Poshmark: Manish Chandra

When the iPhone 4 was released in 2010, Manish Chandra was dazzled by its picture quality, and saw an opportunity for a new type of mobile marketplace. A year later, he and three co-founders launched Poshmark, a shopping app for second-hand clothes and accessories, meant to capture the feel of going thrifting with your friends. The online community grew quickly and vocally—when Poshmark raised shipping fees, users lobbied furiously to lower them, and won. The company faced many more growing pains before being acquired by the Naver Corporation for $1.2 billion in 2023. It now has over 100 million registered users around the world. This episode was produced by Sam Paulson with music composed by Ramtin Arablouei. It was edited by Neva Grant with research help from Katherine Sypher. Our engineers were Robert Rodriguez and Josh Newell. You can follow HIBT on Twitter https://twitter.com/HowIBuiltThis & Instagram https://www.instagram.com/howibuiltthis, and email us at [email protected] mailto:[email protected]. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 0:46Guy Raz?

  build the prototype, analyze the market, maybe even come up with the idea, what separates the people who actually build something from everyone else? I don't have a clean answer yet, so I've been sitting with it with Claude. There's hope in hard questions. Ask yours at claude.ai/hibt. We get support from U.S. Bank. A question I love asking founders. What's the one decision you almost didn't make? The one that changed everything? Because it's never the obvious stuff. It's never, I decided to start a company. It's the small, boring, Tuesday afternoon decision you barely remember making until you realize it's the reason everything after it either worked or didn't.

• 1:32Guy Raz?

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• 2:16Guy Raz?

  on gas and EV charging, office supply stores, cellphone service, and restaurants. You pick up an extra $750 cash back as a bonus. And you've got a low APR on purchases and balance transfers for 12 months while you're scaling. Same business, same expenses, two completely different outcomes based on one small decision. Visit usbank.com/business to learn more. The creditor and issuer of this card is US Bank National Association, pursuant to a license from Visa USA, Inc. Some restrictions apply. If you travel often, you'll want to hear about this unprecedented offer. For the first time ever,

• 3:00Guy Raz?

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• 3:45Guy Raz?

  or bring a guest to the Delta Sky Club. Make every trip feel more rewarding with the car that upgrades your travel. Apply today at delta.com/cardsocial. Offer ends November 4, 2026. Minimum spending requirements and terms apply. Flights are fulfilled as flight certificates valid for Delta Comfort or Delta Maine to select domestic destinations. Book 21-plus days in advance. Up to $80 per person and taxes and fees apply. Other restrictions apply. When I pull up to a gas pump to fill my car, I'm not thinking about chemistry or engineering. I'm thinking about getting in, filling up, and getting on with my day. And it reminds me a little bit of the founders I talk to on this show, because the best

• 4:27Guy Raz?

  ones obsess over things their customers will never see. Tiny details, invisible improvements, relentless iteration. And not because anyone's watching, but because it makes the product better. That's what the mobile brand does. It engineers fuel the same way great founders engineer their products. Mobile Supreme Plus Premium Gas helps keep engines three times cleaner, which can mean better performance and improved gas mileage. It's for people who care about what's under the hood, even if they never see it. Three times cleaner compared to mobile regular gas in port fuel-injected engines. Actual results may vary. Visit mobilefuels.com for details.

• 5:10Guy Raz?

  Hey, it's Guy here, and before we start the show, I want to tell you about a super exciting thing we are launching on How I Built This. So if you own your own business or trying to get one off the ground, we might put you on the show. Yes, on the show! And when you come on, you won't just be joining me, but you'll be speaking with some of our favorite former guests, who also happen to be some of the greatest entrepreneurs on Earth. And together, we'll answer your most pressing questions about launching and growing your business. Imagine getting real-time branding advice from Sun Bum's Tom Rinks, or marketing tips from Von Weaver of Uncle Nearest Whiskey.

• 5:51Guy Raz?

  If you'd like to be considered, send us a one-minute message that tells us about your business and the issues or questions that you'd like help with. And make sure to tell us how to reach you. Each week, we'll pick a few callers to join us on this show. You can send us a voice memo at [email protected], or you can call 1-800-433-1298 and leave a message there. That's 1-800-433-1298. And that's it. Hope to hear from you soon. And we are so excited to have you come on the show. And now, on to the show.

• 6:34Speaker 01

  We'd launched the app with $5 shipping, and our cost of shipping was turning out to be $10.50 on an average. And so, we were basically losing money left and right. And I didn't want to build a business where you're losing money on every order. So, we were like saying, hey, the discount is going to finish. The welcome discount is gone. And we're going to move the shipping to $9. I kid you not, Guy. Within 24 hours, our mailbox and Twitter was flooded with hundreds of people saying, you are going to make us bankrupt? How can you change the shipping? And it was a revolt by our community for us to move

• 7:17Speaker 01

  our shipping from $5 to $9. We had never seen this level of passion ever in my life.

• 7:29Guy Raz?

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, how Manish Chandra launched a marketplace for secondhand fashion that was mobile and social, and grew Poshmark into a community of 80 million buyers and sellers.

• 7:58Guy Raz?

  Sometimes random connections can come together to form a brilliant idea. In the case of Poshmark, the connection was a high school football game in the iPhone 4. The company's founder, Manish Chandra, saw that the homecoming queen was wearing a bright yellow dress. And Manish later found out that she'd bought that dress at a thrift store. Around the same time, Manish was playing around with the latest iPhone, which had new technology that enabled really great quality photos. Not that long after, he came home and walked into his wife's closet, filled with clothing she no longer wore.

• 8:40Guy Raz?

  And at that moment, the yellow dress, the iPhone, his wife's unused clothes, all blended together into an idea. What if, instead of going to the thrift store, it came to you? And that was basically how Poshmark started. If you're not familiar with it, it's basically a marketplace where you can buy and sell clothing, home goods, and even consumer electronics. And in 2011, when it launched, it was one of the very few marketplaces of its kind that was completely mobile, that was designed essentially for the coming iPhone revolution. Manish got to Silicon Valley in the early 1990s, where he saw the rise and fall of the early internet era.

• 9:24Guy Raz?

  After the bubble burst in the early 2000s, he started paying attention to the rise of e-commerce. His first idea, which we'll hear about, was called Kaboodle, a sort of early version of Pinterest. And while Kaboodle never really went anywhere, that idea would eventually also lead to Poshmark. Today, the brand claims over 80 million users, and it brings in hundreds of millions of dollars in revenue. But the path to get there was rocky and might have landed Manish in jail when he had a misunderstanding with the US Postal Service. Manish Chandra was born and grew up in India. His father was a judge and his mom was a homemaker.

• 10:06Guy Raz?

  He would eventually emigrate to the US for grad school, but he stayed in India to get a bachelor's in computer science from one of the country's best technical universities.

• 10:16Speaker 01

  Once you get in, it's kind of like getting into a school here. If you don't keep up, you can really fall behind. And I remember one year, I felt like I might not even pass my classes and I had to work very hard to pass the classes. So first two years, I would say I was much more just expanding my horizon, learning different aspects of life, learning to participate in civic life. And I was the youngest kid in the class. It was kind of a little bit interesting. It wasn't until third year or sort of what would be called a junior year here that I started to get focused on what I wanted to do. And at that time, my focus became Singular, which is Coming to America for Further Studies.

• 10:52Guy Raz?

  Yeah, tell me a little bit about that because from what I gather, you were influenced by Ayn Rand and by reading her books.

• 10:59Speaker 01

  Yes. Ayn Rand and her philosophy of sort of empowerment, individualism, freedom was very appealing. And you know, America was sort of the symbol for me in my mind at that time. And my vision for America, you know, because the information was all spotty, was much more New York. Like everyone lived in an apartment, people were living in high rises, you know, Fountainhead, Howard Rourke, sort of that was sort of my vision. And it was much more about, you know, that you can really carve a life which was very self-driven and based on your values and you don't have to conform to normal standards. And sort of that was sort of the focus for me. And so when I arrived, I went to UT Austin, arrived in Texas, and the reality was exactly the opposite.

• 11:43Speaker 01

  There were no high rises, people lived in bigger homes, there were wider streets. There was a little bit of a culture shock to me, not because America, America itself was a culture shock, but it was a culture shock because my vision was New York and I landed up in Austin, Texas.

• 11:56Guy Raz?

  Hmm. So as you mentioned, you end up in Austin, UT Austin, and you get a master's degree in computer science. And you finish the degree and that I guess at that point you, you're thinking. All right, you know, like I'm gonna, I'm gonna go toward the technology of Silicon Valley. And eventually you wound up, I guess, as a programmer at a company called Cybase?

• 12:22Speaker 01

  Yeah, Cybase was a small company. They were seventy, eighty people company, but they had the best in class technology. So they offered me a job. I accepted it. The job was in Berkeley. I was ready. Believe it or not, you can see from my hair, I actually had a ponytail at that time. So I was ready to live the life and, you know, sort of move from Santa Clara to Berkeley on this company. And then the very first town hall they did that Friday, the CEO Mark Kaufman comes and says, hey, guys, you know, it's been hard to raise money. We are working on a venture bridge round right now, but don't worry, we'll work hard. And so, but I, I had no idea what he was talking about. It was like completely mumbo jumbo to me.

• 13:00Guy Raz?

  You were just coming on as a database guy?

• 13:02Speaker 01

  I was just, yeah, I was just database guy. I was programming. There was beer. There was live music here. I was just coding. I was working eight, 10, 12 hours. I had no idea what was going on.

• 13:11Guy Raz?

  And you were like 22 years old?

• 13:14Speaker 01

  I was 22 years old and by 92, we were a public company. And, and that IPO, even though I had very tiny share, I was an engineer. It ended up creating the down payment for our first house. In that two or three years that I was at Cybase, I ended up meeting my wife, built some really great friends and grew very rapidly in the company because in that time period, they'd taken out the middle layer. So I was an engineer and very soon I was a team lead and very soon I was an architect. So there was a lot of progress and the company started to grow very fast. When I joined them, they were 80 people. It became 600 people in a year and just, you know, there was a lot of growth ahead.

• 13:49Guy Raz?

  And while you were there, I guess you also start to pursue an MBA at Berkeley.

• 13:55Speaker 01

  Yes.

• 13:56Guy Raz?

  And, and from what I gather, after that, you had some, some pretty high level jobs. You worked at, at a bunch of different companies in the Bay Area. But I wanna, I wanna fast forward a few years to like 2004, 2005 because at that time, you were the VP of Marketing at a software company and And I guess you were getting a little restless, like a little frustrated, which, which, you know, is by the, by the way, this is when your, your first idea for a business came to you, right?

• 14:24Speaker 01

  Yes, I was frustrated and I ended up putting a lot of my energy into a home we just bought and remodeling it. And as I was doing it, I realized that the products that we had on internet for shopping, for collaboration, we were working, we were working with my mother-in-law, designer, my wife, were just terrible. And I felt like the entire process of online shopping was broken for home shopping.

• 14:48Guy Raz?

  Well, it wasn't really available yet.

• 14:50Speaker 01

  Yeah, I mean, the basic stuff that we take for granted, like storing, likings, you know, sharing, were just not available at that point in time. So I kind of put this idea together of what I want to do. And the way I did that was I wrote a three, four-page document visualizing a product. And I put it aside. I said, this is a consumer product. I'm an enterprise guy. I have no business doing it. I have no background, nothing, and just kept it in one direction, went on for a few months. And you know how a great idea, it sort of started to take over my mind. Everywhere I looked, I felt like I could solve this problem, I could solve a travel problem, I could solve a fashion problem, I could solve a holiday gifting problem. And after six months, it just, I just couldn't resist it. So I sort of went and talked to some of my mentors and said, you know, what do I do?

• 15:35Speaker 01

  I'm an enterprise guy, I'm a database guy, but I have this idea and it just can't go away. I see this, this, this, this, this. They said, calm down, you know, you should take a step. And the step I was asked to do was to create what I call a kitchen sink cabinet, get a bunch of people, you know, incubation, and, and start to get them together and, and put this idea into work. And that's what I did to, to start my first company.

• 15:57Guy Raz?

  All right, I want to back up for a sec because you're working on, on this remodel, this home remodel, and, and this is 2003, so you couldn't just like, today, if you're doing a remodel, you can go on Pinterest, there's a million places you could go to, to check out ideas and even buy stuff, right? Or houses, or whatever you want to do. And you were presumably just flipping through paper catalogs or going to even, you know, kitchen stores and just looking at fixtures and things like that, right? More or less?

• 16:25Speaker 01

  Yeah, so we would literally print out pages. I would have like these thick folders of printouts, you know, pamphlets, physical brochures, and circle them and then sort of stick them together onto pages. It was like very manual and hard.

• 16:38Guy Raz?

  And what did you want to see happen? I mean, 2004, 2003, like what were you saying? Hey, this should be better. We should be able to just like go online and buy these things and they should just be delivered to our house? Is that what you were saying?

• 16:52Speaker 01

  Well, it wasn't even about the purchase. What I wanted to do was to make sure that there's one page. So if, if let's say there's a project, let's say we were putting together a room for my daughter and my wife, me, my mother-in-law, our designer were collaborating, there should be just one page where we could put what we want, discuss it, and then throw out the things and just collaborate and have a single page. Like even a small project like our kitchen stove, which had so many different decisions to be made. And everyone has different opinions and people are arguing and you're really passionate when you get into this project. You're focused on that doorknob and whatever, like that little knob and, and, you know, at the end, these all sort of dissolve. But at that point, they're the most important things and you're passionately discussing it.

• 17:34Speaker 01

  So any kind of collaborating, decision-making was painful and that's where I started to see the potential of this idea in multiple places.

• 17:42Guy Raz?

  So this idea that you could maybe build something on the web that where people could sort of share ideas and store these things like, oh, I like this, this, you know, fixture on this website and I can store that image or that, that link?

• 17:57Speaker 01

  Yes.

• 17:57Guy Raz?

  And was there, I mean, was a technology there to support something like that in 2003?

• 18:03Speaker 01

  No. It was very, very primitive at that time in 2003, 2004.

• 18:08Guy Raz?

  All right, before we get to that, because you wouldn't create a company around this idea for another year and a half or two years.

• 18:13Speaker 01

  Yeah.

• 18:14Guy Raz?

  But let's talk about the, the sort of these steps that took to get you there. So. You're talking about this and I'm assuming you're talking to your wife or maybe your kids about this or somebody.

• 18:25Speaker 01

  My kids were very young, but yeah, I'm talking to my wife. I'm talking to my friends, a couple of friends, because most friends were in enterprise business. I'm talking to my father-in-law, who's an entrepreneur. And I'm excited and frustrated at the same time because I'm excited because I like the idea. I'm frustrated because I have no networks there. I don't know anybody in this space. Couple of VCs I talked to said, hey, guys, if you did something in database, we, you know, look at you. But consumer, I mean, stay away from it, you know? And again, you have to remember, we are just coming out of dot com. So consumer is still not a very exciting space for a lot of investors.

• 19:01Guy Raz?

  But you had a, you had a kind of a business plan or you, I mean, this is still early before you had a plan, right? You were just kind of casually talking to.

• 19:08Speaker 01

  Yeah, I had a product spec, right? So I had a three, four-page product spec at that time. And what I did was I started to tap into the natural networks. So I started tapping to my IIT network. I tapped into what was called the Indus Entrepreneurs, the Thai network, and started to meet with some people who were in the consumer business. Because I didn't know naturally anybody was in the consumer business. And so to talk to them and bring my idea to them. And that's where I got the advice that, hey, the best way to do it is to incubate. At that time, we called it a kitchen sink cabinet, you know? Get a few people together and start to brainstorm. And so what I did was I started to meet with people and invited them every Saturday to come to my house.

• 19:52Speaker 01

  We signed an NDA, so my IP was protected. And my commitment to those was you show up at 10 o'clock or nine o'clock and we would give you hot Indian chai. My wife would make a snack for them. I would make the chai and then we would brainstorm on the ideas. And if they ended up taking the journey, then, you know, we'll talk about equity, et cetera. And through that sort of recruiting process and creating a very good group, we had eight, 10 people who were starting to meet every Saturday. And then we started to assign projects. Somebody was doing user research. Somebody was doing a little bit of coding. We had a guy who was a UX design guy. And so we kept evolving it. And by end of 2004, we had come to a point where our end-to-end prototype was working.

• 20:36Guy Raz?

  And so how was it like, what, what did it look like?

• 20:39Speaker 01

  So we could go to different websites, get the information summarized. If it was a single page, you could look at all the information unless you're trying to make a decision on, you know, sofas or lamps, you could put them all together, you could have a comment on them. So the basic prototype of the product was working. I said, now is the time to really make a decision. I want to find out who wants to jump in and quit their jobs and put their lives under risk. Who wants to sort of be an advisor kind of a thing? Who's going to contribute and only join us when we have funding? And I had to sit down because I had two young kids, you know, I'm, I was in a secure job. I had everything. I had a mortgage and I had to sort of think it through. So I went back and it just so

• 21:20Speaker 01

  happened that my mom that winter was visiting from India because there was a cousin's wedding. And so I got a chance to talk to her and my mom said, you know, I think you should do it. I can see that there's no way you're not going to do it. You have to do it. So I came back and I was energized and then, um, you know, I wanted to have one technical co-founder and one person from the consumer space. Unfortunately, all the consumer guys backed off and two technical guys came forward and said, you know, we want to do this with you. And I liked both of them and they had slightly different skills and Chetan and Kiran were the two guys. And I ended up sort of saying, hey, let's divide this company three ways. I'll be the business guys. I'll take half and you guys, if you guys are willing

• 22:03Speaker 01

  to share the technical half, we'll divide it between the two of you. So we divided the company between the three of us and reserve 5% for a consumer person that we're going to recruit in the future and started Kaboodle in my garage in 2005.

• 22:17Guy Raz?

  All right. So you had a working prototype and it's sort of like a proto Pinterest in a sense, right? Like you, you would put up ideas and initially I guess it was the, the idea was it was around home improvement or renovation, right?

• 22:32Speaker 01

  It was, it was exactly Pinterest. In fact, Pinterest, when it started, there was a lot of connection to Kaboodle. And we started in home, but as we went through the first year of that journey, we realized that the real sort of attraction was women shopping for fashion. And so we ended up focusing a lot of our energy on fashion and women and coined the term in 2006, social shopping, goes with the words. And when I described that. This is how we want to position our company as a social shopping company. I mean, all of my investors had a very negative reaction because they said, how is shopping social? You go there, you shop, you sort of compare, you make a decision, you go, why do you need shopping to be social?

• 23:16Speaker 01

  And of course, I realized I was in a room full of men. And our product was predominantly ninety percent, ninety-five percent being used by women. And so that sort of was the genesis of Kaboodle and its positioning as social shopping.

• 23:29Guy Raz?

  But let me back up for a moment because you're working on this thing even before you raised money. And what did it take to get you to leave your job? You know, your, your well-paying job at Versant as a, as a, an executive there to jump ship and start this thing because you launched this, this website in two thousand and five. So what happened to make you feel like, okay, I can do this?

• 23:50Speaker 01

  Yeah, you know, the discussion we had was, okay, how much money do you have in the bank? How much money do I have, how much money do you have in Karen? And can we survive for six, nine months without funding? And after nine months, if the idea doesn't take off, then it'll take us maybe three, four months to find a job. So basically, we said, do we have twelve months of cash in the bank? We were lucky that we were able to raise, you know, the money in the first three, four months and didn't have to burn much more than that, which was a series of interesting and wonderful circumstances that raised the money. And so we were, uh, by, by month four, we had a million and a half dollars in the bank. And, you know, we had started payroll and we were able to start to pay a little bit to the company and, and start recruiting engine for the company.

• 24:30Guy Raz?

  What was the business plan? Like, it was going to be a place where people could collaborate, but how was it going to make money? Was it going to make money through advertisements or, or what?

• 24:41Speaker 01

  You know, that was, I think, one of the things I hadn't deeply thought about, unfortunately. We were very much a tech product-driven guys and, you know, we thought we're going to make it big. And then ultimately, the meme at that time was that you could just monetize through advertising, you know? Uh, and Google AdSense was just starting to take shape. So the dominant form of advertising was still banner advertising and sort of non-content advertising. But we were very much focused on usage and growth in the early days. And the engagement numbers were very interesting, um, early on. Now, remember, we were enterprise guys, so even our metrics and measurement systems were very weak in the early days. So we kind of intuitively knew that there was a lot of engagement, but we were using very crude analytics.

• 25:25Speaker 01

  This is two thousand and four, two thousand and five, so it's very, very early days of even data. But we were starting to form a community around the product. People were coming, talking about it.

• 25:37Guy Raz?

  So people start to discover it. And how did people use it initially after it was publicly launched?

• 25:42Speaker 01

  So a lot of people ended up using it for either food. So they were using it for recipes and restaurants or fashion. But as we started to talk to our users, because we picked up the phone and reached out to these users, what we found that almost all of them were women. And there was no women in our investor team, no women in our company. And yet, every single person we talked to ended up being a woman, which was kind of surprising to us. You know, this is how naive we were about the world of internet at that time. And we were having furious debates as we sort of started to think about it. And ended up sort of saying that shopping and fashion will be our focus. We're going to walk away from recipes and all of that.

• 26:22Speaker 01

  And that was, uh, turned out to be a very good decision because social shopping was something in the early days that had a lot of following, that didn't have a solved problem. And sort of closely resembled actually the pain point which triggered the product creation. So it all came together by early 2006.

• 26:42Guy Raz?

  But what's not clear to me is, as you, I mean, you raised some money, so you had a runway. But at a certain point, you had to figure out how you were going to make revenue, right?

• 26:53Speaker 01

  Yes.

• 26:53Guy Raz?

  And so what did you do? Did you, were you, were you guys desperately looking for advertisers to put banner ads on the site?

• 27:01Speaker 01

  Well, so we were still in the growth mode. So we were still not monetizing the site. And coming from an enterprise background, I said, you know, the way I should grow this business is create distribution partnerships. So I approached a bunch of media and commerce companies to say, hey, we could build something for you. And so we created white label solutions for eBay. I remember in May of 2006, launching something called mycollectibles.ebay.com powered by Kabuto. And it was a collaboration engine for collectors to come together on a single page. We ended up doing a partnership with Conde Nast called Conde Nast Traveler. We created something called a suitcase, which was a travel suitcase where you could bring all the travel pieces together.

• 27:46Guy Raz?

  So basically, your sources of revenue were some commissions and then some money from Conde Nast.

• 27:53Speaker 01

  And some subscription money. It was like, basically, I was trying to do too many things at the same time. And being an entrepreneur, I was just going wherever the money was and wherever the distribution was, instead of sort of saying that all distribution and all money is not good for the business. So by the time Conde Nast was happening, business was slowing down. And we went from being a hot startup to suddenly sort of figuring out, you know, investor conversation started to disappear. Investors said, you know, you should come back when there's growth. And I had to lay off a couple of people. So we came to the conclusion that we have to go back to where we started the year. We have to be a shopping company for women, focused around social shopping, for fashion. And

• 28:34Speaker 01

  we had to somehow get ourselves out of eBay and Conde Nast at this time. And we were also starting to run out of money.

• 28:43Guy Raz?

  When we come back in just a moment, how Kaboodle turns out to be a dress rehearsal for Manisha's next business, Poshmark. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

• 29:01Guy Raz?

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  speed and scale, and people bring taste, judgment, and control. Learn how you can get more out of your site from a Framer specialist or get started building for free today at framer.com/built for 30% off a Framer Pro Annual Plan. That's framer.com/built. Rules and restrictions may apply. AI isn't just opening new business opportunities, it's changing the way businesses get work done. The questions they ask, the decisions they make, the routine tasks they can hand off. That's the idea behind NetSuite Next, the next generation of NetSuite with AI woven into the tools your business already relies on.

• 30:28Guy Raz?

  NetSuite Next surfaces insights exactly when you need them, puts agents to work on routine tasks and problems, and lets you ask complex questions in plain language, like talking to a knowledgeable colleague. But technology is only part of the story. AI is also reshaping how people and teams work together, and that shift is already underway. That's why NetSuite wants to put a new expert-created business guide in your hands today. It's called Aligning for the Agentic Era: How AI is Changing Everyday Work. And right now, it's yours, absolutely free. Inside, you'll discover how AI could reshape work across your entire organization, and how to position your business to prosper from it.

• 31:13Guy Raz?

  If your revenues are at least in the seven figures, get NetSuite's free business guide, Aligning for the Agentic Era: How AI is Changing Everyday Work, at netsuite.com/built. The guide is free to you at netsuite.com/built. netsuite.com/built.

• 31:33Speaker 02

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• 32:05Speaker 03

  Guy Raz, how the hell are you? This is keynote vigil from Cary, North Carolina. And if I was pressed to pick across the portfolio of amazing shows and just pick one, I would have to say the Boomchickapop episode was definitely near the top. The power dynamic between the couple, their candid approach to business, their money problems, it was hilarious at times, it was sad at times, and it ended on a high note. And just overall, roller coaster and incredibly fun and candid episode.

• 32:46Guy Raz?

  If you want to share your favorite episode of How I Built This, record a short voice memo on your phone telling us your name, where you're from, what your favorite episode is, and why, a lot like the voice memo you just heard. And email it to us at [email protected] and we'll share your favorites right here in the ad breaks in future episodes. And thanks so much, we love you guys, you're the best. And now, back to the show. Hey, welcome back to How I Built This. I'm Guy Raz. So it's early 2007 and Kaboodle is running out of money.

• 33:31Guy Raz?

  So Manish picks up the phone and starts booking meetings with his investors.

• 33:35Speaker 01

  So I went, drove around, most of my investors were in Silicon Valley, and collected small checks, like $10,000, $15,000, enough to make one or two payrolls at that time so we could survive. Then one of the investors stood up and said, you know what? I see this pattern that this traffic is going up. I see, I see how passionate you guys are. Let me help you get a bridge round together. So he ended up doing a bridge round, $1.7 million bridge round at that time. And that money ended up giving us runway for nine to 12 months. So we got this money done, and suddenly our traffic was now starting to become vertical in the sense that we were starting to, at that time, the rankings were measured through

• 34:16Speaker 01

  Alexa, and we were climbing rapidly in the Alexa ranking for shopping sites. And so we got noticed by investors, you know, one of our...

• 34:25Speaker 01

  Early investors was a guy by the name of Ron Conway and SoftBank, which was not the SoftBank of today. It was, you know, still a VC, still a prominent VC, ended up calling us out of the blue and saying, hey, we're very interested in talking to you. And within sort of two, three weeks, they decide to write us a term sheet. Now, I'm like, you know, feeling like I'm on top of the world, you know, we just the seed funding. Now we get a top notch guy. So I'm like, super excited. I take the term sheet for my board and the board looks at the term sheet and says, this is a terrible term sheet. I think we should look at exit options and you should think of selling the company.

• 35:00Guy Raz?

  Wow. What was so bad about the term sheet? What do you remember about it?

• 35:03Speaker 01

  I was just, it was, I think it was two X of the last round, but it was like not three, four, five X and I, you know, again, I was so tunnel vision. I was like building the company, trying to manage that two young kids, et cetera. I only remember that I was so happy to get the term sheet and then it was like getting cold water poured and I was like, how the hell do I figure out how to sell a company? I mean, I barely know how to raise money. Uh, and again, remember we had very little money. So I had 1.7 million dollars. Even a flight and a hotel was super expensive, you know, uh, to, to use those tiny resources.

• 35:38Guy Raz?

  That's what you had left in the bank.

• 35:39Speaker 01

  Yes. And so it was just, it was a tricky time. And, um, and what ended up happening was one of my co-founders came to me and said, but Manish, you're doing all of these things. What do you really want?

• 35:51Speaker 01

  I didn't know what I wanted. I hadn't decided whether I want to sell the company or, or, uh, I want to keep the company and build it. Like, I wasn't thinking for myself. I was just doing what my board was asking me to do. And he, he created this question and, and provoked it in a way that forced me to think about what do I want? And so I sat down and cleared my head. I wrote down all the pros and cons where I was in my life, sort of what was happening. And I wrote down a number. I said, if I get this number, I actually want to sell the company.

• 36:22Guy Raz?

  And, and you also had great timing because during that period, there were a bunch of established media companies like, like MTV and AOL and CBS, they, they were trying to shore up their businesses by buying digital assets like yours. And so I guess in, in 2007, you got, you got the number you were looking for, right? You were acquired by Hearst. I read they paid something like 30 million dollars for Kaboodle. But I wonder like, And forgive me, I hope this doesn't sound rude, but what exactly were they buying? I mean, you had the technology and you had built this platform, but I mean, did they ask you, like, hey, what's the plan here? What's the business plan? I mean, or do you think they thought, oh, you know, hey, they have this platform, now

• 37:06Guy Raz?

  we can take this and figure out a way to sell things to people?

• 37:11Speaker 01

  Yeah, I think their strategy was digitizing the magazines at that time. They had a new CEO and he was focused on taking all of the magazines and creating engaging digital properties. And also, they wanted to have a presence in Silicon Valley. The last thing is, Hearst as a company was basically made up of a series of acquisitions that they acquired at small stages and then grew and made them meaningful properties. So that was sort of their business model as well. So a bunch of things aligned, unknown to me at that time. You know, I had no idea of the media business. I didn't even know that Hearst was on the East Coast. So I was, again, to some degree, being naive has helped me, being able to just go talk

• 37:53Speaker 01

  to these people without knowing that who I'm talking to or what sort of is on the other side.

• 37:58Guy Raz?

  I mean, in some ways, I mean, who knows what would have happened to Kaboodle if you kept it, if you kept it private. But in some ways, you got really lucky because a year later, the financial crisis would come about and once again, you would have had, it would have been impossible to raise money.

• 38:13Speaker 01

  It was a very, very lucky thing, you know, that happened from a timing perspective because we were not monetized. We were growing, but we were not a massive property. So had we hit 08 without an acquisition, no matter how much cash I had, it would have been a very tough time. You know, we would have been forced to be a profitable company. And so, being acquired in 07 was serendipitously one of the luckiest things that could happen. The ability to sort of get that liquidity turned out to be a fantastic thing because so much particularly non-monetized companies went down under in 08 and 09 overall, whereas we kept growing through that and ended up monetizing and becoming sort of an interesting property within that 08, 09 timeframe.

• 38:57Guy Raz?

  All right, so now you sell it to Hearst and this big media company and you stayed on as the head of Kaboodle and what was the monetization strategy once Hearst took it over?

• 39:08Speaker 01

  It was largely advertising. So they were selling advertising to big companies, whether it's a brand or a retailer, and they would advertise in the print and they would also have a significant digital presence through Kaboodle. But the advertising we were doing was not directly tied to the engagement. Some pages were over monetized. So there were pages we were running where there were three banner ads running on a single page, which made it very, very hard to sort of load up and work with. And so that led to sort of one of the principles by which I looked at anything I create where wherever you have love, the money is sort of synergistic. So engagement monetization had to be 100% synergistic in any business I created. So the more you focus on engagement, the more monetization you get. That was not the case with Kaboodle. You know, we were

• 39:50Speaker 01

  sort of pulling in different directions based on, you know, how the advertising was there. But otherwise, I would say they were very, very healthy partners as an owner of Kaboodle. They were never overly focused on it. But on the monetization side, we didn't have a choice. We had to put those ad units and that was something that none of us really liked in terms of how they manifested in the site.

• 40:13Guy Raz?

  But I'm assuming it was probably never profitable. It was probably still very hard.

• 40:18Speaker 01

  It was never profitable and it needed a 3 or 5x growth before it would be at scale to be, you know, to have enough monetization and its own ad engines at that time. So really the focus of the property should have been less monetization and still much more growth for another year before you got to monetize it.

• 40:36Guy Raz?

  So you had started a business and, and obviously there was a lot of, there was a lot of anxiety as you described, right? There was just a lot, I mean, even, even the short sort of

• 40:45Speaker 01

  Yes.

• 40:46Guy Raz?

  period of time that it was, it was an independent company, you know, raising money and worrying about payroll and, and, you know, kind of retooling the approach and slowing down growth and all trying to do a bunch of different things. So when Hearst bought this business and you became an employee of Hearst, did you think to yourself, I'm done with this. I'm not going to be an entrepreneur again? Or did you think, you know, I like this. I'm going to try this again one day?

• 41:13Speaker 01

  At the time Kaboodle was acquired, I felt like Kaboodle was still a baby. So my attention and my focus was still growing Kaboodle. You know, I was not thinking beyond it. But as time went on, it started to become clear that even if you create a tremendous amount of value, the journey has become completely different. And I was getting very frustrated because I felt like I was working with some constraints. I was working with something that I didn't feel like I had the full ownership. And but financially, we were doing very well and life was, you know, in a groove. And but I was just unhappy personally. And so I was talking to my wife. He goes, you know, I haven't seen you this unhappy in years. Even when you were struggling with Kaboodle, you were so much happier than than than the thing. And I said, I really need to to do something.

• 41:55Speaker 01

  And so but but I don't want to jeopardize, you know, the security that the family has. And she will be all supportive. Why didn't you just leave? And that's when I started to think of leaving.

• 42:05Guy Raz?

  Yeah, you know, Hearst, I mean, I think even at that time, but I know that today, you know, it's got Cosmopolitan and Elle and Harper's Bazaar and, you know, Redbook and Seventeen, a bunch of magazines that feature fashion, right? And so I imagine just working and having kind of pivoted towards fashion with Kaboodle that you kind of just became more aware of how the industry works.

• 42:30Speaker 01

  I did. I did. So I would say, as Malcolm Gladwell calls it, those spending time in Kaboodle and then spending two and a half plus years in Hearst was my 10,000 proverbial hours in fashion. And so as I left Kaboodle, I knew I wanted to do something in fashion. I don't want to touch inventory. I realize that Silicon Valley, we are good at a lot of things, but managing inventory is not our forte. You know, we think of things as very fluid and consumer and bits and bytes. So I said, that's not that inventory is not a great thing to do, but just we are not good at it. And the third thing I wanted to do was build something where monetization and engagement were just one. Right? So I didn't want it to be disconnected.

• 43:12Guy Raz?

  Yeah.

• 43:12Speaker 01

  I felt like the Kaboodle journey had given me enough experience and appetite. And, you know, we'd got a few million users and I wanted to create a community of at least 100 million users. So that was sort of like my thing is I want to hit something with 100 million people.

• 43:26Guy Raz?

  Right, and I think when you came up with the idea for Poshmark, it was inspired by a lot of different things, but it kind of started with the iPhone, right?

• 43:34Speaker 01

  Yeah, I remember I was on a trip with a bunch of my friends and this guy had this little iPhone, it was iPhone 4, and he takes a picture of these birds and shows us, it looks amazing, you know, and we are all here with our SLRs trying to take picture of these birds, and then he quickly uploads it on, at that time, a hot platform called Facebook. And we suddenly see his picture on Facebook and I'm like, I have to now take my SD card, shove it in the laptop and all of that. And so I suddenly said, you know, this mobile is coming of age, like something massive is happening. I had iPhone 3 at that time, which was grainy and, you know, photo quality was mediocre, etc. And this was high-quality

• 44:15Speaker 01

  stuff. And so I said, you know, I need to do something with mobile. And then I was at my son's high school game and the high school homecoming queen was wearing a yellow dress. And we knew her parents, we were talking to her parents, and they said, you know, she's just thrifted this dress, this is she's bought it used from a thrift store. And then I came back home and I was in our closet and there were like bags and bags of clothing just unopened, lying, you know, not returned, you know. And so suddenly like all of these things just clicked in my head. And I said, the right idea is to empower everyone to have this phone. A girl can literally take her clothing from this phone, list them very quickly, put a little filter, make them beautiful, and sell them. And all of these things kind

• 45:00Speaker 01

  of came together and I wrote a two-page paper on what Poshmark should be. And I called it Gosh Posh at that time.

• 45:06Guy Raz?

  Gosh Posh. The idea was basically to make it easy for people to sell their used clothing?

• 45:13Speaker 01

  Yeah. The idea was, buying and selling clothing should be fun and simple. The use case we wrote up was, you'd gone to a wedding, you come out, you know, that dress is now seen by everyone, you quickly take a couple of pictures, you list it, somebody buys it. You don't have to worry about shipping because we've taken care of all of the things, you just ship it and you collect the money. And I met my co-founder, Tracy, through Mayfield, who's one of our early investors, and her background was all fashion. She grew up in the New York fashion scene, she had worked on a small brand there, you know, she had an MBA, she had a fashion background, and she had moved from New York to Silicon Valley to do something which merged fashion and tech. And Talked to her, talked to another person.

• 45:57Speaker 01

  Everyone sort of immediately started to like the idea. Tracy went and mocked up something. Another guy started to prototype something. And soon, this idea caught a momentum of its own. And the thing I was very regimented in my mind was, we're not going to do anything on the web or laptop. This is going to be a pure mobile iPhone thing, which was very hard to pitch to the investors because nobody thought people could actually shop on the phone.

• 46:21Guy Raz?

  Yeah. And this, I mean, and did you, when you described it quickly, I mean, would you say this is just, it's basically going to be like a thrift store online? Is that how you describe it?

• 46:31Speaker 01

  Sort of. But the idea was that over time, you could fail used fashion, new fashion, everything. It becomes sort of this social hub for fashion. And we actually had a lot of people using Kaboodle and hacking it to create a marketplace where people would post and say, I have these Jimmy Choo's, you know, do you buy it? Can you PayPal me the money? So they were using Kaboodle for transactions. And this was sort of transaction built into it. So it was a very simple model.

• 46:56Guy Raz?

  And you had already had a successful exit. So was it easier this time around pitching investors?

• 47:03Speaker 01

  It was. So Naveen Chada, who was the Mayfield general partner, who was the one who, his team had connected me to Tracy, was very keen on at least putting some money into my next company. And then we went and pitched to the partners. And after that, he said, you know, we're ready to invest. And so that first investment from him came very quickly.

• 47:26Guy Raz?

  How much did you raise in that first round?

• 47:29Speaker 01

  We raised three and a half million dollars in that first round. Quite a bit of money at that time. And we raised, I've been from Mayfield, but I also gave room to my investors who had supported me in Kaboodle and carved out room for all of them. So all of them joined the round.

• 47:46Guy Raz?

  All right, now you're going to start working on this thing and it was going to be mobile only. It would enable people to take a picture of an article of clothing, upload it to their page or whatever, and then for somebody else scrolling through this app to buy the product and then you guys would handle everything else. How was it going to work initially?

• 48:10Speaker 01

  Yeah, the idea was that somebody would come, buy it from you. We would take care of all the transaction money movement. Once you ship it using a shipping label we email to you, once the person received it and said that they received it and they're satisfied with it, you get the money. You would keep 80% and you'd get 20% and that's it. I was tired of people, you know, hiding a lot of fees, like, you know, if you sold on other marketplace at that time, you had one fee, then another fee came, and by the time you sort of got your money, there was nothing left. So here, our idea was, day one, we would reveal to you, if you listed your item for 50 bucks, you can get 40 bucks and not a penny more, not a penny less, you can get 40 bucks. We would not charge you any hidden fees, et cetera.

• 48:54Speaker 01

  And then that's sort of how we launched it in 2011.

• 48:59Guy Raz?

  And from what I gather, initially when you launched, there wasn't like a buy now button on the site, right? Like, I read that something like that employees of Poshmark would set up face-to-face meetings with the... What was going on there?

• 49:16Speaker 01

  We were big believers of putting the product out into the customer's hands very early. So, we got funded in February and by May, we were starting to test the product.

• 49:25Guy Raz?

  Of 2011?

• 49:26Speaker 01

  Of 2011. And by August, we were starting to see transactions happening. But we hadn't gotten our payment processing set up, we hadn't gotten shipping set up, so we were still just a content site. And so, people would literally write a comment and Leanne, who was our first employee in our, today our SVP of Community, was heading up the community management. So people would just email her and she would say, "You guys want to buy this thing? Please..." Bring your money or PayPal me the money and then meet us. And typically our meeting was at the District Wine Bar in Somme in San Francisco. And that's where the product would happen. It would be almost like a little physical product exchange. And half the time it was cash and product being exchanged there.

• 50:08Speaker 01

  We were not making any, we were just trying to facilitate the transaction.

• 50:12Guy Raz?

  You would facilitate the seller and buyer physical in-person meetup initially?

• 50:18Speaker 01

  Initially. That was sort of how our community formed. So a lot of our initial alpha testing was we would host a weekly get together at the District Wine Bar and another get together at our office in Menlo Park. And that's how sort of the product got started.

• 50:33Guy Raz?

  Presumably, you know, people were already doing this on eBay, right? For years before anybody were selling secondhand clothing. So how did you sort of persuade people to try this platform? I mean, was it, was the selling point in a sense that this is just about fashion? And that's why you should come here?

• 50:53Speaker 01

  Couple of things. I think the fashion part was very critical. I think the, the, the part that was very exciting for people was it was very empowering and very stylish. So our product has something, or still does, has something called a cover shot. So you don't just create a listing. You start the listing with a cover shot. So the first shot is you posing with your clothes on or you're sort of making it very beautiful. And then you add other photos to kind of describe the product. So it felt like you're creating your little magazine article. And so it was just fun to browse, you know, as, as you were looking at it, fun to connect. There was a community forming and, um, you know, sometimes you build a product and just, you know, the four or five things you build end up all being magical and supplement each other. So the way the product was designed, the fact that it was all happening on the phone.

• 51:38Speaker 01

  2011, very few stuff was on the phone. Even the application that were there were predominantly web application and we didn't have a webpage. So we also leveraged the fact that mobile was very novel. And we finally launched the app in the App Store in December of 2011. Before that, it was still being distributed through hands, you know, sort of through private distribution.

• 52:00Guy Raz?

  And at that time, in December of 2011, when you launched an app on the App Store, it wasn't like today. There weren't, there's millions of apps, right? I mean, the competition was just, there were just fewer apps available. So was it easier to gain traction at that time?

• 52:17Speaker 01

  It was and it wasn't, you know, in the sense that the expectations were very, very moderate. I think we had like 100 users in the first day. It was all through PR and, you know, we got an article in a pub at that time, which was very popular called Refinery 29. We had a couple of articles in San Francisco Chronicle, print, and we started to see some users come in. But there wasn't any cost efficient acquisition engines, you know, it was really, really expensive. So we started to experiment some online advertising, but app installs were not there. So you still had to sort of click through, discover something, then go to the App Store on your own and try to download the app. And so that whole funnel

• 52:58Speaker 01

  was extremely expensive, complicated, et cetera. So we couldn't figure out how to scale it.

• 53:06Guy Raz?

  When we come back in just a moment, Manish learns that shipping clothes from point A to point B is a serious business. So serious that if you don't do it right, you could wind up in jail. Stay with us. I'm Guy Raz and you're listening to How I Built This.

• 53:31Speaker 04

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• 54:38Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's early 2012 and Poshmark is out in the world as an app. And now, Manish and his partners are asking, how do we get people to discover this thing?

• 54:52Speaker 01

  But two things happened. When we first launched the app, we saw amazing engagement. You know, the 100 people who downloaded the app, most of them were actually creating listings and many of them were buying. Eighty, 90% of the people were coming back week after week. So there was the amazing engagement. But the biggest thing was, through our data, and our data systems were still early, we saw that average user was spending 15 to 20 minutes a day in our app. 15 to 20 minutes a day. You know, my belief, having worked in five, six years in consumer, I was not a guru, but I was sort of in the early days, is that you can buy growth, you can buy anything, but you can't buy love, you can't buy engagement. Engagement is very natural to whether your product works for the consumer. And then I knew that this business is going to work.

• 55:36Guy Raz?

  Yeah, and one thing you seemed to really lean into early on was, was developing a strong sense of community among users, right? Like you would do these, these road shows where you'd go to different cities and host these fashion events and things like that.

• 55:50Speaker 01

  Yeah.

• 55:51Guy Raz?

  But, but the thing about a community, right, is that it can turn on you. And I think pretty early on, you're, some of your users did turn on you in part because of your shipping fees. Like, what exactly happened?

• 56:03Speaker 01

  Yeah, so we launched the app with $5 shipping at that time. And our cost of shipping was turning out to be $10.50 on an average. And so we were basically losing money left and right on every order. And if you remember, having come out of dot com, I didn't want to build a business where you were losing money on every order.

• 56:25Guy Raz?

  Right.

• 56:25Speaker 01

  So we were like, what do we do? And, you know, our shipping fee was $9 at that time. We had discounted to $5 for the launch. So we said, you know what, we'll just take the discount away and go back to normal things. So we put a little note in the app in May of 2012, saying, hey, we are, the discount is going to finish, the welcome discount is gone, and we're going to move the shipping to $9. I kid you not, Guy. Within 24 hours, Tracy and our mailbox and Twitter was flooded with hundreds of people saying, "You are going to make us bankrupt. We won't have any clothes to wear. You guys are crazy. How can you change the shipping?"

• 57:07Speaker 01

  And it was a revolt by our community for us to move our shipping from $5 to $9. We had never seen this level of passion ever in my life.

• 57:17Guy Raz?

  So what did you do?

• 57:18Speaker 01

  So finally, after a lot of thought, we said, "Okay, we'll change the shipping fee to $7", right? And even as we changed to $7, we got so much negative feedback from the community. But, you know, we were still losing money on every order, but we said we can afford $7. So we started with $7 shipping in 2012 and 20% take rate. Just to give you a sense, today it's 2024. Our take rate is still 20% and our shipping is $7.97.

• 57:47Guy Raz?

  Huh. But you guys actually ran into a lot of issues with shipping at the beginning. I mean, I read that the post office came down on you after you basically prepaid for a bunch of shipping labels. But basically, they were all the same weight, like, I guess, 2 pounds. So it didn't matter, right? If the seller was sending heavy boots, the shipping label that you paid for would still be for 2 pounds, but that wasn't enough, right?

• 58:14Speaker 01

  Yeah, so at that time, in 2012, we wanted to make sure that the seller didn't have to worry about, you know, how much the item weighed, what they had to do. Like, keep it very simple. We didn't want them to think of them as a seller. They should just be two people exchanging products, I don't think, just shipping. They don't have to worry about anything. Just list the item and price it and ship it. So what we would do is we would ship them the right label for their... So if you were shipping from Minnesota to Texas and you were shipping, say, a pair of shoes or whatever we knew, we would generate the right label, priority mail label from USPS. We would pay for that label and only charge you $7 for that label. So some labels, we were losing a lot of money, some labels were making a lot of money.

• 58:55Speaker 01

  But we were simplifying the job for the seller. So they didn't have to think of weighing the item.

• 59:00Guy Raz?

  Yeah.

• 59:01Speaker 01

  And then in the middle of 2013, we get a knock on our door in the morning and two men walk in and say, we need to speak to Manish Chandra. We are from USPS, we are postal inspectors. And so our team says, you know, I'm Olivia, I'm the head of marketplace operations. No, no, we can only speak to Manish Chandra. And so I sit down with these two postal inspectors. They say, sir, we are here to inform you that you have millions of dollars of fine because you've been underpaying or overcharging for some labels for these things and, and, and, you know, you have to pay the fines, otherwise we can actually legally put you in jail.

• 59:36Guy Raz?

  Wow.

• 59:37Speaker 01

  So I explained to them, I said, yes, you're right, that there's a bunch of labels that we are underpaying, but it is a bunch of labels that we're extremely overpaying for because of the things they're saying. Well, we don't care about overpaying, we only care about underpayment, et cetera. So a lot of back and forth, finally made me sign some things. And, and, you know, we are now growing very fast. So we are consuming a lot of USPS priority labels. And from there, a series of conversations start that ultimately led to creation of PoshPost, which is a simple fashion shipping service that we created. We're basically, we have a partnership with USPS where we have the ability to send you a simple shipping label. We charge you a flat fee, we pay a price to USPS, but every single item goes to the single label,

• 1:00:20Speaker 01

  whether it's underweight or whatever it is. And so that was one thing that was going on.

• 1:00:25Guy Raz?

  And meanwhile, another thing that was happening, I guess, kind of more generally was that mobile was really starting to take off, right? I mean, you guys launched in 2011 as an app. And then with each passing year, more people were discovering and downloading apps, right, from the App Store. So that had to be good for awareness, right?

• 1:00:45Speaker 01

  Yeah, so by Q4 of 2012, Facebook had retooled their app to be a mobile app. And they had done a partnership with Apple to create an ad format where you could click and get an automatic mobile install of the app, right? And we somehow, you know, were good at getting ourselves into beta testing. So we got into the beta testing of that app. And it turned out that in the first two months, it was an extremely successful product. And we just grew three to five X in two months. That sounds like a good problem to have. It was an amazingly good problem to have, but the speed of growth was so crazy. On a system where a lot of things were still, you know,

• 1:01:28Speaker 01

  very weak, you know, in terms of the payment systems, the shipping system were all sort of untested. So suddenly our volume exploded, right? Think of if you're doing half a million dollars transaction, we're now doing five or six million dollars of transactions. You know, which is not much, but the speed was very high. So we started to hit alarms in every single one of our partners. We started to hit alarms with our payment provider, with our shipping provider, infrastructure, we hadn't built some of the distribution scaling, we were starting to hit the problems. And meanwhile, in 2013, the app is growing like weeds in rockets and people are loving it. Everything is sort of working, but our systems are just blowing apart. The the payment processor calls us and says, you know, we can't, the way you're structured, we can't handle your payment process, you got to move to another payment processor.

• 1:02:13Speaker 01

  We went to every payment process, went to PayPal, we went to Braintree, we went to Stripe, we went to Wells Fargo, we went to First USA, we went to like literally every payment processor. And even when they would agree to take our business, their compliance chief would just throw them out. And it was kind of very, very bad because we had actually the safest model. Because, you know, the money was never at risk in this whole sort of transaction. The money would go to the rightful owner, but they didn't understand it. Now we were like few months from shutting down because all the payment processors had rejected us. But around that time PayPal ended up acquiring Braintree and somehow through a miraculous set of licensing and you know this whole area is quite complicated, they were able

• 1:02:54Speaker 01

  to onboard us. So the combination of PayPal and Braintree at that time saved our life and then we became their partners and still are huge partners of PayPal and Braintree.

• 1:03:04Guy Raz?

  I wanna I wanna dive into some a decision that that you took around this time around growth because you were growing so fast and it was unsustainable that you decided that you wanted to slow it down. And and I guess you did that in part by cutting back on marketing, on how much you spent on marketing. Tell me what you did and why?

• 1:03:28Speaker 01

  Yeah, this was middle of thirteen. We were growing like a rocket ship. But in those six months from January through July, competition had massively increased. And there were many companies in the fashion space that were spending a lot of money in marketing and actually were starting to declare bankruptcy. And we had a very sustainable model to begin with, but we were obviously caught up in this frenzy of, you know, of of marketing. And so I went to my board members and I said, and these were both VCs and VCs are ultimately focused on growth. I said, I'm going to cut down growth massively for a year by saving money and using that money to rebuild the infrastructure. And we cut down growth by

• 1:04:10Speaker 01

  taking our marketing and bringing it down pretty close to zero for almost a year before we restarted it while we rebuild the infrastructure. The hard part was that this year of no growth ultimately meant that to get a real funding round was delayed by a couple of years. We had to bridge it the company for more than a year, year and a half, because when people look at our metrics, they saw this time of no growth and they could not wrap their heads. Even though we kept saying it was because we cut down marketing, investors had a hard time. They needed a long runway of growth before they would fund the company. So it kind of delayed by funding by almost a year and a half before I could raise a real proper round. But in hindsight, I felt like it was probably one of the most bold, painful, but probably correct decision that I made in this journey of Poshmark.

• 1:04:55Guy Raz?

  And had you not done it, what do you think could have happened?

• 1:04:59Speaker 01

  I think I think I fear that, you know, we would have lots of failed transactions. Our customers would have churned and gone away. And ultimately, you know, we would, we could have crashed. We could have completely crashed. Instead, through this whole process of cutting our marketing, I hired some of the key executives. Our head of growth joined us in the spring of 2014. I shared with him, I said, you know, for six months, I can't give you any money. He said, no, let me help join. Our head of data joined at that time. And so I felt like we built a management team as well, besides sort of building the infrastructure. But we built a management team, not fair weather fence, but we actually found foul weather fence who would actually stick around. And luckily, none of my co-founders left. They're still all here.

• 1:05:42Speaker 01

  And so we actually ended up forming a lot of grit and character through that sort of year. And and and I think form a lot of bonds where we all sort of almost kind of had a second startup from 2014 onwards, where you had to restart growth, rebuild the infrastructure and grow the business in a much, much more, you know, gritty way, if you may.

• 1:06:04Guy Raz?

  You also started to to kind of not pivot, but but introduce other users, right? Because initially, it started out as a place for women to sell women's fashion. But then you got into men's and kids' fashion. Today, of course, you it's electronics, there's many more products. But tell me, I mean, was that just the kind of the natural outgrowth of of where the business was heading?

• 1:06:29Speaker 01

  No, it wasn't. So actually, in 2015, we were growing very well. In 2016, there was still a lot of hesitation within the leadership team as we talked to the community to go beyond women. But we ended up launching men and kids. And I remember when we announced that we're going to launch these things, we got hundreds of emails in our inbox saying, why are you letting men in our community? It's not the right thing to do. It's terrible. You know, it's going to be.

• 1:06:55Speaker 01

  And anyway, it ended up that men became after women the fastest growing category. And the way men shop was great for our women sellers because they are faster shoppers. They had sort of different characteristics and of course they could diversify their inventory. They could sell more stuff that was in the closet. And then I started to get hundreds of letters of thanks, thanks for launching men. So it ended up being a very good decision to support all the different folks in your household and not just, you know, for women. And so women are still a biggest dominant thing, but all those categories are a meaningful part of our business.

• 1:07:32Guy Raz?

  Yeah, so you guys continued to grow a lot and around 2019, you were actually poised to go public, but then I guess the business takes a few hits that kind of stalled the process. What, what exactly happened? What was, what was going on?

• 1:07:51Speaker 01

  Yes, so we were going to initially be class of 2019 public company. But at that time, the United States government decided that marketplaces should collect sales tax on behalf of their sellers and remit it to them. So we implemented sales tax on our platform, you know, and we thought it'd be a minor and there'd be some friction, but it won't be very big. It turned out it was a major friction. Just adding that sales tax caused the transaction volume to drop, the business growth to slow down and everything sort of moved out, derailed our IPO. We could no longer be a public company because we didn't know what was happening at that time, you know? Literally, we had to stop the IPO process, take a step back.

• 1:08:32Speaker 01

  And so that whole 2019 timeframe, we were growing, but we started to burn a lot of money because suddenly we were doing new category expansion, new countries, new things. And suddenly we went to our investors and we said, you know, what do we do? We have this much money in the bank, et cetera. We were not out of money. We had like money in the bank, but it was a very small amount of money. This was February of 2020 and the feedback was become profitable, right? And we knew how to do that because our single biggest expense was marketing. If we cut down marketing, we'd become profitable. So we were going to present a new business plan to the board in March. We are having a board meeting on March 12th or 13th and it's exactly the day the government is declaring. Covid nineteen to be a pandemic.

• 1:09:17Speaker 01

  And every day, the sales started to go down. We didn't know if anybody would buy used clothing, right? Because it's touch and go. We didn't know if anybody would buy clothing, nothing. So things are going down. We are cutting down marketing, marketing, marketing. Yet, at the same time, every day, the revenue is going down. So I was like, every night I'd go to bed. I said, how do I change my mindset? And when I went to bed and I woke up, I'd visualize ringing the opening bell of New York Stock Exchange. So literally, that was sort of the way I would psych myself up. I said, you know, there'll be a day, we'll go through all this trouble. This is March of 2020, things are going down, and just wake up the next day. And then by March 31st, we actually had our first net EBITDA profitable month.

• 1:10:02Speaker 01

  So we hit profitability a year ahead. And April, government started to release stimulus. And turned out, people really did want to buy and sell clothes in the pandemic. In fact, they cleaned out a lot of closets and used our platform to buy and sell a lot of stuff. And things just started to move. And by June of 2020, all the bankers were at the door, and we were starting to think of filing for a public offering.

• 1:10:24Guy Raz?

  And you finally did wind up going public in 2021. And I think briefly, at the peak of that process, you were valued at like $7 billion. But the company also ran into some turbulence afterwards. And I know that you were kind of feeling some of the effects of Covid and, you know, the after effects. It was kind of tough to retain workers and you had some, a few high-level resignations. But in early 2023, this is just like two years after going public. You guys get acquired and taken private again by a company called Naver, which I guess is a Korean company?

• 1:11:04Speaker 01

  Yes.

• 1:11:04Guy Raz?

  Can you tell me how that came about?

• 1:11:06Speaker 01

  Well, we were coming out of Covid, but kind of in a weird funky way. Inflation was skyrocketing, so consumption was going down. In between, because the business is going through all this turmoil, the stock has taken a dive, we start to get inbound inquiries for acquisition. Right? And in January, we got a call from Naver where they said, hey, we love what you guys are doing. We love this whole area of, you know, consumer marketplaces, social commerce, and we'd like to make an investment in your company and learn from you guys. And so started the conversation. And suddenly, one of the big things that started to shine for me is that one of the

• 1:11:48Speaker 01

  big growth areas for Poshmark could be live streaming and live shopping. And so I started to put a lot of energy into that. And, you know, we're sharing, obviously, what our strategy is with Naver because we're in confidentiality. And suddenly, they actually put an offer on the table. And by January of 2023, we had become part of Naver.

• 1:12:11Guy Raz?

  Wow. And today, you are still the CEO of the company.

• 1:12:16Speaker 01

  Yeah, so so Naver has, you know, acquired the company and they are, think of them as Google and Shopify of of Korea, but sort of they're into many other businesses. They're into AI, they're into robotics, et cetera. And their vision is that they believe this space can be an independent company in the future. So they want to, they want me to grow this company and at some point in the future, make it an independent public company owned by Naver, but also a public. So the journey we're working on is to grow this business over the next few years and and make it into, you know, Poshmark 2.0 as a public company. So that's sort of the journey we are on. We launched live streaming in April of last

• 1:12:59Speaker 01

  year, and it's really growing very fast. The core business is starting to to grow as well. And we continue to gain market share. So we are sort of feeling a lot of momentum. But the best part of this journey, Guy, is that literally all of my team is here here with me, still energized and wanting to go to, let's call it Poshmark 3.0. If Poshmark 1.0 was a private company, Poshmark 2.0 was a couple of years as a public company, this is sort of the third phase of Poshmark growth. And they're still all very excited about building and growing it.

• 1:13:31Guy Raz?

  When you think about the incredible journey you took and, you know, the all of the twists and turns of it and where you are now, how much do you think has to do with your work and your commitment and your focus and intelligence? And how much do you think happened because of luck?

• 1:13:49Speaker 01

  I think it's definitely luck is a big piece of your journey, but luck is something that has to be married with hard work, but also values, you know, in the sense that there are a lot of temptations along the road. And sometimes you do succumb to the temptations. The key is to wean yourself off and continue with your core values. And a lot of times, you know, not given to your fear, not given to your greed, but proceed with love. And ultimately, I think the key to all of this is surrounding yourself with amazing people. I think if you do that, luck, hard work, tenacity, love, all comes through that. And I am just blessed to be surrounded by amazing people at Poshmark.

• 1:14:30Guy Raz?

  That's Manish Chandra, co-founder and CEO of Poshmark. By the way, in 2021, in addition to men, women and kids, Poshmark added pets to its list of categories. You can now buy a turtleneck sweater for your dog, an anti-anxiety vest for your cat, even a previously loved air pump for your home aquarium.

• 1:14:53Guy Raz?

  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 Sam Paulson with music composed by Ramtin Arablouei. It was edited by Neva Grant with research help from Katherine Cypher. Our production staff also includes J.C. Howard, Casey Herman, Kerry Thompson, Alex Chung, John Isabella, Chris Messini, Carla Estvez and Malia Agudelo. Our engineers were Robert Rodriguez and Josh Newell. I'm Guy Raz and you've been listening to How I Built This.