How FabFitFun uses AI & personalization to elevate the subscriber experience

I'm Michael Brokim. I'm the cofounder and co CEO of FabFitFun.

For those of you you were not familiar with us, we are a shopping club online. We're best known for our subscription boxes where we curate products in beauty, fashion, fitness, wellness, send them to over a million members each season.

I'm proud to say that, you know, all of our, subscription boxes are now fully customizable. So all of our members you know, we just made a recent announcement and expanded that to both our our annual members and our seasonal members. So, it's almost like getting, like, a surprise prefix menu of amazing options. And off that menu, you can choose, awesome products for yourself. And then, we have a bunch of other shopping events throughout the season.

And, you know, we think of this as a a treat to yourself. It's kind of the self care reward, where you're getting extraordinary value, and discovering the most awesome products and brands in the universe. And, you know, the other side of our business is really working with brands, and helping them tell their stories, putting them on the map.

And, you know, we we we have this relationship predicated on this kind of subscription and, with our consumers, and we can package that up and offer it to consumer brands and who who wanna launch something new.

So that's a little bit about FabFitFun.

We we started five to five out of a digital agency, actually. Initially, we were doing kinda consulting work in in politics, and then someone told us Hollywood and politics are basically the same. So we started working with folks in Hollywood.

And, we built bunch of different projects.

One of them that we had early success with, we were, helped incubate, what was called the ZO report, which was a newsletter and fashion partnership with Rachel Zoe. That went really well. And, you know, one thing led to another, and and eventually, we had a celebrity partner come approach us to to launch, a brand around, around her, and we came up with the concept for FabFitFun.

We started initially as a media business as a newsletter. So early days, there wasn't, the, you know, the only thing you were subscribing to was an email in your inbox, but proved that we could build an audience and and develop this kind of point of view on on lifestyle through the prism of wellness. So, we wanted to kind of almost, help people access, you know, the world's we kind of best products and tips on how to be, both stylish and, you know, take care of their their beauty routine and their wellness routines, but through the through the prism of this kind of, self care, brand.

And it was only two years into building that media business that we actually said, you know, well, across those two years, we we'd always thought, you know, we'd build an audience and then eventually launch a product to them.

And, you know, in building this brand, we started getting invited to different, you know, kind of events. We we we were essentially the editorial team reviewing products, and we'd go to different media events. And we'd get these kind of swag bags, gift bags. And, you know, meanwhile, we saw these trends, happening where there was these early kind of, pioneers in the subscription space doing, essentially, like, beauty samples, and, set you know, you might be familiar with, like, a Birchbox or or an Ipsy.

And, you know, we thought going to these events, the the magic of of getting this this kind of, box of surprises and delights of, not just samples, but actually, you know, a package coming home, almost like a care package that you'd get if you're at camp, but for you know, designed for an adult.

That was a magical experience, and we want to create that experience where you could just opt into almost the way that a celebrity gets treated in their gift room, having someone choose thoughtfully awesome products for you and send them to your doorstep. So, we launched, the the the subscription box concept in twenty thirteen. That was two and a half years into the journey of FabFitFun, establishing its authority as a, kind of lifestyle, media brand.

And, you know, the editors of FabFitFun weren't just gonna review the products and send it to your inbox, but they were gonna actually negotiate these amazing deals, pick them out, and and drop them at your doorstep.

You know, that that was kind of so in in some sense, the refounding moment. Now we're over a decade into, you know, kind of growing the the subscription box space. And since then, we've we've broadened out and done a lot of other things to create what we what we describe as a a full fledged shopping club. So there's, something to shop on FabFitFun every day.

There's the different shopping events, essentially, where we're now curating, from thousands of brands, each season, bringing, amazing offers. And, you know, the way we think about, this kind of shopping club, you know, we we are essentially a retail model, but, at a value and discount oriented retail model. But instead of a lot of value and discount retail is associated with being essentially at the end of the product life cycle. So you think of, you know, where you go to get, you know, a a liquidation price or or something like that.

You know, we're actually, in the consumer mind and and and where we fit with the brands, is we're actually at the front of the product life cycle. So we're a launch platform. We're telling introducing products and brands to consumers for the first time. And we can do that because based on, you know, our our membership relationship underpinned by a subscription kind of, relationship, We have really strong demand signals, data signals, to curate thoughtfully, to go to brands and and, you know, help them think about what might work, to to get in front of this audience.

If you kind of, like, if you were giving, I don't know, maybe giving perspective to somebody at an earlier stage of developing their subscriber base, and but with an eye towards kind of building a highly engaged, you know, long term subscriber base. What are what are a couple of the, kinda, key insights or or lessons learned that you would share with them or or or maybe even from CEO of Manu's point, like, kind of metrics that you're like, these are these are really my north stars when it comes to, again, you know, trying to strive for the best subscriber experience possible?

Yeah. Good question. I mean, you know, first, it kinda goes without saying that that you you do have to have this kind of customer obsessed, you know, company culture.

And and our, you know, North Star metric, that we we we kind of hone in on and always did from the from the beginning is retention. So if you're gonna have a subscription business, you you really wanna obsess over keeping your customers.

And, you know, we, we even or in our early days, we did things that were kind of, you know, in some sense, economically irrational, you know, in the short term, but to to build that level of trust.

You know, we had, you know, people who were dissatisfied with, with their boxes. We'd send them, you know, alternative boxes, replacement products.

If we made any sort of mistake, we'd we'd kind of double the the the, you know, the, the benefit to make up for it.

And, you know, we just knew that, coming out of the gate, we had to have a a happy customer base, and that if they were happy and we kept them happy, they would they would kinda spread the word. And then as you kind of, you know, start achieving some level of scale, I think data becomes like this, you know, the the this goal that you have because, you know, you you we you know, one of the one of the companies we look up to and admire a lot is Netflix.

You are, you know, in we see a lot of parallels with FabFitFun. When you when you sign up for Netflix, you're usually signing up because there's a specific show you wanna watch.

And, but you're you're joining a membership. Essentially, you're becoming a subscriber. And, you know, six months down the road, a year from now, you don't actually know what the content on Netflix is gonna be. But Netflix has, tons of insights that they've generated about your viewing habits, you know, what other things you clicked on, how long you've watched different things for, and they use that to inform their curating decisions, a year from now. And, similarly, we're doing this in the world of consumer products. And so, I think being very thoughtful and rigorous about how you look at data, how you interpret customer feedback.

You know, once you've gotten, you know, past this kind of just early focus on just, like, whatever it takes to make anyone happy, and you you should carry that through all the way. Although, you know, as you get to bigger scale, there's gonna be, you know, edge cases where you might not just you know, sometimes it's impossible when you're millions of women.

You know, you you know, but we do our best still. But really looking at data and being rigorous about, you know, how you place, you know, how you optimize around the data, I think, becomes really important over time.

You know, the subscription industry, like, if you sort of step back and you look at it, it is a competitive space and competitive industry for consumers' attention, time, money. And yet with that said, it's also an industry that's just that's just growing by, you know, by any measure here. What you know, obviously you've successfully differentiated and built strength in this community and this brand.

Like, tell us a little bit about what you see as kind of key strategies to continue to differentiate, you know, ahead of the kind of ahead of the curve, ahead of the competition as you look forward next three, five years?

Yeah.

You know, we've looked to build, you know, as we've grown, take advantage of our scale to build, essentially, motes in our business that that are really, really hard to replicate. And, you know, you mentioned personalization.

In our view, it's both personalization and, you know, at the forefront of that is is is customization and and some level of choice, amongst our members.

And, you know, in theory, you know, obviously, if you're a Netflix customer, you get to customize what you're viewing, you choose whatever you want. Doing that in the in the world of physical products is actually very challenging.

And, you know, initially, in in our supply chain, we we were relying on three p l's.

But, you know, we knew just, you know, as we went from one thousand subscribers to ten thousand subscribers to a hundred thousand subscribers to a million subscribers, we couldn't satisfy them just by, you know, surprise these are the products for you, or by just trying to find the same products that a million people are gonna love. And so customization was kind of the obvious route for us.

And so in order what what we found that in order to do that, we also had to place significant real world bets.

And we actually, you know, departed from working with three p l's and actually built our own, our own warehouse and distribution capability. And we've actually converted that most recently into a three p l capability ourselves. So we're taking external clients because we essentially have, you know, what we think is the world's greatest kitting factory, where we can do dynamic kitting, create we we now have millions of potential variations of the box each season. And so we've kind of pulled on that thread of personalization and customization, you know, and and, eventually, kind of deployed CapEx against it, frankly, to build, an experience that, you know, no no one actually no one else in the subscription box landscape had this kind of, like, fully customizable experience.

And so I I think it is I I think it's important to look at those kinda early intuitions and early edges and then say, how can I double down continuously in in the road map? And and we've made a big bet on kind of personalization customization.

If you got thoughts on how you whether it's, like, specific capabilities or more just general criteria, how do you like, when you think about the technology that's gonna help your business to scale, where do you kind of where do you where do you choose to, like, to partner versus where do you wanna build on your own?

You you really have to it's a good question. I kinda giggle because, you know, we're we're in this ecommerce cohort, before, I think, you know, you know, something like a a Shopify became, you know, more more of a, you know, kinda go to direct to consumer platform. And interestingly, you know, we're we're not a we don't think of ourselves as a consumer brand per se. We think of ourselves as a retail brand. Right?

You know, we're we're we're closer to Target than we are to Nike, so to speak. In that we we actually are a curational brand. And and, really, something like Shopify isn't built for a company like us, in in that we have thousands of SKUs, and they're constantly changing. And, and and then, you know, we have this kind of really unique kind of customization experience. And so, you know, we we actually have a a full fledged technology team building a custom stack, in terms of the the actual retail storefront, of FabFitFun and the engagement platform. And and, initially, interestingly enough, like, our stack was, you know, day one was Recurly plus, you know, some p some PHPs, you know, HTML, CSS, and and nothing else. And and over the last decade, we've we've kind of expanded on that, you know, leveraging a lot of the capabilities that are inherent in Recurly, but then, you know, building, you know, essentially kind of an ecommerce infrastructure.

And, you know but, obviously, there's areas where we don't need to build. Like, you guys have an amazing subscription platform that helps us with a ton of the stack. You know, we use incredible providers across, let's say, CRM or customer service.

You know, we're happy customers of of of a lot of tooling out there that, you know, it's not gonna be our edge. We're not gonna do something super unique in that place. But in terms of the the the member shopping club customize your box user experience, We own that end to end, and it lets us do things that, you know, frankly, don't come out of the box on on any other solution.

Speaking of technology, like, any any thoughts, experiments, ideas in your head on applications for AI within the context of a subscription business?

Yeah.

The the AI tsunami is real. You know, if if you're paying any attention, the the the scale at which this is improving is just dramatic.

You know, I I think the most obvious one of this one probably capturing a ton of headlines. And and, you know, anyone, with a, you know, a consumer facing business, at least in in some some respect, maybe in b two b world as well. But, like, your customer service is is a is a place where, you know, if you're not looking at, you know, chatbot automation, you know, generative AI powering that, and copilots for for copilots for for your human agents. You're, you're probably missing a lot of potential efficiency gains, and not just efficiency gains. But, actually, you know, what we see is, you know, actual improvements in the in the customer experience because, these a these AIs are getting, you know, super smart. They can keep up with, you know, all your documentation, all the evolution of the business, and what the best answer is and nail it every time. So, you know, that that's one area, we've seen enormous amounts of potential.

And there's other areas which are kind of earlier stage. We're dabbling, experimenting, you know, on on the, you know, marketing and creative stack. There's a bunch of AI solutions in terms of, you know, generating content and and playing with images and refining images.

You know, I talk to our our legal team and, you know, sometimes, I get creative. I went to law school myself, so I I feel like I can, you know, maybe dabble a little bit. And I'll I'll, you know, drop some terms, with the help of AI and just kick it over and say, hey. Take a look at this.

And, you know but that's gonna be coming, you know, hot and heavy and fast. And it's not that you're gonna not need a lawyer, but, you know, the the amount of legal output and efficiency of legal output is gonna be dramatic. You know, we might in my prediction, we'll get ten x the number you know, maybe a hundred x the number of lawsuits going back and forth because it should be so much easier to file one and so much cheaper. And so, but, you know and, you know, we we actually we we encourage our employees, you know, to experiment with AI, make their lives easier with AI.

I I think there's you know, I I've seen, some of our employees who all of a sudden, you know, they're they're a lot more, their pros are a lot cleaner.

They're, you know, and so I know I know they're using it, but I think it's fantastic. I think if, you know, if if you can leverage AI in in just basic operations as well. And then finally, there was one, you know, we'd spoken this just briefly earlier, but consumer insights actually we're we're using the loop behind, customer inquiries, social chatter, chatter in our community forums, to to help us spot issues very effectively and and start categorizing and tagging those using AI.

And, you know, we we're often very customer driven in our prioritization of what to tackle next, and and AI is playing a role in that as well. I'm curious too. You know, what are you guys seeing on your end?

Yeah. I mean, guess I have a couple of thoughts. Like, one is I agree with you that I think sort of you think about tasks in general that a lot of the sort of, you know, repetitive entry level tasks are things that we're gonna be able to free up people's time from in order to go focus on more creative, higher value value activities. Right?

So to me, that's kinda that's the that's the law example. You know, we, you know, is like, okay. A lot of the a lot of the contract drafting that might, you know, might be a part of your first or second year experience, you know, as a as a contract lawyer is going to start to become more and more automated using generative AI. Hopefully, again, just allow us to free up more creativity and capacity for the area.

So I think I think, like, in general, that is true. I mean, what I'm most excited about probably is, you know, is the ability to become more predictive, and and create more kind of more predictive experiences in, you know, in these businesses. I think a lot of, like, call it, like, the first couple chapters of subscript of what we think of as subscription businesses today, ours, you know, ours included, is about we think a lot about how do we kind of simplify and optimize the or the work flows and the experience of running a subscription business? I think a lot of what's gonna come next is about actually how do we kind of predict and delight subscribers with what they're not yet already expecting.

Right? Like, so how do we, how do we identify based on behavior or data as you, you know, as you said, which is AI opportunity here is to connect your unique data with, you know, with these models and translate that into what might be a unique offer, a unique set of recommendations for that subscriber. And AI, to me, is the device that would allow us to kind of scale in a way we otherwise we otherwise could not. So I'm I'm I'm excited.

I I do wanna see us, you know, this I wanna see us, I think we are in experimentation mode versus, you know, versus, okay, we know exactly where this is going. But to your point, genie's out of the bottle.

This is like this is, you know, I spent a lot of time in, colleges and universities over the last eighteen months since phase, you know, I was coming from prior to Recurly. And, if you think about who, you know, who your next hires are going to be coming out, they are already if you're a twenty year old college student, you're already running a lot of your life through Chad GPT. Yes. Yes.

Yeah. I I I I had a, another, CEO I was talking to recently, actually, who's who's turned it he he now prefers hiring younger engineers because they're they're more amenable to using kind of Copilot AI and and finding better results and being a lot more productive.

Public one one other thing I was curious about, because I think if you, if you Google FabFitFun, from more of a business lens, you'll see this as you all have started to, basically do acquisitions in the market. I think you did one recently in the pet care space.

Can you share a little bit of kind of the thinking behind that and, you know, what that means for the future of the business?

Totally. So we're really excited. We, recently acquired Pupbox, from Petco.

And this, you know, we we've been experimenting in the pet space. We we've had, you know, some small offerings in the pet space, and this is a way to go bigger on it because we see a huge appetite, amongst our member base for pet products. And and, you know, there's a lot of pet parents out there who want, you know, subscription box catered to their pet. And for it to come alongside your FabFitFun box, we thought it would just be an awesome experience.

And we can kinda take a differentiated view on, you know, what what that experience could be. And and we're we're gonna be coming out with some, you know, upgraded experiences, in the back half of this year. But, you know, bigger picture, we we think of FabFitFun increasingly as this kind of, ecosystem and and platform where we've gotten really, really great at understanding our consumers. You know, we we beyond the core kind of, building out that retail concept, the way the way we think about the the long run vision for for the the company, is also to both own and operate and help launch in partnership in joint ventures, with other operators, a constellation of brands.

And so, you know, beyond the the Pupbox acquisition, we've also, helped, incubate other companies.

Couple examples of that is, you may be familiar with Our Place as a is a cookware brand that, you know, they generate the always pan, Unhide, which is one of our member favorites, which is the Faux Fur, blanket brand. And, you know, these are these are brands that we actually partnered with world class operators, and, you know, help them with consumer insights, supply chain, marketing, and then, you know, use the the the scale of our platform to bring them, into market at scale, to to our audience. And and so we've come up with a lot of ways to, you know, kinda go up the stack. It's you know, we think of this as, like, a Netflix originals like strategy for us, where, you know, you know, early days of of Netflix was all licensing content.

But once you have a real point of view, you can start to make bigger bets and and and kind of, start to be partners in in the IP and and the brands that, we're putting in front of our customers. So HotBox was an m and a manifestation of that. There's also a kind of joint venture and investment versions of that. We have a program called FabFit Fund with a d at the end of it.

But we're just leveraging kind of our capability stack. You know, as as I noted, we're, you know, we've been we've built some, you know, great proficiency in in supply chain and marketing, etcetera. And so when we see an opportunity to offer something that we think our customers are gonna love, you know, in a in a different way, we'll go ahead and make an acquisition or an investment or, partner in one of these JV models.

Yeah. No. It's exciting. I mean, kinda what I'm hearing is, like, you the the subscriber kind of network community that you've developed is sort of like the core and the center of, you know, of what fab the value FabFitFun can go bring to brands to, you know, to other categories.

But, but around that is we're starting to see these network effects in your business, it sounds like, where, you know, where you can you can kind of experiment out into other adjacent categories, launching and developing new products and new businesses, becoming, as you said, more of a known retail destination as well.

Yeah. So yeah. Exactly. And, you know, we we we just wanna be you know, when we think of we think of ourselves as a platform for, you know, brands, creators, you know, would be operators to partner with and at kind of any stage of the life cycle, frankly. Right? If you're prelaunch, you know, or you're looking to exit, you know, or, you know, anything between even you know, we we work with, you know, huge, you know, brand conglomerates as well.

You know, we we wanna we wanna be able to tell the story of products and brands in the most compelling ways. And so we have just a a lot of different ways to partner depending on, you know, kind of the scale you're at or the the point in your life cycle you're at.