From a masseuse to a business with a turnover of $ 60 million: how Masha from Russia won New York
'18.06.2019'
Source: The Bell
Maria Nurislamova - co-founder and CEO of Scentbird, a platform for the selection of perfume. Her business is the sale of probes to people who want to wear different flavors. And she receives the perfume from the manufacturers for free, and sells them for about $ 15 per bottle. 300 thousand Americans use its service. Nurislamova said in an interview with Elizabeth Ossetia for The Bellhow she changed her company's business model four times and did not get depressed; what it was like to be the boss of her boyfriend, and she explained how she was going to disrupt the beauty industry.
Reference: Scentbird was created in 2014 by four co-founders: Maria Nurislamova, Andrey Rebrov, Sergey Gusev and Rachel ten Brink. The total investment is $ 28,4 million. Reddit founder Alexis Oganyan, Y Combinator, TMT Investments and others invested in the perfume business. The service operates in the USA and claims 300 thousand subscribers and annual revenue in the amount of $ 60 million.
How to move from Berezniki to New York
- I, as a business journalist, know well about the city of Berezniki, because there is the Uralkali enterprise there - because of potash mining, voids and gaps are formed there. There are famous photos: a huge dip in the ground, and on the edge is a small house. When you lived in Berezniki, were you quite well there, or did you dream of living somewhere else?
- I always had a lot of ambitions. True, when I lived in Berezniki, I rather wanted to win the English, Russian, and literature Olympiad.
- I read that in 10 years you made beads and sold them, and this was your first business.
- It's hard to call a business. I had a very adventurous girlfriend from a poor family. She wanted toys, books, and she said to me: "We will weave little crocodile beads and sell." We traded on the street for five rubles for a crocodile. Enough for chupa chups and chocolates.
- You studied at the Perm Polytechnic on applied mathematics. And suddenly you decide to go to the USA to study marketing.
- In my heart I am rather a humanist. Since childhood, she loved to read, she loved languages. True, it so happened that in mathematics I still received fives. When we moved to Perm, I got into a class with in-depth study of mathematics and English. In the first semester, everything was very pitiable for me with mathematics and fine with language. But I'm a stubborn person. In 11 class, a teacher of higher mathematics said: “Mashka, now you will go to university if you go to learn English, I will kill you myself. You can't destroy your brain on languages and the humanities, go and be a mathematician. ” I respected her very much and therefore I went.
“Why didn't you graduate from polytechnic?”
- Went to the United States for the exchange program. To New York. Three months later, the program ended, I returned and told my mother: "I don’t want to study here anymore, I will go to America." Mom was shocked. But she took my side. Dad was very opposed. I did not want to talk to me for a month. Then it cost.
On the subject: As a victim of domestic violence from the Ukrainian hinterland, became a famous artist in New York
- You studied at some Baruch College.
- Yes, this is such an ordinary urban business college, part of the City University of New York. Cheap - $ 7 thousand per semester. I received a bachelor's degree in two years.
- Who helped you with money? Parents?
- No, I worked. In America, you can take classes at any time. You can take classes on Saturdays, Sundays, on 8 in the morning or on 8 evenings. Very convenient for people who work and study at the same time.
- And who did you work?
- A waitress, a masseuse.
- Masseuse?
- Yes. I learned back massage in 10 minutes. I watched the video on YouTube.
- Have you learned to massage by video on YouTube ?!
- Yes. Why? Life made. I also taught speed reading courses. To me such serious uncle who work on Wall Street went.
How and how Nurislamova helped the founder of the site Reddit
- Back to college. So marketing?
- In Baruch it was interesting, the college inspired me to create an online business. Sometimes they organized panel discussions, invited interesting speakers. One day there was a discussion about Internet entrepreneurship, one of the speakers was Alexis Ohanian. He talked about how he founded the Reddit website with his best friend in college and how it all took off and they sold it to Condé Nast.
I could not sit on a chair, I was shaking. I look at him and think: so, this is my future, I want it so. I ran up to him after the event, saying: “Alexis, we need to be friends with you, you inspire me so much, give me your business card”. I wrote him a cute email, then another, of course, he did not answer. Then one day we went to a cafe with a friend, and Alexis was sitting there. I am to him: "You did not answer me by email" ...
- And what is he? Closed chair and ran away?
- No, he's a very nice person. I said to him: “Alexis, I want to interview you, I will have a YouTube channel. I'll ask you about how you started Reddit. ” And he agreed. We did this interview on 3 hours, I edited it in 30 minutes and posted it. Of course, I was very inspired. I had a million ideas how to make a startup. I constantly called Ohanian, pulled: can I have advice, can I have another one? In 2013, I made the Beta Week conference in Moscow, and he agreed to become the main speaker.
How the idea of Scentbird service was born
- I read that the idea of Scentbird originally belonged to Sergey Gusev, your cofounder.
- Yes, I then lived in New York, and he in Moscow. He had his own startup, they monetized blogs. Sergey from Perm, I lived in Perm for several years, but we met through Facebook. We really liked the idea of gamification.
- What were you going to gamify?
- Everything in life. At that time, he thought about how to geamize the alarm clock, Sergey always has very extraordinary ideas. He says: we need to do business. I say: come on. He says: now we divide the whole world into two halves, a white team and a black one. Everyone who logs into the app will play a game with us - you need to get up by the alarm clock the first time, without pressing the "let me sleep again" button. If it turns out, your team gets a point. If not, it loses. Every day, some team one wins, and some lose.
- You didn’t have a thought: “Sergey, are you crazy”?
- Yes. But in a good way. Two days later, he filed a prototype. I have never seen such fast people. Sergey helped me with Beta Week, we realized that it was easy for us to work together. Another year we discussed ideas. I love perfumery, Sergey came up with a perfume recommendation system. We made a landing page, I received a request from the user by email, I recommended something: a fragrance for the summer, an office, and so on. Soon we realized that we need a systematic approach, and decided that we need CTO, a person who understands big data.
- So appeared Andrei [Rebrov]?
- Yes, he responded to Sergey's letter, which he sent out on his base of programmers. We gave him a part of the company, a share. We had no money, everything worked on enthusiasm.
- This is some kind of gamble just. You have another fourth founder, Rachel [ten Brick]. Did she come right away?
“We started working around August 2013 on the idea, Andrew appeared in October, and Rachel was partially with us since the beginning of 2014.
- How did you decide that you would be a CEO?
- I do not know. I just said I would be the CEO. And Sergey has no ego. He said: please, even the queen.
- Are you a couple?
- Yes.
How to find a business model that earns and sell it to investors
- How did you come up with everything further?
- We had four business models, one worse than the other. Before the one that worked, we built a model with 40% fraud - theft. We sent three bottles of perfume to a person, for free, and hoped that he would keep the one he liked and send the other two back.
- And pay?
- Yes.
- Well, you are fools.
- Liza! Where have you been before ?! Well, then I believed in the honesty of the Americans. But almost half of them simply left the box for themselves and did not pay anything. Of course, we had their cards. We shot the dollar, it seemed that this is a normal client. The box is gone, the cost of the box is $ 300, when it did not return at the appointed time, we tried to withdraw $ 300 from the client’s card. And then all four kofaunder stood over the soul of Andrew, our service station, who carried out this payment. Tries to withdraw $ 300 - card failure. We are: try $ 200! Some cards managed to remove $ 20.
- I wanted to send all this to hell and go to work to get a job?
- Of course. Well, there was no desire to get a job, but there was a feeling that the perfume would never go down. What is this market, not interested in innovation and in us. But we entered the ERA Accelerator - Entrepreneurs Roundtable Accelerator in New York. I knew the founder, he for some reason thought that I was a talented entrepreneur, and offered to apply. They took us and gave us $ 40 thousand. I felt like just a billionaire.
We killed half the money for a business model that didn't work. Then we started discussing the idea of a cosmetic brand with the guys. By the way, after a few years we really launched it, it is called Deck of Scarlet.
When the team had already lost faith in our perfume project, I made a fateful call to my mentor, Mike Seibel, now he is the general director of the accelerator Y Combinator. I said, "Michael, everything is bad, nothing is working on the perfume market." And he says: “Wait. You flopped for a year with the idea of a perfumery startup, now you’ll throw it all into the trash can and you will float another year at the cosmetics market, trying to figure out what people need there. Do you understand how much you learned about this market in a year? You already know four ways, how not to build a startup. Do not dare to go the distance now, this is nonsense. What is your main idea about the perfume market? ”I say:“ The main idea is that people are looking for a single perfume that they will like and which they will use all their lives. ” He says: "And if this is not so, what if they want a new one every month?" I say: "No, Michael, they do not want to." He says: “Are you sure?” I say: “Not sure.” Hang up.
On the subject: As a Russian woman could not live in New York and became rich after leaving America
I had a perfume in a small bottle in my purse for traveling. I looked at him and thought: “Maybe, really, the point is to send people a fragrance that can be worn for a month. We flashed the site with lightning speed, Sergey ordered bottles from China, we slapped on them the Scentbird logo. And two weeks later we were in business. Bottles filled themselves in the kitchen with a pipette.
- And people suddenly wanted to buy it?
- On the day when we launched this business model, three girls from our accelerator bought a subscription. We did not ask them, did not beg. We started handing out flacons to opinion leaders, freelancers, on Instagram and on YouTube. We sent out hundreds of our product and wrote a tearful letter about how small a startup we are and that we have absolutely no money, which was true in principle, and asked them very strongly if they like the idea to post a review. We still remember a blogger, a girl with an Instagram account Coffee break with Dani. She wrote a post thanks to which we made 300 sales. Zero dollars we paid this tribute.
- $ 4,5 thousand. You first earned?
- Yes, but we have the same subscription. That is, we receive money every month. We began to appear funds that can be reinvested - buy perfume and send it again.
- Your first investor was a certain John Ayson.
- He is an angel, yes. He invests in e-commerce markets, at one time invested in a company called Quidsi (a platform for selling baby products, household goods and cosmetics. - The Bell), and Amazon bought it. He was my mentor, and asking for money from a mentor is difficult. Probably, he waited for me to ask, and I waited for him to offer. But he did not offer. I, like a real humanist, tried to go to investors with my heart, told: “there is such a market of perfumery”, instead of going with charts, numbers and saying: “look, here is the margin of 65%”, which is rare for the e-commerce market . I realized that I was doing something wrong when the person to whom I told how everything takes off, said: “I won’t give money, but if you give me 10% of your company, I’ll let you rent an office for 6 months for us ".
“Didn't you send him?”
- No, but I really wanted to. I thought: no, I would rather pour out these perfumes in my kitchen than give this share. Then I came to a meeting with a schedule of growth. You take, you print one page, you put it on the table, it works very well.
- You still had, Igor Shoifot, partner of TMT Investments fund, is hanging on Crunchbase. Did TMT fund invest in you then?
- Yes. I knew Igor for a long time, but he told me: “Masha, we do not consider businesses that earn less than $ 50 thousand per month”. As soon as we crawled the growth chart to this indicator, I called: "Igor, we have grown." He says: "Cool, come to San Francisco." It seemed to me that the likelihood of being invested in me was about 1%. And I thought: what a crazy person would go to San Francisco, spend $ 1000 for this trip, knowing that the probability of failure is 99%.
- Did you go?
- I went. Brought back a check for $ 350 thousand.
- How is the project working now?
- We are expanding the model, on our website you can purchase cosmetic products and skin care products. But basically, it's still a perfume subscription. We make money. We have three subscription plans. One - perfume for about $ 15, two - for $ 2, three - for $ 35. There are now more 300 thousands of subscribers and more than $ 5 million per month.
How Scentbird works with manufacturers and infuencers
- Do you still pay for the perfume?
- The bulk of the flavors presented on the platform are affiliate programs with brands. We have a whole mini-department whose task is to bring all the coolest perfume brands to our platform. The brands that this department leads mainly give us fragrances for free. They think about us as a sample distribution service. Scentbird is a very interesting symbiotic business. When we sign a contract with some brand, we give them the data. We count how many people tasted the fragrance, conduct a survey by email, ask if they bought a full bottle of this perfume, if they did, then where. This is usually done 60 days after a person has tried a particular fragrance. We beautifully pack these data into a presentation, we carry it back to our brands. Conversion to the purchase of a full bottle from us from 4% to 12%.
- Is it a lot or a little?
- This is a lot. In an average sampling platform or other initiative that distributes probes, the conversion of 2 – 10% from probes into a full bottle. This is a revolution.
- That is, you persuade brands to give you some volume of perfume for free, make $ 60 million per year of revenue on this, and they are grateful to you for that.
- Naturally, they are grateful to us for that. They earn money from full-size flakonchik.
- What is your audience by age?
- The average age of women is 28 years. The average age of men is 30. They are about 38%.
- Tell me about business influensers. Does it take a lot of money?
- Not. Maybe 10% of our marketing budget. The entire budget is more than 2 million month.
- How about competitors? There are several other companies that do similar things and also earn a lot.
- Earn little.
- Why are they few and you are many?
- Good question. First, they copy what we do. Our main competitor is ScentBox (according to SimillarWeb for April 2019, the site has Scentbird - 1,5 million views, Scent Box - 260 thousand - The Bell). I know for sure that they have fewer 20 thousand subscribers. It is built by two guys, they have a perfume wholesale company. They looked at us and decided to make a second Scentbird, since they already have big bottles.
- Is the recommender system based on artificial intelligence?
- And on artificial intelligence, and on machine learning. And on a huge amount of data that we collect from users. Every month, when someone comes a bottle of Scentbird, a letter with a questionnaire falls to the mail. We ask: appreciate this fragrance, is it summer, winter or spring? Would you put it in the office or on a date? Before Scentbird entered the market, perfumers and perfume companies dictated a description of perfumes and how people should think about them. And now it is dictated by the people themselves.
What future awaits Scentbird service and beauty industry
- You raised a lot of money about a year ago, $ 25 million.
- $ 20 million
- Do you spend more than you earn?
- We try to spend more than we earn. We invest in marketing.
- Investors gave you a total of $ 30 million. They also want to return this money, and five, ten times more. That is, your company should cost 10 times more than they gave.
- Yes, it should. It seems to me that what we are building is the future of the consumption of cosmetic products, perfumes. I see several strong players on the market who could pump their business well if they bought Scentbird. But now I'm not selling. Early.
- Listen, you, like many other entrepreneurs, always say: we are destroying and disrupting the 40 billion-dollar beauty industry. And how should it look, from your point of view, in five years?
- First, I think that basically the process of choosing and buying will be transferred to the Internet. So far, only 9 – 10% of the market is online sales. In a few years, the share will be 50 – 60%. Retail will change a lot. Shops will be like show-museum museums, where everything is beautiful, nothing can be bought, you need to buy everything via a smartphone. We are just changing the distribution model, changing the way the categories in which we work are distributed.
You see, all the big companies, L'oreal, Estee Lauder and others, are launching new products almost every month. 85% of these products are failures. There is also such a concept - fast beauty. Zara, H&M and other mass-market brands change the assortment of their stores every week. This trend has also entered the cosmetics market. There are more launches than ever before, but still most of them fail. Imagine how many unnecessary things this industry creates, then it all ends up in the oceans, somewhere else. Because of this, my soul hurts very much.
Why are women funders still scarce
“Listen, tell me what it is like to be a female boss over men.” I am always in the same position.
- I have never been a male boss, so I don’t know how he feels. You know, I probably was born for this. Therefore, I do not have any stereotypes about how it should be. It is clear that I am a woman, but first of all I am a man. Who said that a person cannot be a general director? I live in an emancipated country. Here a woman is a man.
- In this emancipated country, however, of the attracted venture capital investments, only 2% is accounted for by female founders.
- Unfortunately, so far, yes. But, you know, according to my observations, many women have difficulties [with a career]. But these difficulties are mostly in their head. I saw in the accelerator that women give up much faster when the investor says no to them than men. This, I think, is the biggest problem in women's entrepreneurship.
- What is it like working with a boyfriend?
- Fine.
“And command them?”
- I do not command them. We have equality.
- No, it seems to me, there is some kind of game here.
- Suppose. Let's say the documents are my signature. But partnership is very important to me. And here it’s not only in Sergey, it’s in Andrew, and in other strong players in the team. Their opinion is very important to me. I will never make a decision until I heard everyone. I'm not a king, not a god or a hero.
- No idea to stir up anything in Russia?
- No matter how lofty it may sound, it seems to me, in Russia, when I sell Scentbird, I will be engaged in charity, not business. It seems to me that I understand the American business environment better, I moved here, count, in 19 years. And charity in Russia - because the heart is there.
Abridged with the consent of The Bell. Original - at this link.
