Advice Line with Chieh Huang of Boxed

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29:12Welcome back to the advice line on how I built this lab. I'm Guy Raz, and my guest today is Che Wang, co-founder of Boxed. And Che, you ready for our next call? I am ready. I couldn't be more ready. All right, let's bring in our next caller. Welcome to the advice line. You are on with Che Wang, founder of Boxed. Please tell us your name, where you're calling from, and a little bit about your business. Hi, Che. Hi, Guy. I'm so excited to be here. Thank you for having me. My name is Jessica Dubin, and I'm calling from Indio, California. and I'm the founder of Tail Cinch, which is an equine products brand focused on innovative and sustainable tail care and other essentials for horses.

29:49Awesome. Welcome, Jessica. So Indio, not too far from like Palm Springs, Coachella area, right? Yes, it's right. I'm right across the street from the music festival. Oh, wow. Oh, wow. Okay. Wow. There you go. Tell me about Tail Cinch. What is it? Yeah, so my hero product are reusable tail ties that I made for polo ponies because I myself am a polo player. And when horses are galloping, they naturally swish their tails. So you want to tie them up to get them out of the way for safety reasons and obviously to keep the flow of the game going. It can be very dangerous if a mallet gets stuck in a horse tail.

30:25So the status quo is electrical tape, which I, ever since I started with Polo, I found to be very wasteful. A lot of people just throw it on the ground after the game. They don't pick up after themselves, and it just drove me crazy. So I thought there had to be a better way to do this that maybe was reusable and also more attractive than vinyl electrical tape. So I created these reusable tail ties. And they're Velcro? They're Velcro, and they have a faux leather strip on the outside for style, and then they have silicone grips on the inside so that they stay in place and don't slide down. Okay, I love this because this is super niche.

31:04I mean, I mean in the best of ways, right? Polo is a game that a tiny fraction of people probably play, but probably a necessary thing for it. So just to clarify, horses' tails are tied with electrical tape? Do they put it directly on the tail of the horse? Yes. That must be painful to remove it. It can be, yes, especially on the inside where the skin is exposed. So the top of the tail has hair and the bottom is more just skin. And it's not great. But yeah, it's interesting because even though I started this with polo and polo ponies, it turns out that a wide variety of horse owners and equine practitioners have a use case for tying up tails.

31:50And so it just grew out of there. So now I've got horse owners of all kinds using my products. So that's – Okay. So, okay. This is really interesting. I have a lot of questions for you. But before we get to Che, tell me a little bit about your business. What are you guys doing in sales right now? Yeah, so I do between$70 ,000 to$80 ,000 a year in revenue, and I've been in business for four years. I pretty much hit that number every year, but I'm not really growing from that, and I think that sort of brings me to my main problem right now. Please. Yeah, so tell us your question. Yeah, so I've seen a lot of traction with paid social and influencer outreach, but both can be expensive and difficult to scale on a limited budget.

32:37So I'm wondering, do you think that getting my products on platforms where horse owners are already shopping like Chewy or Valley Vet is a worthy brand awareness play, not just a revenue play, even if the margins are super thin because my product price point isn't that high? All right. Great, great question for Che because he knows that world very well. I want to bring you in. First of all, before we answer Jessica's questions, any questions that you might have for our thoughts? My question, a clarifying question that I had was, it seems like you have been, you know, I'm looking at the website now, and it seems like you are expanding outside of just the tail cinch.

33:14How has that gone? Because that will also kind of influence the answer I wanted to give you. Yeah, so it's gone really well, and I've gotten great feedback from my expansion products. And I've sort of adopted this direction of trying to make what's out there better because there's not a lot of innovation in horse products. You know, people sort of remake the same thing over and over again. The brands just like stick to what they know. And there's flaws, clearly, because I've seen customers come to me and ask if I can fix them. So the issue is that, you know, with so many products and a limited budget, how do you market each one?

33:57Do I pour it all into the Hero product and have people coming in for that? You know, spreading my marketing budget across all the products, that's where the challenge is. because I still hit the same numbers, even though I have more products. That's fair. And so with that said, my if it was just the TLDR answer would be yes, I do think it is worth it to go on those platforms. You'll know better than we will in terms of which particular ones, but they could be excellent almost if you view it as in zero kind of cost of acquisition, kind of ways of marketing. And so as long as you're not losing money, and as long as data will show whether you're cannibalizing your customers or not, it can be an excellent way to get the brand out there, especially if you have other products.

34:47The reason why I asked the question before is that if Tailcinch is your only product and the only product that's doing well, then it probably will start to really cannibalize your base business and just erode your margins. But if you can get them to say, well, you know what? This Tailcinch thing is pretty cool. What else do they have? And let me go directly to the website. I think that could be a very powerful tool. What you have to actually really worry about is not so much the erosion and margin, but also the working capital component of it. And so retailers, especially big ones, are going to expect really long payment cycles.

35:20And so even though you sell that tail cinch, you might not get paid for it for half a year. And I've definitely seen kind of entrepreneurs get bitten by that. And if you then have to factor that payment, aka kind of finance that payment so you get the money early so you can continue to produce, what also happens is the factoring companies will also take a cut. And so your thin margins just became even thinner. So definitely that true cost of listing that product, that's an exercise you should definitely do. Yeah. I'm looking at your products. I'm thinking, wow, this is now you're talking about a much bigger total addressable market.

35:55You're talking about fly protection for ankles and for a horse's face and, you know, different kinds of products that aren't just for polo players. And that to me is really interesting. Is what is the best selling product that you have right now? Well, it's still the tail ties. You know, they definitely do at least 50 % of the sales come from the tail ties. People love them. I have a lot of repeat customers that come back and buy them again. They buy them in all the, you know, I have 21 different colors. So I have another style of them. So yeah, those are still the hero. But yeah. Yeah, I mean, to answer your question, I agree that Chewy is worth going on to.

36:38It can help with awareness. But ultimately, you want to change behavior. And that happens at competitions, through trainers, and at the barn or wherever else that people are around horses. And something you said earlier really struck me, which is there hasn't been a lot of innovation in the things that people buy for their horses. So I would imagine that most horse owners have to buy certain things. Like most dog owners buy balls so their dog can play fetch or they buy water bowls that they can carry with them on hikes. It seems like, based on what you're saying, there's an opportunity to really innovate in these kind of stale products that people have been buying for decades that haven't really – no one's really disrupted or changed.

37:26I got you also sorry I to jump in here guys please you brought up a really great point about dog owners and and uh as well as horse riders and like meaning that um I wonder what the data is on the overlap but I would bet that if you own a horse there's a very high likelihood that you own other pets at home and so targeting that audience uh via Chewy and some of the pet specialty platforms might not be the worst idea in the world. To see where that overlap is, that was quite intriguing. Yeah. Yeah. That's great, great advice. It's a great, great point. And there is a large overlap between horse owning and dog owning.

38:09It's kind of, they go hand in hand. And even cats too, because barn cats. So there's a way to connect them there. Awesome, awesome idea. The brand is called Tail Cinch. Good luck. Thanks again for calling. Thank you so much for having me. Take care. Yeah, I mean, horses are, it's like a thing that if you are a horse lover rider, like it's a huge part of your life. Yeah, I couldn't agree more. And it's one of those things that unless you're really into it, you would never go after it in terms of a market. And it might be sneaky big in terms of the ability for them to generate profits because it's such a niche and defensible market.

38:48I just did a quick search. Apparently, the total addressable market for just horse products, right? Just gear and apparel is$20 billion. Oh my gosh. And that's not nothing. I mean, that's significant. You get 5 % of that, you've got a big business. And the thing that I love about it is that you get that audience, I'm gonna guess out of that audience, probably nine, exactly 99.9 % of that audience is not cost conscious. And that is a market you really want. Exactly. Exactly. I mean, it's the same for pet owners. Yeah. I mean, when it comes to your pet, like for most of us, it's kind of crazy how money is no object, right?

39:27When it comes to our humans in our life, but the pets, it's like, yep, whatever they need. I bet even if money were an object guy, if times got tough in the Razz family, I'm sure you're cutting out your daily coffee run rather than any pet food. So that's my lived experience as well. Yep. All right. We're going to take a quick break, but we'll be right back with another caller and another round of advice. Stay with us. I'm Guy Raz, and you're listening to The Advice Line right here on How I Built This Lab.

40:16Welcome back to the Advice Line on How I Built This Lab. I'm Guy Raz, and today I'm taking your calls with Che Wang, co-founder of Boxed, and let's bring in our next caller. Let's do it. Please tell us your name, where you're calling from, and just a little bit about your business. My name is Eli Mash. I am a co-founder of a coffee brand called McCore Coffee. M-A-K-O-R. We are an organic coffee brand, and what we specialize is in helping with chronic inflammation. So our main product is 93 % coffee, and then we have a blend of organic cacao and organic spices that people can get every day within their blend.

40:51Nice. Well, thanks for calling in, Eli. So it's coffee, and you mix it with herbs and spices that are anti-inflammatory. So you mentioned cacao. What else do you put in there? Yeah, we mix it with a few other ones. So we have organic turmeric, Ceylon cinnamon, chaga mushroom, cayenne pepper, and then some ginger. I love that. And I love that you said Ceylon cinnamon because I know this. Saigon cinnamon from Vietnam doesn't have the same anti-inflammatory effects as the Ceylon cinnamon. Oh, yeah. We definitely – when we were doing this blend, I mean, when I started this, I had put turmeric in my coffee for like a decade.

41:27Yeah. And nobody really enjoyed tasting it but me. Yeah, it's bitter. So I was looking for some other ones that could taste well but also have other properties. No, it's really interesting because I'm super into this stuff. I mean when I get a cold, I grate some fresh turmeric and ginger and garlic and put in the cayenne pepper, black pepper, lemon juice, honey, and hot water, and it knocks it out every time, almost every time. If I do it right when it's starting. A really cool idea. How did you come up with it? so like i said i've been putting turmeric my coffee for quite some time my parents are holistic folks i grew up in a in a family of people who really thought of whole food as nutrition so i had thought hey this is something i do every day how else can people use spices they don't get normally and how can they actually do it in a way they're not going to forget about you forget about your multivitamins you forget about other things what can we do to help people uh every single day and something they won't forget about and coffee is a good way I love this idea.

42:26It's really cool. So you started, and is this your full-time job now? Is this what you're focused on? Oh, I wish. I have three kids. I have three little girls in my family. So as we're raising them and as I'm building the business, I have a full-time job in software sales as well. So this is really nice weekends, and we have a co-manufacturer that can do all the activities that I don't have time to do right now. And you're selling on your website entirely right now, right? So actually, we've been selling on a website for a little over a year now. And we are in a local store in Minneapolis with 11 stores.

42:58And we recently got into another one with 30 stores. So we'll be in about 40 doors by the end, by middle of this year. Wow. Nice. And I'm looking at your bag. Is it clear, does it make it clear right up front what this is and why this is different? You know, we could do a better job of that, I think. I mean, we have the ingredients. Think of like the RX bar, right? We have the ingredients all on the front. Yep. On our website, we do a much better job. But that is one of the challenges definitely when you're on the retail shelf explaining things quickly. And how are you doing in sales? So I think we're doing pretty well.

43:30So we run a subscription business and a purchase one-time business. We have about 300 people who subscribe every month. This year we're on track to do between$200 ,000 and$300 ,000 with 95 % of it being online. Okay. And what is your question for us? What's your challenge? Oh, so yeah, I have many, I think. But the question I have for you guys and is around, you know, when we have this blend, what happens with these spices, they're finer ingredients, right? So when people are going in and they're brewing the coffee, you know, the cacao can even melt a little bit. And what it does is it tends to brew slower.

44:06So when you get to like that six cups, if you don't – if you're not careful with the right filters, it can overflow. And if it overflows, people never come back, right? So we're trying to balance this really healthy coffee and having it with enough ingredients that actually helps and adds benefits. At the same time, being able to have this more of a general population where you don't need to think about that at all. So it doesn't – it's designed to be brewed how? You can brew it as a normal coffee, French press, Keurig, Chemex. and a regular coffee maker. But when you do have a regular coffee maker, if you get above six cups, it can overflow if you're not using the right filter.

44:44All right, I want to bring Che in. Che, interesting, I don't know. Are you a coffee drinker? I am. I've dialed it back a little bit, but I like this because this gives me an excuse to drink more. For sure, yeah. You know, to your exact question, it reminds me, I'm not saying this is the right answer, but it reminds me of an investor of ours that asked me, do you want to be right or do you want to be happy? And you know that in order for the blend to be to your standard, Eli, you know it needs to be a certain degree of the blend. But actually for it to have big uses like six plus cups, hello, offices, that you might need to modify kind of the formula a little bit.

45:32That is a guttural decision that you'll have to make yourself, that you'll have to live with as an entrepreneur and as kind of the parent of this brand. This is basically your fourth child, Eli. But from my opinion, you probably could modify it for that kind of bigger brew because I see coffee offices being a big distribution point for this product. The reason why I say that is I used to always laugh like when we had like people drinking gatorade or like you know like uh vitamin water in the office i'm like oh wow it's a real workout answering these emails you know you better hydrate but the reality is like we're all in the office and we want to do a little bit of good to our bodies um so i can see like the button in front of you saying do you want the regular coffee or the anti-inflammatory one i could see a lot of people pushing that other button yeah um uh so So that's why I think it could be a big distribution point that would get them to then say, in my home, I quite like that coffee brand.

46:34What was it called again? Maybe I'll sign up for my house as well. That's right. I have a question for you about that because it sounds like you want to scale up. But part of the challenge is that if people brew it and it just overflows, they're not going to go back to it. So a couple questions. Coffee, you extract the flavor in part based on the grind. If it's super fine, you're getting espresso. So if it's a grittier grind, a less fine grind, it's a drip machine, whatever it might be, or a percolator. I'm assuming that with the other ingredients, the turmeric and the cinnamon, the ginger, it's powderized.

47:12And so that also helps with the extraction. But is there a way to like have tiny grinds like freeze-dried grinds that are slightly bigger that still bring out that same extraction of nutrients that you want people to ingest? It's a really good question. When we look at suppliers that have all the certifications we need, we haven't been able to find that yet at our size and scale. We'd have to do all that grinding ourselves, which takes a lot of time. It's definitely a conversation, though, to be had and be thought through for sure. I mean, if you grind cinnamon sticks to slightly bigger pieces, does it extract the same way?

47:55Do you get the same flavor? You will get less of it. It seems like that's quite a challenge. But with challenges come sustainable moats. If you're able to have that proprietary grind, that could be really interesting because anyone who's going to copy this, and there will be people that copy this, will have to figure out and walk through the same difficult steps that you'll walk through. Oh, you know, it is interesting, right? Because you can, you know, to your guy's point, there's a lot of different thoughts and things I'm thinking about all the time. And then it's also around storytelling, right?

48:25And maybe the bug is actually a feature too. And now, Che, to your point, it can't go in offices that way unless you're using a French press or a Kierkeg or whatnot. But how much do you want to keep your community, right, and grow with that feature you have versus to your point changing. I think you've answered the question several ways, but that's how I think through this. You know, I wonder whether you can try something and you might be doing it. I don't see it on the package, but literally just say best brewed in a French press. You know, I know most people don't, you know, they probably use drip machines.

49:00But while you're trying to formulate something that – because down the road, you want this to be in K-cups, right? And that's a technology challenge, which I think is probably a challenge you will figure out how to solve, whether it's using freeze-dried ginger and turmeric that you can then grind to the same size as the coffee that enable the same extraction or whatever it is. But in the meantime, I wonder if you do something like that, you know, best brewed and French presser pour over. Yeah. Could it be different formats to that point? Like meaning that a different formulation for larger coffee machines like drip coffee machines?

49:43And it seems like you're very transparent with the ingredients as well. So it's like, you know, the real hardcore users that are like, give me all the anti-inflammation I can get. Well, we can't really offer that experience in a drip machine. And those folks will naturally, because they're hardcore about it, they will naturally gravitate towards the pour over or the other kind of ways of making that coffee. You know, that could be an avenue to explore. I actually don't know why I haven't thought about that. It's a really good idea. Well, that's why you're here, Eli. That's why. When you think about the office space itself, you're like, you know, it does work in a drip machine up to four or five cups, which is fine for most, right?

50:20But if you go to the office, you need 30 cups, right? And in that case, you're right. Maybe it is just a less potent one that allows it to go through. That's a very interesting point. And you know what? Like while we're riffing here, like office coffee is like a knife fight of an industry. Everyone wants to sell coffee to offices because they become like annuities. Like, you know, once you're in there, everyone's happy. The fastest way for team members to burn down the office is to say we're out of coffee or the coffee machine is broken. So once you're in there, you're in there and the office manager does not want to mess with it.

50:54And so I wonder, there might be some really fast, scalable ways for you to get real distribution through that channel. Because if you go to some of these bigger ones and you're like, hey, here's an innovation that we think will resonate with your offices, they might say, great. Because we're done with just selling regular coffee. Like we're looking for innovation in coffee. Do you know what? I just had a thought. We did an episode recently on Justin's Nut Butter, which was sold to Hormel for almost$300 million. And that was a peanut butter brand. And it wasn't – nothing was happening. It wasn't popping off the shelves.

51:27It was another peanut butter brand and people weren't noticing it. What changed, the innovation that really helped that brand blow up was – do you know what I'm talking about? I know. I think I know what you're talking about, guy. The pouches. Yeah, exactly. The pouches. They put peanut butter in a single-use pouch where you could bring on a bike ride or a hike. And that is what completely turned that brand around. I'm looking at this product and I'm thinking, well, could you do something in addition to what you're making, right? The beans, the whole beans in the grind, like a single-serve freeze-dried coffee pack that also has, let's say, 10 % of it is the freeze-dried herbs and spices in there that is an instant version of this, a single-use instant version of this for people to take on the go camping, et cetera.

52:13See if people respond to that. It's just an idea, but I'm just thinking about Justin's nut butter and the pouches. Guys, sorry, I was smiling the entire time you were talking about Justin's because I remember being in line at Whole Foods and seeing pouched peanut butter. I'm like, okay, consumer packaged goods has really jumped the shark. Who has thought, you know? But like months later, I was on a hike at a retreat and I was starving and someone had these pouches. I was like, okay, give me one of those pouches. Give me one of those pouches. And I was like, this is brilliant. And so it doesn't shock me.

52:42It's protein in a pouch, yeah. Exactly. It's a very good way to trial things as well. It's a good way to trial things to let people taste this, and it's anti-inflammatory. So anyway, just some thoughts. It's very cool. I think you have an opportunity to – I mean you know to scale this. You've got to make it frictionless. And if you can figure it out, which I think you could, that could be a game changer. Appreciate that. Eli, if I'm walking through Whole Foods and I see pouches of your coffee, I don't know where you got the idea. You're going to buy it. You've got thousands of them. And we'll expect a commission check for this idea, Eli.

53:13Oh, you guys are on the list. You're on the list of commission checks. Lifetime supply of MacCore Coffee. Eli, thanks so much for calling in MacCore Coffee. Good luck. Thank you so much, guys. I really appreciate your time. Thank you. Che, before I let you go, I want to ask you a question that I ask all of our guests who come back on the show. Uh-oh, here we go. If you could take all the things that you've learned now as a super experienced entrepreneur, you've been through highs and lows, and you scaled a company to unimaginable heights, and you go back to you when you started out. you know, in 2013 and say, hey, Che, here's what you need to know, what would you say?

53:50I would tell myself that it's a life you chose to be an entrepreneur and the reward is the journey. And I know that sounds a bit cliche, but time and time and again, you know, what we experienced today, Guy, it's every entrepreneur experiences the same thing. Yes, yes. It's problem after problem. If we had like another two hours, these folks today could have brought on another 20 challenges that they had this morning. And it gets tough, it gets lonely, it gets stressful. But as I've walked the path for now almost two decades, I enjoy it. I think you're gonna find me hopefully back on the show when I'm 75 with a new company, you know, because I think solving problems and my thing is affecting people in a good way and helping people in a good way as well.

54:43So if we took that time machine, I would say, listen, you're gonna have ups, you're gonna have downs, but enjoy the ride because it's gonna be worth it. And I genuinely feel that way today. That's great advice. That's Box co-founder Chae Wang. Chae, thanks so much for joining me today. Thanks, Guy. And by the way, if you haven't heard Chae's original How I Built This episode, you've gotta go back and check it out. You can find a link to it in the show notes. And here is one of my favorite moments from that interview. I remember I was driving home from a meeting in New York, and one of the folks that quit his six-figure paying job to join the dream and sit in my garage called and said, dude, I refreshed the page over and over.

55:23It's not broken. We got zero orders today. Oh, wow. This dropped down to zero two days in a row. And he was like, dude, I risked my livelihood to do this. Are you sure this is still going to work? Hey, thanks so much for listening to the show this week. And by the way, please make sure to check out my newsletter. You can sign up for it for free at GuyRoz.com or on Substack. And of course, if you are working on a business and you'd like to be on this show, send us a one-minute message that tells us a little bit about your business and the questions or issues that you're currently facing, because we would love to try and help you solve them.

55:57You can send us a voice memo at hibt at id.wondery.com or call us at 1-800-433-1298. Leave a message there and make sure to tell us how to reach you and we'll put all of this information in the podcast description as well. This episode was produced by Ramel Wood with music composed by Ramtina Ablui. It was edited by John Isabella. Our audio engineer was Robert Rodriguez. Our production staff also includes Casey Herman, Sam Paulson, Alex Chung, Chris Messini, Carrie Thompson, Catherine Seifer, Neva Grant, Noor Gill, and Elaine Coates. I'm Guy Raz, and you've been listening to The Advice Line right here on How I Built This Lab.