Nike, Philip, Wayfair discussed on How I Built This

How I Built This
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More fund. Take it out of the box. Venture capital has had a love affair with direct to consumer startups over the past decade. Even though the vast majority of products you buy are sold through third parties the direct to consumer brand model has gotten a lot of attention. I'm talking about peleton and parker. And bonobos even tesla these are all more or less that were designed to be sold directly to you either through the internet or a brick and mortar shop owned by the brand. The idea behind c. Brands is simple and elegant. Sell a product directly to the consumer at a price higher than wholesale but lower than retail. And then use the prophets to aggressively advertise your product to acquire more consumers over time you scale and then soon enough your brand is worth billions except that model has proved to be a lot harder than it sounds. Customer acquisition costs are really high and unlike ten years ago when the tc model really took off there is a lot of competition now. We're be parker. Isn't the only one selling glasses directly to consumers anymore and all birds is now among dozens of dc shoe brands. Same goes for mattresses. Today there are at least a hundred and seventy direct. Consumer brands that sell mattresses online. It's a crowded and confusing marketplace. But when philip krim and his partners launched casper mattresses in two thousand fourteen there were just a handful of these types of businesses. Philip was part of a wave of entrepreneurs who saw that the experience of buying something as mundane but important as a mattress actually matter to consumers he and his partners launched casper as a way to make buying a mattress simpler a mattress that could be ordered online. Compressed into a box and delivered to your door and casper kind of created the model for the way many mattress companies manufacture market and deliver their products. Today casper's rise was meteoric at one point private investors valued the brand at over a billion dollars but since its initial public offering on the new york stock exchange twenty twenty casper's market value has dropped by half and well all. This certainly rattled. Philip krim. He's also an ambitious. Ceo with plans to make casper much bigger than a mattress brand. He wants it to be asleep. Brand of how nike was once a shoe brand but is now known as a sports brand. Philip grew up in sugarland texas where his dad was an entrepreneur. Who tried out all kinds of business ideas as a kid fill up. Knew he would do something in the business world which was his plan when he started college at the university of texas. I very much knew that. I wanted to do business. I didn't think it was going to be kind of the entrepreneurial path. I thought it was going to be more kind of the finance path. I recall fondly playing like the stock market is in fifth grade and during the dot com mania in just being you know looking at the stock market quotes in the newspaper every day and you know probably have read the wall street journal since elementary school. And so i started. Ut as a finance major. But obviously pivoted as i started tinkering around with doing my own things and then ultimately did go down the entrepreneurial journey. While i was in school and post school. I think in school while you were in college. You started your first business in e commerce business right. that's right You know. At the time i didn't say like oh i'm going to go start my business which i start. It was more of well. I don't really wanna get a traditional summer job and sit in an office all summer. Water ways that i could use the internet to make money In a non traditional way. I guess at the time and so i learned what drop shipping was. I learned about html and how to build websites using html. And so. I figured out that. If i built a website and could market the website online others could do a drop shipping to the customer fulfillment and that could be way to make money so just started messing around with that. You had this idea. Maybe i'll start some kind of ecommerce business. You didn't know what it was. But she thought it can be cool and this is like what two thousand to two thousand three something like that. That's right so ecommerce still really early days. People still nervous about putting their credit cards online. But what did you would you decide to sell it. It was early days. This was kind of post. The crash of the dot com boom and bust and so people are still very skeptical about it. You know to me though. There were people online searching for products all day every day and so i would look up what people were searching for. You know you could see search volumes. And then i would go look for manufacturers that would ship directly to the customer if i gave them in order and then you know the manufacturer would charge my credit card and do the fulfillment and i would charge the customer's credit card through my merchant account and i worked with you know dozens of different manufacturers. Who would sell everything from window. Blinds where people would give us their measurements and it would be made to order. Xm cream to help Children with asthma Sofas futons to how to play poker software All the way through to mattresses. So i've actually been around the the mattress side of things Sincerely to thousands as well but at the time it was really just anything. I could find where i could figure out that people were searching for it and i could find a manufacturer who would do the fulfillment. I could do the rest from dorm but it would just be. This was not one website. 'cause you i'm assuming you wouldn't go to a single website and you could buy exit cream and futons and window right no. This was a portfolio of different websites. So i generally try to build a targeted website for the specific product or manufacturer that i was working with. And it's actually. At the time. I think at the time wayfair was doing something similar is exactly i wish i started. You know all kinds of bric a brac and then furniture and played at multan. Dozens hundreds of different websites. And this is essentially. What you were doing was it pretty cheap to do all this. It was cheap enough where i could kind of using misappropriating some student loan money and and you know starting with credit cards so you know it was something i did it all myself i had no money was on scholarship for school into was able to kinda just put it together with you. Know some some sweat equity. I guess and get going and then the nice thing about the model Which is true also for casper when we started it is just a. It's a negative cash conversion which is a fancy way of saying customers. Give you the money to to buy the goods before you have to put the money out. So it's actually very capital way to start and scale business philip. How did you find these kinds. It's you were so young and it's such a cool idea two thousand and two three like how did you find even find companies that were willing to work with you. Did you just because this is before you can find anything on the internet. It was still pretty early days. So how'd you identify those companies. I wish i remembered the specifics. I remember just trying to call up companies.

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