Weee!: Larry Liu

30:43And WeChat in the early days allowed you to add people to groups without their consent. So not only I was on WeChat, I was added by my friends to so many different groups. For example, I was in this attitude, like a San Jose mom's group by my friends. And then I saw something really interesting. I saw people were trying to buy things together in those groups. I remember one night, a mom in the group posted some information. She said, oh, I went to this harbor called Half Moon Bay. There was a fisherman's market, right? She said, I talked to this fisherman because I really like the fish, the Pacific black cod.

31:34And if you guys want to buy together, I can actually ask the fisherman to go out and catch the fish and then deliver to our local community. And then in one night, right, she got an order of like$10 ,000, like hundreds of people. So people were like, I want some of that. So people – and she ended up getting$10 ,000 at the borders to go to this fisherman in Half Moon Bay and say, hey, can you catch – we'll give you$10 ,000. Can you catch all this cod for us and we'll buy it? Yeah. So she named the price roughly how much per pound. And the Pacific Placot is like 10 to 20 pounds each. So she asked, OK, do you guys want any?

32:14Right. So people just text in the group. I want one. I want two. and just more than 100 people sign up. Very, very new to me. So I was very surprised to see that. And it was just incredible. And then after people got the fish, the whole WeChat group exploded again because everyone loved the fish. They said, wow, this is the best fish I've ever had in the U.S. When can we buy it again? People posted a recipe, posted pictures. It's just such an incredible experience. All right. So this happens. And she wasn't making money off of this. She was just organizing the purchase, right? Correct. Correct.

33:00But this, I guess, got you thinking about group purchases. Maybe there's a way to organize big group purchases around big items and create a business around it. Is that what you started to think about? So first of all, I saw this happening in many different groups, right? Not just this one group. And also I talked to my friends in other cities in the US. People were doing this in Boston. People were doing this in Seattle. So Chinese immigrants were doing this everywhere. And my eBay experience taught me something about e-commerce, right? My understanding of e-commerce was always, it's going to be a search-based model.

33:42So what I mean by that is as the customer, you have to know exactly what you want. So I thought that is a completely different e-commerce model. Yeah. This really intrigued me because this is something new. Like no one was doing this. So I thought, wow, this could be a big opportunity. So how, I mean, you're still working for this company, right, in finance at the time. You still have a job. But as you started to kind of think about it, how were you going to turn that in? Like, it's not clear to me how you were going to make money off of it. You would create like a platform where people could organize, self-organize group buying things.

34:24But then because it would be on the platform, you would get like a 10 % commission or something? We didn't know how to make money at all. So first of all, I saw a lot of pain points in the group buying process. The organizers had a lot of work to do, and they didn't make any money, so they couldn't just do this as a volunteer for very long. So our initial idea was, okay, let's create a platform to solve these pain points, to make order super easy, to find vendors for the group leaders, to enable the group leaders to make some money. and by making the match, we can also make some money in the process.

35:10That's what we thought we could do, but we didn't think through the business model at all in the very beginning. And it was when you say we, it was the same friends that you, your friends from China, from college. Yeah, correct. So, all right, first of all, how were you going to finance this idea? Could you do it with the money you had? So, you know, living in Silicon Valley, Obviously, everyone was familiar with startups and raising money. I remember at the time, I knew that my background was not strong enough. I'm not this whiz kid from MIT or Stanford. My track record was not impressive enough to raise money.

35:52So we decided to run the business using our savings from the eBay days and to self-fund the business until we see significant traction. Then we can try to raise money. That was the thinking at the time. And at what point were you comfortable quitting your job to pursue this idea full time? How did you get to that point? I couldn't quit my job because I didn't have a green card. So in 2014, I was very fortunate that I finally got my green card. So I quit my job in September of 2014. When I quit my job, we still had no product at all. We didn't write a single line of code yet for the group buying thing.

36:41But also your wife was still working at Yahoo at that point? My wife still had a full-time job. I think by the time she probably was working at eBay or LinkedIn. I don't remember which one. All right. So you basically – you were going to depend on her salary and her health insurance and all those things while you started this thing. Were you nervous about it? Were you like – was any part of you worried? I think so. I think deep down, by the time, we had three kids already. So we didn't just have one kid. We had three kids. It's expensive to live in the Bay Area. Yeah, but we felt like, I think it's important, my wife and I are very aligned all the time, is that what kind of life we want to live, right?

37:23What kind of adventure we want to have. So we were aligned that we wanted the opportunity to do something significant and meaningful. So we were willing to take the risk together. Why don't we come back in just a moment How Larry, with a brand new green card but no job Leveraged his eBay and WeChat experiences To build a new kind of group-buying online business Stay with us, I'm Guy Raz And you're listening to How I Built This

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41:11Hey, welcome back to How I Built This. I'm Guy Raz. So by 2015, Larry and his friends figured out how to leverage the group buying experiences on WeChat into a streamlined e-commerce platform. But they needed financing in a name. So we wanted to create a different type of e-commerce experience. We felt like there were two important components. One is it's a social thing, right? People didn't buy alone. People buy together. So that's why W-E means social. Then the second thing is people were super excited. And I have three kids. And whenever they slide down a slide, they were like, whee! So I thought, oh, that's a very exciting sound.

41:59So that's why we picked this name. So we want to create a company that's social and exciting. All right. So you've got this name. And by the way, when you say group buying, was it going to be for food only or was it going to be for anything? So for group buying, we didn't set to just do food because people were buying different things. People were buying pianos together. People were buying minivans together using our application. So we wrote the first version of software by using our own money that we made from the eBay business. So we gained traction very quickly. So we released the software, I remember it's January of 2015.

42:44By mid-2015, we had tens of thousands of users already using our software to organize group buys. All right. Well, help me understand how you would connect a buyer to a seller. For example, let's say somebody wanted to buy a minivan with a bunch of people that they would share, right? Which sounds really complicated to do, but all right. People want to do that. You guys would find the minivan for them? You would find the deal for them? Yeah, for minivan, for example, we just call all the Honda dealers in the Bay Area. We just call, hey, we can have an order of 20 minivans. What deal can you give us?

43:27Oh, 20 minivans. Oh, so like a mass order of a bunch of minivans together, almost like a scaled order to get a group discount. Yeah, exactly. Okay, got it. Okay, so you call the dealerships and say, we can buy 20 minivans. What's the best price you can give us? Exactly. But for minivans, we don't make any money. We basically turn around and just tell the groups that, hey, here's the deal. It's a way for us to attract users. So people, oh, you can buy minivan in such groups. We love pianos. We talk to Yamaha Piano. We talk to Kawaii Piano. Chinese people like to buy pianos. They sell a lot of pianos that way.

44:15And you would basically source the deals and then initially you weren't making money off of this. It was just to generate interest, right? We made some money when the wholesalers didn't want to deal with the group leaders. For example, I remember one of the things we sold really well is pork belly. You wouldn't imagine we can sell pork belly this way, but you walk into any American supermarket, you cannot buy pork belly. They just don't sell pork belly. Then during wintertime, you know, Chinese immigrants make sausages. They need a lot of pork belly. So then we talked to a wholesaler of pork belly.

44:54We say, okay, do you want to sell to these groups? And they said, no, we don't want to sell to these groups, but we can sell to you. We said, okay, then you sell to us. We resell to the group leaders, right? That's how we got into like handling some of the products ourselves. So we start to have warehouses. we can just be the intermediary between the wholesalers and the group leaders. Right. So you would store things at the warehouse? We started to have physical warehouses in later part of 2015. And this was entirely through WeChat. You could promote it through WeChat and word of mouth? Yeah, yeah, exactly.

45:33And because we add value to the group leaders, so we basically pitch to the group leaders, hey, you don't need to organize group buys all the way. You can use our software. You can create a very simple HTML5 page. Then you just send the page to the group chat and people can click your link. People can place order on the link. And we also help you find suppliers. So once one group leader signed up, hundreds of users in that group became our users. So we had this pretty strong growth engine in the beginning. All right. Tell me how you raised money from investors. I mean, was there enthusiasm for this idea?

46:19It seems like a novel idea and interesting. This is 2015. There was a lot of money going around, certainly in the direct-to-consumer space. What did investors say when you brought them this idea? I didn't want to raise money until we achieved some scale. So my first investment actually came to us. She reached out to me on WeChat. She said, do you want to talk to my husband? He may be able to invest. I asked him, who is your husband? She said, he's one of the co-founders of Hotmail. Of Hotmail, oh wow. I was like, yeah, Hotmail, right? I grew up using Hotmail. So I was like, wow, that's huge, right?

47:03So I said, yeah, of course. So I went to his office. When I walked into the meeting, I felt like he probably wasn't very interested in the beginning. But two hours later, he committed to write the first check we ever received,$250 ,000, because he really liked the scrappiness and the creative ways that we approached this. I also asked him, I said, but Jack, his name is Jack Smith. I said, Jack,$250 ,000 is not enough. I want to raise more than$1 million. Then he taught me a lesson. He said, look, Larry, raising money is one of the most important skills a CEO needs to have. So I'm not going to give you more money.

47:55You need to raise the rest to prove that you have the ability to raise money. Just do cold email and cold phone call. That's exactly what I did. Huh, the cold email. Yeah. You just go on their websites of venture firms and just email their information at whatever, capital.com? Exactly. I went to all the early stage investors' website. I tried to find their email. If I couldn't find their email, I tried to guess their email and just send a bunch of cold emails out. And I guess eventually you started to pitch some of them, including, I guess, one called Amino Capital. And you did. You were able to raise a little over a million dollars in seed funding.

48:38Yeah, seed funding. We were able to raise that. Amino was not from cold email. It was also from a customer who used we. So you see, our seed round was all from the husbands of customers. So we were very lucky. All right. And tell me a little bit more about what people were, I mean, pianos, minivans, but was it still mainly food that people were buying in large quantities together? Yeah, mainly food, fresh vegetables, fresh fruits, restaurant food, some imported food, not a lot, but mostly food. And it was still mainly Chinese expats who were using it initially. Yeah, more than like 99.5 % of the users actually use Chinese language on our application.

49:32So almost all Chinese immigrants. All right. So you managed to show enough momentum that by April of 2016, you raised a very big round,$7.5 million. And that was led by Goodwater Capital. And at this point, just a year and a half in, you raised a$35 million valuation. So tell me about what that enabled you to do. I mean, this business looked like it was heading in the right direction at that point. Yeah, at the time we thought, oh, it's not so hard to start up a company. A lot of stories were like, oh, you raise some money and then boom, you became a huge success. That's what we expected. So we just kept doing.

50:21We didn't really think a lot about the more fundamental things. We just, okay, let's just keep doing what we're doing. But then all of a sudden things start to slow down. It felt like we couldn't find enough group leaders and the growth just very quickly slowed down to a halt. So by early 2017, we were really feeling the pressure that the growth was a lot slower. I would imagine that at this point, like one of the things that you might try, right, is, okay, well, I mean, maybe we need to just expand beyond the Chinese expat community. But clearly that wasn't – it turned out that it wouldn't be enough.

51:10But what were some of the things you were thinking about on how to get the business back on track? Because you say two years in, it starts to grind to a halt. So, how were you thinking about – I mean, were you panicking or were you just kind of calmly going through a list of like different things you might try? What were you doing? Now, looking back, we were doing the exactly wrong thing, which is when something is not quite working in a smaller geographic area, we try to make it work in more areas, right? Wider range, right? So we were, oh, maybe we need to find more group leaders outside of California.

51:55Maybe we should try to bring it nationwide and even internationally. Oh, maybe some people do group bias in Singapore or Australia. When we didn't know what to do, we just tried to bring it to a wider audience, hoping to sustain that growth or momentum. But that didn't work at all. So, yeah, I was trying to raise money. Also, by the time, by mid of 2017, we were running out of money. We had less than$1 million left. Tell me what your costs were. I mean, presumably, you had to hire employees. You had warehouses. Where were you spending your money? Mostly people. So we had to hire business development people.

52:44These are basically people to recruit group leaders, right? We also had a small warehouse. We had people who have to deliver some orders. And we didn't think hard enough about the business model, so we didn't try to make money. We just thought, oh, we just grow the users and we can raise more capital. And then with more capital, we have time to figure out monetization. But meantime, that$7.5 million that you raised, you were burning through that fast. Right. Because you're saying by the middle of 2017, you were close to bankruptcy? We had less than$1 million left, and we needed cash immediately.

53:33So I was trying to raise money. Again, I'm good at cold email and cold calls. So I reached out to almost all the investors I could find in the Silicon Valley. I remember just driving up and down Sand Hill Road like every day, right, meeting investors. But I had no luck to raise money in the U.S. Investors were not interested in giving money to the business because it looked like it was about to go under. Was that what they were saying? Yeah, I think partly the momentum was slowing down a lot. Partly, most investors couldn't understand the phenomena. Most investors couldn't understand why people would buy things in WeChat groups.

54:22It just sounded so absurd. So you could not raise any additional money. You were like – it sounds like you were like on the precipice here. Tell me about your own – the stress that you were feeling about this. Did you feel like this is not going to make it? Or were you convinced, absolutely convinced you could save the company? I was not absolutely convinced. That much I know. But I wasn't giving up because I – from the very beginning, I started the business. I always told myself, I'm not going to be the one who shut it down. I will give my last ounce of energy to make it work. So we were in danger, so I didn't give up.

55:13I couldn't raise money in the U.S. I thought, oh, maybe I can raise money from investors in China. So I flew back to China. I tried to raise money from Chinese investors. And what did investors there say? They said a bit different things. So U.S. investors said, oh, this is a social thing, a Chinese thing that we don't understand. Chinese investors said, oh, this is in America. We don't understand what's going on in America. Although it seems promising, but we don't know about America. So yeah, I had no luck. I couldn't raise any money from Chinese investors either. Wow. So you're in Shanghai trying to raise money, no luck, probably feeling pretty low, and then it gets worse.

56:08Yeah. So it was a rainy day. I probably had something on my mind, so I didn't pay attention. And I slipped and hit my back on the stairs. I couldn't get up for a few minutes, and it hurt really badly. But I didn't think much of it. I just went back to my hotel room. The next day, it hurt even more, right? So I went to the hospital and they found I fractured three bones around my spine. So my co-founder then just took me to the airport. So I was flown back to Wuhan then because my parents lived in Wuhan. So I stayed in my parents' house for four whole months, laying in bed and couldn't move. Wow.

56:54Because there's really nothing you can do. There's no like, you can't, you just have to lay there and rest when you break a bone in your back, in your spine. Yeah, exactly. It's probably the darkest moment of my life. We were running out of money and I couldn't do anything about it. But like many things, it turned out to be a blessing in disguise. For the first time since I started, I had a lot of time to think. I tried to replay everything in my head, what went wrong, what started as something really promising, how come it went horribly wrong. I also read some books. You know, I reread Sam Walton's book.

57:40I read the IKEA story during that time. And all of a sudden, I don't remember which day, but I started to realize what was wrong about our approach was that we tried to make this group buy thing work better. But the fundamental reason why people were doing these group buys in the U.S. was actually not because it was fun. It was not fun. The fundamental reason people were doing this was because they couldn't have easy, affordable access to the food they love. I remember that's what I felt like the fundamental problem people were trying to solve using these group buys. But it was not the right solution.

58:33It was not the best solution. The best solution is to address the issue at its core, which is to give the Chinese immigrants easy, affordable access to the food they love. That's the most fundamental problem we need to solve. And when you say it was a low period of your life or maybe even the lowest period, because, you know, when your health is affected, of course, that can really – I mean that takes over everything. I don't know. Did you just think – were there moments during that period of time where you just kind of wanted to give up entirely and just fold the thing and start over, start something different?

59:17After I started, I started to understand this word faith, the meaning of this word. You know, China, most Chinese people don't believe in God, right? So when we grew up, it never occurred to us or nobody taught us about this word. But I started to develop my own sense of faith. So I felt, okay, since this is something I'm really passionate about, I started it. So I'll do my best. I'll give my all and let the outcome to show itself. But I'm not going to question so much every day whether I should continue or not. So I started to develop this faith. And also, I didn't know this. I knew this later from a very wise mentor from me.

1:00:18I asked him the question. I said, when should I give up? What's the criteria? If I pursue something. He said, it depends on whether it's the right thing to do or not. So he said, there are two ways to look at things. One is, is this the right thing? The second question you ask yourself is, are you doing it right? So if it's the right thing and you are just not doing it right, you should not give up. You should try to find a way to do it right. However, if it's not the right thing, you should not try to make it better. Because if it's not the right thing, you should stop right away. You can never make it right.

1:01:06So I think deep down, I knew that I couldn't summarize as well as he did. But deep down, I knew that it was the right thing to keep up. So, all right. So you are thinking about what to do and you realize that you're not really solving a problem that many people have because the group buy was interesting and maybe fun, but it wasn't really the problem. The problem was access to the things that you needed. And how did that translate in your mind to, okay, we need to completely change the business model here. We need to completely change what our business does. Yeah, so once I realized making Groobite better is not the solution, then I asked myself, what is the ultimate solution?

1:01:55so I think the automated solution is to deliver the food to people's home and we have to dramatically expand the selection to cover not only the hard to find exciting products but also the more staple products that can be found in Asian supermarkets but it's very very different from what we knew how to do. So we have to like completely change the business and restructure the team, everything. When we come back in just a moment, how Larry reinvents his business to save it, even driving forklifts and delivering orders, all while serving as the CEO. Stay with us. I'm Guy Raj, and you're listening to How I Built This.

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1:05:08Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2017, and Larry realizes that on top of having to completely reorganize and change his business, he also needs to offer more food and products, free delivery, and the best prices around. We believe that to become the go-to grocery shopping app, we cannot be more expensive than brick-and-mortar stores. We had that belief very early on. Maybe because, you know, the Chinese communities, people in that community is very price sensitive. We knew that no one wants to pay 20, 30, 40 % more to get the price delivered to their home. So we couldn't follow the Instacart model because that model will be more expensive than you buy from brick-and-mortar stores.

1:06:02Right. So we had to create a new model. So the idea was you had the warehouses, but you would basically have a bunch of products, food products in those warehouses. And then people could go on a website and order what they want and then you would deliver it. Correct. That's the new model. All right. So you're still you still have not raised the cash to save the business. I mean, you're still teetering on the brink of bankruptcy. this is the summer because in the summer is the summer of 2017 where you break your back right you come back to the u.s i have to imagine the first thing you need to do is get more money just to stop stop the business from going under so how did you do that right so i tried i think i tried a couple new pitches to new investors obviously i suspected no one believed me because the old idea didn't work.

1:06:58We had no credibility that the new idea would work. So my only hope was to turn to our existing investors. I pitched this new direction. Our investors were highly skeptical, of course. And I'm really appreciative that they decided to put in some capital, partly because they want to give us a try, Partly also because otherwise all the investment they put in just went down the drain. The three co-founders, we also put in some capital to show that we had faith in this new direction. So with that, we were able to raise a little bit of capital from existing investors. So this was one of your investors.

1:07:50It was Goodwater Capital, right? Yeah, Goodwater Capital. They agree to give you more money. But I think that in exchange for that, you had to give – there's a major dilution, right? You had to give up a significant percentage of the company to them. Yeah, yeah. So by the end of 2018, they ended up owning more than 50 % of the business. Wow. And that was your only option. You had no other choice. That was the only way to save we at this point. Yeah, we had no other choice. So I'm really appreciative of what Goodwater did to us. That's kind of the cost we have to pay by not able to realize our ideas the first time.

1:08:34Yeah, but it was still risky. You also put in your own money, right? Can you explain this to me? I guess you guys had like an investment property that you rented out and you sold it or something? Yeah. So we had two houses. We lived in one. We had another one. So I was making very little money still from we even after I raised the$7.6 million. I still made very little money from we. What was your salary? Under$100 ,000 or under$200 ,000? Yeah, definitely under$100 ,000. So I discussed with my wife, and she was very determined. She was very supportive. So with her together, we said, okay, let's do this.

1:09:26Let's sell the house so we can have our personal finance in order for some time. So this was a – there's a lot going on in your life at this time. And with this new model, what did it mean for – like you had people working for a company that was designed for group buy. So did you have to reorient everyone around this new direction or did you have to basically lay people off and find new people? Yeah, we had to lay people off because all the people whose job was to recruit group leaders, we had no jobs for them. So that was pretty tough. I remember I flew to LA and I had to deliver the news. I said, I'm here to close down this site.

1:10:26And it was really, really tough. Yeah, I'm sure. Because obviously, you know, you were reorienting the company. So when you began this kind of massive pivot, once you had to do the layoffs and restart the company, how many people were working for We at this point after the layoffs? We had about 30 to 40 people, including all the warehouse workers and drivers. So very small already. And everybody had to do everything. I remember every day around 11 a.m., I would come to the office and say, OK, everyone, drop everything we're doing. Let's go to the warehouse to pick orders. So everyone picked orders for two, three hours every day.

1:11:27And in the afternoon, we do deliveries. So I deliver a lot of orders. I delivered more than a thousand orders myself because I had to figure out how to do delivery, how to write the software, how to design the driver experience, and how to figure out the delivery part. And so it was a very, very tough period of time. I worked in the freezer, in the cooler. Sometimes, you know, I was in a meeting, for example, then someone in the warehouse came in and said, hey, Larry, we need you to receive the order because you are the only certified forklift driver still on site. Everybody went out to deliver.

1:12:15So I had to like stop the meeting, go drive the forklift to get the pallets from the truck and receive the goods and then come back for a meeting. And how did you know what to keep on site? Like how did you know what the most, I don't know, 500 or 1 ,000 most popular products were? This is when our own experience as Chinese immigrants comes in, right? So every day, we just gather everyone and say, what do you guys want to buy? What other people are selling but we don't have? What do you guys want? We basically just ask our employees, what do they want? And we felt like if we serve ourselves well, we actually serve the customers well.

1:13:02So I think that is a very important advantage for us. We are serving people just like us. So you had a sense of what the most popular products would be and what you could store. Now the question is, how were you able to offer it at a lower price? I mean, there were Chinese markets around, places that presumably had some scale and could offer pretty good prices. How could you compete on price at this point? We compete on price by being more efficient. Our purchasing price was definitely higher than these larger supermarkets pay, for sure. So we could never compete on the purchase price. But what we could do is we could run a more efficient operation.

1:13:54So your markup was lower. Yeah, markup was lower. Our warehouse operations, we were very few people. And from day one, we knew that we couldn't do the on-demand delivery. because on-demand delivery is so expensive. So we did what we call scheduled delivery. That way we can aggregate a lot of orders and we can do the route planning. In the beginning, we only deliver once a week. Then as the demand pick up, we started to do twice a week, three days a week, five days a week. Until 2019, we finally was able to do seven days a week delivery. So this pivot really happens. It starts in the fall of 2017.

1:14:40I imagine it didn't turn around right away. You still have to get users. You're still targeting mostly Chinese expats, right? That was still the target market at this point. Correct. So the thing that did keep us motivated and hope very high is the moment we pivoted to this new model, the business started to grow and started to grow very, very steadily. Even once a week delivery, people start to embrace that, right? And also couldn't really have any hiccups in the process, right? Every month, we had to rise to a different level. Otherwise, the capital would dry out. You had to grow. You had to grow every month.

1:15:26We had to grow every month. And our model did work. So our model did work. So the growth did happen. I remember summer of 2017, we were only doing$100 ,000 a week in sales. Not bad. A year and a half later, we were doing half a million dollars a week in sales. Wow. So you basically are hitting$2 million a month in sales, which is pretty great. I mean, that's – and that growth is fueled almost entirely by Chinese expats or was it – did you start to see it growing beyond the Chinese expat community? I don't think there are aspects. They are Chinese, mostly first-generation immigrants living in the U.S.

1:16:18A lot of people have been here for some time, but their most comfortable language is still Chinese, and their diet is primarily still Chinese food. So in terms of language of choice, right, almost all the customers we had at the time prefer Chinese language over English language when they order food. And was WeChat mainly the sort of the platform on which people learned about We or were there other places that people found out about it? So WeChat was our main user acquisition channel. We did not have money to do any advertisement. So we had to rely on word of mouth. So the foundation we built during the group buy days paid off because we still had those groups, right?

1:17:08We still had those group leaders who, in each of the groups, there were hundreds of people. So they just help us to advertise to those customers, say, hey, now We does delivery. And so we developed a feature we call order share feature. So, for example, if I place an order, I would be prompt to share the order with my friends. Usually people share into WeChat, right? So, Guy, you are my friend. You saw in WeChat that, oh, Larry just purchased these products. click the link to get a coupon. So after you click the link, I would get a little bit of money back as incentive. So what you're saying is people, you would get a, if you made an order, you'd get an email that said, hey, if you share your order on social media or WeChat or wherever, we'll send a coupon.

1:18:01Like people who click on it will get a coupon to basically order and save money. And we'll give you a refund of your purchase. if you do this? Yeah, we call it WePoints. So we give you some WePoints that can be used as cash for your next order. Basically, this is a way to acquire users. People, other e-commerce companies spend probably$50 to$100 to Google and Facebook to acquire a new user. So instead of giving the money to Google and Facebook, we leverage our communities, we give our benefit to our customers. And it's much more authentic, and our customers appreciate this kind of incentives. And they genuinely recommend WE to their friends.

1:18:49And I guess around this time, that momentum allowed you guys to expand really for the first time outside the Bay Area. Yeah, we expanded to Seattle in 2019, early 2019. So 2019 compared to 2018, we grew 2.5x in one year. And that year, I know that 2018, you were doing about$2 million in revenue a month, $24 million in revenue a year. But I have to imagine you were not yet profitable. We were not profitable, but we didn't burn a lot of money either. So without burning money and growing 2.5x year over year, it was a good result. All right. Now comes 2020, which we know what's about to happen, which was the pandemic.

1:19:41And I guess even before the pandemic kind of started or became clear that it was a thing in the United States, you already knew what was happening in China. You were following that. But I guess you even started to see an uptick in purchases by Chinese Americans or Chinese first generation Chinese in the U.S. who already before the pandemic were not kind of started to avoid going to the markets. Is that right? Yeah. So Lunar New Year every year was always the pick for us every year. But the week after Lunar New Year was the really worst week for the first half of the year. Because it would slow down.

1:20:23Everything would slow down. Exactly. But that year was really surprising. The week immediately after Lunar New Year was even higher than Lunar New Year week. So we were like all surprised. How could this happen? Then we knew just by reading the data that, oh, our community, people in our community is probably worrying about the virus. You could see that. You could see in how people were using the… We could see that clearly from our data, yeah. And then since then, every day, sales just went higher. I mean, I read that you saw 700 % revenue growth year over year, that pandemic year, which seems just unsustainable.

1:21:10Like, I mean, how did you manage that? So it was very hard. So we had to add capacities constantly, meaning warehouse capacities. And wherever there's a warehouse, we just couldn't wait. We have to get the warehouse and move in to that larger warehouse immediately. And by moving the warehouse, we actually did not shut down the business, not even for a day. We shipped today's order, then we put away the inventory. We disassemble the shelves. Then overnight, we move the shelves and inventory to the new warehouse. We reassemble the shelf, put the goods on the shelf, and deliver from the new warehouse the next day.

1:21:58And people from our community, they really appreciate what we did because they were like, okay, this is the only place we can actually get the products. And I guess at a certain point that year, you started to notice that it wasn't just Chinese folks who were buying from you. It was many other Asian communities and even non-Asian communities, Latino, Hispanic populations, communities who were ordering. How did you start to notice that? Actually, in the process, I asked myself why nobody was doing online Latino food delivery. So I start to remember, I'm a student of U.S. history. I learned that actually there was a very important piece of legislation passed Congress.

1:22:47It's called the Immigration Act of 1965. So that Immigration Act actually changed the demographic shift of the U.S. completely. Before 1965, only people from European countries can more freely immigrate to the U.S. For example, people who were born in China, before 1965, the quota was 100 per year to immigrate to the U.S. So that's why before that, there wasn't many immigrants from Asian descent or Latino descent in the U.S., right? But that Immigration Act changed everything. So people from Asian countries, Latino countries start to come. And by about 1980, all these offline brick and mortar, ethnic brick mortar stores start to emerge because there were enough immigrants to support some offline ethnic stores.

1:23:42So after I read the history, I realized that the problem Chinese immigrants were facing was not unique for Chinese immigrants. It's actually the same for every immigrant group. They are the same. They are even more underserved than Chinese, right? For example, Koreans, Japanese, Vietnamese, Filipino, Indians, they face the same thing. It's a very, very diverse group of people. They're not just Latinos. They are very diverse and they all want to eat their own food. They all want easy, affordable access to the food they love. That's when I started to feel like, oh, this actually can be a lot broader, much bigger business and can have much broader appeal.

1:24:31So we start to expand to other ethnicities to solve the problems for more than just the Chinese people. This really, I think, in a sense, kind of was a third pivot because it had begun really as a Chinese-focused brand. I mean, not only were you starting to understand that you had this huge opportunity to serve all kinds of communities. It was almost like you start to think about making this website hospitable and familiar to any ethnic group that came there. I think it's a very important expansion of the concept. I think for a startup business, one of the biggest challenges, you can have power market fit among a small group of people.

1:25:18But how can you have a power market fit with a bigger group of people? Eventually, any startup that wants to grow to a bigger company, you have to consistently tweak your offerings so you have the bigger and bigger product market fit. So for us, we accomplish that by expanding to more ethnic communities that share the same struggle, same problem as the Chinese. All right. After that COVID year, even during that COVID year, you had to raise tons of money to fund the expansion. And I think you actually hit profitability in 2020 for a period of time. Yeah, correct. I know that you probably, I mean, anyone doing anything, I mean, you know, most of, I think most of us are focused on, or where we've been, where we've come to.

1:26:08Most of us are focused on where we are at the moment and the anxieties ahead. I think that's just normal. I have anxiety all the time. about things coming around the corner or unfinished work. But I wonder if you ever did that by 2021. You raised$315 million that year. I mean, your valuation that year was$2.8 billion. Did you breathe a sigh of relief? Were you like, ah, now we're good. We're in a good place. Or did you still, as a CEO and a founder, still feel anxiety? I use this analogy when people ask me that question. I said, when we were small, we were kind of like, let's say, a basketball team, right?

1:26:56We were playing with other regional basketball team. Then when we get a bit stronger, we start to play, say, national college basketball. Then we become a bit stronger, we play NBA. Which one is harder, right? Is it harder to play NBA? Is it harder to become NBA championship? Or it's harder to play a regional player? I think it's probably harder when you raise your game to the next level. So all the success we had basically only earned our ticket to play the next game. And the next game is going to be harder. That's how I felt. I felt it's definitely harder than the early days. simply because we have bigger vision, we have bigger dreams, and we are competing at a different stage with much stronger players.

1:27:53Tell me about, I mean, when you kind of reflect on your story, right? Here we are in 2024. You got here a little over 20 years ago to the U.S. And you built a billion-dollar brand. I mean, I guess you could say multi-brand brand. And here you were, a kid from Wuhan, who really didn't speak much English when you got here 20 years ago. And now you're running a company that is very successful and could go public. I mean, I don't know. Do you ever reflect on that? Or do you just feel like everything's just moving forward? and I just have to keep my head down and keep grinding. It's very amazing that we were able to do what we did.

1:28:47Guy, I asked myself this question when I listened to your show all the time. I said, okay, what made these people successful, right? My summary after listening to so many episodes is I think each of them were uniquely positioned to see the opportunities that they saw. It doesn't mean that they were the smartest people or, you know, they were the best problem solvers. They were uniquely positioned to see the problems and they did something about it. So in a sense, you can say they chose to do those things or you can say history chose them to do those things. So it's kind of how I feel, right? I feel like looking at me, right, an immigrant coming to this country, I had no idea what problem I was going to solve here in the U.S.

1:29:36But it's kind of this thing chose me to do it. And I was lucky enough to assemble a team that are passionate about solving this problem. So it's an amazing feeling. It's the feeling that you felt like your life is meaningful. you were brought to this world to do something that's meaningful. That's a really good feeling. So when you think about where you are now, how much do you think has to do with the work you put in and how much do you think has to do with luck? My dad once said, I'm the luckiest person in the world. Because he went through cultural revolution, he didn't have the opportunity to study.

1:30:22So he felt like my generation was the luckiest generation in China. And among those people, I was the luckiest person in the world. So I think luck has a lot of impact. Or maybe it's the destiny. Hard work is a given. So to me, I feel like maybe the hard work and the talents are just necessary. But how high you can go, how far you can grow. really has a lot to do with the situations you are in, what happened to you, what people you met. And you can loosely say those are all luck or fate or destiny. That's Larry Liu, co-founder and CEO of We. What's your favorite thing on We? I love dumplings. I love dumplings.

1:31:18You get the frozen ones? I get the frozen ones, although they're not as good as the ones my mom made. Unfortunately, you cannot buy. No, you can't ship your mom's. Can't ship those out. But those frozen ones are pretty good. 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 Kerry Thompson with music composed by Ramtina Arablui. It was edited by Andrea Bruce with a research help from Catherine Seifer. Our audio engineers were Josh Newell and Gilly Moon.

1:31:53Our production staff also includes Alex Chung, Chris Messini, Carla Estevez, Casey Herman, J.C. Howard, Eva Grant, Sam Paulson, John Isabella, and Malia Agudelo. I'm Guy Raz, and you've been listening to How I Built This.

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