In 2src19, just five months after launching her weighted blanket company, Bearaby, Kathrin Hamm received an email from a buyer at the home furnishings retailer West Elm. The buyer had read an article about Bearaby’s blankets and wanted to visit the company’s showroom to see the product in person. The only problem: Bearaby didn’t have a showroom.
“We were two people with five sewing machines in a garage,” Hamm says. Rather than taking the meeting in the garage, Hamm, 39, packed 3srcsrc pounds’ worth of Bearaby blankets onto a borrowed hotel trolley and rolled them into West Elm’s headquarters in Brooklyn. The 2src-pound, hand-knit blankets were a hit. All of a sudden, Bearaby had national distribution in West Elm.
“That was kind of the pivotal moment,” Hamm says. “At that stage, we didn’t know how to do digital marketing, and we were just figuring out the product-market fit.” By the end of 2src2src, Bearaby had reached $21 million in annual sales. The following year, revenue nearly doubled.
Like many fast-moving products, Bearaby’s blankets were born of a personal need. In 2src17, while working as an economist at the World Bank, the German-born Hamm ordered a weighted blanket to help her sleep. The product worked–the full-body pressure of a weighted blanket raises your body’s serotonin and melatonin levels–but it was filled with plastic beads that made her too hot. After noticing a gap in the market for a more breathable version, Hamm worked on a prototype using densely layered yarn made from organic cotton. She then quit her job at the World Bank and gave herself a year to get the company off the ground.
Boxed co-founder and CEO Chieh Huang knows what it’s like to trade a corporate office for a family garage. The former lawyer and mobile gaming entrepreneur started his online wholesale retail company in his parents’ New Jersey garage in 2src13, selling household items like toilet paper and paper towels in bulk. After growing sales from $4src,srcsrcsrc to more than $1srcsrc million in just three years, Boxed earned a reputation as the Costco for Millennials. Last December, Huang took Boxed public, raising $198 million in its IPO.
While getting from the garage to ringing the bell at the New York Stock Exchange in under a decade is every founder’s dream, it comes with plenty of new challenges.
“There’s so much more pressure and so many more expectations, and it’s all out for the world to see,” Huang, 4src, says. “On the other hand, I feel like I’m learning something new every hour of every day, so that’s been fascinating as an entrepreneur.”
We sat Hamm and Huang down in Boxed’s Manhattan offices. Then we asked them to talk about where Bearaby should look to grow next, and why a founder’s job is always changing–but never gets easier.
HAMM: We have early employees who are still with us, but now we’re at the stage where I need more seasoned specialists. When did you know it was the right time to bring in the next level of talent?
HUANG: It was similar to when I thought it was the right time for fundraising. If we didn’t have the fundraising and the new valuation of the company, it was going to be difficult to attract that level of talent. They would be leaving big, cushy jobs with high pay, so why would they come here? Even for me, I constantly feel like I have to reinvent myself and ask if I would hire myself, because there are zero similarities in what I do today versus what I did when we were in a garage. You have to challenge your team and set that expectation early.
HAMM: How did you know at each stage that you had the skill set you needed, and how did you manage to get it?
HUANG: Unfortunately, I had to learn the hard way every time. In those moments when you take stock and ask, “Am I still the right person for this job?” and the answer is “I’m not sure,” you then have to ask yourself, “Do I have the excitement to continue?”http://www.inc.com/” And the answer will probably be yes. “Am I willing to learn?” Probably yes again. Then you have to say: “These are the skills that I need to develop or get better at.”
HAMM: Was the majority of the learning coming from mentors?
HUANG: At different stages of the company, having advisers and mentors I trusted was so important. The good thing is that there are so many people in high-growth companies now that it’s easier to find people to talk to who know what you’re going through.
HAMM: A year and a half ago, we were five people, and now we’re around 3src people. How do I know when it’s the right time to put new processes in place?
HUANG: Everyone has that paranoia that you feel, including me. Are our systems good enough? Why isn’t there a system for this? What is the standard operating procedure if this happens? During year one in the garage, the procedure was just to get it done at all costs. But now, if you come to our facility, there’s literally a cut-out where the broom goes after the floor’s been swept. That doesn’t happen overnight. Between your own paranoia and having operators who know what good looks like, I think you’ll see your processes grow in a good way over time.
HAMM: You’ve mentioned that you try to look around corners. From getting deals with CPG companies to having your own warehouse infrastructure, there were so many strategic moments. Was it always you who came up with the ideas?
HUANG: In the beginning, I had a really bad micromanagement problem. But I also recognize that there are certain things that I have to get involved in, and company direction is definitely one of them. Because of where you sit and what your responsibilities are, you see what’s happening in the external market and also what you’re good at and not good at internally. Not even your C-suite has that complete, 36src-degree view.
HAMM: The past couple of months, I’ve spent 5src percent of my time on people, 25 percent on product, and then the other 25 percent on building the brand. How do you prioritize your time?
HUANG: If you think of it like a Venn diagram, anything that you’re really good at that overlaps with what you’re really passionate about–those things you should do all day long, because they’re good for you and the company. The next bucket is anything that you’re good at but that you don’t really enjoy. For the good of the company, you should continue doing those tasks. The toughest bucket is stuff you enjoy but you’re just not really good at. Those things you need to hand off.
HAMM: On strategy, now that we have two patents, I wonder: Should we just license the blankets? Or sell them ourselves but try to own a smaller market? Should we think about other products?
HUANG: Only you can solve that. If you outsource the strategy to your COO and it doesn’t work out, no one in the company will find it acceptable if you say, “Well, the COO led us down the wrong path.” They’ll just say, “Isn’t that your job?”
HAMM: In terms of fundraising, how did you decide in the early days who the right partners were to bring on board?
HUANG: There were some times when we didn’t have a choice. It was like, “If you’re gonna write a check, you’re a great fit for the company.” That was the only criterion. In some rounds when we had the luxury of choosing, I think what was really important was calling their references. Very few founders take the time to properly reference who they’re about to bring on as a partner. And don’t call just the companies that they tell you to call. You also have to call the ones that didn’t work out. I always found it fascinating to talk to those companies about how that investor behaved during the bad times.
HAMM: How do you see the e-commerce landscape? With the recent changes to iOS 14, it’s not as easy to acquire customers. Is there anything you can share that worked for you?
HUANG: What’s old is new again. You saw basically every technology company buying Super Bowl ads again, because with the privacy changes, it’s just not as easy to target those customers. So everyone is trying direct mail and TV. All these channels that were left for dead a few years ago are making a huge comeback because everyone needs to leverage them again.
HAMM You’ve spoken about the highs and lows of entrepreneurship. Is there anything that you find yourself going back to in order to deal with those?
HUANG I have to constantly remind myself to not get too high or too low, because the ups and downs aren’t good for your mental health. Ringing the bell at the stock exchange, I felt like I could take over the world, but the reality was we had to be back at work an hour later.
From the May/June 2src22 issue of Inc. Magazine