In mid 2018, Carlota and Alejandro were struggling to keep up with the responsibilities of full-time jobs and parenting a 2-year-old and a newborn. The children out-grew their clothing at a faster pace than the young couple could keep up with. As their tastes evolved, even the books and toys that they had loved months before became irrelevant for their stage of development. That is when Alejandro had an idea that would get him to quit his job and pursue a career as co-founder and CEO of Surmile.
The concept was simple. Surmile is a box that is delivered for free to parents’ homes on a bimonthly basis. It contains a selection of the best clothing, books and toys in the market. The box is tailored specifically to the children’s preferences and stage of the child’s development. Parents pay only for what they keep and return the rest, getting a 20% discount it they decide to keep the whole box.
Alejandro teamed up with two former colleagues from work, Blas and Ricardo, and set off on their journey. They planned a small-scale launch in 2019 to a segment of 500 families, talking to suppliers and brands in order to fulfil the boxes. The task that lay in front of them was immense: What products would they put inside the box? How could they make sure they got the right products every time? What would it take to fulfil the boxes?
With these questions in mind, the team attended one of NOBA’s workshops in late November, 2018 (which we actually wrote about here). Finding merit in the approach, they showed up the next day at NOBA’s office to propose a collaboration.
Surmile and NOBA sat down together to redefine their launch strategy. They recognised that the original plan was full of assumptions. The fact that it would take months to hit the market meant that they would be dedicating too much of their precious time before gathering learnings from consumers. Also, they risked dedicating too much time talking to the suppliers of products that might not end up selling. The question was, how could they launch quicker?
The team dug deep into NOBA’s toolbox of techniques and prototypes and drew up a new plan. They would forget the original small scale launch and focus on making 15 families happy. But the new launch date would be in two weeks, rather than months away.
First, they set up a campaign on Facebook. The ads were not optimized. The images were not completely finished, as they did not have time to do a photoshoot. But they managed to launch the campaign that same day, which was what mattered.
Fulfilling the box in time would be the hardest part. Talking to suppliers and negotiating the terms would take weeks, if not months. Brands would never agree to sending such a small number of products.
So they decided to forget about them and head out to el Corte Inglés, a spanish retail giant, and Amazon.com. They would buy all the necessary products at face value, therefore making no money on sales. If they sold them, they would be able to cover the cost. If they didn’t, they would take advantage of the return policy.
Of course, in terms of making a profitable venture, this is a terrible idea. However, at the stage they were at, it did not make sense to focus on making a scalable business. By taking this approach, they were able to narrow down their focus on making sure that their 15 first customers were truly satisfied. And the first results started coming in.
They began seeing what products led to the highest sales. This allowed them to prioritize some brands in their negotiation. They got immediate feedback from parents, understanding how they could make sure they could nail the next batch and increase their sales per box. Furthermore, and completely out of coincidence, it turned out that one of their first customers was an Instagram influencer. She published herself opening the box, acquiring their next round of customers.
The team continued with this approach. They progressively decreased the number of products they acquired at el Corte Inglés and Amazon on every batch of boxes they sold. This meant it took them a few months to start making a profit, but it allowed them to continue learning and building their customer base.
Not even a year has passed since the initial launch, and Surmile boasts 1000’s of customers and a turnover going on 6 digits. Their team is now comprised of 8 full time employees. Their numbers have allowed them to raise a small round of FFF’s, and are planning another in Q2 2020. They have even developed their own app, based on what they have learned these past few months.
Most importantly, they have managed to get the critical parts of the business right. They have optimized their cost of customer acquisition. They have achieved healthy margins on boxes, by improving their algorithm to choose the contents. Their time to fulfill the box has also been reduced, from almost an hour to under 10 minutes.
The lean approach is now part of their company culture. Everytime and idea comes up, they refuse to spend time arguing and instead design an experiment to test it. Data is what leads the way, not assumptions.
Alejandro is now a happier man. Not only does he get to work with a kick-ass team, but he is also enjoying fatherhood. It can be hard, he says, but “thanks to Surmile, it is now a little bit easier”.
If you would like to hear about how NOBA can help you kick-start your business, shoot us an email at accelerate@nobaventures.com.
