KiwiCo: Sandra Oh Lin

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2:53Welcome 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 home arts and crafts projects grew into a multi-million dollar business when Sandra Olin launched KiwiCo, now a top-selling subscription box for kids. Subscription boxes generate around$30 billion a year. That's globally. And by 2028, that number is expected to rise to around$73 billion. So not an insignificant amount of money. The challenge, though, is there is a lot of competition for those dollars. Back around 2010, when subscription boxes were starting to get attention, brands like Birchbox, BarkBox, and Blue Apron were the darlings of venture capital.

3:50The money fueled massive growth and massive expectations, which I should mention were not always achieved. Birchbox, for example, which did samples of personal care products, was valued at half a billion dollars at its peak. But just 10 years on, it sold to a private equity group for just$45 million. BarkBox, which sells pet supplies, went public at a$1.6 billion valuation. But since 2020, it's lost about 90 % of its value. And Blue Apron, a meal kit brand, was valued at$1.9 billion, only to be bought out by a private equity group for around$100 million in September of 2023. But one company that's managed to weather the storm in the subscription box world is KiwiCo.

4:43And part of that has to do with what it makes and who its audience is. KiwiCo makes hands-on activities for kids around things like science and craft making. So for example, a kit that allows kids to make things like stomp rockets or solar-powered cars or crafts that use pipe cleaners and styrofoam balls and googly eyes. Sandra Olin founded KiwiCo back in 2011. And the idea came from, well, being a mom herself who wanted more tactile and educational toys for her own kids. Sandra was actually on this show briefly back in September 2020 in the thick of the pandemic when her supply could barely meet the demand.

5:28At the time, KiwiCo was inundated with orders from parents trying to keep their kids busy at home. And today, KiwiCo is a leading subscription box for kids. Sandra grew up mostly in the Cincinnati area in the 1980s and 90s. Her parents immigrated to the U.S. from Korea when she was a baby, so her dad could study for his Ph.D. in physics. When we immigrated to the U.S., it was kind of the classic story of immigrating. My parents didn't have a lot of money. My dad was going to grad school. My mom sold her wedding ring when she moved to the US. She had gone to a top university in Korea. She ended up being a seamstress for a bit when I was young.

6:18She ended up taking care of kids at our graduate student housing apartment. So she had four kids come for a couple bucks a day. essentially was doing child care. And later on, she was the one who started our little family business. When I was in high school, we actually sold troll dolls in the mall at a kiosk. So it was a fad at the time. And so she actually took that on too. The whole kiosk was just troll dolls? Yeah. There were a lot of different kinds. But like, I don't know, they're troll. Of troll dolls. There are little ones. There are bigger ones. They each had a theme, right? So a tennis troll doll might have a little tennis skirt and a tennis racket.

7:08There was a Santa troll doll. I still, to this day, on my Christmas tree have a little Santa troll doll and a Mrs. Claus. So that this and was that I mean, I mean, it's a kiosk in the mall. So you got to pay some rent on it. But did they did they do OK selling? I mean, this is amazing because your dad is like this sort of, you know, prestigious chemist and got his Ph.D. And then you also have a troll doll side business. I love that. Yeah, I mean, it was it was a fad. So I think that was a little bit problematic. At some point, fads fade. And so I remember when we had some excess inventory on the weekends, we would go to the flea market and we would sell the excess inventory there on the weekends.

7:58How long did that business last? It was just a year or two. And that was really your first experience in retail or in sales? It was one of my first experiences in retail. I had the good fortune of being able to name the business too. And so I ended up naming the little kiosk Wonderland. And it was my first foray into children's products in a way. I mean, I love it. You know, you can really build a business out of anything. When you eventually decided to go to college, you went to study chemical engineering, just like basically like your dad, I think. Yeah, I had always really enjoyed science and math.

8:41And when I got to college, I was specifically interested in engineering fields that were a bit broader. So I dug into mechanical engineering and dug into chemical engineering because I thought that that would give me more options kind of coming out of school and figuring out what I wanted to do. You went to Case Western Reserve and graduate with a degree in chemical engineering. And you are in, you were in Cleveland, but you went back to Cincinnati and worked at Procter & Gamble right out of school. Did you think at the time your intention, like, did you imagine pursuing a career in, you know, at a place like P &G, maybe becoming a lifer?

9:21I went to P &G really thinking that, one, the job that I was going to be doing was going to be very interesting. So I was a products research engineer. And essentially what you're doing is you're helping to develop new products. and then you're working with marketing and brand, and then you're working with the customer. So you're creating products for those customers by really understanding more intimately kind of what the needs and what the desires are. So I guess also at the time, it's not clear to me whether you were dating the person who would become your husband or you were already married, but I guess around sort of 1999, he was a medical student and he got a residency in San Francisco.

10:06Were you guys married at the time or not quite yet? We had just gotten married. That's correct. Oh, wow. So you got married relatively young. Fortunately, it worked out. Compared to some of your peers. Yeah. And you met your husband in college? I met my husband at Case. And yeah, he matched for his residency in the Bay Area. And so we ended up moving to the West Coast. And it was the first time that I had been to the West Coast. and it was an interesting experience going from Procter & Gamble then to the Bay Area, where it was the height of the first dot-com boom. So lots going on, lots of small companies starting.

10:49And so I ended up securing a job at a small startup. So going from Procter & Gamble to the small startup was a very, very different experience. I remember asking, I was going to a conference and I was asking, how do I get business cards? They basically gave me some cardstock and a printer, right, and pointed to it. And they're like, there you go. You get to design your business cards and print them out. So pretty different from being at P &G. And by the way, what did they do? They did online content management. All right. So we're – and I know I'm going to fast forward just for a moment here. But I know that over the next several years, you were exposed to like a ton of different experiences because you – I think you went to work at another startup.

11:35You applied to business school and went there. You got your MBA at Harvard. And then you moved out west to work for PayPal and then eBay. And all the while, I mean you were sort of working your way up to sort of more and more senior positions. So I guess by around 2008, 2009, you became the head of the fashion business at eBay. That's right. And so what did that mean? I mean, you were in charge. What did you specifically do there? Yeah, it was about a$2 billion business. And I was the general manager for the fashion business. So basically figuring out kind of the path and the strategy forward, what we're going to do to grow this business.

12:19And then I ended up hiring out the team and figuring out the different types of programmatic initiatives that we were going to pursue in order to grow that business. All right. So you're at eBay. And I guess also around that time or during that time, you became a mom. So I had my first child when I was at PayPal. And then I had my second child when I was at eBay. and at that time actually as I was thinking about leaving and had one of my classmates from business school who was an adventure capital reached out and said they had an idea around a fashion related startup and given my background in fashion at eBay it could be a really really great opportunity for me to come on board be a founding CEO and pursue this nugget of an idea that they had.

13:16So as I left eBay, I actually looked at that pretty seriously, ended up looking at pulling together a founding team, pitching that business, and then ultimately decided not to do it. But I think what that gave me is once I did actually start to make the decision to pursue KiwiCo as a business, I had this under my belt, this experience in basically pitching a startup in order to try to secure capital. And so that was actually a really valuable experience. Tell me a little bit more about the idea for that startup. The idea behind the startup was basically to get feedback on your clothing, on your outfits, on your style.

14:06And so you would upload photos and then kind of get feedback. People could tell you what they thought of it. They could give you suggestions on how to accessorize it, et cetera. And so it was a very kind of social fashion, getting advice and styling type of app with the thought that you could hopefully monetize off of those suggestions down the road. And meanwhile, you're no longer at this point at eBay and your kids are obviously still pretty young at the time. And I guess I guess you start to realize that that not only do you want to spend more time with them, but you want to start doing more things with them at home, like like projects, like arts, like arts and crafts and things like that.

14:55Yeah, the reason behind that is because I wanted them to basically exercise their creativity and feel like they could kind of be makers. And I think part of it came from the fact that when I was growing up, my mom, you know, she had a few kids who she took care of. And then for me, this is a very distinct memory just kind of throughout my childhood. My mom is, she would kind of set up these different projects for us. So we would, okay, this dates me, but way back when, you know, McDonald's used to have styrofoam containers. So we would make like purses out of those. We would do a bunch of origami.

15:40We would make potato prints and we would take food scraps and make, you know, sweet potato plants or onion plants. So I remember these really fond memories of making and creating with my mom. She was kind of a MacGyver of sorts, too. So I wanted this experience with my kids and for my kids. Your mom looked after kids when you were growing up like a sort of an informal daycare? Yeah, kind of like a child care drop-off situation. But she put a lot into it. Yeah. You just triggered a memory of mine, which is when I was a kid, one of the coolest things my mom did was we would make these like televisions.

16:24We have a cardboard box and we cut two holes in the top corners and then we would insert paper towel tubes in them and paste. I don't know how we did it. Maybe we pasted like paper on the paper towel tubes and we would draw scenes on different. And then you roll it at the top and, you know, it would just slide and you have another image. And it was it was like magic. Yeah, I mean, absolutely. I think I mean, look at what you do now. Right. Yeah, I just have really great memories of that. I really wanted my kids to have exposure to kind of that that hands on making. I wanted them to feel kind of empowered to be able to create.

17:10and I started pulling together different materials and different ideas and I found that it was taking quite a bit of time and so I was like okay I need to amortize my time I started to invite my friends their kids over for play dates and they would make and create with my kids what were you making with them? Yeah. I mean, there were simple projects. We were creating different like Halloween luminaries. So basically using glue and tissue and then figuring out how it's the, that kind of, it interacted once you actually put a tea light in this, in this jar, that type of thing. We were doing a lot of kind of experimentation and chemistry, kind of traditional oobleck.

18:01So the whole cornstarch and water concoction. Made that many times. Yeah. I mean, it's a little messy, but it's so much fun. And also just kind of setting up kind of trays with salt, vinegar, oil, and see what happens when you mix different things, baking soda. Yeah. And one mom, I remember during one of these playdates came over. I was like, Sandra, you should start a business around this. And so then I started to think, maybe there's something here. When we come back in just a moment, Sandra tests her idea in front of two very demanding audiences, a home garage full of kids and an office full of investors.

18:51Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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22:49Hey, welcome back to How I Built This. I'm Guy Raz. So it's around 2010, and Sandra's crafts projects for kids are getting so popular that she's thinking of turning them into a business. I talked it over with my husband, because certainly if we're going to, if I was going to pursue this as a potential business, there would be implications, um, for our family, uh, for our income. And then I started to ask kind of trusted advisors, friends. And so I started to get feedback around it. And it seemed like there was a there there. And then, uh, would do focus groups in my living room. And it was really important to me that I didn't do focus groups just like close friends, but really try to bring in friends of friends, people who I didn't know to get feedback.

23:41And was it just you initially? It was me initially and then ended up bringing on board a co-founder who was a bit more technical, had been in product management. And then I also brought on a technical co-founder, somebody who had been actually a founder of PayPal, was the first engineer at YouTube. And so at first, there were kind of the three of us. And this is, I mean, what was the pitch to them? Like, how did you describe what you wanted to do at that point? So essentially what we wanted to do is we wanted to design and deliver hands-on projects to kids through a direct-to-consumer kind of e-commerce experience.

24:31Before we sort of dive deep into the beginnings of how you were going to make this work, tell me about the name. Was Kiwi just like the fruit, like you like kiwi? Actually, it's the animal, not the fruit. I really like the idea of an animal. And so the original name was Kiwi Crate. My husband and I had gone to New Zealand actually before we had kids, but we had brought back a stuffed kiwi bird, which my kids had adopted and kind of went on adventures with them. And I think there was something attractive also about the idea of alliteration with the crate too. And so we landed on Kiwi Crate. And this was around the time.

25:15I mean, 2011, when you had subscription boxes starting to really not necessarily take off, but I mean, Birchbox, which was one of the earlier ones, I think launched in 2010. And were you looking at things like Birchbox and thinking, this is going to be huge, this model is going to be huge? I mean, we certainly looked at Birchbox once we settle in on a model ourselves, but really we were trying to start with kind of the customer need along with what it was that we were delivering first. And so we really liked the idea of these boxes kind of being centered around different themes. So with materials and inspiration.

26:00So if you want to learn about colors, there's two or three hands-on activities about colors. If you want to learn about farms, there's two or three, or if you want to learn about birds, there's two or three of these projects. And then the other part of it is that we're thinking about it as a program. Part of what we do is incredibly kind of fun and delightful, but part of it is about learning too. And so the idea of subscription, the idea of something coming every month and having a child's name on it was really worked well for us. All right. So now, I mean, you have this pretty experienced founding team.

26:40And by the way, were your co-founders also also women or one woman and one male? So a strong team, but we're definitely working on something, you know, I mean, not counterintuitive, but certainly different, right? Especially where you were, because you were based in Silicon Valley, where everybody was starting apps and social media networks. And here you were trying to create a consumer products company that was like a hard good. I think we were pretty fortunate at the time that e-commerce companies were getting funded. And to your point, there were subscription e-commerce companies that were getting funded at the time.

27:23So we were able to get our foot in the door. I think we also had a network too. I think the experience that we collectively had at PayPal, at eBay, one of the co-founders had been at Yahoo before, we had a network. So we were really, really lucky in that we were able to at least secure meetings with potential investors. And we knew that it was important to get some capital because it was a pretty capital-intensive business because we were dealing with a physical product. And we knew we had to buy the inventory up front and then ship out to customers. But it was not easy. It was, we had a lot of meetings and we were not your typical kind of founders.

28:14I do think, especially for early stage investing, there is an element of pattern matching for investors. And there is a little bit of a lens where I was a, you know, um, a mompreneur. And what's funny, though, is that being a mom actually made me uniquely qualified to run and to start this business. But I would say my vehicle, a minivan, was the only minivan in the parking lots of Sand Hill Road. And so it was hard. I mean, I think we did, I don't know, somewhere between 30 to 40 different meetings with different folks. And even though they could see it or they would ask their wives what they thought of the concept, we weren't necessarily kind of securing the funding until we got to some folks who did actually see the potential and the promise around the idea.

29:23But we were kind of through a lot of kind of pounding the pavement. We were able to secure our seed round of financing. And we closed that in the summer of 2011. Let's talk about the idea itself. How did you come up with what those early boxes were going to be, for example? So we did a ton of kind of testing with kids. And so we started off 2011 was spent mostly in my garage. And so we would have kids kind of descend on the garage and we would put different projects and different materials in front of them. Yeah. We would see what would work for them. I mean, it ranged from materials not working because maybe clay was not malleable enough for small hands to projects just being too complicated.