#031: David J. Sitt - Building the Next Billion-Dollar Fulfillment Brand

If your business fails, why?

I think the only way we fail is if we're not executing for our partners and we're not collaborating with them. I think it all comes down to collaboration and how can we make sure they're communicating with us and we're communicating back to them. I think one of the hardest things to do is to let a brand know when something went wrong and you can never tell them fast enough. You can tell them within a second and it's still never fast enough. That communication level's always got to be there.

David Sit, an alumni at Columbia Business School, is the founder of ShipEssentials, an e-commerce fulfillment partner that is empowering creators to focus on and grow their businesses like never before. In this episode, we deliver the evolution of ShipEssentials from its basement-bound roots and the challenges David faced with the delicate balance between entrepreneurship and parenting while comparing the business cultures of LA and New York. Welcome back to episode 31 of the Turning Pro Podcast. Today we have David Sit, the founder of ShipEssentials. Thanks for joining us today.

Thanks, guys.

Thanks for coming on, man. So I want to start with origin story because I actually don't think I've heard that whole story. And I know every business has multiple phases to it. So walk me through— if you think of Ship Essential in different eras, walk me through era 1, 2, and maybe where you guys are now.

You know, started off, you know, myself working with a lot of brands, just talking to a lot of brands in New York. Meeting people and really just hanging out. And the question kept coming up, you know, hey, you know, can you find me a basement space, an office space where I could just do some fulfillment, you know, taking some packages to FedEx? And sort of asking the question, like, what do you do for logistics? Everybody comes up with, hey, I hate my 3PL. And, uh, that started us off where, where I just started touring 3PLs, trying to understand what was going on. And, you know, COVID hit, everyone's starting a brand from their couch, And summer of COVID buddy of mine looks at me and he's like, you just got to get started today. So we filled up my truck, took it to— took a couple brands' inventory, took it to a basement in Midtown and started shipping orders out of the basement in Midtown. No one else is doing anything in COVID. And then, you know, that, that lasted for a few months. We acquired a small company that was based in Tribeca, which was pretty exciting, acquired some customers, really started learning, you know, the business model and what these brands need. And, you know, from there spent a lot of time building the team and growing. And finally, you know, this, that next phase was moving into a new location in Brooklyn, building on that location. We've doubled in size over there. And, you know, that next iteration is going to be, you know, more expansion, open up more cities and, you know, continue building the team.

There's a lot of, most of our audiences are kind of like e-com or e-com adjacent, but for folks that aren't in that ecosystem, why do so many brands hate their 3PL?

So I asked someone this question yesterday who's more on the operations side, and she just kept responding with the same thing: communication, communication, communication, transparency. Where's my inventory? What's going on? And that's something that we tried to solve for, where it's a very simple solve— just respond to the email, right? Respond to the question. And it's something that, you know, not a lot of 3PLs do. They weren't built for e-commerce originally, so that modification of their operations really started to, to change the way they did business. And it's not the way it used to be done.

Is there like a unique innovation on the model or is it just we're faster, great communicators and it's great quality and there's no secret sauce here?

No. I mean, for us, it's really about being in the city and everything that that entails. So our brands are doing site visits. We're probably doing, you know, 10 a week or something like that where, you know, they're just walking in, they're sitting down. Sometimes they'll, you know, start looking at their, their inventory. How's the team packing? It, what's going on. Uh, you know, we don't have a team that's, you know, doing customer support out of, out of the outside of the warehouse. Everybody's on, on the ground. So email comes to support, our entire team can jump on that and they're looking at the orders, looking at the inventory. And from an actual business model, we can do things like ship from store. So we can go to stores and pick up product really quickly and bring it back to our space, ship it out that same day. We can do same day delivery. We can drop off retail replenishment same day. So we can really move quickly because we're in the city. And it's just, you know, a little bit different.

I worked at GoPuff for a year.

How was that?

Wild. It's crazy. It was a crazy experience. I mean, I, I joined there right before they raised a billion-dollar convertible note at a $40 billion cap.

Good time.

With plans to go public right before the market crashed. So I learned a lot during that time, good and bad. But just this concept of like the instant delivery and the convenience I don't know. I personally think that those types of businesses introduce this new level of urgency that just isn't particularly necessary for like 99% of product categories. But now consumers just have this unrealistic expectation.

Yeah.

And so as a business owner, you just need to meet them with what they want or they're not going to be happy.

Yeah, I think the GoPuff model, Joker, Getir, Gorilla's 15, 20, right? There's a, you know, big crew. Of those companies that came out and they were in super dense areas focused on that fast delivery. We're doing— we're shipping globally also, so we can really do it all. And we're not in— we're not in the middle of the West Village trying to get a location there and then shutting that location off. You see that, you know, GoPuff and even, you know, Gorillas, they have these storefronts where people can walk in and shop in person too. And I think they realize, you know, I realize that, you know, customers are coming in and sometimes they just want to buy it off the shelves. And people are sometimes banging on that door saying, hey, can I buy something? Like, no, no, you have to order it on the app and we'll deliver it to you.

That was— I mean, that was very much a phase 2 iteration of the business. So that was never like— they just launched their first storefront when I was there. That was never an expectation. But I think for them it was just another revenue stream. But I am very curious, because you just alluded to this, how do you stand out amongst people who offer 3PL? Because I feel like there's— I feel like it's a really crowded space where everyone's like, oh, I know a 3PL, I know someone who can pick, pack, ship, whatever. But as a brand owner, I'm trying to understand, like, if I talk to 10, like, what is the reason that I'm working with you versus other options?

Yeah, it's definitely a commoditized business. It's a commoditized product or service. And, you know, the way we try to stand out is that open communication, right? We, we come to them, we say, hey, let's partner together to build a workflow. We're not trying to get these brands to work within, you know, what we do. We're trying to learn from them, grow with them. And, you know, when we started out, we weren't doing dropshipping, we weren't doing wholesale or retail or you know, all this inventory management and integrations that we needed to do. And over time we started to build that in. So, you know, learning from our brands, growing with them and trying to scale up that way. It's a little bit inefficient. It would be great to just, you know, have everything all at once and just say, hey, everybody could fit in. But we're trying to build for what the customer wants as opposed to build for what we think the industry needs.

I feel like you guys very much treat it like a software product or like a tech product. Versus a lot of— I mean, there are also some great other 3PLs out there. I won't bash the whole industry, but I've also talked to a lot of other owners that it's just— they're just a vendor and service partner. And A, you guys are investing in tech, but B, you think of it from our conversations, you think of it iteratively the same way that you would iterate on a software product and slowly introducing, say, new feature updates, even if that's just a new communication flow.

For sure. You know, we've, we've partnered with other 3PLs. I was at a dinner that was co-sponsored by us and two other 3PLs. So we're all sitting together, we're just like sharing ideas, hanging out, having a good time. And we realize we're, you know, the few of the few in a space of many that can sit together, have that conversation and learn from each other. You know, talk about— I would even mention like Outer Space, right? Like Mason Hub. Like those guys are great. And, you know, we've spoken to them a bunch and I think they, they've got great teams, they've got great people over there. And, you know, we sort of have a similar, similar understanding of where we want to take, you know, this industry and what we want to do within it. We're definitely the smallest fish in the pond, it feels like. So, you know, trying to, trying to grow and get to that scale is, you know, it's a challenge, but it's fun.

I also feel like it's a sheer numbers game, right? Like it's not a one size fits all. It's not like a one winner category, right? There's millions of brands. There's so many people who need this. So like you can just run the back of the napkin math. Like if we get this many brands selling this many units, we have a massive business.

Yeah. And for us, it's, you know, it's sort of a real estate game too. So if we can fill up our warehouse facility you know, to 80%, you know, make back that money. Everything else is gravy on top of that. And, you know, that's where, you know, our ship from store model comes in because we don't have to have that stuff on our shelves. So our real estate gets, you know, more and more valuable and more, you know, revenue generating as we can continue to add more of that type of, uh, service.

For the ship from store, are you literally sending someone to the store to go get the unit?

Yeah, we've got— well, the store staff really puts it aside, and then we have a driver that goes around New York, or a couple of drivers that go around New York every day to go pick up from stores.

So you have like communication streams with specific stores because you have certain brands that are in there?

Yeah, not really stores. We have— it's their brands, you know, their own branded retail stores.

So we're going retail storefronts.

Got it.

Yeah. So it's a retail storefront that we're going. It's more apparel, right? It's more fashion, sometimes accessories or, you know, home or anything like that. And, you know, our team is really going around and we're either picking, picking that stuff up to ship it same day So then we've got couriers that will meet around the city, start dropping that off to, you know, people's homes, right? Communicating through the, through the text platform. Looks like an Amazon courier or Uber or Uber driver. And, you know, that's one side. And then the other side is it comes back to our warehouse, we pack it up and we ship it to, you know, Kuwait. We're shipping it to Australia, we're shipping it, you know, wherever.

I love that. I'm curious on your end, what are some of the marquee brands just for people listening that you guys have worked with?

Yeah, I'd say, you know, who we're working with now is the Frankie Shop. We love them. Mad Happy, Adams, the footwear company, you know, Terry John dresses. So the bar, you know, there are a lot of brands that we're working with and, you know, it's a lot of fun.

As you guys have scaled, what does— you know, we talked about kind of like those eras of growth. What does the next era entail? Is it new geo expansion? Is it new brands onboarding? Is it team and quote product iteration?

Yeah. Uh, right now we're seeing a lot of need on the West Coast, so we want to open up in LA next. We're pumped about it. You know, we've got a couple people out there already, so we're starting to build that up. That'll be open pretty soon. And then, you know, with that, we want to bring our same-day model over there. We want to bring our ship-from-store model over there. We're starting with the, with the traditional 3PL model and building upon that.

Are you guys bootstrapped?

We've, we raised a little bit of money. Uh, more family and friends. You know, not, not, not so much on the institutional side.

Got it. That makes sense. And as you— I'm curious, in that journey, the reason we call it Turning Pro is there's just like a— there's probably multiple turning pro moments in everyone's, I guess, entrepreneurial journey. It doesn't have to be in a business to an artist or someone working big law, whatever it is. Were there one or multiple moments? You alluded to some of them where you kind of went from an amateur to a professional and started taking yourself more seriously as an operator.

I mean, as every— as we hire more people and bring more people onto the team, I think every founder's journey is, you know, how quickly can I fire myself from this job to take on a new one? So, you know, originally it was, you know, when can we bring on a fulfillment manager? When can we bring on a warehouse manager and a general manager and a head of ops, you know, and a head of growth? And so it's a lot of those moments. So whenever the team comes on, we take this really collaborative approach. And, you know, I try my best to step away, but it is my baby, right? I'm still, you know, involved in a lot of things day to day. But, you know, really learning to trust the team and learn from them, I think that's, you know, how I can be more and more professional over time where, you know, learning from them and just trusting a little bit more.

What are the responsibilities that you have that you're struggling to like delegate real time? Yeah, every founder has that thing they just don't want to let go of, even though they know they have to.

It's a lot of the relationships. So, you know, started off on my own where I met all these brands or some of them were friends that came in and I'm managing those relationships. I do have a hard time like handing that off to the team and telling them, hey, you guys got this because they have my cell phone, right? They're just going to call me and say, Dave, you know, you guys just screwed this up. Just fix it. And then I call our team like, don't worry, everything's fine. You know, leave us alone. Stop calling.

With any larger brands, especially ones that were previously friends. I mean, I deal with that all the time. It's so— we were talking about this right before. Yeah, they're like, you'll get those calls and you're never sure what's going to happen. My immediate reaction, I think probably a year ago, was never get mad at my team, but like, what happened here? We need to go fix it immediately. And it just stresses everyone out. Yeah, everyone's trying their best. Everyone's working their hardest. And so have you changed your approach at all of like, okay, when something bad happens, like a real fire, like we messed up, what is your approach to solving that?

It's really about just asking the question of what happened. It used to be, it used to be me doing it, right? So I'm the one that screwed up. I'm the one that had to fix it. And then it, then it became, hey, you know, what's going on here? What happened? This brand's freaking out. Call me right now and, you know, learn from that. That really wasn't the best way because everybody would just dilute the situation, say, you know, nothing, nothing's wrong, everything's cool. I also found that people became more defensive that way, right? The team will get more defensive if you're, you know, attacking them. But if you call them and say, hey, you know, what's up? You know, this brand just emailed me to call them. What happened? They give me the rundown right away. I call the brand. They're like, everything's cool, everything's fine. We've got it. And it's about trusting the team to know that they've got it covered. And for me personally, I just got to be good about asking that question and not, not jumping at people.

What did you do before this?

I was in real estate.

Okay.

My family's in real estate, you know, based in New York, was, you know, on our acquisitions, asset management, leasing team. Spent some time in London a little bit after that, went to business school. While I was in business school, thought I was going to be, you know, more focused on the real estate side. And Columbia sort of transitioned that and made me change and think like, okay, let's, let's jump into venture, let's jump into operating businesses and figure this out.

We got another Columbia MBA. I know.

All right.

So you're done with business school. Was it worth it?

Business school was awesome. What? I was 23 when I started. Average age is 28.

Straight out of college.

Okay. I got more out of it than anybody else. And that, that was the most fun. And a lot of people started companies. A lot of people did a lot of really cool things. For me, it was like an extension of undergrad. So, you know, go— when you're in business school, nobody realizes like every Wednesday night is a party night, every Tuesday night's a party night, every Monday night's a party night. So it's, it's a great time. And, you know, just learned a lot from mainly the other students, you know, more than anything else.

If you could go back, would you do it the same way you did?

Yeah, 100%. That was especially because I got to go in so young, you know, when I was hanging out, you know, with a lot of these guys, you know, diving into business school, I was ready to take tests. You know, the other— my other classmates weren't ready to just be taking tests, right? They're coming out of consulting businesses, consulting careers, or, you know, wherever it might be.

We had a long conversation on a previous episode about just like business school in 2024. Like, is that still the most valuable thing to do with access to like the internet and resources and how expensive it is?

Personally, I think it has nothing to do with class.

And you're— I think it's— I mean, you could— you did it, but I feel like it's a, it's a relationship thing.

Yeah, 100%. You know, a lot of the, a lot of the relationships and friends that I've made, you know, out of business school, they're, they're friends, right? We get to hang out, we get to talk about business, we get to refer each other, you know, clients and partners and, and just, and just bounce ideas off each other. You know, the best part about it was the relationships, 100%.

At what point did you actually fall in love with kind of the game of business? Because I feel like a lot of founders I talk to, myself included, early days, you, you don't even know enough. You're just trying to make something work. And I feel like only— I've been doing this for like almost 3 years and like only recently, even in my free time, like actually enjoying just thinking about business creation, how to run it, how to delegate, hire, how to hire teams. Was there a point that you were like, oh, this is fun?

I think it's like an iterative process for me because I have like by no means figured anything out. It's sort of you know, started off, said, okay, you know, something in the 3PL world needs to change. I need to jump in there. And in time that started to evolve. We started negotiating deals, uh, to acquire that company. You know, that was a big learning for me, was sort of running that process relatively solo. And just, that was the first deal I did like completely alone, right? Didn't have a full underwriting team behind me. Didn't have a full, you know, analyst group.

And what exactly was it that you acquired?

It was a small 3PL in Tribeca, and that really, you know, set us off, you know, on a good path to have customers. And then we started— we jumped in. I had to renegotiate all the contracts with all those customers, you know, had to sign new deals, had to find new brands and continue making deals. And I think that's sort of what, what I'm starting to learn to love about it, you know, being able to talk to a brand and say, okay, what do you need? And how can we each get compensated properly for it? And it's a— I like to look at it as a partnership. I don't want to, you know, screw anybody over, you know, in terms of pricing. I want to be there, you know, and do a great job, obviously get compensated for it. But we want it to first and foremost be a great thing for the customer and, you know, a great, great experience all around.

Yeah, I, I have a question just about the 3PL model, but like when I hear people like, I have better pricing, I have better pricing, can you actually walk me through your ability to like undercut competitors on pricing? Is it just a sheer volume game or it's also like margin game to like win business? Or like what is the, what is the actual differentiator?

I'd say it's definitely a volume game. You know, if the brand has more volume, we can do, we can do more with their volume, right? With their orders. Uh, you know, very simply think of it, think about it like this. If you have, if you have to walk over there and grab, you know, 2 hats, it's going to cost you the same as grabbing one hat. So for us, that's sort of how we look at the volume side of it. It's also a margin game, right? Sometimes you just want to buy logos. Sometimes they're relationships. Sometimes they're just different pieces to the puzzle that you're trying to figure out. And yeah, a little bit of it is a negotiation where you say, okay, you know, we want to make this much. They negotiate you down and say, you know, we want a 5% discount. And depending on the relationship and how easy it might be, you know, there's an opportunity there. You know, a lot of it— talk about undercutting, you know, some of the competitors. For us, it's, it's also a matter of how much do we believe in this brand. So sometimes I might look at a brand and they tell me, hey, you know, we do $1 million in revenue this year, and I can look at that founder and know that they have a good path. Or, you know, if they're coming from you, right, if they're coming from Verbatim, I may say, you know what, I know that they've got something behind them. There's a maturity level there. They're looking to grow. And not just look at this as a, you know, a side business. So we can bet on that and we're investing in the brands that we're working with. So it's a bet, it's a game. And we want to say, hey, you know, I know you're doing $1 million now and I know that in a year you're going to be doing $10 million and then $50 million and then $100 million.

What percentage of brands are you actually like working with that you're talking to? Like, how often are you telling a brand like, this just doesn't make sense for us? I feel like in a way it's almost like you're an investor. You're not necessarily deploying capital like a VC, but you're deploying resources and you're turning away brands, I would say more frequently than maybe some software companies.

We just had this conversation right before I got here where there's this brand that we're talking to, really complicated process, really tough integrations, and I really want to do it personally. But it's like, absolutely not.

Yeah, the team.

Yeah, I don't know anything about it, but the pass.

Yeah.

Basically the team is saying, you know, this is really difficult to execute. You know, the revenue might be there, but we won't be able to execute. So the revenue makes no sense. We're probably turning down, you know, a couple every month, maybe, to be honest, probably less, probably maybe one a month. You know, we have a lot of flexibility when it comes to the brands that we're working with. And, you know, when I say turning down, I mean turning down once we get to like that negotiating table.

What have you learned about negotiation and closing deals and getting deals done?

I think it's a tough— I think it's a tough look when you're, you know, depending on who you're talking to, it can be really tough to close that deal. But at the end of the day, for us, it feels like once we get to that negotiating table, it's a matter of finding that middle ground. So, you know, I think it's harder to get to the negotiating table than it is to close the deal once it's there.

Agreed. What levers can you pull once you're at the table?

I mean, there are different things like, you know, we, we may, you know, negotiate on payment terms. You know, we may negotiate on, you know, timeline or the contract or, or what, what that might actually look like. You know, there are small things, but it's a very simple process for us. We try to keep it as simple and straightforward as possible. And we don't want to, we don't want to clutter their, you know, a lot of these brands' minds. We work with a lot of brands that don't have a big team. So the simpler and easier we can make it, the better it is.

In terms of actually getting deals to that table, similar question, what have you learned or biggest lessons around business development and sales?

It's, it's a, it's a funny question because I've been to LA a lot lately and I found that this is my own personal experience. I don't know what it is, but I feel like in LA, you know, people are down to do business and they're also down to go out and have a drink or maybe go to a Lakers game or something like that. When you're in New York, it's very transactional and it's very, hey, you know, I got 10 minutes tomorrow, can we hop on a Zoom? It's like, if you have 10 minutes tomorrow, you probably have 10 minutes to write this long email that you just sent me. So just call me on my cell, or let's just go for a drink and it's all good. But I found that, you know, it's a lot more social in LA and, you know, we're seeing a lot of traction over there versus New York. We're seeing the traction, but it's very transactional. It's very, let's hop on a Zoom, let's talk about it. I had a Zoom call yesterday. We were one block away from each other. I could have gone for coffee.

It's all about efficiency.

Yeah, it's all about efficiency in New York.

Can't do the, can't do the 5-minute walk to meet you for a coffee.

It's really crazy.

That's actually, it's a really good observation of the difference between New York and LA. But I think you'll find, if I had to guess, that the volume of interactions is way higher in New York. Yeah, because people just want to like get to the point.

Exactly.

So you can talk to 10 brands back to back to back. In LA, it's like you go to coffee with one, you get lunch with one, you go to a Lakers game, Culver City to Glendale, back to the Staples Center. Yeah, the transportation is is not ideal in LA if you're going all over. How do you— what about like from an acquisition perspective, like your top of funnel? Is it different in New York versus LA in terms of how you're getting in front of brands?

Right now we're doing a lot of cold outreach.

We email.

Yeah, cold call, email mostly. And then it's a lot of referrals. We may DM on LinkedIn. LinkedIn's, you know, huge for us, you know, less so Instagram. You know, that's, that's definitely one way that we've been attracting brands and talking to them and sort of meeting them where they are, making it easy for them to You know, check us out, see the link, say hi to us. And then it's referrals. You know, a lot— we're finding, you know, a lot of our tech partners and service partners will say, hey, you know, have a brand looking for a new 3PL. You should, you know, talk to— you should talk to them now. Yeah.

Tell me more about compounding value of those referrals, because there are some people that I've met 3 years ago that only now are starting to refer business in, or people that I met a year ago that no one referred business in, and all of a sudden 10 deals come in. And so I'm curious from your lens, A, it's about making sure those relationships are still there, but also is it ever tough where you meet people and you really vibe and you think there's overlap and then it only actually starts a couple of years in?

Yeah. You know, there was, uh, Adams Footwear.

Yeah.

Great brand. They're awesome. Spoke to them in 2020 and had a quick conversation with them. They were doing fulfillment on their own. Really wasn't the right time. And then they went to another 3PL finally, stopped doing fulfillment on their own in, I think it was October of 2022. And my brother happened to bump into the founder in SoHo one, one day. You know, she was saying, she was talking about, you know, fulfillment needs and what's going on over there. And he said, just call my brother right now. Wow. And it was really easy for us to do that because we did all the work beforehand. So it took about 2 and a half years, but we ended up onboarding that, that brand. And that, that's turned— that's one, elevated our operation and allowed us to grow. But it's also allowed us to, you know, acquire that logo and be able to talk through, you know, those capabilities that we've gained by bringing that brand on. And, you know, we, we talk about this all the time, but, you know, internally, all our brands know other brands. They all know each other. Streetwear is a small world, especially. So, you know, if we can get one brand, work with them, do an amazing job, that can turn into 3, that can turn into 4 brands.

I always wonder in your business, like, do you have people who are asking you for other types of partners where you're referring out or within fulfillment? Is it usually like tech people hear about a brand who needs someone to help ship things? And so it's like, you're the guy, you're the guy.

Yeah. I mean, we're definitely getting people who are like, hey, can you just do this like one project here or one project there? And then they say, oh, do you know anybody that can do kitting or, you know, QC or anything like that?

Shout out Factor Quality.

Shout out Prince.

Prince is the OG Turning Pro.

Yeah.

Oh yeah.

Prince actually introduced us.

Yes. That's how it started.

Yeah. But that's like the perfect example where, you know, we've got a brand who's doing, who's, you know, doing their manufacturing in LA. They might be doing it, you know, in Vietnam or Taiwan. And I can refer them to Prince right away because a lot of people are looking for tech integration help or, you know, or even just manufacturing help. Sometimes people are like, hey, you know, who does footwear? And I don't know, but I'll figure it out. I'll go to some of our footwear brands and say, you know, who are you working with and how do I, how do I get the connection so I can introduce them to, you know, a fellow partner?

I think a big part of it too is when it comes to the compounding nature of those referrals, it's such a huge testament about just like staying in the game. Everyone in startups talks about longevity and you just need to stay in it. But I feel like especially with referrals and especially with long sales cycles where Maybe they actually chose a competitor, but 2 years later they want to come work with you. Yeah, you just have to stay in the game and you just need to keep doing it and hopefully doing good work.

It's sort of like staying at the blackjack tables in Vegas, you know, just it's, it's, you got it. It's a, it's a war of attrition.

The longer you stay, the more money you lose.

No, you got to leave your debit card upstairs. There's no more cash coming out.

Um, if your business fails, like, why?

I think it's I think the way— the only— I think the only way we fail is if we're not, you know, executing for our partners and we're not collaborating with them. I think it all comes down to collaboration and, you know, how can we make sure they're communicating with us and we're communicating back to them? I think one of the hardest things to do is to let a brand know when something went wrong and how you can never tell them fast enough. You can tell them within a second and it's still never fast enough. And, you know, the communication level's always got to be there.

What does innovation look like in this space? Like, is there a world where it's actually just robots like running around your warehouse, like doing orders?

There's a level of robots. There's a lot going on in the space in terms of automation. It's not necessarily, you know, robots walking around handpicking product, but there's, there's a company called AutoStore that is great. They, they just make bins that are extremely efficient. and then a robot will go pick that bin, and then there's one person at the bottom of that, you know, massive cube of thousands and thousands of bins that is picking those products. So it makes it a lot more efficient to obviously pick the product, but that's one person that can do probably like 30x of what, you know, a normal operation can do.

I just think about like the developments with AI as it relates to general software, and so I'm just— I think about that business being a very people-heavy manual business, there's got to be people out there who are trying to solve like, how do I let an owner of a 3PL have zero employees and like actually do this, you know, in a future state? Of course.

Yeah. Uh, the founder of ShipHero, who's, you know, the WMS that we use, Aaron, he, he put something out there, but he was talking about, you know, what are the developments, what's going to happen in this space. Nobody knows. Uh, I think it's really difficult. People are trying, you know, a lot of it is just how much information can we get to be smarter, right? How can we make sure that inventory is placed in the right location so that speed, speed can happen, you know, at a faster clip and you can continue to exponentially grow and expand on that? It's, it's not easy. And it's a space where, you know, a lot of the players in the game are not used to investing in technology, right? Like all these, all these old school warehouse operators, there are, you know, thousands and thousands of 3PLs out there. All these old school warehouse operators are, you know, running an easy business. It's cash flowing, it's simple. You know, who's the one that's doing the innovation? It's, it's hard to, it's hard to convert those types of, you know, I'd say customers from an AI and tech perspective.

Yeah, but isn't that where it becomes like an adapt or die kind of conversation in a future state when there are enough of like tech-forward 3PLs that brands are like, I'm going to go here because it's way cheaper and faster and all the—

Well, that's assuming that the brand is like able to wrap their heads around it themselves.

Yeah, it's, you know, adoption.

It's a high retention business. So when a brand signs on with us to, to get their product out of our warehouse, to learn a new system, it's a new software, new system, new people that they need to meet and integrate with and, you know, build a relationship with. It's, it's a high retention business and it's really high switching costs. So for them, if it's going well with somebody who's doing it manually and, you know, the costs aren't that difficult, you know, things are great, but, you know, once they're ready to move on, yeah, I think that they're, they're going to go with somebody who's a lot more efficient and a lot easier.

So then what's the— what is the most common use case when brands are coming to you knowing that switching costs are really high for them to leave maybe their previous 3PL?

Sometimes it's communication and cost. You know, we talk about— there are a lot of, you know, 3PLs in the fashion space that are out there, and I said this, I said this earlier, but it's that communication, it's that You know, we can, we can try to beat them on price to buy that logo. But at the end of the day, if we're not doing a good job, the price really won't make a difference.

As you've scaled up to larger and larger brands, Mad Happy, Adams, Terry Johns of the world, I'm sure a bunch of others that you were mentioning. In each of those conversations within the sales process or BD process or final negotiation, you need to show up as your best self in every one of those. And I feel like as you're closing bigger and bigger brands, it can get more and more stressful that you need to show up. So tell me more about the mental aspect behind it, that sometimes you're in these rooms with crazy brands you never thought you'd be in, and you need to be calm and steady and on it, and you can't mess up those conversations.

It's not easy. Um, we had a brand right when we were moving to Brooklyn that we had an opportunity with. They were signing with another 3PL. Uh, there was potential that, you know, we were excited, you know, about, about bringing them in, and we weren't even set up yet. We didn't have the racking. I needed to show up and just look the part, feel the part, you know, do everything and sell a dream because this was just an empty warehouse space.

Spoken like a true founder.

Yeah. I'm like, don't worry, everything's going to be great over here. This is going to be beautiful. You know, and we sat there and she, and she looked at me and she's like, I totally believe you. Not making the jump right now. Let's talk again next year. You know, sometimes we're talking to brands and, you know, it's on that Zoom call and, you know, talk to the team. We sort of prep internally, have our, have all our ducks in a row. A lot of it is just connecting and building that relationship. And for me, it's just understanding what they need and going back to the team. I now have a team that I can turn to and say, hey guys, what can we do for this brand? Who do I bring in depending on what their needs are? Is it wholesale? Is it retail tech? What is it that's their biggest pain point? And I bring in that right person. You know, and it's that collaborative effort. It's bringing in the team.

But on the days— that all sounds great. On the days that you're well-slept and you're working out and you're eating healthy. On the days that you just put out a fire the day before, your biggest client's unhappy with you, metaphorically or hypothetically.

Yeah.

And you got like 4 hours of sleep. You just flew in on a red-eye from L.A.

I got 2 kids. I'm always on 4 hours of sleep.

On those days when it's hard to show up, it's not easy.

Yeah.

What are you telling yourself? Is it just get through this, show up for the team, show up for our customers?

I mean, you're, you're not gonna always show up at your best and that's just the reality of it. It's, you know, I, I play a lot of tennis, so it's like life imitates tennis. You're not gonna always be your best self on the court. You're not gonna always be your best self out there. But it's, it's this old trick that, that we learned growing up playing tennis. It's, uh, it's just WIN, W-I-N, what's important now. And you focus on that. Calls are quick, right? When they're Zoom calls, they're like 20, 30 minutes. So you can lock in for that 30 minutes and you know you're not gonna, always play your best, but you focus on what's important now. You ask those questions. And personally, I get a lot of energy from, from other people, right? Those conversations— I may— my wife might look at me and say, you know, you're exhausted today. Like, I don't know how you're going to do this. And then she tells me, but don't worry, I see you have a lot of meetings today. You'll be fine. You'll be fine. You got a lot of good interactions that'll give you a lot of energy.

I want to hear about life as a founder with kids. I feel like we've only had a couple.

Have we?

Matt from Huron. Ron from Avi. And I'm not even sure beyond—

I think that's all.

Is that it?

Yeah, maybe a couple others.

Like, what— how— what is that dynamic building a company and also raising kids?

I'll give you a funny story from when we acquired that company a few years ago. I had just had my kid. He had just turned 1 and my, my apartment was in SoHo, the warehouse was in Tribeca. So I would wake up, hang out with him in the morning, chill. And then once it hit, you know, 8:30, 9:00, walk over to the warehouse, open up myself. The team wouldn't start coming in because it was really just, you know, a warehouse team that was coming in to pack the orders. So I needed to do a lot of prep before and we would work late nights. So I would go in, set up that— set up the warehouse, set up the operation. Either do lunch or dinner with my wife and my son, walk back home. It was like a 7-minute walk. And then once my son was out, you know, once he was out cold sleeping, 6:30, 7:00, I would walk right back to the warehouse and continue the operation till like 10, 11:00. And my brothers, my wife, my family, my dad, my mom, my sister, you know, they would be so supportive. They'd just start sending us brands like they would DM me brands all the time. So it was that energy. It was that feel of like everything's going to be cool. And then, you know, the fun part is getting to bring the kids into the warehouse, getting them, getting them to feel, you know, what I'm doing every day and talk to them. It's, it's tiring. It's exhausting when, you know, your kid comes to your room at 4:30 and says, I had a bad dream. But, you know, it's fun. Like, that's, you know, that's what it's all about. It's—

has it changed how you think about, like, prioritizing your time and also just your to-do list, knowing that you have— yeah, a couple of non-negotiables that a lot of other founders don't have.

Yeah, I think, you know, I'm definitely flexible with it, that's for sure. You know, generally in the mornings is when I see my kids. I don't get home till like 8:30, 9:00. So I'll like before school, I'll hang out with them. We have like a whole coffee routine that we do together.

And then little kids, yeah, he's got his fake like grinder and espresso machine.

I've got mine. And he, if he had the muscle strength, my 5-year-old could, almost 5-year-old could, could really make me an espresso. Um, but like normally it used to be when I was working real estate in the office by 8, 8:30 and, you know, out at probably around 7. Now that, that time has completely shifted where, you know, my morning time, you know, is the hangout, get the chill, do my thing, come into the city, and then I have a long day, you know, ahead of me after that.

Have you just become more efficient with like we were talking about Ben and I do sometimes solo podcasts. And we call them therapy sessions.

Yeah.

And we were talking about delegation and I feel like a lot of the phases we're going through right now because we don't have kids is learning how to delegate and learning how to empower your team. And I feel like a kid just introduces again this non-negotiable, as you mentioned.

Yeah.

Of it's not a question of whether you want to delegate, you just need to delegate because you got this kid that's waiting for you.

Yeah. I mean, for me, it's— I don't, I don't think I'm that efficient. I wish I was more efficient. Definitely. You know, my— I'm always available when my kids are around, right? They're jumping in on a Zoom call, right, when I'm taking it at home. And they jump into that meeting and, you know, it is what it is. I sort of just go on mute while they're talking to me and, you know, they got to be there. I don't really have a choice. There's no door on that room and they're just running in. You know, would love to have those non-negotiables, but sort of as a founder, you don't have that that optionality. You know, everything really is up to you. You wake up in the morning, you know, if the— if something's going wrong, you're the one that's trying to really put it out.

How do you think about like, are there any types of resources that you're using to make sure you continue to level up as a founder when you're living in chaos, whether it's like books or podcasts or—

Yeah, I mean, I love my podcasts. I found that going back to tennis, but my tennis game is always better when I'm reading, which is a really interesting thing. It's a mental game, tennis. So if you can And the same thing in life, right? There are only so many decisions that you can make. So if you can really train that brain, train, train your mind to continue to operate that way. So, you know, love my books, love really podcasts in general.

What podcasts do you like to listen to?

Turning Pro. That's, you know, the best. Should be the number one.

You trained him well before the episode.

But I'd say, you know, Farnam Street is probably my favorite podcast. Yeah. Shane Parrish, he's amazing. I'm reading Clear Thinking now.

So it's good.

That's fun. It's pretty solid. Yeah. Mm-hmm. Um, that one's great. And, you know, people are sending me podcasts all the time or, or books to read or, you know, different things like that. Um, I have like my own personal Notion where I have all the books that I read and I try to do notes on them. And sometimes they have tags that like finished without notes and like I gotta go into the Kindle and search it. Um, but definitely reading has helped, you know, has helped my brain stay sharp and, and stay, stay calm and stay clear.

Are there any non-negotiable habits that you need to have in your day in order to be at least semi-present and awake during calls, hanging out with your kids, staying present?

Uh, yeah, I mean, when I wake up in the morning, it's like Athletic Greens automatically, jump into that, you know, the Huberman thing.

Um, RIP.

Yeah, yeah. Um, so, you know, jump into that. That's, you know, that's my morning. It's not a non-negotiable, obviously, you know, got to jump into different things. But generally I'm making coffee every day and that, that really helps me. And then, you know, as the day goes on, you know, definitely I try to take those breaks. I try to take like a 30-minute break, go for a walk, go grab lunch or something.

And, and yeah, it's crazy how the difference in my mental psyche after a walk, especially without a podcast in or without music in, One of the, one of the best things I've been doing recently to make sure, like after the day when my roommate's back or my girlfriend's over, I have friends over to make sure I'm actually present with them and not thinking about the last Slack or email that I got. Even just a 10-minute walk at the end of calls, even if I have a little work after, it's just one of the best bookends to like, okay, I'm going to start the next phase of my day or my evening. Um, that's definitely one of the things I swear by, but I feel like once between calls would work too.

Yeah. Uh, when I was training, I did the marathon a few years ago, and when I did it, I was, you know, listening. I had my AirPods in, and, you know, as the runs got longer, once I started doing 6, 8, you know, 10, 12 miles, the runs got longer and my AirPods kept dying. So I stopped having music to really run with.

That's my guy right there.

Which was great. You're gonna love that. It was awesome.

I was like, dude, if you go listen to every Turning Pro episode, there's probably at least 4 episodes where I talk about how I don't run with headphones.

Yeah, I wish I could run more. Like, I play, I play a lot of tennis, so it's like, like I stopped running as much since the marathon. Like, that was such a painful experience. But, you know, I went for a run on Friday and I came out of it. I said, oh, this is, this is a good feeling. I feel great right now without headphones. Yeah, they died on the way.

Does it just clear your head?

Yeah, it was like 2 miles, so it was a quick one and it was just a good way to clear my head right before sales call. Right. So I was able to lock in and, uh, and have it— have that conversation, you know, a little bit sweaty but, you know, really locked in and really, you know, in the conversation.

I did a 16-miler like a week and a half ago with no headphones, and it's just like you get— you get into a— you get into a flow state much faster, I think. And it's kind of on you to either accept it and embrace it or be so miserable in it that you just stop.

Yeah, I mean, I used to do— I used to do runs with calls. No way. My friends would call me while the headphones were in and I'd answer because I'm like, oh, okay, friends, fine. I thought you're about to be like, oh yeah, like sales calls.

I do like a 2-mile like zone 2 run heavily.

And yeah, just like hyperventilating.

We only have a few minutes left, but I'm curious on your end, within— especially within the apparel space that you, you specifically operate in, are there any brands over the next handful of years that you really want to work with, that you're really impressed by? Could be the quality, just the design.

I mean, this— we were talking about the Lady White Co. Like, I love them. Like, I want them to, you know, continue to grow. Um, I don't know them too well, but, you know, spoke to the founder a couple times while I was in the store. I don't think he even knows my name, but I was like, Love Lady White Co. You know, want to continue. I know you had like Max Eagleman on here. Love that brand. You know, there are a lot of brands that are out there. It's like an APC or, you know, Kate. You know, there are a lot of women's fashion brands that are out there too that, you know, we just love.

Is it the design, the quality, or just even knowing the team and how good operators they are?

Personally, it's sort of the quality of the product. Like, I love— I have— I think of every single brand that we work with, I have at least one product. And some of them were from after the— after we acquired them as a customer. Some of them are from way before, you know, like Adams. I had their socks and I was using their masks in COVID and—

oh, their masks.

Yeah, they were great. So it's really, you know, what would I shop? And that's sort of how I look at it. You know, we want to work with all different kinds of brands, but at the same time, you know, the dream brands are the ones that you shop at, you know, whatever it is.

I love it. Anything you want to cover?

No, I think I'm good.

Hell yeah, man. Speaking of that, camera, tell people where they can find you.

Yeah, you can find us at shipessential.com or David J. Sit on Instagram or Twitter or something like that. But yeah, hit me up. I'm around.

Yeah. Thanks, guys.

Oh yeah.

Thanks for coming on.

All right.

This is great.

What's up?