A New York-headquartered data company focused on the beauty industry, Poshly, has closed on a $1.5 million seed round of funding, which will largely be used to grow its engineering team in San Francisco. The funding was led by Frontier Equities VC, and included Astia Angels, CPEG Ventures, WI Harper Group, and other private investors. To date, Poshly has raised over $2 million to date.
Poshly was co-founded by former SecondMarket employees, Doreen Bloch (CEO) and Brad Falk (CTO). Falk’s background also included time as an engineer at cosmetics brand Bare Escentuals, giving him a first-hand look at the beauty industry.
As Bloch explains, traditionally, beauty brands haven’t had access to the sort of detailed data on their consumers’ preferences and behavior that Poshly now provides, having relied heavily on purchase data and traditional market research to inform their decisions.
“Hyper-Personal” Consumer Data
Poshly’s website offers a variety of beauty product giveaways which consumers can compete to win by answering personal questions about their beauty routines, habits, interests, and more. The data these questions generate is highly personalized, but only shared with Poshly’s brand customers after being anonymized – meaning users’ personally identifiable information is removed, like their name, email or address.
This “hyper-personal data,” as Bloch calls it, helps brands better understand their customer base in general, or influence larger decisions, like what retail channel to roll out to next, for example.
“When we started, we knew there was something special about collecting very personal data – stuff like whether someone has dandruff or acne scarring – very personal information that no one would post on Facebook or share on Twitter,” says Bloch.
Today, the company works with everyone from large conglomerates down to small brands, and has “dozens” of clients like L’Oréal, Unilever, Interpublic Group, Weleda, Borghese, illuMask, Bluebeards Original, Montagne Jeunesse and others. Clients pay anywhere from $2,500 to $25,000 per campaign, depending on a range of factors.
How It Works
In exchange for participation on the site, consumers have the chance to win the product they’re being asked about – which may be makeup, or skin cream, or perfume, bath products, or sometimes even gift cards. The products are generally provided by the brand doing the survey.
As someone who spent a solid week answering questions on the site shortly after TechCrunch first covered last summer it and never won a thing, using Poshly began to feel like playing the lottery – it was fun to dream about the products it offered, but you’d never win even when you thought you’d be the ideal customer.
Bloch admits that this could be because there are only a small number of samples provided – each campaign has one to ten units available, she says. That’s great for the brands participating, of course, as their costs are minimal.
Over 200,000 consumers have interacted on Poshly to date, so eventually if word got out how hard it was to win, one would think retention rates would be an issue. But Bloch claims the opposite is true: 62% of visitors return on a monthly basis, spending over 7 minutes on the site, on average. Over time, users answer around 400 questions.
Now that the company has a trove of data on hand, it will also begin to help brands better target their samples to the most receptive consumers – that, in turn, will also help more of the site’s users feel like they’re getting rewarded for over-sharing their personal data.
My gut takeaway from the consumer’s perspective is that you should always receive something when you give up your private data to a company, whether that’s a platform for social interactions or communications, like Facebook or Gmail, or a history of their location, as with Placed. Poshly today is acquiring a lot of personal data, without having to give back much in return.
Of course, from a pure business angle, it’s fairly impressive that they’ve accomplished that.
With the additional funding, Poshly is moving to a SaaS-based model, focusing more on generating subscription revenue from its clients rather than working on one-off campaigns. It will grow its team of 8 to around 20, with engineering and design hires in San Francisco coming on board in the next few months.
Correction: Co-founder’s last name, Bradley Falk, spelled incorrectly. The article has been updated to correct.