Recurring Revenue: Turning a Commodity Into a Premium Product

In 2010, Griffin Thall was finishing his final year at San Diego State University and trying to figure out what to do with his life. He spent the last of his savings on a graduation trip to Costa Rica where he crossed paths with two bracelet artisans named Jorge and Joaquin, who were living in poverty. 

Jorge and Joaquin made beautiful, colorful handmade bracelets that seemed to capture the essence of their journey. Thall took the last few hundred dollars in his bank account and asked the artisans to make 400 bracelets. 

Upon returning to San Diego, Thall got to work selling their bracelets. They built a simple website and took orders online. Pura Vida created a novel subscription program which offered loyal customers a new selection of bracelets and other goodies each month. 

Over the next nine years, Thall built Pura Vida into a $68 million company with supply continuing to come from Jorge and Joaquin, who now employ more than 1,000 people. In July 2019, Vera Bradley announced their acquisition of a 75% stake in Pura Vida Bracelets for $75 million in cash plus a $22.5 million earn-out, which equates to a little more than nine times that year’s adjusted EBITDA.

 Which of the nine subscription models apply to your business?                                            

Would covering 100% of overhead with recurring revenue help you sleep at night?