Daniel Broukhim: Building a Thriving Ecommerce Business

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Good morning Los Angeles!

If you want to be featured or know folks who want to be featured, feel free to contact me on LinkedIn. This week, we talked to entrepreneur Daniel Broukhim about his ecommerce subscription service, FabFitFun.

🏃♀️ Quick hits

Cofounder Brothers: Daniel co-founded FabFitFun with his brother Michael in 2013, pivoting from running a digital agency and lifestyle newsletter. The core business is a seasonal subscription box service delivering full-size beauty, fashion and lifestyle products.

Expansive Mindset: Daniel attributes their success to differentiating with full-size products across categories, evolving the membership offerings over time, and maintaining operational and financial discipline.

New Frontiers: FabFitFun has expanded into a membership model with sales, brand partnerships, trade financing and other offerings beyond just subscription boxes. Daniel sees opportunities in further growing the membership.

Daniel Broukhim, Co-CEO, Co-Founder; Katie Rosen Kitchens, Editor in Chief, Co-Founder; Michael Broukhim, Co-CEO, Co-Founder

During the pandemic, we had an explosion of ecommerce activity as everyone sheltered at home waiting for the vaccine. In that time, an already massive user behavior exploded. It went from a convenience to a mainstay of our weekly behaviors. But in the last 2 decades, we’ve already seen waves of ecommerce trends and startups come and go, the game has changed and it was fascinating for us to speak with FabFitFun, an ecommerce box subscription service company that has survived and thrived through multiple headwinds of the ecommerce waves.

So what is FabFitFun?

"FabFitFun is a membership and as part of that membership you get a seasonally curated box with full size beauty, health, fitness, fashion, wellness, home, technology products and you're paying $60 a season but you're getting a guarantee of at least $200 and an average of about $300 in products."

But it didn’t start out like that. Daniel Broukhim, cofounder and co-CEO, told us about how it all started.

"My brother and I started the business together. Initially, we were running as a digital agency and building products for other people. One of those was a newsletter that we had developed for Rachel Zoe called The Zoe Report. We built a newsletter called FabFitfun initially as a healthy lifestyle newsletter. And then we were running that for a few years and then we realized that the newsletter business wasn't the direction that we wanted to go in. We decided to take a new direction and launch an e-commerce business, partially because as a newsletter and media business, we're going to VIP events and events and they give us these swag bags and we thought to ourselves, oh, why not take that swag bag concept and consumerize it?

By following their noses and seeing opportunities in front of them, the two brothers, Michael Broukhim and Daniel Broukhim, landed into a business that they really loved and turned out to be very lucrative. But it wasn’t without its stumbles, with a capital intensive business like ecommerce, even though money was constantly coming in, they had to leverage quite a bit until they finally raised and took it to the next level.

"By the time we actually did raise money, we were a million dollars in credit card debt in and out within two weeks. I don't even think our investors knew that, but we just kind of pushed it right to the limits."

It’s always bizarre to hear stories like this, when entrepreneurs go all the way to the edge and still make it out, with the scar tissue but wisdom to take on the next challenge. We wondered what made the brothers keep going.

"We also had seen some other subscription services do well, including some subscription boxes, but they were mostly focused on single categories like beauty or food. And a lot of them were giving you sample size products. We're like, oh, why not supersize the experience, give people something where they're really getting value for what they're paying for much more like free samples in a box and have an eye towards building a broader membership over time."

"We added bells and whistles to the memberships itself, like our sales. We generate more revenue from our sales than we do from the box itself in some ways…or an equal amount. And I don't think any other subscription box company has that dynamic, but we do. So we really are in fact a real membership."

It’s this broader and opportunistic mindset that converged with a larger potential and sustainable userbase that has stuck with them til today. But we think it’s also the entrepreneurial and compatible spirits of the brothers that really made this happen, at the core.

"Co-funding with my brother has been great. You know, I think naturally it's a progression. And I'm happy to say that things have gotten better with time. Now it's like, hey, you know, flip a coin, loser gets to do more work than the other person. It's like you get older and you're like, okay, you know, I love working. I love what we're doing, but if you want to take on that responsibility, go for it and I'll take on this one."

Daniel also took us through the more obvious basic things of business, “just like discipline around finances and how you spend and how efficient you are at running your company” as well as the difficult moments “"There are moments where I was like, oh, this is really stressful. There were some moments where I thought I might not make it."

But we think this speaks to the resilience of the team. At one point, Daniel had cancer, but his attitude about it speaks to the deep strength of the team to build, sell, and surive “I had cancer but at no point in time did I think FabFitFun wasn't going to be the company that stood the test of time."

Today, there still new horizons for the company as they shift to expanding their offerings even further:

"We're also opening up the platform so that people can shop whether or not they have a membership and at the very least browse it. People don't realize how much stuff we sell and how good the prices are and how good the products are. And so we want to give people an ability to experience FabFitFun without necessarily having to commit or commit to something that might be the subscription box because maybe not everyone's a subscription box subscriber, but there is something else that they would sign up for as part of the membership and that would propel them to become a FabFitFun member and then experience all the other things that we have to offer them."

Keeping this in mind, we finally asked them what their advice was to startups and businesses trying to tough out the economic downturn. After all, this wasn’t their first rodeo.

“Even though there's less money in the ecosystem, fundraising becomes a little tougher. I mean, you think if you can really build a business in this environment, you can do anything. So I always have sort of an eye towards action. If someone really wants to get going and do it, then I would tell them there should be nothing holding them back."

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🏰 Disney's Epic Investment Stands Out Amidst Gaming Industry Layoffs

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

🔦 Spotlight

In the midst of widespread gaming industry layoffs, a glimmer of positive news emerges as Disney announces a significant move: a $1.5 billion investment in Epic Games. 🏰💰🐭

Image Source: Disney

Disney's $1.5 billion investment in Epic Games, disclosed late Wednesday, signals a strategic alignment aimed at expanding the success of "Fortnite." The deal enhances Epic's growth prospects after financial setbacks, including layoffs, and strengthens the partnership between the two companies. With Disney gaining a larger equity stake in Epic, the collaboration will broaden the integration of beloved Disney franchises like Marvel, Star Wars, Pixar, and Avatar into the game, potentially boosting its appeal and longevity. This significant investment underscores Disney's commitment to interactive entertainment and signifies a shift towards games as a primary revenue stream, aligning with the growing trend of digital engagement among younger demographics. Moreover, the potential for crossover sales of physical Disney products within "Fortnite" and the exploration of new content distribution channels are just some of the opportunities arising from this partnership.

For LA tech, the Disney-Epic Games partnership represents a validation of the region's burgeoning tech and gaming ecosystem. The substantial investment in Epic, who maintains a large Los Angeles office with 1,000+ employees (according to LinkedIn), reflects confidence in the LA’s talent pool and innovation potential. Additionally, this partnership between two industry giants fosters an environment for further collaboration, investment, and growth within LA's tech sector. As Disney and Epic Games deepen their ties and explore new avenues for content integration and distribution, it not only elevates the prominence of LA as a tech hub but also stimulates economic growth and job creation in the region. This partnership highlights LA's unique position as a hub where technology and entertainment converge. With its ability to integrate diverse industries, LA is driving innovation and expansion in digital entertainment. 🚀💸🎮

🤝 Venture Deals

LA Companies

  • ProducePay, a financing and marketplace platform for the fresh produce market, raised a $38M Series D led by Syngenta Group Ventures joined by Commonfund, Highgate Private Equity, G2 Venture Partners, Anterra Capital, Astanor Ventures, Endeavor8, Avenue Venture Opportunities, Avenue Sustainable Solutions, and Red Bear Angels. - learn more
  • Blush, an invite-only dating app that drives users to local businesses on dates, raised a $7M Seed Round from individuals like Naval Ravikant. - learn more
  • Mogul, a startup founded last year that provides an overview of an artist's royalty earnings and identifies areas where money is owed but has not yet been collected, raised a $1.9 million seed round from Wonder Ventures, United Talent Agency, AmplifyLA, and Creator Partners. - learn more
  • Avnos, a hybrid direct air capture startup, raised a $36M Series A led by NextEra Energy and joined by Safran Corporate Ventures, Shell Ventures, Envisioning Partners, and Rusheen Capital Management. - learn more
  • AI.fashion, startup whose mission is to help retailers enhance the online shopping experience by providing consumers with virtual try-ons and personalized fashion recommendations, raised a $3.6M Seed Round led by Neo. - learn more
  • Suma Wealth, startup that aims to demystify financial topics and provide culturally relevant content, virtual experiences, and resources to help Latino users navigate financial challenges and opportunities, raised a $2.2M Seed Round . Radicle Impact led, and was joined by Vamos Ventures, OVO fund and the American Heart Association Impact Fund. - learn more
  • 222, a startup that helps users discover their city and meet new people through unique social experiences, raised a $2.5M Seed Round. Investors included 1517 Fund, General Catalyst, Best Nights VC, Scrum Ventures, and Upfront Ventures. - learn more
  • LimaCharlie, a security operations cloud platform, raised a $10.2M Series A led by Sands Capital. - learn more
  • Polycam, an app that uses a smartphone’s sensors to capture 3D scans of objects, raised an $18M Series A co-led by Left Lane Capital and Adjacent, and joined by Adobe Ventures and individuals like Chad Hurley and Shaun Maguire. -learn more.

LA Venture Funds

Actively Raising

  • ReelCall, Inc., an entertainment technology company focused on powerful apps and platforms that help build and maintain the professional network of connections vital to career growth, is raising a $850K Pre-Seed Round. - learn more
  • CZero, a startup building software to decarbonize logistics for logistics businesses and goods business through a vetted marketplace and optimization software. - learn more
  • Couri, a technology startup addressing last-mile delivery issues, is raising a $450K Pre-Seed Round at a $2.2M post money valuation. - learn more
  • Sweetie, a marketplace to help people plan date nights, is raising a $1.5M Pre Seed Round. - learn more
  • StartupStarter, an investment platform that provides real-time data and analytics on startups, is raising an $850K Angel Round. - learn more

If you’re a founder raising money in Los Angeles, give us a shout, and we’d love to include you in the newsletter!

Venture Waves, Climate Tech Wins, and Silicon Beach's Ongoing Evolution

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Anduril Seeks $1.5B in VC Funds

Defense company Anduril Industries Inc., based in Costa Mesa and founded by Palmer Luckey, is seeking to raise $1.5 billion in fresh funds to boost its valuation to $12.5 billion or more, according to sources quoted by The Information. This fundraising effort, if successful, would mark one of the largest venture capital rounds of the year.

Image Source: Anduril

Anduril recently secured a contract to develop and test small unmanned fighter jet prototypes under the Air Force’s Collaborative Combat Aircraft (CCA) program, beating out major defense companies like Boeing, Lockheed Martin, and Northrop Grumman. Alongside General Atomics, Anduril will design, manufacture, and test these aircraft, with a final multibillion-dollar production decision expected in fiscal year 2026. This program aims to deliver at least 1,000 combat aircraft to fly in concert with manned platforms and is part of the Air Force’s Next Generation Air Dominance initiative. Central to Anduril’s success in this contract is the Fury autonomous air vehicle, acquired through the purchase of Blue Force Technologies. This victory underscores Anduril's rapid advancement in the defense sector, aligning with Luckey's vision of building faster and more cost-effective defense assets. - learn more

Los Angeles Ranks Number 1 in Emerging Climate Tech Hub

The 2024 Emerging Climate Tech Hubs Report by Revolution highlights Los Angeles as a burgeoning center for climate tech innovation. LA's growth in this sector is driven by its diverse talent pool, strong research institutions, and a culture of environmental consciousness. The city's unique mix of legacy industries, such as entertainment and aerospace, alongside emerging tech companies, positions it as a pivotal player in the climate tech landscape. This shift reflects a broader trend of decentralized climate tech funding across the U.S., reducing the historical dominance of California's traditional hubs. - learn more

Silicon Beach: Looking Back, Moving Forward

Assessing the overall health of the startup market is challenging, especially as venture capital funding has decreased by an average of 61% from 2021 to 2023 across the top VC markets in the US. Markets with robust ecosystems in AI, SaaS, Biotech, Healthtech, and Fintech appear to be weathering the downturn better than those focused on Consumer and Gaming industries, areas where Los Angeles traditionally excels.

Percent Change In VC Funding By Region

CB Insights

LA Times paints a rather bleak outlook on the Los Angeles tech scene noting venture capital funding in Greater Los Angeles plummeted 73% from 2021 to 2022. Silicon Beach, once a vibrant tech corridor, currently faces high vacancy rates and lacks late-stage financiers, especially in the AI sector. However, there are positive signs, including growth in aerospace startups and increased venture capital investment in early 2024, suggesting a potential rebound for LA's tech ecosystem.

While LA may not be exceeding expectations during this period, its tech ecosystem warrants a nuanced evaluation, given the broader market dynamics and its strong performance in specific sectors. Reach out to us with your thoughts.

🚀 SpaceX gears up for another stellar year, active raises, and more

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Happy Friday Los Angeles! You made it through the first week of 2024!

🔦 Spotlight

Elon Musk may be a divisive (albeit entertaining) figure, but the continued success of SpaceX is pivotal for the aerospace industry in Los Angeles and more broadly around the world.

Image Source: SpaceX webcast

What happened with SpaceX in 2023?

  • Elon Musk challenged Facebook founder, Mark Zuckerberg to a cage fight.
  • SpaceX launched 96 successful missions with its Falcon series of rockets, a 57% increase over its previous annual record.
  • SpaceX conducted two test flights of the largest and most powerful rocket ever built, Starship.
  • Roughly two-thirds of SpaceX's launches in 2023 were devoted to building out Starlink, the company's satellite-internet megaconstellation.
  • Isaacson’s Elon Musk biography was published in September including everything from Musk’s tumultuous relationship with his father to his work ethic and “demon mode”.

Moving forward what can we expect from SpaceX and its controversial founder? Continued innovation pushing the aerospace industry to new limits? Yes. More drama? Without a doubt.

Here is some of what is to come in 2024:

🤝 Venture Deals

Just Announced

Check back next week!

LA Exits

  • CG Oncology, an Irvine, CA-based developer of immunotherapies for bladder cancer, filed for a $100M IPO. It plans to list on the Nasdaq (CGON) with Morgan Stanley as left lead underwriter, and has raised around $317m in VC funding. - learn more
  • McNally Capital agreed to sell Advanced Micro Instruments, a Costa Mesa, CA-based maker of gas analyzers and sensing technologies, to Enpro (NYSE: NPO). - learn more

Actively Raising

  • ReelCall, Inc., an entertainment technology company focused on powerful apps and platforms that help build and maintain the professional network of connections vital to career growth, is raising a $850K Pre-Seed Round. - learn more
  • CZero, a hard-tech startup that is developing a technology for decarbonizing natural gas, is raising a $1.5M Seed Round. - learn more
  • Couri, a technology startup addressing last-mile delivery issues, is raising a $450K Pre-Seed Round at a $2.2M post money valuation. - learn more
  • Sweetie, a marketplace to help people plan date nights, is raising a $250K Angel Round. - learn more
  • StartupStarter, an investment platform that provides real-time data and analytics on startups, is raising an $850K Angel Round. - learn more

If you’re a founder raising money in Los Angeles, give us a shout, and we’d love to include you in the newsletter!

📅 LA Tech Calendar

Sunday, January 7th

Wednesday, January 10th

  • Startup Cafe: Networking with a Kick - Entrepreneurs, Startups, and Tech Enthusiasts join together to meet and connect with like-minded people, industry professionals and investors, while enjoying a nice cup of coffee in Venice at The KINN. This week’s interactive discussion about AI’s evolution in entertainment will feature Dr. Sam Khoze and Rachel Joy Victor.
  • Venice Tech Happy Hour- Join Startup Coil and FoundrHaus Wednesday evening and enjoy the sunset from the rooftop, grab a bite overlooking Abbot Kinney, and mingle with other tech enthusiasts and entrepreneurs by the bar on the patio.

Have an awesome event coming up? Reach out to be featured on next week’s Newsletter!

📙 What We’re Reading

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