Building for the circular economy and the future of shopping with Poshmark’s Manish Chandra | E1805

0:00And then on the people side, my one principle that has been very core to me as an entrepreneur is embracing the weirdness of every single person you meet and also embracing your weirdness, which means recognizing your special and you're kind of your own. but you're also kind of screwed up and effed up like everyone else. And then aligning with the person you're meeting and knowing that they have strength and figuring out how to combine those strengths and admire that. And that has allowed me to tap into various folks. For example, in my board, we had people of certainly different ethnicities and colors.

0:33I was privileged to have two black women on my board, but that was sort of what you can look. But then when you think of their strengths with each person brought, But there were people who had never finished college and the people who had two master's degrees on the board and similarly at the employment team. So tapping into everyone's uniqueness is very powerful, too. This Week in Startups is brought to you by Embroker's Startup Insurance Program. Helps startups secure the most important types of insurance at a lower cost and with less hassle. Save up to 20 % off of traditional insurance today at Embroker.com slash twist.

1:10While you're there, get an extra 10 % off using offer code TWIST. .tech Domains has a new program called Startups.tech, where you can get your company featured on This Week in Startups. Go to startups.tech slash Jason to find out how. And Plunge. Go to plunge.com and use code TWIST150 for$150 off your cold plunge tub. All right, everybody. Welcome back to our all-star summer here on This Week in Startups. It has been crazy. Darmesh from HubSpot was on the pod. Rich Barton from Zillow, Glassdoor, and Expedia. Dave from MongoDB. Ryan from Qualtrics, and he happened to buy the Utah Jazz. We had a little discussion about NBA teams.

1:59Will from Whoop. Mike from Zapier, which makes you happier. and just the train is going to keep going like the grammarly ceo coming on i love that product or a ceo a bunch of folks are lunatics about the aura ring linkedin ceo plaid ceo booking.com ceo man it's like all-star summer is going to go into all-star september because so many great founders and ceos want to come on the program and investors and today will be no different i have been fascinated with poshmark since i heard about it and if you have anyone in your life who is into fashion you've heard about it uh manish chandra is the ceo welcome to the program manish thank you jason thanks for having me all right so um there's something about the circular economy that captures everybody's attention um tell me what is the circular economy What is Poshmark?

2:59And why are this group of people so absolutely fanatical about it? So for us, the circular economy is really about conserving what you have and really reusing what you have. So we've produced a lot over the last decades, and now it's time to consume what we've produced and recycle it. So that's, in a nutshell, circular economy. For us, the circular economy means really shopping each other's closets. Instead of buying retail, you buy resale. And if you think about something that almost everyone in the world has, it's a closet. You have some clothes that you wear every day, no matter where you live, no matter which part of the world you are.

3:43And likely, in any part of the world, and certainly for a lot of people, they have some clothes that they are not wearing right now. Either they've gone out of style, they've gone out of fashion, or they just don't like it. And what we've seen over the last decade is something that you don't want, somebody else wants. So the whole purpose and focus is how to make it delightful and simple for this closet economy to scale and make it easy to buy and sell your closets. and so what drives consumers towards this because it does seem like there's a group of people who are into this not for saving money but it's the way they believe they should be consumers so maybe we could just open up and double double click on that piece of it this is and i don't know what percentage of your users this is but we've always had consignment stores we've always the ability to save money if you wanted to buy used but this seems to be something more than that there's a bit of a movement here so if you were to look at a hundred poshmark users how many would be in that subset of like fanatically interested in saving the planet and having their shoes for 10 years and you know if they're not using them making sure somebody else is using them and they don't get fast fashion thrown into a landfill yeah no i i would say if you go back to the very beginning of Boshmark over the last decade or so, a small number of people, maybe 10%, 15%, have been very much about the fact that it's only for them.

5:16It's reuse. It's the only way to shop. It's the only way to sort of live your life through thrifting. Outside of just the money saving, it's saving the planet because you're not consuming as much. You're not producing as much. You're not producing a lot of the second order side effects, global warming, which is really upon us in different ways. you are impacting all of that. The volume of those consumers and sort of a whole generation, particularly, you know, the generation we call Gen Z, and even the younger generations after that are in some ways very focused. You could even use the word militant, fighting for their right, or maybe in a way undoing the sins of their fathers and mothers as they consume.

6:00So that's something we've seen in research or our surgeons in the last few years. It would be harder to quantify, but I would say that number has doubled or tripled as a percentage of Poshmark users where that is a core piece. But if that was the only thing and you didn't have convenience, you didn't have value pricing, you didn't have styling, that number would be much lower. When you add all of that, it becomes really a core movement. That's what's happened probably in the last five years. It was growing and then it's taken another point of inflection. Hmm. Interesting. And so what are the popular categories on the site?

6:36I'm certain some things will lend themselves to being resold, other things maybe less so. So I'm wondering if it's things that are high end, you know, Chanel bags or, you know, notable pieces, or if it's just everyday pieces at a great price. yeah for us it's mostly everyday pieces we have a pretty significant business in luxury but unlike say the real real it's not our only form of business so we have a segment that's very high price because we physically authenticate the items and so that's there but the the amazing equation we created with the shopper when we started the product is that we are able to buy and sell apparel like day-to-day the shirt you're wearing the shirt i'm wearing you can buy and sell that's a predominant amount like more than half of the stuff we buy and sell is apparel now that's a category historically that was not very big for ebay that was not very big for any of the sort of online players and we literally single-handedly pioneered the growth of that category outside of handbags and shoes sort of stuff that is a little bit easier to transact than you know a dress or a shirt which has so much uh fitting requirements etc the second thing with apparel is that the average price per item is much lower.

7:53So you have to make the shipping, the transaction costs much cheaper for that to work. And we've been able to effectively achieve all of that. So it's kind of like, you know, if you think of UberX or Lyft kind of expanded the taxi market, we've sort of expanded the resale fashion market with a singular focus on empowering everybody to be able to sell and fulfill themselves without having to go to a central point. And then working on systems that It can reduce cost of payment processing, shipping, trust, you know, returns, all of the stuff that become friction and allowing that to create millions of closets across America with each other.

8:32And so talk to me a little bit about how you made the decisions about fulfillment, because there's a group of people who are like, I want to send, I want to get the stuff out of my closet. That's like part one. I don't want to do the fulfillment. I don't want to manage this. Just get it all out of here. I know. Send it to a consignment store or whatever. um and then you know there's hey is this actually what you said it is is it in the condition you said it is in is it the right size and is it often authenticated so if i want to buy something that's nike i don't want to buy a three dollar fake nike shirt or shoes i want to buy the the ones that are legit so how did you determine you know which model to go with and did you think about different models or running them simultaneously?

9:17It's a really good question. I think our vision from day one was that, imagine if you are a girl sitting in a dorm or sort of, initially, for the first five years or so, we only ran it in the women's fashion category. And it wasn't until 2016 that we expanded to men's and kids and other categories out there. So, from 2011 to 2016, First five years, it was 100 % focused on women's fashion. Partly it's because, you know, if you think of traditionally, women are a much bigger consumer percentage of the fashion span, which means they naturally have bigger closets. They transact more. They're sort of more focused on it.

9:54And then over the last four or five years, we've seen men expand their footprint. And for men, you know, it's not universal across categories. Certain categories are extremely biased in terms of their spend. More notably, sneakers is, you know, it's a huge sort of part of the men's wardrobe. in general but for women it's really spread across the thing when you do that you have to really solve for lower price point because that's the higher problem i mean if you have a 30 item well to give it to someone or ship it to someone then they process it and ship it out there's just not enough dollars to go around so unless you take on the process of self-fulfillment it's much harder to make the economics work whereas if you take a three thousand dollar chanel bag well it can go through many hops and still, you know, there's profit to be had for each hop along the way.

10:40So that was sort of one thing. But the other thing was, when you look at sort of one of our users, we wanted to make sure that they can spend$10 a year and$5 ,000 a year. So that took many years to kind of build the right product and the right service level across the spectrum. So we can really be part of your whole closet. And then when we added Mens and Kids, we really expanded that footprint to all of the dimensions of your life. So today we feel from an end-to-end perspective, we provide the most comprehensive resale solution with different levels of things. Now consignment, which is, you know, say you want to sell something, you may not want to sell it directly, but you still want to make sure your clothes are going to a good home, environmental things, and you know, maybe the money you make, you can donate it somewhere or whatever.

11:25That part is a process that many of our sellers support. We don't have a structured support for it, but many of our sellers act as consignors out there and help other people. And we certainly want to look in the future and maybe creating our own consignment network as an option at the right time. Again, you've got to remain focused on your roadmap as an entrepreneur. You can't just go everywhere, but we've systematically added things to the product. All right, listen, we work with super early stage companies at my investment firm. It's called launch. I'm talking pre-series A, right? We're talking seed stage, friends and family.

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12:36And that goes beyond your policy. Okay, we use this at all of our companies. It's easy peasy lemon squeezy. And if you're not getting insurance, you know, at some point, you're going to have to get it. So let's make that point today. Right now, this weekend, tonight, just go to Inbroker today with the code twist, and you'll get 10 % off their startup package. how do you get the startup package in broker.com slash twist that's e-m-b-r-o-k-e-r.com slash twist make sure you use that code twist for 10 % off that also more importantly than getting the 10 % off that shows them that you're listening to this week in startups so we love and broker they've been amazing in terms of supporting our founders for years and of course this very podcast great job and broker maybe you talk a little bit about this movement of fast fashion and disposable usable clothes this is something that i think is a major driver here that maybe consumers are learning that if you buy like my favorite brand of shoes is crocketing jones it's a a shoe store in london that has been making shoes i think for 200 years or something crazy and i was just on poshmark i found all the crocketing jones and i'm like wow the resale value of my thousand dollar crocketing jones is like three hundred dollars you know for my 10 year old shoes wow this is pretty incredible if it was a younger if i was a younger jason i might actually buy those nine and a half crock of jones and just get the soles redone and i would be in them for 30 or 40 percent um but then on the other side you have people going to is it sheen or shine whatever this yeah um you know horrible horrible trend is of buying clothes and you wear them once and throw them away you can talk a little bit about that counter trend and how people are looking at it?

14:21Yes. So a couple of things. Fast fashion has been around in various forms. I mean, Shein is the latest example of it and probably at the very low end in terms of the price point. But you've had people who've been part of this trend and have been sort of under the microscope, if you may. I mean, many years back, Forever 21 was criticized as a fast fashion brand, right? It's sort of changed since then and evolved. H &M was a very low-priced brand, and they've added a lot of sustainability piece, etc. So rather than commenting on specific brands, I would just say that the consumer's desire to have products that give them latest trendy looks at an extremely low price they can use a few times and they don't care about the lifecycle has always been there.

15:07Today's consumer, if you look at a Gen Z consumer and you talk to them, they're kind of a little bit bifurcated in the sense that they will be spending money on Shein and they'll be spending money on a Poshmark at the same time. And, you know, when you ask them the questions and answers, they'll have different answers as to why they do it. But there is a very good framework. The thing that has happened is between social media, which gives you instant access to so much data and information, the TikTok trends, which are sort of moving literally by two days, the ability for an average young person to keep up with all these things that are happening is very hard.

15:52And when you look at a platform like Shein, they give them a tool at an economic price to be able to keep up with trends. Whether you should keep up with trends or not is not a decision I want to get into, but the fact that these things do that. So what a platform like Poshmark is trying to do is to give them the same kind of trend data, but in a paid forward way. So you can buy that item. It may cost you sometimes more than Shein, sometimes equal to Shein, but certainly something you can use forward. like you were talking about your Crockett and Jones shoes that can kind of keep going forward.

16:23And, you know, I mean, obviously, it's a little less convenient than just buying an item and throwing it away. You have to sort of use it and then wear it. But certainly, the impact of what you do is much higher and the clothes look better. So, I think from a pop culture perspective, the movement towards reuse is growing. And I believe that we will hit a point where suddenly, if you are wearing an inauthentic or sort of, you know, like if you're wearing an inauthentic designer bag, people will look down or criticize upon you. But I think if you're wearing an inexpensive dress from one of these fast marketplaces, it's not something we sort of consciously internalize.

17:01So it's all about sort of that social dynamic that's happening. The funny thing is, if you search for Shein and Poshmark, there's thousands of items that are up for sale from that brand, which is insane in some ways. Well, right. I mean, if it's a$20 piece and you're selling it used, how much are you possibly selling it for? I mean, I would think people would just put them in a stack and be like, I'm a size X here, buy 20 items. That happens as well. So for a very low price item, people will create these mystery boxes and then sell them that way because it's cheaper to transport it, cheaper logistically to do that.

17:39but an auxiliary point here is that people actually want to buy resale and reuse at a core level so sometimes even fast fashion brands are coming through the resale channel into people's closets which is okay i mean if you're reusing another way i want to think about it is if i buy this shirt and i use it two times and move it forward and then it goes into the garbage boil supposing i sell it to someone they use it once and then throw it away that's not a good use if i use it 20 times somebody else uses it 20 times is a great thing so if a low-priced fast fashion item can be used 10 20 30 40 50 times whatever the number is it's actually a better usage even though it is throwaway item and so use usage in my mind transcends sort of the the bucket in which you put an item and you guys did you guys go public and then get bought by neighbor is that the history of the company?

18:36Yes, we went public in January of 21 and January of 23 we were acquired by Naver. Yeah, Naver of course is kind of the Google plus Yahoo of Korea and incredible company. There's three search engines basically, Naver, Dow, Daum and Google in Korea. How did those transactions occur is is this becoming uh the circular economy um something popular in asia and korea or is it that neighbor and and they've had aspirations to kind of have more um properties in the west is it something like they look at you as a way to kind of head west and build a base of revenue outside of the asian markets a little bit of both like it's really a a little bit of both So circular economy is becoming big in US, in Europe, in the developed Asian markets, and even sort of the emerging Asian markets.

19:35You are starting to see circular economy become big. You know, you have players like… Where, like Philippines, Singapore? Everywhere. Japan, Korea, China. China has massive platforms. Believe it or not, they have sneaker-resale platforms that are driving tens of billions of dollars of GMV out there. So it's big. But for Naver, as they are looking into expansion, they have a strong thesis that consumer-to-consumer shopping is a big dominant wave that's here and will grow over the next many decades, which we share. It's a shared business. So that's the second thesis. The third thing is, out of all the players they looked at, they really thought that Poshmark had the unique sort of market and market dynamic, and they really were interested in partnering with Poshmark.

20:25So our conversation started by them making a private investment in a public company and potential discussions around that because they wanted to learn and partner with Poshmark around both C2C commerce and social commerce because we sit at the intersection of those two things. And somewhere along that line, which we've documented through our public filings, it turned into an M &A discussion. That's fantastic. Sort of ended up leading to this partnership that we are in. Yeah, a private investment in a public entity. yeah um so question i have is you see a lot of cultural um bridges being built and especially in fashion music k-pop in japan uh you know japanese fashion and in america all the stuff anime it's really just in the last you know gen x our generation and millennials have really gotten into this gen z so i'm wondering is there a way for you to move large amounts of product that could be interesting to people in japan and products that are in japan to the united states in bulk so that you could overcome this you know cost to ship products i was i went down the rabbit hole of trying to understand how fashion is made because i was looking at some investments and i found on um very fascinating there's an underground on reddit of services that will let you shop in china put your stuff into a box put that box into a container and so you could go shopping and every week they send a container to the united states and then resend your package so if you're an american and you want to shop the chinese websites buy a bunch of products in china and then shipped into the united states you have this like underground way of doing it yes it's really weird um i think panda was the name of the the product but that shows that there is something here in terms of globalization.

22:18So maybe have you thought about that? Has that come up? I'm just spitballing with your future. Yeah, yeah. No. So we've just been testing something we call a global bazaar for cross-border shipping, et cetera. But I think what you're tapping into sort of this optimization of logistics, so it makes it cost accessible, which you're talking about one of these things a little bit more structured. There's a company in Japan, I think It's called Bayou or something where expats and their spouses would be shopping on behalf of the core Japanese folks and post photos. And then they would buy this item in a boutique in Europe or whatever and cost arbitrage because it was a significant cost.

22:58Sometimes they'll bring it back, but sometimes it was even economical for them to ship it back to Japan. And then you've seen K-Beauty as sort of a bulk purchase. And certainly Europe coming back here, you've got sites that try to bypass some of the systems. And certainly, I mean, if you've got a person who loves fashion, when they go to Europe, they'll buy stuff at 30%, 40 % cheaper in France and Italy that you get overall. So there's all of this stuff. We haven't looked at optimizing the bulk logistics, but we have looked at optimizing individual point-to-point logistics and making the inventory available.

23:34But, of course, all inventory is not easily purchasable. So it boiled down to more something that are economically better to do, but some things that are just unique, you know, because there's so much stuff you can get access, particularly from different markets, you know, whether you're looking at Korea or Japan or France or Italy, there's items available that you just don't get. So that's sort of been our focus a little bit in testing. But the economics and logistics are a significant thing. So a panda-like service certainly could be something we could look to. I'm just thinking, like, you don't have any physical...

24:09Do you have physical stores ever? Have you experimented with pop-ups? We don't have physical stores. See, I think, like I say, pop-up, if you did one in New York, one in LA, one in Seoul, one in Tokyo, and you just did it as a one-year experiment, you shifted a bunch of, like you're saying, the most interesting items from the most interesting folks, you could say, hey, everybody who orders has to use the app when they come to the store, they download the app, and you could just say, hey, however many app downloads... Yeah. One of the interesting things is that we recently, about eight, nine months back, introduced live shows on the platform.

24:43And they've really taken off. What's a live show? A live show is someone actually goes, opens up a live camera. We have something called POS shows full support for transaction in the show. And I can just show, hey, I want to sell this cup. I can bring it up and I can talk about it, that I can start an auction and people auction and buy that. That's been a very popular form of shopping. So what you're talking about could actually be achieved through these global streaming networks without having to do a full shop, but you could kind of effectively simulate a shop where I could put these products up and other people could buy.

25:16Yeah. So I think these are all very interesting. Has that started to work in America? Have the live shows, because I know that was a big thing in China, right? I don't know if it got big in Korea or Japan, but have those live shows? Because we had QVC here for a while, but that was for schlocky stuff, I think, generally. I don't want to dig QVC. seen tremendous success so we um yeah so the format that has worked for us is kind of very different than china and and sort of other areas where china and other areas is very much focused on big influence of selling a lot of products from a lot of brands and you know it's a big economy there hundreds of billions of dollars sure we haven't even achieved that but the business has grown very rapidly for us we haven't shared gmv numbers or revenue numbers yet on the business But I would say it's the fastest growing business I've personally built in this timeframe.

26:07It's growing very fast. And the difference is that our sellers are everyday sellers on Poshmark who are selling it. And our GMV is coming from tens of thousands of these sellers as opposed to just a few hundred sellers. So those sellers are individually selling an item. You're stitching together their videos to play on a live stream. Is that right? or no they're doing they're actually hosting a live oh they host it themselves got it okay so they will go through their 20 items yes got it and then what we enabled was something unique to us was sell together so i'm selling my items you can also join my show and i can help you sell your items and brie who's sitting with me can help sell her items so much more dynamic to do a collab because you can riff on each other's stuff i bring my audience you bring your audience third person brings theirs.

26:57Now we got three times as many people. Very community oriented. Very community oriented. Which is sort of the essence of Poshmark. Yes. When you're building an early stage tech startup, it can be really hard to stand out, right? Well, I've got great news for you. Instead of just selling domains,.techdomains is going to give our Twist listeners a platform to show off their startups. And that platform is This Week in Startups. That's right. During this.techdomains ad read, I will watch and judge a 20 second elevator pitch from a dot tech founder that's right there's only one rule you must have a dot tech domain name to apply and dot tech domain names are blowing up right now aurora a self-driving ai startup they are building at aurora.tech another ai startup called onex.tech backed by sam altman and open ai is also building on a dot tech domain name it's sweeping the globe So if you're interested in pitching me, and I'm going to give you candid feedback, and you're building on a.tech domain name, all I want you to do is fill out a form at startups.tech slash Jason.

28:01That's right, startups.tech slash Jason. Fill out the form to apply and I look forward to giving you feedback on your startup. you had work in the uh social shopping space so this was an area people don't it's a forgotten area but i had invested and was on the board of a company called this now this next okay yes caboodle yes and then there was this weird site pinterest that was trying to make it work yes he had and you had a couple of other people who were doing it um why did that largely fail I mean, I know you sold, but that whole space didn't create exactly enough value to become strong independent.

28:44Obviously, Pinterest came out of that, and then what you were doing with Poshmark. So what are the lessons you learned from that? Was it just too early? Was the affiliate revenue that most of you relied on just not enough? I think there are three lessons. One is, I think, as an entrepreneur, how you think about the product and problem determines the outcome, right? And so I typically give this story, Jason, where we talk a little bit about the fact that somebody looks at the coffee cup and sees a coffee cup. Somebody looks at it and thinks of a coffee cart. Somebody thinks of it and thinks of a coffee shop.

29:23Somebody can visualize a couple of coffee shops. but there was somebody who looked at a coffee cup and visualized a whole Starbucks. And so how you think about the problem and how you redefine the problem matters. I think Pinterest founding team, particularly when I give a lot of respect for them, they look at the problem and kept iterating and expanding the scope of the problem till that problem became so big and they could solve, you know, really big, big things. What do you think their, their definition of it was that works so well versus say the other ones that didn't work out so well. because they're saying the framing the the the magical thing in my mind there was two magical things if if if we could go back that far and you and i probably remember very clearly at that time just for your audience i'll paint a picture the the vogue at that time was products like delicious and caboodle where you would go to a website clip something store it and people could collaborate on it that was sort of the shopping thing caboodle had sort of taken this and organized this kind of like Pinterest in the form of a list.

30:24So you could go there, you could clip it, and everything was on the list. So it felt very utilitarian because it was in the form of a list. It was visually uninteresting. Then came a company called Polyvore, if you remember. Sequoia funded. Ultimately, I think Yahoo bought it. There, they took the same sort of clippings, but people would organize them in these beautiful visual collages, spend time perfecting them. Their engagement in Kaboodle, the velocity of creation was very high. the engagement velocity was low. So it was kind of not a great media property. It was a good utility. Bollywood was a great media property.

31:00The number of creators was very small because it took a lot of time. But once you created this thing, this collage was very fun to consume. I felt what Ben and team did was they really combined the two things. So they made it very easy to create. So creating was just clipping, but instead of displaying the whole thing as a collage, they automatically created a collage of these images, hence a pinboard. The second dynamic we saw was enabling a creator to go to various websites and clip from it was slow. But when you reclip something, we had something called add to Kabul, which was a kind of a repin.

31:34It was much faster because you were right there. You don't have to go to another site. You just kind of repinned it. Ben and team focused on that repin mechanics, called that sort of thing. Basically, between repinning and this easy visual collaboration, they tapped into two things. increase the velocity of creators by tapping into reaping and increase the velocity of consumption by not having to spend time laying it out but just sort of auto laying it out so i think they they kind of took the best of both sides and so they they out executed everybody they really figured they figured out that you need it needed to look beautiful but it needed to be utilitarian and fast yes and this is a great lesson for all entrepreneurs making products there is just no slowing down you have to keep iterating and it has to be beautiful and it also has to be functional right and sometimes people make things that are beautiful yes you know as you were pointing out like um people were really bummed uh when that website um you mentioned polyvore closed their doors i remember like that was a community that really really had codified itself and you look at these yeah super passionate they were very deep into it like here's days like a hipster magazine talking in 2018 about you know how heartbroken they were when this thing uh was gone so uh i guess that takes me to your doing a good job building community at posh mark so what have you learned about community across the two companies and let's face it you started as an engineer at intel in the late 80s early 90s yes so i don't know when you got into being a fashionista uh but that's probably a good question too but what have you learned specifically about community Let's start there because it's hard to build a community.