Updated to include official statement from Beachmint.
Is Beachmint going up in flames like the hills of Los Angeles during fire season? Not yet. So put your happy Schadenfreude dancing shoes away for now.
There has been plenty of speculation that Beachmint is struggling and may be going the way of the Dodo, and that speculation has now come to a head with a new report that Beachmint founders Josh Berman and Diego Berdakin have been ousted by the board. Additionally, the company is said to be returning $20 million of the $73.5 million it’s raised since 2010.
But my source says that the rumor is not true at all and founder Josh Berman says that the story is 100% false.
PandoDaily’s Michael Carney claims that “multiple sources” said that the board was unhappy with Berdakin’s “party-animal” lifestyle and Josh Berman’s “distant” and detached presence with the company.
But Beachmint issued a statement Wednesday refuting Carney's claims:
"Diego and I remain 100% focused and are fully backed by the BeachMint Board of Directors, and there are no plans to make any changes to our leadership team," said CEO Josh Berman. "Unfortunately, nobody at BeachMint or the Board of Directors was contacted to confirm or provide input on this story."
NEA partner and Beachmint's largest shareholder Peter Sonsini added:
"The Board of Directors is incredibly positive about the future of BeachMint and we fully support both Josh and Diego in their efforts to build a phenomenally successful business. BeachMint's business performance, alongside the talented and experienced executive team at the helm, ensures we remain incredibly positive about the future of this company, and the role we know it will play in driving innovation within e-commerce.”
PandoDaily founder Sarah Lacy has addressed the discrepancy via tweet: "FYI--Beachmint is disputing our story. We are continuing to report and will update it if we have evidence our reporting was not correct."
The rumor has likely been fueled by the company’s very public growing pains. In the last year, BeachMint has lost its CMO John Volturo (who had been with the company since launch), CTO Carl Trudel, and CFO Jordan Posell.
In exchange, it got new COO Greg Steiner, who packs some heavy industry punch.
When a company plays a game of musical executives, that can only mean one of two things: it’s either in its death throes (think Zynga), or it’s scrapping the first plan and trying something else with a new team (think Yahoo). Co-founder and CEO Josh Berman says it’s the latter.
“I think we’ve had very low turnover with key people: [co-founder] Diego and myself. We brought in more people with the right experience in the right categories. We’ve kept the same engineers—these guys are crazy good. We kept the same guys in Ops. I can’t be more pleased with our team,” said Berman in an earlier interview.
Berman argues that the departure of a number of top executives doesn’t signal that BeachMint is floundering. Rather, BeachMint finding the right people to put into the right roles.
"There are challenges in every startup, and turnover happens. There have been some changes in management at Beachmint, but I wouldn't categorize it as anything extraordinary for a dynamic, fast growth startup," said BeachMint investor Peter Sonsini of NEA in an earlier email. "Anticipating your hiring needs is always tricky. The company has really found a good fit with their focus on technology and their brand-based model in women's fashion. Ecommerce is obviously a huge category and they are sufficiently differentiated from the other companies in the space."
BeachMint has had an interesting story in its two-and-a-half years. The company launched in late 2010 with a familiar L.A. subscription commerce model: pair up a celebrity with your product and get customers to sign up to buy a new product every month. ShoeDazzle got Kim Kardashian. JustFab got Kimora Lee. BeachMint got Kate Bosworth—and then added Mary-Kate and Ashley Olsen, Jessica Simpson, Justin Timberlake, Brooke Burke-Charvet, and Rachel Bilson.
While ShoeDazzle and JustFab were drilling down on shoes, BeachMint was throwing its arms open and dabbling in a little bit of everything: jewelry (JewelMint), shoes (ShoeMint), beauty products (BeautyMint), lingerie (IntiMint), home design (HomeMint), and apparel (StyleMint). The company also took a decidedly higher end approach. While ShoeDazzle and JustFab were offering a new pair of shoes for $40 a month, BeachMint’s styles were twice that. Today, shoes on BeachMint start at $79.99.
The company raised $73.5 million across four rounds in just 18 months to fuel its rapid growth. In the seven months between its June 2011 round and its January 2012 round, the company said that both subscribers and revenue tripled.
The company has seen some strong growth in the last year. Sales increased 250% in 2012, and BeachMint saw a 150+% increase in new memberships in the first quarter of 2013.
Traffic figures from comScore reveal that BeachMint's three most popular sites, StyleMint, ShoeMint, and JewelMint, drew a combined total of 749,000 unique visitors in March. BeachMint declined to give the traffic figures for the remaining three properties, but it's probably safe to assume that BeachMint's properties draw over one million unique visits per month.
By comparison, JustFab saw 4.2 million uniques in March, and ShoeDazzle drew 928,000 (ShoeDazzle has had its own problems over the last year).
E-commerce companies are notorious for needing lots of money to grow and thrive. Notably, Fab just raised a $150 million round, bringing its total raised to $321 million.
Beachmint’s competitors JustFab and ShoeDazzle have raised $109 million and $66 million, respectively.
But of course, six product categories is harder and more expensive to support than one or two. While JustFab and ShoeDazzle drilled down on shoes and later expanded to accessories, handbags, and/or denim, Beachmint expanded much more quickly.
Berman says that Beachmint expanded the way it did because the company needed to find out what works. It’s since learned that the categories it does best are women’s fashion verticals, namely StyleMint, JewelMint, ShoeMint, and IntiMint. The company’s flagship category, JewelMint, has proven to be particularly promising. Earlier this year, JewelMint unveiled its designer collaboration program Studio Series, which launched with a collection designed exclusively for JewelMint by CFDA award winning jewelry designer Philip Crangi of Giles & Brother. Over half the collection sold out in the first week.
Image source: finsmes.com