 From Sand Hill Road in the heart of Silicon Valley, it's theCUBE, presenting the People First Network, insights from entrepreneurs and tech leaders. Hello everyone, I'm John Furrier with theCUBE. We are here for a special conversation as part of Mayfield's 50th anniversary, People First Network. This is a series of interviews from thought leaders around entrepreneurship and insights. I'm John Furrier with here with Manish Chandra, who's the CEO, co-founder and CEO of Poshmark, a very successful company, serial entrepreneur. I've known Manish for many, many years, going back to his early startups. Great to see you. Thanks for spending the time today. Thanks for having me, John, and it's great. We were just talking about our early days, where you were doing your podcasting company. I was doing a social shopping company back in 2006, 2005 timeframe, right, for a long time. Pioneers have arrows on their back as they always say in entrepreneurship. But if you look at the time when we were doing startups over 14 years ago, social sharing, democratization, these were the buzzwords, these was the way that we were all trying to ride. You know, the 2008 hit kind of took the water down a little bit, but still the game didn't change. The rise comes Facebook, Twitter, social, multiple channels. The consumer's expectations changed a lot in that timeframe. And I want to get your thoughts because you have two successful companies, Kaboodle and now Poshmark, almost 40 million users, billion dollar valuation, hundreds and hundreds of employees, you got like a hundred openings in your company. You're ramping up when you're scaling. But the expectations or uses have changed. What are some of those dynamics in your business that you're seeing? I think the biggest sort of culmination or ignition point for social platforms came with the advent of mobile. And early days of mobile were crude days, but you know, if you look back to the advent of Poshmark where sort of the idea of Poshmark reignited in my mind, it was 2010 and iPhone 4 had just come out. It was a couple of months after Instagram had started and Snapchat had not even started yet. And what I think mobile platform did, and especially with a high quality platform like iPhone 4 was it made the process of content creation, consumption and sharing so fast. And you finally had the device that could produce it that it just kept accelerating. And now in the days of, you know, iPhone XS Max and what have you, it's just so easy. At the same time, the speed expectation, the transparency expectation, the velocity of expectation has gone up. And so what we've seen in Poshmark is day one, our users were spending somewhere between 20 to 25 minutes in the app. And here today we have millions of users and they're still doing that same thing. So that level of deep immersion that you see is sort of unique to the mobile paradigm. I want to dig into the user expectation and the experiences that you're delivering. But before we start, take a minute to explain Poshmark what you guys are doing as a core business, how it's evolved. So Poshmark very simply is a simple way to buy and sell fashion and other sort of style based paradigm. We call it a social commerce platform because it really brings together users in a unique way. But it really allows anybody to build a business starting with their closet all the way to opening up a full brand wholesale engine on the platform. We provide all of the infrastructure, you know, shipping, payments, technology, and you have to bring in your inventory. So we don't touch inventory but everything else we handle for you. So you're really helping people enable them to be successful with these views. Heavy lifting, heavy lifting. It's kind of like Amazon. You don't need to provision anything. You just kind of get started. E-commerce, in the era now of Google, Amazon and cloud technology, you see the rise of all the scale. How are you riding that trend? Because that's a tailwind for you. And what is that doing for the user's expectations? I mean, I have four kids, I'd see them all online. They never use their laptop stuff for homework, but they're on the mobile device. They're doing new things. This is the new expectation. What are some of those expectations? So in our business, which is the business of fashion and style, what it means for people is, number one is if they see something, whether they see something on Instagram, or there's something on Snapchat, it needs to be instantly shoppable, right? And that obviously benefits a platform like us which makes easy access to all of the different brands and things available. At the same time what social media is also doing is making the obsolete-ing of your products very fast. Because once you've used it, you've posted a picture, you want to be able to not consume it again. You've been seeing it. You've seen the same outfit. I can't wear it twice. Exactly. And so we make that easy as well. And then the third thing is, everyone is a content creator. Everyone is a seller. Everyone is sort of participating in this economy. People are hosting air and regest in their home. People are selling on Poshmark. And the reason is because phone and sort of this new mindset of collaboration and social makes it very easy for people to participate. So they want to be able to sell, but they don't want any hassle in that process. And so the new consumer expectation is instantaneous, deeply immersive and constantly changing. And if you can't satisfy all of those things, then it becomes harder for you to scale. So you have to use technology, the physical world and sort of the emotion all in the right mixture. One of the things I know that you're passionate about and we've had this conversation and we feel the same way, certainly at theCUBE is the role of community. And I see a lot of companies these days, whether they're saying we're doing an ICO using tokens to getting a big bag of money from venture capitalists. Oh yeah, our key strategy is to build a community. You can't buy a community. You got to really win the hearts and minds and provide value. And you really can't, you got to build trust. Talk about the role of community for you guys, especially in the stylist world, we have all this, where styles involves very robust community. How did you do it? How did you foster a community? How did you nurture it? And how has that played out for you guys? So community is a foundation of Poshmark and community is our value, our sort of, not just our customer, but also what we are. And community is what I'm more passionate about, even more passionate than fashion. And that was sort of in my previous company, the thing that was really highlighted for me. And so we did it very slowly actually. So in the first year of our company, we only had a hundred users. But these hundred users emerged. Then we went from a hundred to thousand, then thousand to five thousand, but very deliberately and slowly. So at the end of the first 18 months of our company's life, we had maybe 10,000 users, right? And then we went from 10,000 to 300,000 in the next seven months. Then we from 300,000 to 12 million in the next two years. And then today we are 12 millions to 40 million in the next few years, because once you have sort of figured out how the community is created, it can scale very fast. But the early days, if you compromise on how the community is being created, it's very powerful. For example, in the first probably eight, nine months of the company, I answered every single customer service email. And today I probably interact with 80 to 100 customer directly every day, really keeping the pulse and sort of servicing and service and love are sort of two of our core values. And it is very important that's built into the system. The second thing is the community has to be authentic. You cannot fake a community, which means there is conversations that'll happen in the community. There is, which may be antithetical to what you think is your brand. But if you don't let that authenticity happen, then what ends up happening is the community sort of with us away. Because people are not going to tolerate anything inauthentic. The third thing, as you mentioned, is trust. And so from day one, we created not just trust in the way the platform was built, but also in the economics. So day one we said, hey, if you're going to be part of this platform, there is two things that you're going to pay for. One is, as a buyer, you're going to pay for shipping. And as a seller, you're going to have revenue shared with us. And we're not going to charge you any other money. Nothing. And so we started from day one, our 2080 partnership with our sellers. And today here we are six or seven years later and we have the exact same partnership. On the buyers, we started by charging them $7 for shipping. Today our shipping is $649. At that time, our shipping was three pounds. Today it's five pounds. Everything was priority. Today everything is priority. So in six to seven years, if you think of any other marketplace in the world, not just in the country, how many times have they raised their fees? How many times have they changed their paradigm, changed their shipping paradigm for us? And it was very important in the early days it felt people were saying, why are you charging so heavily? I said, I don't want to charge anything different tomorrow that I'm charging today. And by the way, there is no additional fees we've ever imposed on the platform. So we don't have any marketing fees, any promotion fees, any credit card fees. And so that trust that's created ultimately leads to a lot of loyalty. So today you see our consumers growing, our users growing in every single cohort we have continues to grow in revenue more like SaaS businesses of those e-commerce businesses. And that to me is the power of community if you do it right. And that's an interesting point. There's a lot of things you said in there. I think worth doubling down on one. I just want to highlight is if you're creating value and you're certainly scaling, passing that down in cost savings and reducing costs and adding value, that's a secret formula. See, we know one company that does that really well, Amazon. And that has worked. And they recognize the value of keeping people in there engaged. So I think that's almost a takeaway for everyone watching is that if you're not adding value in reducing the costs while you're scaling, they probably don't have your math right. Absolutely. The second thing I want to talk about and get your reaction to is you know what community is slowing it down at first. That's almost counterintuitive. The almost the answer is put the pedal to the metal. Let's get some numbers. You took a different approach. You decided to take your time. Was that to get a feeling for the community? Build the trust. Understand the dynamics. Talk about why you went slow at first. The key is that the first two, three years, you are perfecting a lot of things, right? You have to make sure the things are getting right. And in the first year, it was all about getting the product right, right? And then we scaled. And then we quickly realized that that scaling was breaking everything. It was breaking our shipping system, it was breaking our technology software. So actually Mayfield, which was an early investor in Poshmark was on the board and I went to my board and I said, you know, I'm going to actually slow down growth by 60%. And if you can imagine a venture board hearing that from their CEO in the early days, it's challenging. It's a conversation. Yes. But I think one of the things that I value about Mayfield and my early investors is their focus on partnership with, at a people level, at a human level with me. And trust. And so we actually cut down our marketing budget by 80%. Built out the systems, got the partnership with USPS where we created the country's first fashion shipping label called Posh Post. And built out our technology and infrastructure, built out our payment partnership with Braintree and PayPal. And by sort of early to mid 2014, we started scaling and I've never stopped. And in fact, I had told my investors early on that first two, three years of building this business will be challenging. So hopefully you're prepared to go on this journey with me. But once we build it, it'll accelerate. And what you see with us is the business continues to accelerate every quarter. And we are seeing hyper growth six, seven years into the business, which is even faster than the growth we saw in the first few years. And part of it is that network businesses which are built around true sort of networks continue to accelerate and can accelerate later on in the process. But if you haven't created the right foundation in the early days, they fall apart. And I think that's a lesson. I think that's what entrepreneurs can learn because you got to go slow to go fast because in cloud-based businesses where you have network effects, if there's a crack in the foundation, it could come crumbling down. It can come completely coming down. And it did. I mean, there were times in 2013 when people were literally doing things and their data would get lost and other things. We had to fix many of those broken pieces. We had USPS come to our offices and say, hey, either you pay us multimillion dollar fine or we have the right to arrest you. We had to renegotiate our contract with them. There's a bunch of things that happen in that scaling. And you hear terms like blitz scaling and stuff these days and they're great terms. But at the same time, if you don't fix what's broken, you can't build a super scalable business. You got to be ready to blitz scale. As Reid Hoffman's famous channel, Masters of Scale points out, which by the way is great program. But if you're not ready, you could crash and burn big time. This is a good point. I have conversations a lot with a lot of senior people. One of them Theresa Carlson who runs Amazon web services, public sector cloud business. She talks about doing the hard work up front. And you know, she's in public sector so you have to get those kind of certifications. Sounds like this is a lot of things that you had to do. How did that test your entrepreneurial spirit? I know you and you're hard charging, but you're pragmatic and you can see that. But taking the time to do the work can sometimes test the patience of the team and the entrepreneur themselves. What's your reaction to that? I would say that when we started Poshmark, the mission was that can we serve 100 million people in the country, not even around the world. We're in our way, we have 40 million people. From day one, what we saw was deep engagement in the platform or because of the level of usage we had because of the level of sort of activation we had, we knew we were on to something. I'll share a small episode with you which convinced us that we've touched a deep nerve within the community is in May of 2012, we were barely six, seven months into our app being launched in the public space and we had maybe five or 10,000 users. At that time, we were adjusting our shipping for the first time and literally we announced, we had launched the product with a small discount on the shipping, we were going to take it back. And we just said, we're going to take it back. We got 200 plus emails, which range from you're going to take away my entire set of clothing and my entire business and we barely thought we were even launched. And so we knew we were servicing something very deep. That commitment to servicing the community where you are really helping people at a deep level allowed us right through these crazy ups and downs. And there was a point in time we went around the valley even though we had the initial funding, in the mid stages of it, we got over 200 rejections in the paradigm. Sometimes multiple buys by the same investors. And so it was definitely not a smooth ride in the middle of building this company but that sort of passion for community and what they were experiencing kept us going. Let's talk about people first and venture capital. One of the things I'm impressed on with this program we're doing with Mayfield is and theCUBE has a network effect business in the U.S. as well with the community. It's a people-centric culture. We live through the social media early days when social and democratization was happening. More than ever now, you're seeing the role of people because we're all connected. So there's rapid communications, there's frictionless people to yell and to raise their hand and give accolades as well. So you have now a social dynamic with the fabric around the world. People can transact, communicate, complain, applaud. This is changing everything. How does that change your outlook on life? Because you have to recruit people. They want to work for a company that's people-centric. They want to work for a mission-driven company. These are the new dynamics we're starting to see in this next generation. How does people first impact your mission? So for me, life is all about people. This company is all about people. We serve people. People is one of our core values. And my connection with Mayfield, which was through Naveen, started back actually in my previous company. At the very beginning of that journey, 0405, and we tried to partner up, but the timing was never right. So when we were starting Poshmark, Naveen was the first one with a term sheet even before he'd sort of seen the business idea. And to me, that was a huge belief in me and the team I could put together. And then I have the same sort of feelings about the people we bring on into the company where many of my team members here, including two of my co-founders, were involved with me at Kaboodle. One of them was a co-founder in Kaboodle. The first 20, 30, 40 people I think in the company are still here seven or eight years later. There were people who are now playing very senior roles in the company where they've gone through their ups and downs and we are always behind. Two, three people left and we re-recruited them back into the company. So I think at the end, life anywhere, but particularly in today's world is so much about people and relationships. And it's the same thing we take to our community. I mean, we just finished our sixth annual user conference which was six times bigger than our first one. But what was amazing was there were so many people who were there in the first conference who have been coming to all the six conferences and they are now like many celebrities in the community. And so it's just amazing to see how focus on people can be both rewarding at a business level but also very gratifying at a personal level. It's nice to see you hit that tipping point. Congratulations on your success. It's great to see your great entrepreneur. I want to ask you the question around funding because I know we've both been through venture capital fundings. You've been through this one building this great company you're on now and you actually hit massive growth to a whole other level you're challenged today and going forward. And this is given it's Mayfield's 50th anniversary. You've seen a lot of changes in venture capital. A round used to be A rounds, now there's Steve and pre-seed. There's all kinds of nuance and now you have alternative funding now in a global lens. Keeps you seeing blockchain and cryptocurrency although ICOs have taken a bath because of the regulatory issues around regulation. Some scams out there obviously. But venture capital has been tried and true. What's changed in venture capital the past 25 years in your view? I think two things which have happened particularly in the last seven or eight years is there's a lot of it. And secondly it favors the mighty more than the weak. And so those are sort of the two big changes that have happened in the venture capital business. And I think you were just mentioning is that the people I used to work with who are angel investors who are now investing in post growth stage funds, right? I mean the same company. So everyone is sort of leveled up and leveled up and then leveled up. You see venture capital is raising two, three, four billion dollar funds. I mean that's not venture capital. There's no way you can deploy it at the venture stage. Companies are staying private much longer at different scales. Which I think is probably more sort of a sign of the times. And finally I think it is the metrics and the scale that your business can achieve that VCs are very aware of is an order of magnitude bigger than it has ever been. In fact sort of in some ways unicorn being a unicorn is sometimes people joke is almost an insult. You need to be a deca unicorn these days. So the feeling of not being enough is constant. And that's challenging too for the venture industry because there's still the classic building blocks of entrepreneurship and venture architecture which is you start with an idea and you get a prototype and certainly it's easier to get on cloud computing. Certainly a great win for the entrepreneur. So I can see some maybe some acceleration but at the end of the day it's still the classic blocking and tackling of building a company. Yes. Building a durable company. Absolutely. And you and I have both seen the 98, 99, 2000 timeframe. Everyone believes nothing repeats and we certainly see maybe not exactly the same thing. Maybe it's an order of magnitude less but there's definitely some level of exuberance we see today. But if you're building a fundamentally good business that has robust economics that can scale and has built on foundational principles with a large sort of market, I don't think that we are wrong in terms of deploying massive amounts of capital against it. But at the same time, I think it also creates certain socioeconomic as well as responsibility challenges that I don't think we are fully facing up to as a economy and as a valley. Well, you've raised over a hundred million plus so you've done some funding, a lot of funding. So you have a lot of cash you've raised. When you had to go through those exercises of looking at the fundraising because you don't want it to die on the vine. You're building durable business. You got to go through multiple round of fundings. What were the key decision points for you as you started to look at this fundraising process to build your business? So in the early days, it was literally just about survival. I mean, there were times when I ran the business on negative balance sheet, right? So it isn't that it's been easy. It was only, I would say, the last funding round was the one that was easy where we got multiple term sheets proactively and the first couple of them. In between every single round. You're gonna work on them, things are scaling, things are great. In the middle of it, every single round was effectively zero to one term sheets every single time. We were lucky to have Mayfield as a partner and some of our early investors like Inventus and Menlo who sort of supported us through each of these pieces of journey. Mayfield has an anchor point, but it was really, really hard. And part of it is that what we were doing was challenging so many things still are that even to process our cohort data is hard. Do you think of it as user? Do you think of it as buyer? Do you think of it as seller? What is it? It looks like a bird, but it moves like a plane, you know. What is it? It's Superman or Superwoman, right? And so that being a challenge, only in the last round did we have the freedom. We could raise no money, some money, all of the money and most of the focus for us for that capital was really to have the deep pockets that'll be required for global expansion. We had actually scaled the business at that point in time that we didn't need too much money for domestic expansion. And in fact, not only have we not touched any money from that round, we've not touched money from the previous round so far, most of the money from the previous round. So again, it's part of it is you need muscle to compete in a bigger world, but at the same time, if you build a fundamentally sound business, then over time you can scale it without, without money. And you got SaaS, services service and network effects booming in great community. That's great tailwind for you guys for sure. It is a phenomenal tailwind. And in fact, I was just in my management team meeting this morning and I said, you know, we are growing, but we can grow even faster at this point because the level of network effect we are seeing in the community is it an extraordinary effect where there's sort of second order. Our community is opening up Instagram accounts to promote Poshmark to sort of go out to YouTube. So there's sort of this viral organic movement that's happening across the country, which is just bringing out a whole different level of growth than we've ever seen. You know, there's a whole new dynamic. It's interesting. I'm seeing it. Not a lot of people writing stories about it or documenting it, but you know, the masses of scale has a whole different perspective, but no one's really talking about some of that you guys are touching upon and we're seeing it in our business. Creating an environment that has network effects and community and good content, in this case, product for your end. Creates a flywheel. And what's interesting is in this new era of people who can create value with the ability to capture it, it's really a unique formula. And I think this is the new kind of management discussion. Certainly lower prices increase value. That's an Amazon effect, I call that. Black from the words, good examples, well documented. You do that, you're good, you're doing it. But now you've got the ability for people to create value. Who can then capture it? This is almost a whole nother big wave. I think the power of people today is at a very unique level, right? And it can go in the negative direction, but when you harness it from a positive perspective, it's phenomenal. To me, we sort of added a fifth core value recently is that at the end, the true happiness come from service of others, right? And if you service everyone in our job, you're servicing our community, who's then servicing other people, and that creates an amazing sort of paradigm. And if you remove the conversation money because it's taken care of, it's built into the platform, then it just keeps sort of circulating. And I think that's something that people underestimate. And one of the things that you see is that, for example, an open source software, right? You start by focusing on community, then it becomes all about money, and then you forget about the community, and you see many of the large open source companies slow down because they forget the fact that what got them there was the community. And to me, I think that's the heart. If they agree, the projects fail. Exactly, exactly. And so the hardest thing at scale to balance is, how do you make sure that you're still focused on the community? Great stuff. Final question for you, you know, on these days with venture capital, the question always is, where's the value add? Talk about your experiences with Mayfield, and what differentiates a value add versus a value subtract investor? When should an entrepreneur feel it? What's the sign, tell signs of someone who's got value add and a partner who's not? I think Mayfield is so aligned in so many ways with our core values, which is focus on people and focus on service, that it's been just an amazing partnership with them. You know, even in our lowest moments, I knew that we will get funded. I didn't know how it is, because I knew that Naveen and Mayfield will figure out a way. So I never sort of worried about the capital after I partnered with Naveen and saw him in action for a year and a half. And if you're a venture capitalist, you need to provide capital. And forget about any other service. Many VCs fail that one test, which is to provide capital when you're most needed, right? But beyond that, it's been a great resource. I mean, I met my co-founder through Mayfield. Tracy and I were first introduced via Mayfield. Many of our recruiting of the top executives have come through Mayfield, but they're always available as a sounding board across the pieces. So I do think that they take their service paradigm to a whole new level. And I realize too, right, the supports there, they support, I mean, they have an HR partner who's helped up with, you know, thinking through some many of the recruiting issues, hiding the recruiting partnerships, et cetera. BR, other areas as we need it. And somebody that you can call on to, my CFO was just talking about, we are in a searching for a general counsel and Mayfield has been great, even in that help at this late stage of a company. So it's fantastic. It's a great network. People value paying it forward. Manish, thanks for coming on, sharing your insights here as part of theCUBE's 50th People Network with Mayfield. Thanks for sharing your experience. Thanks for having me. It's been a pleasure and joy to see you after so many years as well. Yeah, you look great. This is theCUBE here on St. Hill Road at Mayfield for their 50th anniversary as a venture capital firm, sharing insights and ideas from entrepreneurs and tech executives. I'm John Furrier with theCUBE. Thanks for watching.