Manish Chandra built Poshmark around love, not profit. He recruited early users one by one in a San Francisco bar and created a community of seller stylists turning closets into boutique businesses. The 80/20 revenue split has stayed unchanged for six years, and the platform now has 2.5 million seller stylists.
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Manish is the CEO and founder of Poshmark, and he's going to tell us the story of how he scaled this company and made it happen. So let's give a round of applause for Manish. Good afternoon. I feel like last time I was here, I was watching TV Corporation, so I'm feeling a little bit of a rock star here. I might start dancing or something here. Well, I'm going to tell you a little bit about how we've created Poshmark, which has grown to be a very avid sort of social fashion marketplace platform, and really where we focused on a core tenet, which is love, and really built the entire platform on how love operates as a core tenet of communicating and tying a lot of emotions. And one of the central founding principles of the company and the platform is that when you focus on love, money comes. And when you focus on money, nothing comes. And that's sort of how we've grown this thing. How do I— is there a clicker here? There is. Okay. So the key thing that really what the opportunity we saw was that there were a lot of marketplaces that were geared towards selling products, but there was nothing that enabled any individual to really participate in the world of fashion and style. And my insights from creating Kaboodle was that a lot of fashion discovery had to be done through people. And if you look at sort of the last 5 years and see the migration of how fashion has moved more and more online, a lot of this is driven by individuals and people influencing how fashion is consumed and discovered online. And by fashion, we really take it in a broad way. We certainly talk about the clothes and items we wear, but then we also talk a lot about anything that is style and discovery-based products. And that is sort of some of the future of where we can really expand the platform and bring a whole bunch of products that people can buy and sell on Poshmark. The key thing we wanted to do from day one was to build a community, and to do that, we really started with literally one person at a time. So for the first year of existence of the company, at the end of that year, we had 800 total users. And those 800 users were recruited literally one person at a time. A lot of them actually not far from here in a bar in SoMa in the city called District where we would really bring the community into that where my team would go out and recruit and we teach them how to take pictures, how to sort of photograph and how to sell items. And in fact, in the early days, we didn't have any payment or shipping system, so we really focused on using that place also as a venue for transacting. So people would bring little packages of clothing and transact them like little secret drug deals that were going on in the bar. And that's how sort of we started the platform. And one of the big realization that we had was that people were craving to be connected in real time, and people were craving to be connected with each other in sort of this virtual world that was emerging around mobile computing in 2010-2011 timeframe. So what we created and have sort of started to enable is what we call the next generation of retailers. So these are people who are starting fashion businesses and scaling fashion businesses where they may start with just stuff in their closet, but then slowly build out a fashion boutique which is maybe generating hundreds of thousands of dollars a year, And in the last year, we've also enabled them to turn them into fashion brands that they're creating hundreds of boutiques that are selling on their behalf. So what you see is a person like Suzanne Cannon, who's a mother who has two kids, who lives in Texas, who started out by selling from her closet, built out a business over the last two or three years that is a boutique, launched her own fashion brand called Infinity Rain on Poshmark, and now has over 250 other women on the platform selling on behalf of Suzanne Cannon and building out a boutique network for Infinity Reign. So it's really changing that sort of whole process. We've raised a little over $7 million. We have close to a little over 2.5 million seller stylists. And what's remarkable today is that in Poshmark pricing, which is actually many times discounted from retail pricing, these women are uploading, and now men are uploading, a little over $4 million of inventory a day, which is roughly a way to think about it is that every 3 or 4 days people are opening up what is the equivalent of a Nordstrom store on Poshmark. The core market opportunity is massive. We are talking about $30 trillion. That may be a little overstated, but they are really spending a massive amount of money. I think The stat is a little about a trillion dollars worth of fashion is consumed every day— every year. And so every 3 years is like close to $3 trillion. I think that may be the number that they wanted to put here. And a lot of it just sits in the closet and goes to waste. So we really found a place and a way for that to sort of get consumed. But more importantly, by connecting people to people, what we are doing is bringing back small retail in an online setting. So if you go back 30 to 40 years in America, the way we bought products was we would walk into a neighborhood store, whether it was for fashion or hardware, and it was Tom or Jenny, they would know you by name. They would in fact merchandise to that store catered towards specific customers, and they would, when you walk in, and they'd say, "Hey, this is not just the screw that you want today, but here's a hammer. This is not just the dress you want, but here's a piece of necklace to go with it." Well, over time as we move towards big box retailing, that personal touch disappeared and everything became sort of SKUs and items and products. When we move to e-commerce, we sort of just took that same model and applied to e-commerce and things became even bigger and more massive. And then we tried to bring personalization as a substitute for personal. Well, personalization could be Minority Report, but it isn't personal. What we are really doing is enabling Jenny to know you by name, and that's exactly what happens. That's why our seller stylists have a 75 to 80% repeat selling process, and we did that by really creating a social framework where when you build your follower network, you start to get that repeat selling paradigm happening. But the second thing that happens is what used to happen again in the olden days, where it wasn't just the brand, it was also the communication that you were putting around the brand that led to the consumption by the person. By building that affinity with the seller stylist, it allows many different independent and smaller brands to actually thrive on the platform. In fact, when you look at our wholesale engine, the top 5 brands are brands you've never heard of, and these guys have scaled from zero to millions of dollars of revenue in just less than a year on Poshmark as a platform. This is our first, first team, and one of the keys to creating a great company from day one is to really recruit the right team, and I've been privileged to not only be surrounded by an amazing team, but the fact is that almost all of these people are still here today, 6 years later, and through a lot of ups and downs. We are a company that really prides on really bringing people together and then keeping them, whether it is our team or it's our community. If you look at cohorts, which is a group of people who join at a certain point in time and scale up, our cohorts deliver revenues as if it is sort of, you know, if they generate $1 million in the first year, they keep generating $1 million forever. And in fact grow on top of that. And that is something you don't see, that kind of loyalty across the whole platform. So when we sort of really started, one of the key things we wanted to do was to keep not just shopping, which is, you know, has to be simple and fun, but also selling simple and fun. And to do that, we had to fight many different battles. So one of the things, sort of vision I had was if you're an 18-year-old girl and you're sitting in a college dorm and you want to sell or shop on Poshmark, it shouldn't be a chore. It shouldn't require you to sort of on-ramp as a merchant, figure out how much things weigh, figure out, you know, to build a reputation online, etc., etc. It should feel like fun. Selling and buying should feel like taking Instagram photos or taking a selfie on Snapchat and being able to participate in it. To do that, we had to fight a lot of sort of built-in logistics payment systems that existed out there. We challenged the norm of how payments and distribution of payments should work. And that led to in 2013, 2 years after we started the company and things were scaling, where every single payment processor in the country had rejected us. And we were almost 2 months from shutting down because of the mindset we took to the problem, saying that we will only want to support a payment processing system that eliminates the need for every one of our sellers to onboard as a merchant. And it took many more months to fight many different battles before we won that thing. So today when you come in, you can literally take a few pictures and go out and start to sell, and you don't have to onboard as a merchant no matter what your scale is. You could be doing millions of dollars of business or selling one item, and that allows a very seamless experience to happen where today in just the hour that you'll be sitting here, over 300 to 400 people would have opened up and signed on as new sellers, stylists on the platform. Second thing we had to do was to make shipping simple. Fashion has this unique characteristic where most items are very, very light. However, items can have very random shapes and sizes, and at the same time, some things can be arbitrarily heavy. What that leads to is, is that you really don't know how much it's going to cost to ship something. You don't know what it'll take to do that. The second characteristics, particularly for women's fashion, that exist is Even though it can take weeks to make a decision, once a person makes a decision, they want it tomorrow. So it is quite possible that I now need that dress to wear on a date tomorrow or for a wedding this weekend. How do you make that happen? You need speed, efficiency, flexibility, and all of that on a highly distributed logistics network. So we created this single box, which is now called Posh Post, that took almost 2.5 years to correct, and in the process USPS almost wanted to put me in jail because we had hacked their entire shipping system. Not hacked it in a way, in a bad way, but really created a service that they didn't support. And it took a lot of negotiation meetings all the way to the top to really create in 2014 what is now called PoshPost, which is a unique shipping system that allows you to drop any number of fashion items in a box, put our label, ship everything 1 to 2 day priority, and as a seller status, you never have to pay a penny. Everything is priced in. And in fact, the pricing of that box, which we launched in June of 2012, and at that time we launched the box for $7, is today $6.49. And in between, the pricing of priority mail and other systems has gone up by between 40 to 60%. So it was a belief we took to the market in 2012 where we were losing a lot of money, and today that's actually a profitable box that we can scale and really deliver to millions of our sellers, stylists, shipping millions of packages out there. So you have to take a core belief and really not give up. If you want to keep things simple. Keeping things simple is, as we know, super hard. We are really bringing social and commerce together, and this is really the power. So for example, one of the norms we challenge is every marketplace is built on ratings. Poshmark, for the first 3 years, actually had no ratings. Even today, the ratings we have are actually kept private to a seller stylist. The only thing that is published is a 5-star note that is left that we call a love note. And that's built on the fact that at the point a woman is actually putting her closet online, not only is she vulnerable because every feedback hits her personally, she is also not confident that what she's putting in makes any sense to put in. And then slowly she starts to actually sell stuff, and that is amazing. But then you get one bad comment and you sort of feel like, oh my God, Is it something wrong with me or my style or my products? And so that's why we really focused it from day one on a very deep emotion that everyone wants to feel, which is to be feeling this feeling of love. And if you can do that, then there's a lot of longevity you create in the system. And that's the social part of the platform. The second thing is, in order to drive the platform, you have to constantly curate massive amounts of inventory to create freshness. So our seller stylists are empowered to not just curate their inventory but other people's inventory. We're the only marketplace where really to succeed you have to actually pay forward. You have to give love to other people in order to build your own brand. And that leads to almost today 7 million items being curated by our seller stylists on a daily basis. 6 months back it was 3.5 million items being shared on a daily basis. 6 months back it was just 1 million items being shared on a daily basis. So that's a metric we scale and that ultimately drives the entire merchandising platform. And ultimately drives liquidity as well as sales for every seller stylist on the platform. So the key in all of this is to really always think about who you are building this product for at a very deep empathy level and ultimately fight for that person. And how do you do that? You have to do that by being in touch. Well, I'm not a woman, so I can't really look at myself, and in fact, there could be a flaw if I just look at myself as a customer of one. So on a daily basis, in fact, for the first 6 months, I personally tried to answer every single customer inquiry that come in. And today I'm sort of solving dozens, if not many, many dozens of customer inquiries that come in on a daily basis on different channels. So in fact, at this point, probably have 7 or 8 things I have to respond to, some on Facebook, some on Instagram, some on email, some on private messaging, some through Poshmark, that you sort of are constantly engaged with the system. We've done, I think, hundreds of events over the last 5 years, and I have probably missed only 2 so far traveling across the country. So you always have to be constantly in touch with the customer that you're building the product for. We really empower our community to spread the love, and that is one of the ever-binding features. And love doesn't have to be completely ethereal. It is something that actually drives the development of their brand, development of their followers. And ultimately allows them to succeed. And in the process, they're empowering other people to succeed and other people to succeed. And that creates a community, but it's a community powered by love, which ultimately ends up delivering success to each of these sellers through their incomes, through their independence, through money. So to do that, you really have to build something where everyone is accepting of another person. And in order to keep a culture scalable, you have to from day one build a tenet where each person really accepts another person. And in a community, that is very, very critical. And so one of the tenets we have in the company is that in order to accept other people, you have to first start to accept yourself. And if I were to look at all of you, which is hard to do in this darkness, I'm sure all of you feel a little bit weird inside. In fact, part of the reason you're sitting here is because you feel a little strange. By embracing that strangeness and that weirdness, you can actually accept other people. And that's one of the core tenets of the company. Community, and that was founded in the very, very early days of how we started, and that's sort of how we start and live everything. And that allows us to constantly scale the business and bring in different points of views and different point of views within the company itself. So that scalability which starts from logistics goes into payments, goes into how we think about community, goes into how we think about love, goes into scalability. But the one thing I did not talk about is money. I'm going to go and talk about money. From day one, we created a partnership with our seller stylists, which was a 20-80 partnership. They kept 80% of the revenue, we kept 20% of the revenue. Throughout the 5 and a half or 6 years that we've been around, people have attacked that. Somebody wanted to offer 10, 11, free, 2, 3, 4, 5, 6, all kinds of numbers. Ultimately, most of the businesses melted down because they had to change those models, either start to tax the customer more or come up with hidden taxes, etc. In the 5 years, that partnership has remained intact. We have never raised our fees. In that same time frame, Amazon, eBay, many other marketplaces have changed their fee structures more than a dozen times and came up with 12 to 15 other taxes for the customers. So that is a trust that you create because you're thinking of scalability in the future and take the arrows today so that you don't have to change your system out later. And that That creates a foundation where you've really empowered people, created a trusted partnership with them, and you can deliver innovation to them, deliver ways for them to expand their business that ultimately creates a unification of everyone and what we believe is something that's going to scale forever regardless of how the landscape evolves. Thank you very much and thank you for your time.
