In 2019, just five months after launching her weighted blanket company, Bearaby, Kathrin Hamm received an email from a buyer at home furnishing dealer 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 hold the meeting in the garage, Hamm, 39, grabbed £300 worth of Bearaby blankets on a borrowed hotel trolley and rolled them to the West Elm headquarters in Brooklyn. The 20lb hand knit blankets were a hit. Suddenly, Bearaby had nationwide distribution in West Elm.
“That was kind of a pivotal moment,” Hamm says. “At that stage, we didn’t know how to do digital marketing, and we were just figuring out what the product-market fit was.” By the end of 2020, Bearaby had reached annual sales of $21 million. The following year, sales nearly doubled.
Like many fast-moving products, Bearaby’s blankets were born out of a personal need. In 2017, while working as an economist at the World Bank, German-born Hamm ordered a weighted blanket to help her sleep. The product worked — the full-body pressure of a weighted blanket increases your body’s serotonin and melatonin levels — but it was filled with plastic beads that made her feel too hot. After Hamm noticed a gap in the market for a more breathable version, Hamm worked on a prototype with densely layered organic cotton yarn. 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 in headquarters for a family garage. The former mobile gaming attorney and entrepreneur started his online wholesale business in 2013 from his parents’ garage in New Jersey, selling household items such as toilet paper and paper towels in bulk. After growing sales from $40,000 to over $100 million in just three years, Boxed acquired a reputation as the Costco for millennials. Last December, Huang floated Boxed publicly and raised $198 million in its IPO.
While it’s every founder’s dream to get off the garage and ring the bell on the New York Stock Exchange in less than a decade, it comes with plenty of new challenges.
“There’s so much more pressure and so much more expectations, and it’s all up to the world to see it,” says Huang, 40. “On the other hand, I feel like I’m learning something new every hour of every day, so That was fascinating as an entrepreneur.”
We met Hamm and Huang in Boxed’s Manhattan offices. Then we asked them to talk about what Bearaby should look to to grow, and why a founder’s job always changes, but never gets easier.
HAMM: We have early staff who are still with us, but now we are at the stage where I need more experienced 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 to start raising money. If we didn’t have the fundraising and the new valuation of the company, it would be difficult to attract that level of talent. They would leave big, soft jobs with high wages, so why would they come here? Even for me, I constantly feel like I have to reinvent myself and ask if I should hire myself because there are no similarities in what I do today and what I did when we were in a garage. You have to challenge your team and set that expectation early.
HAMM: At each stage, how did you know you had the skills you needed, and how did you get them?
HUANG: Unfortunately I had to learn the hard way every time. In those moments when you take stock and wonder, “Am I still the right person for this job?” and the answer is “I’m not sure”, then you have to ask yourself, “Do I have the excitement to continue?” And the answer will probably be yes. “Am I willing to learn?” Probably yes again. Then you have to say, “These are the skills I need to develop or get better at.”
HAMM: Did most of the learning come from mentors?
HUANG: At different stages of the business it was so important to have advisors and mentors I trusted. The good thing is that there are now so many people in high-growth companies 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 are about 30 people. How do I know when it is the right time to introduce new processes?
HUANG: Everyone has that paranoia you feel, including me. Are our systems good enough? Why isn’t there a system for this? What is the standard procedure if this happens? During the first year in the garage, the procedure was simply to get it done at all costs. But when you come to our facility now, there is literally a recess where the broom goes after the floor is 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 well over time.
HAMM: You said you’re trying to look around the corner. From closing deals with CPG companies to having your own warehouse infrastructure, there were so many strategic moments. Was it you who always 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 need to focus on, and leadership is certainly one of them. By where you are and what your responsibilities are, you can see what is going on in the external market and also what you are good at and what you are less good at internally. Even your C-suite doesn’t have that full 360-degree view.
HAMM: For the past few months, I’ve spent 50 percent of my time on people, 25 percent on product, and the other 25 percent on brand building. How do you prioritize your time?
HUANG: If you think of it as a Venn diagram, everything you’re really good at overlaps with what you’re really passionate about — those things you should be doing all day because they’re good for you and the business. The next bucket is everything you’re good at but don’t really enjoy. In the interest of the company, you must continue to perform these tasks. The heaviest buckets are things you like, but you’re just not really good at. Those things you have to give up.
HAMM: As for the strategy, now that we have two patents, I wonder, should we just license the blankets? Or do they sell themselves 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, no one in the company will find it acceptable for you to say, “Well, the COO has led us astray.” They’ll just say, “Isn’t that your job?”
HAMM: How did you decide who the right fundraising partners were in the beginning?
HUANG: There were times when we had no choice. It was like, “If you’re going to write a check, you’re a great fit for the company.” That was the only criterion. In some rounds where we had the luxury of choosing, I think it was really important to call their references. Very few founders take the time to properly state who they are going to recruit as a partner. And don’t just call the companies they tell you to call. You should also call those who failed. I always found it fascinating to talk to those companies about how that investor behaved in bad times.
HAMM: How do you see the e-commerce landscape? With the recent changes in iOS 14, it’s not that easy to acquire customers. Is there anything you can share that has worked for you?
HUANG: What is old is new again. You basically saw every tech company buying Super Bowl ads again because with the privacy changes it’s not that 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 has to use them again.
HAMM You have talked about the highs and lows of entrepreneurship. Is there anything you go back to to deal with that?
HUANG I have to constantly remind myself not to go too high or too low because the ups and downs are not good for your mental health. When I rang the bell at the fair, I felt like I could take over the world, but the reality was we had to go back to work an hour later.
From the May/June 2022 issue of businesstraverse.com. magazine