Poshmark: Manish Chandra

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And that's it. Hope to hear from you soon and we are so excited to have you come on the show. And now On to the show. We'd launched the app with$5 shipping, and our cost of shipping was turning out to be ten dollars and fifty cents on an average.

And so we were basically losing Money left and right. And uh I didn't want to build a business where You were losing money on every order. So we were like saying, Hey, the discount is gonna finish, the welcome discount is gone and we're gonna Move the shipping to nine dollars.

I kid you not, guy, within 24 hours. our mailbox and Twitter was flooded with hundreds of people saying You are going to make us bankrupt? How can you change the shipping? And it was a revolt by our community for us to move our shipping from five to nine dollars. We had never seen

of this level of passion ever in my life. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements. They built. I'm Guy Raz and on the show today

how Manish Chandra launched a marketplace for secondhand fashion that was mobile and social. and grew Poshmark into a community of eighty million buy and sellers. Sometimes random connections can come together to form a brilliant idea. In the case of Poshmark The connection was a high school football game in the iPhone 4.

Mm. The company's founder, Manish Chandra, saw that the homecoming queen was wearing a bright yellow dress. And Manish later found out that she'd bought that dress at a thrift store. Around the same time, Manish was playing around with the latest iPhone, which had new technology that enabled really great quality photos. Not that long after, he came home and walked into his wife's closet. filled with clothing she no longer wore. And at that moment,

The yellow dress, the iPhone, his wife's unused clothes? All blended together into an idea. What if, instead of going to the thrift store, It came to you. And that was basically how Poshmark started.

If you're not familiar with it, it's basically a marketplace where you can buy and sell clothing, home goods, and even consumer electronics. And in 2011, when it launched it was one of the very few marketplaces of its kind that was completely mobile, that was design essentially for the coming iPhone revolution. Manish got to Silicon Valley in the early 1990s, where he saw the rise and fall of the ear internet era. After the bubble burst in the early 2000s, He started paying attention to the rise of e-commerce. His first idea, which we'll hear about, was called Caboodle, a sort of early version of Pinterest. And while Caboodle never really went anywhere, That idea would eventually also lead to

to Poshmark. Today, the brand claims 80 million users and it brings in hundreds of millions of dollars in revenue. But the path to get there was rocky and might have landed Manish in jail when he had a misunderstanding with the US Postal Service. Manish Chandra was born and grew up in India. His father was a judge and his mom was a homemaker. He would eventually emigrate to the US for grad school, but he stayed in India to get a bachelor's in computer science from one of the country's best technical universities.

Once you get in, it's kinda like getting into a school here. If you don't keep up, you can really fall behind. And I remember one year I felt like I might not even pass my classes and I had to work very hard to pass the classes. So first two years I would say guy I was much more just expanding my horizon, learning different aspects of life. learning to participate in in civic life. And I was the youngest kid in the class. It was kind of a little bit interesting. It wasn't until third year or sort of what would be called a junior year here that I started to get focused on what I wanted to do. Uh and at that time my focus became

Singular, which is coming to America for further studies. Yeah, tell me a little bit about that because uh f from what I gather you were influenced by by Ayn Rand and and and by reading her books. Yes. Ayn Rand and her philosophy of sort of, you know, empowerment, individualism, freedom was very appealing. And, you know, America was sort of the symbol for me in my mind at that time. And my vision for America, you know,'cause the information was all spoty, was much more New York. Like everyone lived in an apartment, people were living in high rises, you know, Fountainhead, Howard Rourke, sort of that was sort of my vision. And it was much more about, you know, that you can really carve a life which was very self driven and based on your values and you don't have to

Conform. to to normal standards and sort of that was sort of the focus for me. And so when I arrived, I went to UT Austin, arrived in Texas, and the reality was exactly the opposite. There were no high rises, people lived in bigger homes and there were wider streets. So it was a little bit of uh a culture shock to me, not because America America itself was a culture shock, but it was a culture shock because my vision was New York and I landed up in Austin, Texas. Hm. So as you mentioned, you end up in Austin at U T Austin, um, and you get a master's degree. in computer science.

And uh you finished the degree and th that I guess uh at that point you you're thinking uh all right, you know, like I'm gonna g I'm gonna go toward the technology of Silicon Valley. Uh. And eventually you wound up, I guess, as a programmer. Uh at a company called Sybase.

Yeah, Cybus was a small company. They were seventy, eighty people uh company, but they had the best in class technology. So they offered me a job. I accepted it. The job was in Berkeley. I was ready. Um, believe it or not, you can't see from my hair, I actually had a ponytail at that time. So I was ready to live the life and you know, sort of move from Santa Clara to Berkeley on this company. And then the very first downhaul they did that Friday, the CEO Mark Hoffman comes and says, Hey guys, you know, it's been hard to raise money. We are working on a venture bridge round right now. But don't worry, we'll work hard. And so

But I I had no idea what he was talking about. It was like Completely mumbo jumbo to me. You were just coming on as a t database guy. I was just yeah, I was just database guy. I was programming, there was beer, there was live music here. I was just coding. I was working eight, ten, twelve hours, I had no idea what was going on. And you were like twenty two years old. I was twenty two years old. And by ninety two we were a public company. And and That IBO. Even though I had very tiny share I was an engineer, it ended up creating the down payment for our first house. In that two three years that I was at Cybase, I ended up meeting my wife. Um built some really great friends and grew very rapidly in the company because in that time period they'd taken out the middle layer. So I was an engineer and very soon I was a team lead and very soon. Soon I was an architect. So there was a lot of progress. And the company started to grow very fast. When I joined them, there were eighty people. It became six hundred people in a year and just, you know, there was a lot of growth ahead. And while you were there, um, I guess you also start to pursue an MBA at Berkeley. Yes. Um and and from what I gather a after that you had some

some pretty high level jobs. You worked at at a bunch of different companies in the Bay Area. But I wanna I wanna fast forward a few years to like uh two thousand four, two thousand five, because at that time you were uh the V PP of marketing at a software company, and and I guess you were getting a little restless, like a little frustrated, which which you know, b is by the by the way, this is when your f your first idea for a business came to you, right? Yes, I was frustrated and I ended up putting a lot of my energy into a home we just bought and remodeling it. And as I was doing it, I realized that the products that we had on internet for shopping, for collaboration, we were working with working with my mother in law, a designer, my wife,

were just terrible. And I felt like the entire process of online shopping was broken. For home shopping. Well, it wasn't really available yet. Yeah, I mean I like the basic stuff that we take for granted, like storing, liking, st uh, you know, sharing were just not available at that point in time. So I kinda put this idea together.

of what I want to do. And the way I did that was I wrote a three, four page document visualizing a product. And I put it aside. I said, this is a consumer product. I'm an enterprise guy. I have no business doing it. I have no background, nothing. And just kept it. in one direction went on for a few months. And you know how a great idea. It sort of started to take over my mind. Everywhere I looked, I felt like I could solve this problem. I could solve a travel problem. I could solve a fashion. I could solve a holiday gifting problem. And after six months it just I I just couldn't resist it. So I sort of went and talked to fr some of my mentors and said, You know, what do I do? I'm an enterprise guy, I'm a database guy, but I have this idea and it just can't go away. I see this, this, this, this, this. They said, calm down.

You know, you should take a step. And the step I was asked to do was to create what I call a kitchen sink cabinet, get a bunch of people, you know, incubation and and start to get them together and and put this idea into work. And that's what I did. to to start my first company.

All right, I wanna back up for a sec because you're working on a on this remodel, this h home remodel, and and this is two thousand three, so you couldn't just like uh today if you're do doing a remodel, you can go on Pinterest or there's a million places you could go to to check out ideas and even buy stuff, right? Or house or whatever you want to do. And you were presumably just flipping through paper catalogs or going to even, you know, kitchen stores and just looking at fixtures and and things like that, right? Or less. Yeah. So we would literally print out pages. I would have like these thick folders of print outs

You know, pamphlets. physical brochures and and circle them and then sort of stick them together onto a page. It was like very manual and hard. And what did you want? to to see happen. I mean two thousand four, two thousand three, like what were you saying, hey

This should be better we should be able to just like go online and buy these things and they should just be delivered to our house, is that what you were saying? Well It wasn't even about the purchase. What I wanted to do was to make sure that there's one page. So if if let's say there's a project, let's say we were putting together a a room for my daughter And my wife

Me, my mother in law, our designer, we're collaborating. There should be just one page where we could put what we want, discuss it, and then throw out the things and just collaborate and have a single page, like even a small project like our kitchen stove, which has so many different decisions to be made, and everyone has different opinions and people are arguing and you're really passionate when you get into this project. You're you're focused on that door knob and whatever, like and that little knob and and and you know At the end, these all sort of dissolve, but at that point, they're the most important things and you're passionately discussing it. So any kind of collaborating decision making was painful, and that's when I started to see the potential of this idea in multiple places. So this idea that you could maybe build something on the web that where people could sort of share ideas in store.

these things like oh I like this this, you know, fixture on this website and I can store that image or that that link. Yes. And was there I mean, uh w did the t was the technology there to support something like that in two thousand three? No. It was very, very Primitive at that time in two thousand three, two thousand and four. Alright, before we get to that,'cause you wouldn't create a company around this idea for another year and a half or two years, but let's talk about the the sort of the steps that that that took to get you there. So You're talking about this and um I'm assuming you're talking to your wife or maybe your kids about this or somebody. My kids were very young, but yeah, I'm talking to my wife, I'm talking to my friends, couple of friends, because most friends were in enterprise business. I'm talking to my father in law, who's an entrepreneur, and

I'm excited and frustrated at the same time because I'm excited because I like the idea. I'm frustrated because I have no networks there. I don't know anybody in this space. A couple of VCs I talked to said, Hey guys, if you did something in database we you know, look at you, but consumer, I mean, stay away from it, you know, and again You have to remember we are just coming out of dot com. So consumer is still Not

a very exciting space for a lot of investors. But you had a you had a kind of a a a business plan, or you I mean, this is still early before you had a plan, right? You're just kinda casually talking a few. Yeah, I had a product spec, right. So I had uh three, four page product spec at that time. And what I did was I um started to tap into the natural network. So I started tap into my IIT network. I tapped into what was called the Indus Entrepreneurs, the TI network, and started to meet with some people who were in the consumer business

Yeah,'cause I didn't know naturally anybody was in the consumer business. And sort of talk to them and bring my idea to them. And that's where I got the advice that, hey, the best way to do it is to incubate at that time. We called it a kitchen sink cabinet, you know, get a few people together and start to brainstorm. And so what I did was I started to meet with people and invited them every Saturday to come to my house.

We signed an NDA, so my IP was protected. And my commitment to those was you show up at ten o'clock or nine o'clock, uh and We would give you hot Indian chai. My wife would make a snack for them. I would make the chai. And then we would brainstorm on the ideas.

And uh if they ended up Taking the journey, then you know, we'll talk about equity, et cetera. And through that sort of recruiting process and creating a very good group. We had eight, ten people who were starting to meet every Saturday. And then we started to assign projects. Somebody was doing user research, somebody was doing a little bit of coding. We had a guy who was a UX design guy.

And so we kept evolving it and by end of two thousand and Four. We had come to a point where the end to end prototype was working. And so how was it? Like what What did it look like?

So we could go to different websites. Get the uh information summarized. If it was a single page you could look at all the information unless you're trying to make a decision on, you know, uh sofas or lamps, you could put them all together, you could have a comment on them. So the basic prototype of the product was working. I said now is the time to really make a decision. I want to find out

Who wants to jump in? and quit their jobs and put their Lives and the risk. Who wants to sort of be an advisor kind of a thing, who's gonna contribute and only join us when we have funding. And I had to sit down because I had two young kids, you know, I'm I was in a secure job. I had everything, I had a mortgage and I had to sort of think it through. So I went back and it just so happened that my mom that winter was visiting

from India because there was a cousin's wedding. And so I got a chance to talk to her. And my mom said, you know I think you should do it. I can see that there's no way you're not going to do it. You have to do it. So I came back and I was energized and then um you know I wanted to have one technical co-founder and one person for the consumer space. Unfortunately, all the consumer guys backed off.

And two technical guys came forward and said, you know, we want to do this with you. And I like both of them and they have slightly different skills and Chaitin and Kirin were the two guys and I ended up sort of saying, Hey, let's divide this company three ways. I'll be the business guys, I'll take half and you guys, if you guys are willing to share the technical half, we'll divide it between the two of you. So we divided the company between the three of us and reserved five percent for a consumer person that we're gonna recruit in the future. and uh started caboodling my garage in two thousand and five.

Alright, so you had a working prototype and it's sort of like a proto Pinterest in a sense, right? Like you you would Put up. ideas and and initially I guess it was the the idea was it was around home improvement or or r renovation, right? It it was it was exactly Pinterest. In fact Pinterest when it started there was a lot of connection to Caboodle. And uh we started in home. But

As we went through the first year of that journey. We realised that the real sort of Um Attraction was Women

Shopping for fashion. And so we ended up focusing a lot of our energy on fashion and women and coined the term in two thousand and six. Social shopping, those are the words. This is how we want to position our company as a social shopping company.

I mean all of my investors had a very negative reaction'cause they said, How's shopping social? You go there, you shop, you sort of compare, you make a decision, you go Why do you need shopping to be social? And of course I realized I was in a room full of men. And our product was predominantly ninety percent, ninety five percent being used by women. And so that sort of was the genesis of Caboodle and its positioning as social shopping. But let me back up for a moment because w you working on this thing even before you raised money.

And what did it take to get you to leave your job? You know, your your well paying job at Fursant as a as a an executive there. to jump ship and start this thing,'cause you launch this this website in two thousand five. So what happened to make you feel like okay, I can do this? Yeah, you know, the discussion we had was, okay, how much money do you have in the bank? How much money do I have, how much money Chaitanya Kiran. And can we survive for six, nine months without funding?

And after nine months if the idea doesn't take off, then it'll take us maybe three, four months to find a job. So basically we said, Do we have twelve months of cash in the bank? We were lucky that we were able to raise you know, the money in the first three, four months and didn't have to burn much more than that, which was a series of interesting and wonderful circumstances that raised the money. And so we were uh by by month four, We had a million and a half dollars in the bank and you know, we have started payroll and we were able to start to pay a little bit to the company and and start recruiting engine for the company.

What was the business plan? Like it was going to be a place where people could collaborate, but how was it gonna make money? Was it gonna make money through advertisements or Or what? You know, that was I think one of the things I hadn't deeply thought about, unfortunately. We were very much a tech product driven guys and you know, we thought we're gonna make it big and then ultimately The meme at that time was that you could just monetize through advertising, you know. Uh and and Google AdSense was just starting to take shape. So the dominant form of advertising was still uh banner advertising and sort of non-content advertising.

But we were very much focused on usage and growth in the early days. And the engagement numbers were very interesting, um early on. Now remember, we were enterprise guys, so even our metrics and measurement systems were very weak in the early days. So we kind of intuitively knew that there was a lot of engagement, but we were using very crude analytics. This is two thousand for 2005, so it's very, very early days of even data. But we were starting to form a community around the product. People were coming, talking about it. So people start to discover and how did people use it initially after after it was publicly launched? So m a lot of people ended up using it for either food, so they were using it for recipes and restaurants, or fashion. But as we started to talk to our users,'cause we picked up the phone and reached out to these users, what we found that almost all of them were women.

And uh there was no women in our investor team, no women in our company, and yet every single person we talked to ended up being a woman, which was kind of surprising to us, you know. This is how naive we were about the world of internet at that time, and we were having furious debates as we sort of started to think about it. And ended up. Sort of saying that. Shopping and fashion will be our focus. We're gonna walk away from recipes and all of that. And that was uh turned out to be a very good decision because social shopping

In the early days. That had a lot of following that didn't have a solved problem and sort of closely resembled actually the pain point which triggered the product creation. So it all of came together by early two thousand and six.

But what's not clear to me is as you I mean, you you raise some money, so you had a runway But a at at a certain point you had to figure out how you were gonna make Revenue, right? Yes. And so what did you do? Did you were you were were you guys desperately looking for advertisers to put banner ads on the site? Well So we were still in the growth mode. So we were still not monetizing the site and

Coming from an enterprise background, I said you know, the way I should grow this business is create distribution partnerships. So I approached a bunch of media and commerce companies to say, Hey, we could build something for you. And so we created white label solutions for eBay.

Uh I remember in May of two thousand six launching something called mycollectibles.eb.com powered by Kabuto. and uh it was a collaboration engine for collectors to come together on a single page. We ended up doing a partnership with Condonash called Condon Asht Traveler. We created something called a suitcase, which was a travel suitcase where you could bring all the travel pieces together. So

Basically you're sources of revenue or some or some commissions. Yes. And then some money from Cond and some subscription money. It was like basically I was trying to do too many things at the same time. And uh being a an entrepreneur, I was just going wherever the money was

And where the distribution was, instead of sort of saying that all distribution and all money is not good for the business. So by the time Condonash was happening, business was slowing down, and we went from being a hot startup to suddenly sort of figuring out, you know, um investor conversation started to disappeared investors said you should come back when there's growth and I had to lay off a couple of people. So we came to the conclusion that we have to go back to where we started the year. We have to be a shopping company for women, focused around social shopping, for fashion. and we have to somehow get ourselves out of eBay and Condinast at this time. and we were also starting to run out of money.

When we come back in just a moment. How Kaboodle turns out to be a dress rehearsal. for Manisha's next business. Poshmark. Stay with us. I'm Guy Raz and you're listening to how I built this.

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At hid.wondery.com, and we'll share your favorites right here in the ad breaks in future episodes. And thanks so much. We love you guys. You're the best. And now Back to the show. Hey, welcome back to How I Built This. I'm Guy Raz. So it's early 2007, and Caboodle is running out of money.

So Manish picks up the phone and starts booking meetings with his investors. So I went, drove around, most of my investors were in Silicon Valley. and collected small checks like ten thousand dollars, fifteen thousand dollars, enough to make one or two payrolls at that time, so we could survive. Then one of the investors stood up and said, You know what? I see this pattern that this traffic is going up. I see I see how passionate you guys are. Let me help you. get a bridge round together. So he ended up doing a bridge round.

uh one point seven million dollar breach round at that time. And that money ended up giving us runway. For Nine to twelve twelve months. So we got this money done. And suddenly

our traffic was now starting to become vertical in the sense that we were starting to at that time the rankings were measured to Alexa and we were climbing rapidly in the Alexa ranking for shopping sites. And so we got noticed by investors. You know, one of our um Early investors was a guy by the name of Ron Conway. And Softbank, which was Not the soft bank of today, it was, you know, still a V C still a prominent VC.

ended up calling us out of the blue and saying, Hey, we're very interested in talking to you. And within sort of two, three weeks they decide to write as a term sheet. No I'm like, you know. feeling like I'm on top of the world, you know, we got the seed funding. Now we get a top notch guy. So I'm like super excited. I take the term sheet for my board.

And the board looks at the time sheet and says, This is a terrible term sheet. I think we should look at exit options and you should think of selling the company. Wow. What was so bad about the term sheet? What do you remember about it? I mean it was just it was I think it was two X of the last round, but it was like not three, four, five X and I

You know Again, I was so tunnel vision. I was like building the company, trying to manage I had two young kids, et cetera. I only remember that I was so happy to get the term sheet and then it was like getting cold water poured and and I was like How the

How do I figure out how to sell a company? I mean, I barely know how to raise money. Uh and again, remember we had very little money. So I had one point seven million dollars, even a flight in a hotel was super expensive. you know, uh to to use those tiny resources. That's you have left in the bank. Yes. And so it was just it was a tricky time. And um And what ended up happening was

One of my co founders came to me and said, But Manish, you're doing all of these things, what do you really want? Hm. I didn't know what I wanted. I hadn't decided whether I want to sell the company or Or uh I wanna keep the company and build it like I wasn't thinking for myself. I was just doing what my board was asking me to do.

And He he created this question and and provoked it in a way that forced me to think about what do I want. And so I sat down and cleared my head. I wrote down all the pros and cons where I was in my life, sort of what was happening, and I wrote down a number. I said, if I get this number, I actually want to sell the company.

And and you also. Great timing because During that period, there were a bunch of established media companies like MTV and AOL and CBS, they they were trying to shore up their businesses by buying Digital assets like yours. And so I guess in in two thousand seven you got you got the number you were looking for, right? You were acquired by Hurst. I read they paid something like

thirty million dollars for caboodle. But I wonder like And forgive me, I hope this doesn't sound rude, but w what exactly were they buying? I mean they you the you were you had the technology and you had built this platform, but I mean d did they ask you Like, hey, what's the plan here? What's the business plan? I mean, or do you think they thought, Oh, you know, hey, they have this platform, now we can take this and figure out a way to uh to sell things to people.

Yeah, I think their strategy was digitizing the magazines at that time. They had a new CEO, and he was focused on taking all of the magazines and creating engaging digital properties. And also they wanted to have a presence in um in Silicon Valley. The last thing is Hearst as a as a company was basically made up of a series of acquisitions that they acquired at small stages and then grew and made them meaningful properties. So that was sort of their business model as well. So Bunch of things aligned, unknown to me at that time. Um I had no no idea of the media business. I didn't even know that Hurst was on the east coast. So I was again

Being naive has helped me in being able to just go talk to these people without knowing that who I'm talking to or what sort of uh is on the other side. I mean in some ways, I mean who knows what would have happened to Caboodle if you kept it if he kept it private. Uh, but in some ways you got really lucky because a year later The financial crisis would come about and once again you would have had it would have been impossible to raise money. it was a very, very lucky thing, uh, you know, that happened from a timing perspective because

we were not monetized, we were growing, but we were not a massive property. So had we hit O eight without an acquisition, no matter how much cash I had, it would have been a very tough time. You know, we would have to be enforced to be a profitable company. And so being acquired in O seven was serendipitously one of the luckiest thing that could happen. The ability to sort of get that liquidity turned out to be a fantastic thing because so much particularly non monetized companies went down under in oh eight and oh nine overall whereas we kept growing through that and ended up monetizing and becoming sort of an interesting property within that zero eight zero nine time frame.

Yeah. Alright, so now You sell it to Hurst. And w this big media company. And you stayed on as the head of Caboodle.

And what what was the monetization strategy once Hearst took it over? It was it was largely advertising. So they were selling advertising to big companies, you know, whether it's a brand or a retailer, and they would advertise in the print and they would also have a significant digital presence through caboodle. But the advertising we were doing was not directly tied to the engagement. Some pages were over monetized. So there were pages we were running where there were three banner ads running on a single page, which made it very, very hard to sort of load up and and work with. And so that led to sort of one of the principles by which I looked at anything I create where Wherever you have love, the money is sort of

synergistic. So engagement and monetization had to be hundred percent synergistic in any business I I created. So the more you focus on engagement, the more monetization you get. That was not the case with Caboodle. Yeah, we were sort of Bulling. in different directions based on, you know

how the advertising was there. But otherwise. I I would say they were very, very healthy partners as an owner of Caboodle. They were never overly focused on it. But On the monetization side, we didn't have a choice. We had to put those ad units, and that was something that none of us really liked in terms of how they manifested in the site.

But I'm assuming it was probably never It was never profitable. And um it needed a got a three or five X growth before it would be at scale to be you know to have enough monetization and its own ad engines at that time. So Really the focus of the property should have been less monetization and still much more growth for another year before you got to monetize it. So you had started a business and and obviously there was a lot of um there was a lot of anxiety as you described, right? There was just a lot I mean, even even the short sort of period of time that it was uh it was an an independent company.

you know, raising money and worrying about payroll and and, you know, kind of retooling the approach and and slowing down growth and and all trying to do a bunch of different things. Um So when Hurst bought this business and you became an employee of Hearst Did you think to yourself, I'm done with with this, I'm not gonna be an entrepreneur again, or did you think, you know

Uh I like this. I'm gonna try this again one day. At at the time Kaboodle was acquired, I felt like Kaboodle was still a baby. So my attention and my focus was still growing Kaboodle. You know, I was not thinking beyond it. But as time went on, it started to become clear that as even if we create a tremendous amount of value. the the journey has become completely different. And I was getting very frustrated because I felt like I was working with some constraints. I was working with something but I didn't feel like I had the full ownership. And but financially we were doing very well and life was, you know, in a groove and but I was just unhappy personally. And so I was talking to my wife, she goes, you know, I haven't seen you this unhappy in years. Even when you were struggling with cabool, you were so much happier than than than the thing. And I said I really need to

to do something and so but but I don't wanna jeopardize, you know, the security that the family has. And she will be all supportive. Why didn't she just Leave. And that's when I started to think of leaving. Yeah, you know, Hurst I mean, I I I think even at that time, but I know that today it you know, it's got Cosmopolitan and L and uh Harper's Bazaar and Red book and 17, a bunch of magazines that

Featuring. fashion, right? And so I imagine Just working and having Kind of pivoted towards fashion with

with Caboodle that that you kind of just became more aware of the how the industry works. I did, I did. So I would say as Malcolm Gladwood calls it, those spending time in Caboodle and then spending two and a half plus years in Hurst was my ten thousand proverbial hours in fashion. And so as I left Caboodle, I knew I wanna do something in fashion.

I don't want to touch inventory. I realise that Silicon Valley we are good at a lot of things, but managing inventory is not our forte. You know, we we think of things as very fluid and consum consumer and bits and bites. So I said that's Not that inventory is not a great thing to do, but just we are not good at it. And the third thing I wanted to do was build something where monetization and engagement were just one. Like so I didn't want it to be disconnected. Yeah. I felt like the Caboodle journey had given me enough experience and appetite.

And you know we We'd got a few million users, and I wanted to create a community of at least a hundred million users. So that was sort of like my thing is I want to hit something with a hundred million people. Right, and I think when you came up with the idea for Poshmark, it was inspired by a a lot of different things, but it kind of started with the iPhone, right? Yeah. I remember I was on a trip With a bunch of my friends And this guy had this little iPhone, uh, it was iPhone.

And he t takes a picture of these birds and and shows us it looks amazing, you know, and we are all here with our SLRs trying to take picture of these birds. And then he quickly uploads it on At that time a hot platform called Facebook. And we suddenly see his picture on Facebook and and I'm like, I have to now take my S D card, shove it in the laptop and all of that. And so I suddenly said, you know. This mobile is coming of age, like something massive has happened. I I had iPhone three at that time, which was grainy and you know.

photo quality was mediocre, et cetera. And this was high quality stuff. And so I said, you know I need to do something with mobile. And then I was at my son's high school game. And the high school homecoming queen was wearing a yellow dress. And we knew her parents, we were talking to her parents, and they said, You know, she's just thrifted this dress. This is she's bought it used from a thrift store.

And then I came back home and I was in our closet and they were like bags and bags of clothing just unopened, lying, you know, not returned, you know. And so suddenly like all of these things just clicked in my head. And I said The right idea is to empower everyone to have this phone. A girl can literally take her

Yeah. List them very quickly. And sell them. And

All of these things kinda came together. And I wrote a two page paper on what Poshmark should be. And I called it Gosh Posh at that time. Gosh Posh. The idea was basically to make it easy for people to sell their Used clothing. Yeah. The the idea was Buy and selling clothing should be fun and simple.

The use case we wrote up was you'd gone to a wedding, you come out, you know, their dress is now seen by everyone, you quickly pictures, you list it, somebody buys it. you don't have to worry about shipping because we've taken care of all of the things. You just ship it and you collect the money. And um I met my co-founder uh Tracy through Mayfield, who's one of our early investors. And her background was all uh all fashion. She grew up in the New York fashion scene. She had uh worked on a small uh brand there You know, she had an MBA, she had a fashion background, and she had moved from New York to Silicon Valley to do something which marked fashion and tech. And uh talk to her, talk to another person, everyone sort of immediately started to like the idea. Tracy went and mocked up something, another guy started to prototype something, and soon this idea caught a momentum of its own. And uh the the the thing that was very regimented in my mind was we're not going to do anything on the web or laptop. This is gonna be a pure mobile iPhone thing, which was very hard to pitch to the investors because nobody thought people could actually shop on the phone. Yeah.

Quickly, I mean would you say this is just It's basically gonna be like a thrift store online. Over time you could fail used fashion, new fashion, everything. It becomes sort of the social hub for fashion. And we actually had a lot of people using caboodle and hacking it to create a marketplace where people would post and say, I have these Jimmy Chews, you know, do you buy it? Can you pay pal me the money? So they were using Caboodle for transactions. And this was sort of transaction built into it. So it was very simple model. And you had already had a successful exit, so was it easier this time around pitching?

Investors. It was. So Naveen Chada, who was the Mayfield General Partner, who's the one who uh his team had connected me to Tracy, was very keen on at least putting some money into my next company. And then we went and pitched. to the partners and uh after that he said, you know, we're ready to invest. And so That first investment from him came very quickly. How how much did you raise in that first round? We raised uh three and a half million dollars in that first round.

quite a bit of money at that time. And we raised to a bin from Mayfield, but I also gave room to my investors who had supported me in Caboodle and and carved out room for for for all of them. So all of them joined the round. All right, now you're gonna start working on This thing and and it was gonna be mobile only. It would enable people to Take a picture of uh an article of clothing, upload it to their

Page or whatever and then uh for somebody else scrolling through this app. to buy the product and then You guys would handle everything else. How was it gonna work initially? Yeah. The idea was that somebody would come, buy it from you, we would take care of all the transaction money movement.

Once you ship it. using a shipping label we email to you. Once the person received it and said that they received it and they're satisfied with it, you get the money. You would keep eighty percent and you'd get twenty percent. And that's it. I was tired of people

You know. hiding a lot of fees. Like, you know, if you sold on other marketplaces at that time, you had one fee, then other fee came, and by the time you sort of got your money, there was nothing left. So here our idea was day one we would reveal to you if you listed your item for Fifty bucks, you can get forty bucks. And not up any more, not up any less, you can get forty bucks. They would we would not charge you any hidden fees, et cetera. And then that's sort of how we launched it uh in in twenty eleven.

And and from what I gather, i initially when you launched, it wasn't like a buy now button on the site, right? Like I read that something like that that e that employees of Poshmark would set up face to face meetings with the how did what what was going on there. We were big believers of putting the product out into the customers' hands very early. So we got funded in February and by May We were starting to test the product in of two thousand eleven. And and by August we were starting to see transactions happening, but we hadn't gotten our payment processing set up, we hadn't gotten shipping set up. So we were still just a content site. And so people would literally write a comment and Leanne who was our first employee in our today our S V P of community was heading up the community management. So people would just email her and she would say, Uh, you guys want to buy this thing, please bring your money or Paypal me the money and then meet us and and typically our meeting was at the district wine bar in Soma in San Francisco. And that's where the product would happen. It would be almost like a little physical product exchange.

half the time it was cash and product being exchanged there. We were not making any we were just trying to facilitate the transaction. you would you would facilitate the seller and buyer Physical in person meetup. Yeah. Initially. Initially. That was sort of how our community formed. So a lot of our initial Alpha testing was

We would host a weekly get together at the District Wine Bar and other get together at our office in Menlo Park. And that's how sort of the product got started. Presumably, you know. people were already doing this on eBay, right, for years before po anybody was selling secondhand clothing. So how did you um sort of persuade people to try this platform. I mean was it

w was the selling point this is just about fashion and that's why you should come here. Couple of things. I think the fashion part was very critical. I think the the the part that was very exciting for people was it was very empowering and very stylish. So our product has something or still does has something called a cover shot. So you don't just create a listing, you start the listing with a cover shot. So the first shot is you posing with your clothes on or you sort of making it very beautiful. And then you add other photos to kind of describe the product. So it felt like you're creating your little magazine article. And so it was just fun to browse you know, as as you were looking at it, fun to connect.

It was a community forming And um You know. Sometimes you build a product and just, you know, the four or five things you build end up all being magical and supplement each other. So the way the product were designed, the fact that it was all happening on the phone. Two thousand eleven Very few stuff.

was on the phone. Even the application that were there were predominantly web application and we didn't have a web page. So we also leveraged the fact that mobile was very novel. And we finally launched the app in the app store in December of twenty eleven. Before that it was still being distributed. Through hands, you know, so sort of through private distribution. And at that time in in December of twenty eleven, when when you launched an app on the App Store

It wasn't like today. There weren't to say there's millions of apps, right? I mean t the the the the competition was just the there were just fewer apps available. So Was it easier to gain traction at that time? It was and it wasn't, you know, in the sense that the expectations were very moderate. I think we got like a hundred users in the first day. It was all through PR and you know, we got an article in a pub at that time which was very popular called Refinery Twenty Nine. Uh we had a couple of articles in San Francisco Chronicle print. And and we started to see some users come in. But there wasn't any cost efficient acquisition engines, you know. It was really, really expensive. So we started to experiment some online advertising.

But app installs were not there, so you still had to sort of click through. Discover something then go to the app store on your own and try to Download the app. And so that whole funnel was extremely

Expensive, complicated, etcetera. So We couldn't figure out how to scale it. When we come back in just a moment. Manish learns that shipping clothes from point A to point B is a serious business, so serious that if you don't do it right,

you could wind up in jail. Stay with us, I'm Guy Raz, and you're listening to how I built this. Hey, welcome back to how I built this. I'm Guy Raz. So it's early 2012, and Poshmark is out in the world as an app. And now, Manish and his partners are asking, how do we get people to discover this thing? But two things happen. When we first launched the app, we saw

Amazing engagement. downloaded the app, most of them were actually creating listings and many of them were buying. eighty, ninety percent of the people were coming back week after week. So there was the amazing engagement. But the biggest thing was, through our data and our data systems were still early, we saw that average user spending 15 to 20 minutes a day. You know that.

fifteen to twenty minutes a day. You know, my belief having work in five, six years in consumer, I was not a guru, but I was sort of in the early days, is that You can buy growth, you can buy anything, but you can't buy love. You can buy engagement. Engagement is really natural to whether your product works for the consumer. And then I knew that this business is gonna work. Yeah. And and one thing you seem to really lean into early on was was developing a strong sense of community among users, right? Like you would do these

these road shows where you go to different cities and and and host these fashion events and things like that. Um But But the thing about a community, right, is that it it can turn on you and and I think pretty early on your some of your users did turn on you in in part because of your shipping fees. Like w what exactly happened? Yeah, so we launched the app at five dollar shipping at that time. And our cost of shipping was turning out to be

Ten dollars and fifty cents on an average. And so we were basically losing money left and right on every order. And uh if you remember Having come out of dot com, I didn't want to build a business where

You were losing money on every order. So we were like, What do we do? And you know, our shipping fee was nine dollars at that time. We had discounted to five dollars for the launch. So we said, You know what? We'll just Take the discount away and go back to normal things. So we put a little note in the app. in May of two thousand and Twelve. saying hey, we are

The discount is gonna finish, the welcome discount is gone, and we're gonna Move the shipping to nine dollars. Hm. I kid you not, Guy, within 24 hours. Tracy and our mailbox and Twitter was flooded with hundreds of people saying

You are going to make us bankrupt. We won't have any clothes to wear. You guys are crazy. How can you change the shipping? And it was a revolt by our community for us to move our shipping from five to nine dollars. We had never seen this level of passion ever in my life.

So w what did you do? So finally after a lot of thought, we said, Okay, we'll change the shipping fee to seven dollars, right? And even as we change to seven dollars, we got so much negative feedback from the community, but You know, we were still losing money on every order. but we said we can afford seven dollars. So we started with seven dollar shipping.

In twenty twelve. And Twenty percent take rate. Just to give you a sense. Today it's

Twenty twenty four. our take rate is still twenty percent. And our shipping is seven ninety seven. Huh. But but but you guys actually ran into

a lot of issues with shipping at the beginning. I I mean I I read that the that the post office came down on you after you basically prepaid for a bunch of uh but be k basically they were all the same weight, like like I guess two pounds. Uh so it it didn't matter, right? If the seller was sending heavy boots, the shipping label that you paid for would still be for two pounds, but that wasn't enough, right?

Yeah, so at that time in twenty twelve, we wanted to make sure that the seller didn't have to worry about, you know, how much the item weighed, what they had to do, like Keep it very simple. We didn't want them to think of them as a seller. They should just be two people exchanging products out of a thing, just shipping. They don't have to worry about anything. Just list the item and and price it and ship it. So what we would do is we would ship them The right label. for this. So if you were shipping from Minnesota to Texas

And you were shipping say a pair of shoes or whatever we knew, we would generate the right label priority mail label from USPS. We would pay for that label and only charge you seven dollars for that label. So some labels we were losing a lot of money, some labels we were making a lot of money, but we were simplifying the job for the seller. So they didn't have to

Think. of weighing the item. And then in uh middle of twenty thirteen We get a knock on our door in the morning and two men walk in and say, We need to speak to Manish Chandra.

is we are from USPS, we're postal inspectors. And uh so our team says, You know, I'm Olivia, I'm the head of marketplace operations. No, no, we can only speak to Manish Chandra. And so I sit down with these two postal inspectors. They sir We are here to inform you that you have millions of dollars of fine because you've been uh underpaying or overcharging for some pa labels for these things and and and you know you have to pay the fines otherwise we can actually legally put you in jail. Wow. So explained to them, I said, yes, you're right that there's a bunch of labels that we are underpaying, but here's a bunch of labels that we're extremely overpaying for because of the the thing they're saying. Well we don't care about overpaying, we only care about underpayment, et cetera. So a lot of back and forth finally made me sign some things.

And and you know, we are now growing very fast. So we are Consuming a lot of USPS priority labels. And from there a series of conversations start that ultimately led to creation of Posh Post, which is a simple fashion shipping service that we created, where basically We have a partage with USPS where we have the ability to send you a simple shipping label, we charge you a flat fee, we pay a price to USPS, but every single item goes to the single label, whether it's underweight or whatever it is. And so that was one thing that was going on.

And meanwhile, another thing that was happening, I guess kind of more generally, was that uh mobile was really starting to take off, right? I mean you guys launch in twenty eleven as an app And then with each passing year, more people were discovering and downloading apps, right, from the app store. So that had to be Good for awareness, right?

Yeah. So by Q four of twenty twelve. Facebook had retooled their app to be a mobile app. And they had done a partnership with Apple. To create in add for bat where you could click

and get an automatic mobile install of the app, right? And we somehow you know, we're good at getting ourselves into beta testing. So we got into the beta testing of that app. And it turned out that in the first two months It was an extremely successful product.

And we just grew Three to five X in two months. That sounds like a good problem to have. It was an amazingly good problem to have, but the speed of growth was so crazy. On a system. Where a lot of things were still.

You know. very weak, you know, in terms of the payment systems, the shipping system, but all sort of untested. So suddenly your volume exploded. Like think of if you're doing half a million dollars of transaction, we're now doing five or six million dollars of transactions, you know, which is not much, but the speed was very high. So we started to hit alarms in every single one of our partner. We started to hit alarms with our payment provider, with our shipping provider. infrastructure. We hadn't built some of the distribution scaling, we were starting to hit the problems. And meanwhile

In twenty thirteen, the app is going like weeds and rockets and people are loving it. Everything is sort of working. But Our systems are just blowing apart. Uh the the payment processor calls us and says you

You know. We can't w the way you're structured, we can't handle your payment process. You gotta move to another payment process, sir. We went to every payment process. Went to PayPal, we went to Braintree, we went to Stripe, we went to uh Wells Fargo we went to First USA. We went to like literally every payment processor. And even when they would agree to take our business, their compliance chief would just throw them out. And it was kind of very Very bad because we had actually the safest model.

Because, you know, the money was never at risk in this whole sort of transaction. The money would go to the rightful owner. But they didn't understand it. Now we were like But around that time PayPal ended up acquiring Braintree. And somehow

Through a miraculous set of licensing and you know this whole area is quite complicated, they were able to onboard us. So the combination of Bell and Raintree at that time saved our live and then we became their partners and still are.

Huge partners of PayPal and Braintree. I I I wanna I wanna dive into some a decision that that you took around this time. around growth because you were growing so fast and it was unsustainable. That you decided that you wanted to slow it down. Um, and and I guess you did that in part by cut cutting back on marketing.

W tell me what what you did and w and why. Yeah, this was middle of thirteen. We were growing like a rocket ship. But in those six months from January through July competition had massively increased and there were many companies in the fashion space that were spending a lot of money in marketing and actually were starting to declare bankruptcy. Yeah.

And we had a very sustainable model to begin with, but we were obviously caught up in this frenzy of, you know, of of marketing. And so um I went to my board members and I said, and these were both VCs and VCs are ultimately focused on growth, I said, I'm gonna cut down growth massively for a year. by saving money and using that money to rebuild the infrastructure. And we cut down growth by taking our marketing and bringing it down to pretty close to zero. for almost a year before we restart it, while we rebuilt the infrastructure. The hard part was that this year of no growth

ultimately meant that to get a real funding route was delayed by a couple of years. We had to bridget the company for more than a year, year and a half because when people would look at our metrics, they saw this time of no growth and they could not grab their heads. Even though we kept saying it was because we cut down marketing. investors just had a hard time. They needed a long runway of growth before they would fund the company. So it kinda delayed my funding by almost a year and a half before I could raise a real Proper round. Um

But in hindsight I felt like it was probably one of the most Bald? Painful. but probably correct decision that I made in this journey of Poshmark.

could have happened. I think I think I I fear that, you know, we would have lots of failed transactions, our customers would have churned and gone away. And ultimately you know, we would we could have crashed. We could have completely crashed. Instead through this whole process of cutting our marketing, I hired some of the key executives. Our head of growth joined us in spring of twenty fourteen. I shared with him, I said, you know, for sixpence I can't give you any money. He said, no, let me help join. Our head of data joined at that time. And so

I felt like we build a management team as well, besides sort of building the infrastructure, but we built a management team, not fair weather friends, but we actually found foul weather friends who would actually stick around. And luckily none of my co-founders left. They're still all here. And so we actually ended up forming a lot of um great in character through that sort of year. Um and and and and I think form a lot of bonds where we all sort of almost kind of had a second startup from twenty fourteen onwards, where you had to restart growth, rebuild the infrastructure, and grow the business in a much, much more you know, gritty way, if you may. you also started to p to kinda not pivot but but introduce other uh users, right? Because it initially it started out as a

place for women to sell women's fashion. Um, but then you got into men's and kids' fashion today of course you it's electronics has many more products, but t tell me, I mean was that just the kind of the natural uh outgrowth of of of where the business was heading? No, it wasn't. So actually in twenty fifteen we were growing very well. In twenty sixteen, um there was still a lot of hesitation within The leadership team as we talk to the community to go beyond women.

But we ended up launching Men and Kids. And I remember when we announced that we're gonna launch these things, we got hundreds of emails in our inboxing Why are you letting men in our community? It's not the right thing to do. It's terrible. You know, it's gonna be And and um anyway, um it ended up that men became after women the fastest growing category. And

The Women's Shop was great for our women sellers because They are faster shoppers. They had sort of different characteristics and of course they could diversify their inventory. They could sell more stuff that was in the closet. And then I started to get hundreds of letters of thanks. Thanks for launching, men. So it ended up being a very good decision to support All the different folks in your household and not just, you know uh for women. And so women are still uh a a

Biggest dominant thing, but All those categories are a meaningful part of our business. Yeah. So see you guys Continued. to grow um a lot. And and around twenty nineteen you're actually

poise to go public, but But but then I guess the business takes a few hits that that kind of stall the process. What What exactly happened? What was what was going on? Yes. So we were going to initially be class of twenty nineteen public company. But at that time the United States government

decided that marketplaces should collect sales tax on behalf of their sellers and limit it to them. So we implemented sales tax on our platform, you know and We thought it'd be a minor and there'd be some friction, but it won't be very big. It turned out it was a major friction. Just adding that sales tax caused the transaction volume to draw, the business growth to slow down, and everything sort of

Move down. derailed our IPO. We could no longer be a public company'cause we didn't know what was happening at that time, you know. Literally we had to stop the IPO process, take a step back. And so that whole twenty nineteen time frame, we were growing But we started to burn a lot of money because suddenly we were doing

New category expansion, new countries. new things and suddenly we went to our investors. And we said, you know, what do we do? We have this much money in the bank, et cetera. We were not out of money. We had like money in the bank, but it was very small amount of money. This was February of twenty twenty and the feedback was become profitable, right? And we knew how to do that because our single biggest expense was marketing. If we cut down marketing, we'd become profitable. So we were going to present a new business plan to the board in March. We're having our board meeting on March twelfth or thirteenth, and it's exactly the day

The government is declaring Covid nineteen to be a pandemic. And every day the sales started to go down. We didn't know if anybody would buy use clothing, right? Because It's touch it and go. We didn't know if anybody would buy clothing, nothing. So things are going down. We're cutting down marketing, marketing, marketing.

Yet at the same time, every day the revenue was going down. So I was like Every night I'd go to bed, I said, How do I change my mindset? And when I Went to bed and I woke up, I'd visualize Drinking.

The opening bell of New York Stock Exchange. So I literally that was sort of the way I would psych myself up. I said, you know, there'll be a day we'll go through all this trouble. This is March of twenty twenty, things are going down, and just wake up the next day. And then By March thirty first, we actually had our first Not.

Ibita profitable month. So we hit profitability a year ahead. In April government started release stimulus. And turned out people really did want to buy and sell clothes in the pandemic. In fact they cleaned out a lot of closets and used our platform to buy and sell a lot of stuff and things just started to move. And by June of twenty twenty. All the bankers were at the door and we were starting to think of filing for a public offering. And and you finally did wind up going public in in twenty twenty one, and I I think

Briefly at the at the peak of that process, you were valued like seven billion dollars. Um but the company also ran into some turbulence. And I know that you were kinda feeling some of the the effects of Covet and and and you know the after effects it was kind of tough to retain workers and and you had some a few high level resignations. Um

But in early twenty twenty three, this is just like two years. After going public, Um, you guys get acquired and taken private again by a a company called Navar, uh, which I guess is a Korean company. Yes. Can you tell me how that came about? Well

We were coming out of Covid, but kind of in a weird funky way. Inflation was skyrocketing, so consumption was going down. In between. Because the business is going through all this turmoil, the stock has taken a dive, we start to get inbound increase.

For acquisition. Yeah. Right. And in January we got a call from Neighbor. Where they said, Hey

We love what you guys are doing. We love this whole area of you know consumer marketplaces social commerce And we'd like to make an investment in your company and learn from you guys. And so started the conversation.

And suddenly one of the big things that started to sh shine for me is that one of the big growth areas for Poshmark could be live streaming and live shopping. And so I start to put a lot of energy into that. And uh you know, we're sharing obviously what our strategy is with neighbor because we're in confidentiality. And

Suddenly They actually put an offer on the table. And by January of twenty twenty three, we had become part of Navar. Well, And today you are still the CEO of the company.

Yeah, so so Never has uh you know, acquired the company and They are Think of them as Google and Shopify of of Korea, but sort of they're into many other businesses. They're into AI, they're into robotics, et cetera. And their vision is that they believe the space can be an independent company in the future. So they want to

They want me to grow this company and at some point in the future make it an independent public company owned by a neighbor but also uh public. So the journey we're working on is to grow this business over the next few years and and make it into you know, Bosch Mark two point oh as a public company. So that's sort of the journey we are on. We launched live streaming in uh April of last year. And it's really growing very fast. Uh the core business is starting to to grow as well. And we continue to gain market share. So we are sort of feeling a lot of momentum. But the best part of this journey, uh guy, is that

Literally all of my team is still here with me, still energized and wanting to go to Let's call it Poshmark three point oh. If Poshmark one point oh was a private company, Poshmark two point oh was a couple of years of the public company, this is sort of the third phase of Boschmark growth and they're still all very excited. about building and growing it. When you think about

The and incredible journey you took in, you know, the all of the to the twists and turns of it and where you are now, how much do you think has to do with your work and your commitment and your focus and Intelligence and how much do you think happened because

Of luck. I think it's definitely luck is a big piece of your journey but luck is something um That has to be married with hard work. But also um

values, you know, in the sense that temptations along the road. And sometimes you do succumb to the temptations. The key is to wean yourself off and continue with your core values and and a lot of times you know, not give in to your fear, not give in to your greed, but proceed with love. And ultimately I think the key to all of this is surrounding yourself with amazing people. I think if you do that, luck, hard work, tenacity, love all comes to that, and I am just blessed to be surrounded by amazing people at Pashmart. That's Manish Chandra, co-founder and CEO of Poshmark.

By the way, in 2021, in addition to men, women, and kids, Poshmark added pets to its list of categories. You can now buy a turtleneck sweater for your dog. an anti-anxiety vest for your cat, even a previously loved air pump. for your home aquarium. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show.

And as always, it's free. This episode was produced by Sam Paulsen with music composed by Rumpin Erablui. It was edited by Neva Grant. Research help from Catherine Cipher. Our production staff also includes JC Howard, Casey Herman, Carrie Thompson, Alex Chung, John Isabella, Chris Massini, Carla Esteves, and Malia Agadello.

Our engineers were Robert Rodriguez and Josh Newell. I'm Guy Raz and you've been listening to how I built this.

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