Pressbox and Tide Cleaners: Vijen Patel. The $1.99 Gamble That Built a National Brand

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27:59Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2013, and Vijan has just joined his co-founder, Drew, in Chicago to launch their new laundry business, PressBox. They're going to use lockers to pick up and drop off the clothes, and they want to put those lockers in office buildings. To start, we would just call family members and be like, hey, do we know anyone who's in real estate and has an office building? And we'd get one meeting, and they'd be like, all right, this isn't going to work, but you should meet my friend. And actually, another favor we asked was actually at Notre Dame.

28:34But we actually asked at the time, the head of the endowment, to say, hey, we're going to go do this idea. And he so kindly sent 10 emails to owners and developers in Chicago. Who were Notre Dame alums? They were actually, the endowment had invested into their companies. Okay, wow. And so again, it was like some of these favors were like, all right, we got 10 leads from this engine, 10 from our family, 10 from like our friends. Specifically, Guy, we thought offices were like where we were going to clean up. And we were completely wrong. why people were not like lawyers and finance people weren't leaving their stuff in lockers we quickly found out that no one wanted to bring their dry cleaning to work right and that was when the light bulb went off where we need to find the path of least resistance and it ended up being we soon found out proximity to someone's wardrobe in terms of not even not even in the buildings of apartment buildings, but also in terms of where we'd go in the apartment building.

29:39If we can be close to someone's wardrobe, we had a higher ability for them to become customers. So you had to be in the buildings and where they lived. We had to be in the buildings. And our big breakthrough moment guy was around the month eight mark. And I'll never forget this building. It's called 1225 Old Town. And at the time, this was the hottest property to be in. It had the highest rent per square foot. It had a bunch of users who were, you know, around the 20 to 35 mark. And we knew if we could get them, we could get any residential building in Chicago. And they said no for five months.

30:22and ultimately we were lucky, but we ended up having a lot of friends or friends of friends who lived in that building. And we actually had them incessantly email the property manager. And I think at the time of like the ninth email, she's like, all right, I'll meet. And guy, once we got 1225 Old Town, that's when the model started working. How many lockers did you put in there? 10, so five on the top, five at the bottom. And was there a big sign that said, get your dry cleaning done here? Or I mean, how did you catch people's attention? We did a lot of guerrilla marketing. So that same idea we had where we sat at a storefront and put a table down and talk to people, we did the exact same thing in the lobbies.

31:08because what we realized in all the work we did up front is that the reason why everyone wanted to drop off their clothes with a known person is because they're dropping off what they love to wear and that gives them confidence. And so ultimately when we realized the best tactic is, it's not the lockers, but it was actually us setting up tables in the lobbies of apartment buildings and offices to say, hey, we're a dry cleaner. And this was really, I mean, Guy, I think over the course of our entire entrepreneurship, I think I might have hosted a thousand events in lobbies of buildings. And that would be really where we convert.

31:46Let's talk about the unit economics for a moment, because you knew that even with 15 percent margins, well, you could increase those margins because you weren't paying rent for a storefront. And did you have to pay rent for the lockers to the buildings charge you? No, this was the huge benefit. But we we were called an amenity. And so as a result, our pitch to all these buildings was you will now be able to charge higher in rent or keep people longer in their buildings. And that was enough for these owners to take a chance. Because they could say on-site dry cleaning. Correct. In their advertising.

32:22So basically you got into these buildings rent-free. Rent-free. To the unit economics, it cost us$5 ,000 to set up a location. That's it. And the cost was the locker and then the install. And doing the math, if the average person spends$40 a month on dry cleaning and you get 25 users, that's it. We realized you generate$1 ,000 of revenue. You have to spend about half of it to actually get it cleaned. And most of your costs were to pay for the dry cleaning, right? That's right. 50 % of it. And there's transport costs. And then the other one was actually parking tickets. We ended up on our P &L having a line item, which was parking tickets.

33:05You know, I've been to all of Chicago's tow yards. Drew has been to more of them. But at the end of the day, our marketing was a flyer. That's it. And so we realized our break-even mark was around that 26 mark, 26 customers. And so if we can just get 26 customers to use us. In one location. In one location, we'll make money. And by the way, that's every month. So over the course of a year, we were going to be cash flow positive. And this is when it clicked. And this is when we really found what we'd call product market fit. It was that 1225 all-time moment where we broke even, Guy, in six weeks.

33:42Once you got that apartment building, you broke even six weeks. In six weeks. So you were profitable within the first year. In the first year. I'll never forget when we hit the$80 ,000 mark per month, because 80 times 12 is roughly a million dollars. And we got there at around like the 15-month mark after starting. And how did you identify – how did you find a place that was willing to work with you to clean the stuff? Because I imagine dry cleaners like taxis are – there's probably some – they're represented by maybe some lobbying groups. I don't know. I don't know how it works. But was there any resistance from the sort of the central dry cleaning facility that was going to clean the stuff?

34:28Was there any resistance to working with you guys? So in general, with all these facilities, they have a big fixed cost component, right, which is labor, people ironing, washing clothes all day. And so they were open to working together with other dry cleaners to process more volume. right but to your point our work would always be secondary so they always want to take care of their own customers and then if they had capacity they would then entertain our items and so to start off with we actually use three or four different cleaners and ultimately we realize is like that was an operational headache and this is where again maybe call it a break but we realized is there was a cleaner in the city that did a lot of hotels, and they had capacity to take.

35:19And so around, again, the one-year mark, we started using this facility on Goose Island, and they became our ultimate supplier for ultimately a lot of Chicago as we scaled. So in the first 12 months, let's say, when you would get a text, hey, I'm in locker one or whatever, who was picking up the stuff? Who was driving the cars and dropping the clothes off at the dry cleaners and making sure that you didn't lose clothing? And I mean, who was doing all that stuff? So we – it was Drew and I doing a lot of it, but we ended up hiring two people. And these were our third and fourth employees. And David came on to work with Drew.

35:59And Ariana helped me on the marketing and sales side. Drew would be in charge of ops. I would be in charge of sales. And so the team of the four of us did this work. We operated seven days a week. One of the worst decisions we ever made. But we did it seven days a week. And Drew and I would always do the routes on the weekends. And David would do it on Monday through Friday. All right. So you've got this. And now, I mean, as you begin to see more traction, did it become easier and easier to get into other buildings? This is why 1225 Old Town is so clear in my mind is that we then could go to any building in Chicago and say, we work with 1225 Old Town.

36:43And in real estate, it's so critical you are matching the amenities of the building across the street. And once we were in 1225 Old Town, the snowball started to form. And we ended up adding eight new locations a month. And then ultimately, Guy, we grew to 250 locations in Chicago over the course of, call it, three years. And I go back to this idea of like 15 % gross margins, right, for a dry cleaner. What kind of margins were you guys able to hit? 20 to 25 % roughly was our EBITDA margin, if you want to call it that. And how much money were you paying yourself? $40 ,000. So you went from probably making over$100 ,000 a year in San Francisco to$40 ,000.

37:33Yeah, I was making almost$300 ,000. And I was, what, 27? Wow. And threw it all away to make$40 ,000 for five years. And Drew's the same. So as it was growing, and you start to get some significant numbers, You must have also been keeping an eye on competitors that were popping up in other cities, right? Did that worry you or stress you out at any point? It did. And the big gorilla in the room was Washoe. Because Washoe had raised like$18 million or something. Yeah, enormous amounts. They had Ashton Kutcher. It was the big one. Oh, he was an investor. Okay. He was an investor, and it was the one that we were terrified of.

38:16And again, I'll remember this moment. It was around the year two mark. they decided to come to Chicago as their third market. And I don't think I slept that month. And I'll never forget just the paranoia Drew and I had. I'd be like, we don't have nearly as much money as them. How are we going to compete with these guys? And then I never will also forget feeling as good as I felt one month after they launched, and we looked at our revenue, and it had only gone down by 2%. And that was the moment where I was like, oh my God, it actually does not matter how much money you've raised. I mean, it's wild because WashU doesn't exist anymore.

38:52I don't know the exact story, but it shut down in 2016 and then its assets were purchased is what I've seen. So clearly something must have happened. Maybe they expanded too quickly. Who knows? But that was a real threat to your business. I mean, it was a potential threat. It was an incredible threat. And by the way, they had the funding to go down to a dollar per shirt, and we didn't have that. And all of these customers, users, buildings, they could have switched, but they didn't. They were happy with our service, and they kept using us. Yeah. Let me ask you about the expansion because you're doing well enough in Chicago so you decide to go to Washington, D.C.

39:32next? Correct. And I'm assuming because D.C. is a dry-cleaning-heavy town. Yes. And they also had a lot of new construction coming up. But there were two pieces of data that we missed completely. One is that no building in DC can be higher than the Capitol statue. Yep. And our entire model is built off of density. And two is that we didn't realize how hard it would be to staff our facilities because we're competing versus the government for hourly labor. Our cost for a driver was 60 % higher than Chicago. Wow. And also, they wouldn't stick around. We ended up churning through people in D.C. at two times the rate that we did Chicago.

40:16So was the D.C. market profitable? It was. Luckily, we were incredibly frugal, but we never saw the liftoff like we did in Chicago. All right. So back to Chicago, you've got your own. I mean, at a certain point, I think like two and a half, almost three years in, you guys decide that you don't outsource this anymore. You actually want to control. You want to be vertically integrated. You want to clean your own clothing with a plant that you own. And you decide to explore this idea. That's right. So the big trick we realized in our business model was that take 1225, there's 220 units. If we lost a customer guy in that building, our serviceable addressable market now is 219 people.

41:05And so it was so critical that we nailed quality because we couldn't just replace someone, right? We kind of had a smaller audience. And so for us, quality is what really kept me up at night. And we ended up with our wholesaler and our supplier, we ended up just building this friction where at times, you know, they might have a staff shortage. And so all of a sudden, you know, they're delayed in all of our cleaning by six hours, which then means lower quality cleaning, which means that we then take the hit on our user base. And we did the math guide. We realized that the difference between 98 % retention and 96 % retention, even though it sounds small, when you compound that every month, it's astronomical.

41:53The difference, I think, is between having 55 % of your customers at the end of two years versus 78%. Wow. And so we realized that it was so critical for us to be at 98 % retention or higher. 98%. It had to be that high. When we come back in just a moment, PressBox guards its customer base by building its own laundry facility and then winds up competing with one of the biggest companies in the world. Stay with us. I'm Guy Raz and you're listening to How I Built This.

42:48Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2016, and Vijan and Drew are taking on a massive project, building their own laundry facility just north of Chicago. But to do it, they need cash. So at this point, we probably should have raised some venture funding. We should have raised something. guy our bank account i'd get a call every two weeks from our banker because our our bank account would go from positive 300 000 to negative 400 000 and the driver of it was payroll but i mean how many employees did you have to pay so i think around this three-year mark we were in dc and then also nashville and so i want to say at this point we probably had 45 to 50 employees And so we had a huge transportation team.

43:40We had a team that would inventory all the items. At this point, we had a marketing team that would set up these events. We had a sales team. And when we decided to insource this, this is where the issue with the business model up front became our asset later on because this opened us up for debt financing. And so we were able to buy all this equipment. We bought some of it used, some of it new. But we were able to finance about 80 % of our plant using debt and asset-backed lending. And you just needed a warehouse that was relatively inexpensive. Did you buy the warehouse or did you lease it? We leased it.

44:17And it was really hard to build this plant. And, you know, we had to get all these licenses and utilities figured out. We even had to get an architect because we're the first dry cleaner that was in this facility. But once we were up and running, we ended up realizing that we could all of a sudden get rid of this middleman. And so instead of 50 % of our costs all of a sudden going away, all we had to do was pay for our own people and rent. And so again, our margin was typically around 25 % of the bottom line, 50 % at the gross margin level. Both of those went up by 10 percentage points. Even though now these are your employees running the facility?

44:59There are employees. And this was probably, guy, though, the hardest part is that it's one thing to hire a driver or someone who can sit in front of a lobby at a table. It's harder to staff a presser. I thought we would, at the time, Indeed was out, Craigslist. We'd post these roles, and we got no hits. People literally pressing shirts and trousers like you couldn't find people to do those jobs. I didn't know where to go. and you know we asked our suppliers if they would work for us and they would say no and then we finally this light bulb went off that we were looking in the wrong place you know instead of looking at indeed we decided we need to start advertising in spanish newspapers and so there's a newspaper in chicago called oy and so all of a sudden we posted these jobs of this new facility opened up in Skokie and my phone wouldn't stop ringing.

45:56And we ended up staffing this entire plant in two or three months with incredible people all through the Spanish newspaper. All right. So now you've got your own facility, a bunch of new employees. And tell me a little bit about how you were, I mean, just growing. Was it organic or did you, I mean, where you constantly – because now you've got Washio and other potential competitors coming in. I mean when you would go into a building, for example, in Chicago or even in Washington, D.C., presumably they might push back and say, well, we've been approached by Washio and they're offering us this incentive.

46:35That's right. And timing plays such a huge role in everything. But one thing that we got right was that we were on the front end of not just the amenity war but also the new construction development in all these major cities. But I think the year was 2016, and I believe there were 55 new buildings coming up in Chicago. And, Guy, I think we were in 53 of the 55. And it was because we just skipped the game overall. We didn't pitch any property manager. We didn't go to any of their customers. We talked to the owners, and we said, Hey, we're in three of your buildings. We notice you're building this other building.

47:14can we just go ahead and inspect these lockers into your architectural drawings now? And then the best part was as we got into these new construction buildings in Chicago, D.C., Nashville was our third market, not just did we get these lockers in a great location where they'd be highly visible, we ended up being able to create behavior instead of change behavior. So someone would move into their building and as they walk into their apartment, we'd have a gift box. This cost us like$7, but it would be a bag, a water bottle, a handwritten note, and a flyer with our pricing. Those four things. And we would drop off 200 of these at every one of our new buildings.

47:57And we slowly realized that we would track this KPI called revenue per unit. And revenue per unit was twice as high at a new construction building versus an existing building. Because people move in and it's part of the welcome package. And And they're like, great, let me set this up while I'm setting up my phone or my internet. Exactly. And we realize that people are just really reluctant to change behavior. So if you can find them during these moments of change, then you get them. They're set in their ways. Yeah. And then WashU can come to them. And he's like, no, I'm good. I'm kind of into my habit.

48:31I'm going to use PressBox. All right. I think around 2016, you've got another fire to put out, maybe a fire to battle, which is Procter & Gamble, right, one of the biggest multinationals in the world, they launched their own version of this, a competitor called Tide Spin. And I guess they launched in Chicago. And so tell me about how you reacted, at least in your mind, when you first heard about Procter & Gamble coming into this space. So luckily, we were used to competition. And as Tide Spin started to get going, we kind of, we saw them coming, but it wasn't like we had a different level of fear.

49:10It was like, all right, same old, same old. Tide's been followed the Washington model. They start with pickup and drop off. And around the year mark, I think for them, they realized that they were not going to make money off of this. Because again, the unit economics just don't work where if you're just doing four transactions per hour for a driver and you then take up into account this 50 % gross margin guy, you're taking home like$5. And funny enough, their order sizes were bigger. I think for that model, you generally have like$80 per order instead of like$40 for us. But still, it was really hard to make money.

49:43And the good part guy at this point for our journey was we had 250 buildings in Chicago. And so we'd go to one building, we'd pick up four orders, drop off six, then we drive half a block down the road and pick up three orders and drop off five. Then we take a left turn, do that all over again. We could do 26 transactions per hour where all of our competitors are doing four. And so it's the same cost where everyone has to send a driver on the road. And by the way, because it's 24-7, we got our drivers on the road at like 5 a.m. And they were done with their routes at 9 a.m. And what was the average cost per order?

50:25So the average cost per order for us was around$26. dollars. Well, what I'm curious about was you would think that Tide, that P &G with their Tide branding would just switch to your model, would just say, all right, this doesn't work. We need lockers like PressBox has. And that's exactly what they did. And so they ended up realizing that pickup and drop off was not the path. And then they went down the locker path. And for about three to six months, they competed with us head to head. They would, what would they do? They would go and try to get into the same buildings you were in? They get into the same buildings.

51:00They would try to pitch the new construction. And every time we would win because we would have this track record, we've also oftentimes worked with these developers and owners. And if it was an existing building, it's like, why would I take out these lockers and put your lockers in? Like, that's the same thing. And again, PressBox has done a great job. So I'm not hearing complaints. So why would I create my own headache? So I'm wondering now, I mean, by the way, you've expanded to Nashville, you're D.C., Nashville, Chicago, anywhere else yet? Yeah, so 2016, we were in Philly, and I believe we were just getting going on Dallas.

51:38And what was exciting is around that 2016 mark, partly why we went to D.C. is that four of our developers in Chicago said, hey, we're going to go build in D.C. Do you want to come with us? And then those same developers did that in Denver. And this became our expansion plan is that we kind of just followed our customers. And then that would always lower how much we need to get in revenue for us to break even because we would have a head start versus any competition. And this is still without any outside capital, right? You're doing this all through cash flow. So you must have been thinking this is going to be a national brand.

52:14We're going to expand this all over the country. That's our goal. No, even back then, we were just focused on execution. I mean, we had enough confidence that DC was going well, but still it was like death by a thousand cuts. Like it was just barely starting to stay afloat. And so we just had this tension throughout our company's history of like grow, but also be paranoid about quality. And so, yeah, there were probably some inklings of like, you know, we could be a national company, but it didn't feel like it. And did it feel like there was going to be one winner? Like there was the Uber-Lyft wars, right, going on at that time.

52:51Did you feel like one of these companies is ultimately going to win? Or were you not even focused on that because you didn't see yourself competing with those other competitors? Our view was that if we just capture 3 % market share, we're going to be millionaires. And so we didn't view this as a winner-take-all market. Because again, we could only sell into high rises. And so if you're in some small building in, you know, Marina and SF or Bucktown in Chicago or, you know, Brooklyn in New York, we can't serve you. And so our view is that we knew exactly what our product was for, which was these 25 to 45 year olds and high rises.

53:30And if we could just capture that across the country, that would be our model. And you only needed what percentage of those residents to use your service? 10 % to break even. Wow. So the numbers were on your side. The numbers were on our side, and it was because we were so frugal. We didn't have any money to spend to make any of the upfront costs. We would have loved to have invested more upfront to make the lockers and get QR codes and to do all this signage, but we didn't have the money. Did you hire a PR firm? Never. Never. Trevor Burrus So all of the – I mean because there were – every time you'd go to a new city, there were articles written about – and so all this was just earned media.

54:14Aaron Ross Powell Earned media. Trevor Burrus All right. So it's 2017, and Procter & Gamble is really going head-to-head trying to get into the same buildings you guys are in, at least in Chicago. And I'm wondering – and as you're sort of expanding, you're going to move into Philadelphia and you're in D.C. and Nashville. I'm wondering why you didn't, the two of you, you and Drew didn't at that point say, all right, we have got to do a fundraise. We've got to go out and raise money because now you're profitable, right? You've got a nice business going. You've got, I mean, you could really raise money on pretty good terms at that point.

54:51So why didn't you or did you start to explore this? So I think two things. One, I think we were still, you know, of a view of like, these guys were never, they were never there for us. You had a chip on your shoulder. We had a huge chip on our shoulder. You know, we tried to be vulnerable and expose ourselves and let people invest. And they all said no. And so we had a huge chip on our shoulder and probably too much of a chip on our shoulder because at that point, you know, we talked about we have a few regrets, but one of them is that we should have raised because at that point, like my homepage for our computer was my bank account.

55:28And I only now realize how unhealthy that was because we were so focused in our business that we never actually got time to put on our business. And so this was a, this was a huge issue and it was a, it was an issue that we never fixed, but it was around that 2017 mark where we started to realize also like, what are we going to do with this thing? Right? Because as you know, we were not looking at this as like, we were passionate about dry cleaning. You know, one of the first things we did, Guy, in that 12-page deck early on, that investment deck, one of the biggest issues was who are you going to sell this to?

56:04And we knew you'd never IPO it. You would not really be able to sell to private equity because we had come from that world. And so it was always quite logical that we would want to get a strategic buyer. And we actually viewed it as a really good sign that P &G was doing work here. And so we were always just actually very proactive. about I always kept our competitors close. And it was, you know, we'd always be guards up, not tell them everything, but we would always have a relationship. And so around 2017 mark, we actually got to know the Tide Spin team. And we just said, hey, what are you guys doing here?

56:38Like, I remember they actually wanted to come to our plant. And Drew said, yeah, come. And I was like, absolutely no way you're coming in. But we wanted to make sure we knew all of our competitors because either we were gonna buy them or they would buy us. And so because we were just upfront about that, whenever there was a P &G conversation, we would be there. And we'd say, yeah, we'll make the time for this. Let's make it happen. Because from their end, Guy, they were thinking through, all right, they're at 52 % market share of Tide. And they can't push that much further. And so they've always organically had this journey where if they can't provide the goods for laundry, can they just do your laundry?

57:16And so they were more curious to meet with us because of how we built PressBox. And then, Guy, we ultimately around 2017 realized like, hey, we will have no negotiating power with P &G if we don't have anything else on the table. And so this is when we did then start having some conversations for additional funding. So you started to go around and now you've got some private equity firms who are interested in raising. You guys were trying to raise about, I think,$5 million. That's correct. And this is where multiple things happen at the same time. But we then ultimately got some term sheets. and for P &G, they started offering capital to owners to switch from PressBox to TideSpin.

57:57And how much were they offering? You know, we don't even know the ultimate numbers, but I think it was anywhere between$10 ,000 to$25 ,000. They were going to pay these buildings$10 ,000 to bring on the Tide blockers. Yep, and switch from us. And it makes a ton of sense because from them, their math they're doing is, again, build or buy. Do we just give TideSpin more money or should we buy? Is there something special here? And ultimately, all of our partners except for one said no thanks. And that meant an incredible amount to us. And still I get emotional thinking about it because we had this trust that was embedded with all of these partners that had been compounding over five or six years.

58:39So while you're doing that, you get a, from what I've read, you get an offer from P &G. they basically say, all right, we want to acquire you. But I think their initial offer was like a lowball offer. Yeah, we ended up with a couple term sheets for funding and P &G had expressed interest. And they lowballed us, I think a couple times. And I remember the third time, Drew was a little bit fired up and upset. And I think within 20 minutes of the response, had redacted a term sheet and sent it back to them and said, we're going to go ahead and sign this term sheet. We look forward to competing head to head.

59:19And I'll never forget, I was next to my wife and she's like, don't you just want to talk about this maybe for a second? And she was right because it would have been life changing money. But what I value so much about Drew is how principled he was about how we had built something of value. And yeah, maybe we should have taken longer than 20 minutes to respond to it, but we, we didn't. And I think a few hours later, P and G, they said, give us 24 hours and we'll come back with something. And, and we ultimately decided to sell. And you and Drew would go work for, for P and G. We'd go work for P and G and they would rebrand PressBox to Tide Cleaners.

59:59It was a short debate about seven minutes of which brand name was taught, was stronger, But Tide won. And the Tide spin team would work for us and we would end up running the urban division of Tide cleaners in which they wanted our model to go national. Wow. From every – and I mean it sounds like from virtually any perspective it made sense because they were aggressive and they had certainly had the money to pour into this if they really wanted to go after this business. You saw that there were opportunities, but there were also potential pitfalls. and so partnering with the big one of the biggest multinationals in the world uh would enable you guys to really super scale this business too a hundred percent and we know we wanted a home right i think what kept us up at night guy was it was a night in nashville was raining and i was walking to an event to sell dry cleaning and i remember realizing i don't want to do this when i'm 45 years old like we need to find a home for this and it doesn't have to be now but there has Why did you say that to yourself?

1:01:08What was it about? What were you feeling that gave you that impetus to say, I don't want to be doing this at 45? You know, at this point, we had been working for about 1 ,000 days in a row. And I'm not joking. Like, we worked seven days a week. We were open 24-7. I had missed friends' weddings. I stopped getting invited to friends' birthday parties because I would just be no-show. And this path of us building just took a huge toll on our life. You know, every night my wife would come home and on the weekends and she was a resident in med school. And you had no kids yet, right? No kids, no kids.

1:01:49And she'd say, hey, let's go out on Saturday night. And like, I want to see my friends. And I'd be like, I am so exhausted that I can't do that. And there was just such a toll that had taken on us from bootstrapping this that we just wanted to make sure that this wasn't our permanent state. You were burned out. Incredibly. And guy, I made$40 ,000. I had friends in private equity who were at this point making partner and making a million dollars plus per year. I remember at one point calling my dad and saying, hey, dad, when this doesn't work out, if this doesn't work out, can I borrow some money so I can start again?

1:02:27Like not a business, but to start life again. My wife and I on our first trip, we were – she was a resident. I was this dry cleaner. We wanted to do a trip. And so we went to Kansas City, because it was where we could find Spirit Airlines flights. And we found a hotel on like some website and like the all together the trip cost us$500. That was our life. And I just didn't know what the end state would be. And we were incredibly burned out. So the deal with Tide wasn't just obviously wouldn't just change your life financially, but it was a real it was a lifeline. Yeah, like I think we would have we would have probably, you know, found another purchaser, another dry cleaner to sell to, but they never would have matched the terms or the capital available.

1:03:17And it was an incredible alignment that led us to that opportunity. How long because you were acquired in July of 2018. So when you now transition to becoming a P &G and play, how long did you stay with the company? We stayed for two years. And in fact, Like they wanted me to stay longer. And guy, I had a great experience. Like not just did we have capital, but Drew and I could shine. You know, I could finally, for the first time, I made a PowerPoint slide again. And, you know, all of our employees who were making 15, 20,$25 an hour because we didn't have more capital, all of a sudden they got a pay raise.

1:03:57We made some like actual salary. We didn't make a lot, but we had like a real salary. We're like, I could, you know, pay rent, not from savings. Yeah. Yeah. So we had this, this two year experience at our PNG. It was great. And finally, like our earn out had ended. And around then, there was also this thing called COVID. And we got guy our last earn out check, March of 2020. And so the world was falling apart. Our business, right? You could think about dry couldn't volumes, our business had had hit a wall and was starting to see some real hit in terms of what people were wearing. And I was somehow in this sanctuary in Chicago with capital and with free time.

1:04:38And it was a wild world to be in. Yeah, I bet. I mean, I guess after this time or around this time, you took some time off, like quite a few months off just to take a break from all that. And then you eventually kind of jumped back into things. You founded a venture firm called the 81 Collection. And I guess you're focusing on something pretty specific, which is investing in companies like Pressbox, basically like boring industries, right? Companies that really don't get a lot of attention from VCs, right? Yep. We did some math on this recently, Guy, and there's about 3 ,400 early stage or early investing firms and about 90 % focus on software.

1:05:23Yeah. Leaving only 10 to 20 % to fund things that are quite critical to our society. And even in that group, half are not even active anymore. And I noticed that everyone in this technology world was continuing to look for the same thing. They were all looking for the next asset light, employee light, cloud-based unicorn. And then I look back at my own experience guy and I'm like, wait, we built the opposite. You know, we built this plant up in Skokie. We ended up having these assets all across the walls of America, bolted into the walls of all these buildings. And we also built a good company, but in a completely different way.

1:05:58You know, a lot of our employees who originally started making$15,$20 an hour, as the business grew, they started making$50K a year. 75k here. And having gone to their weddings and seen them buy homes, and in many cases, even start their own businesses. We move people from lower class into middle class. Yeah. And I realized this is a giant hole in our economy. You know, we're in the greatest economic period in global history. But the profits are going to 10 ,000 people. And so that was the inception of the 81 collection. Yeah, I mean, when I think of like boring businesses, or businesses that are unsexy.

1:06:37Like I think about in high school, there was a brother and sister and their family owned a mortuary and they were like the richest kids in town. It's a mortuary, but it's a, I think funeral homes are profitable businesses. Mortuaries are profitable. Like, right? Am I right about that? We just recently did an investment in pet cremation and we were blown away. 80 % EBITDA margins. And I have to imagine there's a similar profile with the end of life space. Yeah. So now you're looking at these sort of quote unquote boring businesses, right? Like what are some other, I mean, I think of like car washes or laundromats or like, are you looking at industries?

1:07:19You're looking at specific businesses? Like how do you evaluate where you want to deploy your capital? You know, we've realized these opportunities are everywhere. You know, from dentistry, you know, we looked at something recently in property tax appeals. We've looked at pediatric services. There's all of these industries that are, frankly, they're oversubscribed from private equity and buyouts, but they're completely undersubscribed from technology and innovation. And when was the last time you went to a doctor's office and it was newer? Or a mortician and it was newer? They're integral, but they're 40 years behind best practices.

1:07:58And so if we think about some stuff that's going on right now, it's important that we lift these industries, which then will lift these economies. Yeah. Vijayan, when you think about the journey you took and the outcome, how much of it do you attribute to the work you put on the grind and how much do you think had to do with luck and timing? I think luck plays a huge role in our life and timing and luck played a huge influence. and not just the exit timing, but the multifamily wave, the new construction wave. And so I think there were a lot of forces that we benefited from. I used to think 80 % of it was hard work, smarts, grit.

1:08:39I now think 80 % of it was luck.

1:08:44That's Vijan Patel, co-founder of PressBox, now known as Tide Cleaners. 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 also, if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at GuyRoz.com or on Substack. This episode was produced by Alex Chung with music composed by Ramtin Ereblui. It was edited by Neva Grant with research help from Olivia Rockman. Our engineers were Patrick Murray and Maggie Luthar.

1:09:17Our production staff also includes Casey Herman, Chris Messini, Sam Paulson, Carrie Thompson, Catherine Seifer, Noor Gill, Ramel Wood, Andrea Bruce, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built This.

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