from those who read about Memebox on the media and Japanese telecom company SoftBank has introduced some high caliber candidates including a student from the Wharton School of the University of Pennsylvania, a leading business school in the United States.
“Start-ups are nowadays highly popular among job seekers, especially in the U.S. People think we are hot and cool,” said Ha.
While his reputation as an eccentric decision maker fun to work with draws some applicants, he also met future employees while delivering lectures about start-ups at universities. He recently participated in the start-up camp at Sogang University.
He said that people who join Memebox tend to be driven and constantly question him how the company would, should and could grow.
“Proactive” would be the best word describing Ha and the team. Memebox constantly seeks new marketing opportunities for the client as well as itself.
One example is the firm’s participation in New York Fashion Week. Five prominent Korean designers including Lee Sang-bon and Son Jung-wan will run a fashion show during this. Memebox will put together boxes with only Korean beauty products and distribute them to journalists and VIP guests attending the show. The box has been named “Concept Korea Box” while Ha refused to reveal the participating brands because the details are still under negotiation.