September 22, 2020 –
What is the role of community in building companies? Poshmark, co-founded by CEO Manish Chandra, is the largest social commerce marketplace for fashion which has grown because of the loyalty of its seller stylist community. In this episode, Manish shares Poshmark’s principles of community building, and how living by their community has allowed them to become a category leader. He also discusses the importance of diversity – including diverse educational backgrounds – to help build lasting companies.
Listen to the Podcast:
Building a Vibrant Community with Poshmark Co-founder & CEO Manish Chandra
Welcome to Conscious VC, where we have real conversations that explore how to build businesses that shape the future while making a giant difference at the same time. Hosted by Navin Chaddha, Managing Director of Mayfield, and me, podcaster and author, Christopher Lochhead. On this episode, Navin and I welcome the Co-founder and CEO of the massively successful fashion community Poshmark, Manish Chandra. We have a deep conversation about the role of a startup beyond just making money, how Poshmark became a category defining leader by building a powerful and diverse community of millions of buyers and sellers, and a whole lot more. Enjoy.
I’m very curious as to this role of community. There’s so many legendary companies today that are doing way more than building customers, they’re building communities and starting movements. And so I’m curious what both of you think about that.
Chandra: For me, this is Manish, I have always been very passionate about the power of community and when I think of shopping or selling, I think it always starts with community. The history of shopping and selling has been deeply rooted in each individual community, and only when we went to online selling that that notion of community was disrupted. And for us, the focus has been really bringing that community back into the whole world of shopping and selling. Community is about joy. It’s about connection. It’s about trust and it’s about sustainability. If you’re part of a community you’re more likely to sustain over a longer period of time and embrace the very specific issues that are specific to that community, whether it’s about merchandising or local issues or cultural issues. So that’s why I think communities are so powerful and so important.
And Manish, remind me again how big the Poshmark community is at this stage?
Chandra: So we have over 60 million users in US and we just launched in Canada about a year back and that’s growing as well. They are really distributed across the country and they are very much like the population of US. So they are fairly wide and deep. You’ll find them in suburban United States, you’ll find them in rural US, and you certainly find them in the bigger cities. Three out of four Poshers, as we call our community, live outside the major cities in US.
Chaddha: Christopher, from my perspective, to your question, as an investor in a lot of these companies, why is community important? So as you might have seen, I recently wrote about a new definition of ROI, which is not Return on Investment, but more around the Rise of the Individual. You’re empowering them and giving them voice. And as a result, you’re elevating them from humans to super humans. The role of communities is extremely important there because you can grow together, you can learn together and I’ll just point to a few examples outside of Poshmark, where we have been early investors at the series. HashiCorp is a good example of a company, which is sitting at a valuation of over 4 billion, 5 billion, where it’s empowering developers and DevOps and ITOps people and building the community. Lyft, which achieved a market cap of over $20 billion, focused on individuals looking to generate income from their ability to drive passengers and to build a loyal driver community strengthened to their needs and providing them with resources. Marketo did the same for marketing professionals in moving them from cost centers to revenue accelerators, and Outreach is targeting the inside sales rep, and then eventually the sales professionals, enabling them to become more efficient within engagement platforms. And to me, it’s extremely important, as you and I have been talking about how, as a conscious venture capitalist, we look at doing business for better or other than business as usual. And one of the pillars of that is how do you invest in the Rise of the Individual?
And so I’m curious what both of you have learned. If I was an entrepreneur coming to you and saying, I want to do more than just attract customers. I want to build a community and potentially a marketplace or an ecosystem, depending on how you want to think about it. What advice would you give me for kind of mobilizing this kind of a community?
Chandra: So the way I think of community is that it has to be very much authentic to your mission and what you’re trying to do. I don’t think you can just slap on a community if you haven’t thought about it from day one. It has to have strong principles that are sustainable. It can’t just be a gaming architecture. And ultimately there has to be a level of comfort in having disagreements, critical discourse within the community and being able to engage in all dimensions. So when you think of community, you have to think of authenticity, the fact that it is there from the genesis of whatever you are trying to do, and the fact that you want to nurture it, but you don’t want to control it. Those to me are the core foundational principles of community. And they’re hard principles to live by for a long period of time, but if you can do that, then you can have over the long term, something that is genuine and sustainable.
Chaddha: And what I would add to that is just looking at things outside of Poshmark, if entrepreneurs see themselves as moment creators, or more than simply innovators, they end up building big valuable companies. Poshmark is just one example, but HashiCorp, Marketo, Lyft are some other examples. And if they’re conscious leaders, they believe in doing both good for the world and make businesses better, they can foster good behavior in their communities and check bad practices. And if I look at what are the things I see in companies that end up building super communities, which are extremely engaged, is they have a value of people first. Everything they do starts and ends with people. They champion others. They are very authentic to their mission and values, extremely loyal to their community members. They’re always looking at creating opportunities for diversity, equity and inclusion and bringing an ethical lens to running a company. And finally, they’re investing in relationships, not transactions because building business for them is like running a marathon, not a sprint.
I love all that. And on the economic side where you’re creating as part of this community an economic platform, as you have at Poshmark, how do you think about creating a marketplace where the economics work for everyone?
Chandra: So I think one of our core principles at Poshmark has been really, if you focus on love, money comes, and if you focus on money, nothing comes. And so the power of community really starts with creating something where everyone can participate. It creates something that anybody can have the same advantages, whether you’re big or small, the advantages don’t dramatically ascribe to the big players, but also at the same time, you don’t not support people as they grow.
So in order to do that, you have to come up with great principles. So for us, they were about having a consistent and fair and transparent model of the marketplace. So our model has, from the very beginning, supported an architecture where every seller gets to keep 80% of the revenue they earn and there’s no hidden costs from the beginning. Second piece has been providing them with a system that really takes care of all of their needs. And as we add more features of services, there is never an extra charge for that, they’re all included.
When we started our journey as a platform, we provide them with a very simple shipping option that has withstood the taste test of time called Posh Post. And that allows people to ship a wide variety of items from the comfort of their home and sell and send them anywhere. We provided them with sort of a fail-safe payment processing solution. That is again, consistently applicable to everyone. Great for the seller. Great for the shopper. We provide them with simple, transparent promotional tools by which they could promote what they’re doing, market them, share them. That is again, consistently available, same principles for everyone. On top of that, we then gave them ways of communicating with their customers because this is a social marketplace and you really want to be able to have that dialogue again, consistently freely available.
Every single tool we’ve developed is available to the new seller and available to our mature seller. Then we give sellers a way to empower and build communities around them because eight out of 10 sales that a seller will make over their lifetime will come from repeat shoppers and building that community is really, really important for the seller. So we allow them to do that. We also support sellers who are selling two items and sellers who are building million dollar businesses on the platform. So again, giving that sort of thought process from the beginning and having and creating a community with those foundational principles has allowed us to scale from the very beginning that we only had a few hundred users, today with over 60 million users. And we haven’t had to change the principle. We’ve been adding value to that community over a long period of time.
And in between, we’ve had people who’ve generated full meaningful incomes. There are people generating millions of dollars of sales, people building resale businesses, where they are really saving the environment, people building boutiques and brands, where they’re combining their passion for resale, with creating new fashion brands, people creating DIY brands, people partnering with large brands and selling them on Poshmark, and then people actually selling to other sellers on the platform so they can empower them to sell more. So you have a full, vibrant ecosystem of fashion, of home, and most recently, we introduced beauty that allows people to make a living scale, really start their entrepreneurial journey, and many have gone on and created even bigger businesses in and around Poshmark. So to me, community, money, business, they all go hand in hand if you orchestrate them from day one.
I love it, Manish. And Navin, if I came to you and said, “Hey, I’m an entrepreneur, but I’ve been listening to you. And I think, I think you’re right. I want to shift my mindset to become a movement creator. How do you think I should think if I want to go from entrepreneur or CEO to movement creator?”
Chaddha: I think first and foremost, everything I would tell the entrepreneur to do is try to create a win-win for everyone. So if you’re creating a movement, you’re going to have suppliers, you’re going to have partners and you’re going to have customers. So you look at the whole ecosystem and think about how do you make that movement sustainable from both an economic perspective and also a values perspective, where you’re working with people who share your mission and values. So that’s what I would say first and foremost. The second thing I would tell them is make sure the value proposition you’re providing to your suppliers, partners, and customers is a painkiller. Don’t provide them vitamins because they don’t just sell. The third thing I would say is focus because startups die of indigestion. They don’t die of starvation. The fourth thing I would tell them is continuously adapt and build a culture of that because dinosaurs never survive. Be customer first, listen to them because customer is queen and then have a people-first mentality in everything you do. And then finally, and most importantly, you need to remember creating a movement is like running a marathon. It’s not a sprint. So don’t look for any overnight successes, play the long game and try to build a company which helps create a movement and ends up creating economic value for all constituents in its ecosystem.
You said a lot of powerful things there, Navin, but off the top, I think one of the first things you said was startups die of indigestion. Could you pop the hood on that a little bit?
Chaddha: Absolutely. So one of the things, having been involved as a board member for 50 plus companies and Mayfield has been involved in over 500 companies – when you start as a startup or as an entrepreneur, you end up having a big vision and want to do everything. You end up becoming a Jack of all trades rather than king of something. And my advice to entrepreneurs is in everything you do, focus. Rather than going six-inches deep in that area, try to build trenches and become the king of some hill and then go climb other hills.
Just because you see Google can do everything today, or Facebook can do everything today. Go back to the basics. Google still makes the majority of its profits from search and for the first five to seven years, that’s what they ended up doing. And entrepreneurs need to make sure the first hill they climb, they need to essentially conquer it and become number one. And the reason is, having worked at Microsoft in the mid to late nineties, I learned from Bill Gates. And he said, “Hey, in any ecosystem, the number one company makes all the profits, the number two company breaks even. And over time, there’s no number three.” And if you look at operating systems that sort of happened, you look at smart phones, that’s what has happened. So that’s what I would tell people why this is so critical.
And Manish I’m curious, today, Poshmark it really feels like you’re expanding the opportunity in your category and adding new capabilities and so forth. But in the beginning, it sounds like you were pretty focused. So maybe share with me what that niche was in the beginning and sort of how you decided to focus on it?
Chandra: Well, so for us, the insight that sort of drove the development of Poshmark was twofold. One was that there really wasn’t a super scaled solution for social shopping and more importantly, social selling online never existed 10 years back or nine and a half years back when we first really started the company. Second thing was, there was a ton of inventory locked up in all of our closets. 85% of our apparel actually goes to landfill, or basically there’s a massive important economic sort of stress on every household in terms of the money that they are spending on fashion. And so the combination of those two things led to creating a platform where anybody can really sell fashion and shop for fashion in a highly trusted way and grind out every aspect of fashion from the system. We focused on women first because women are the largest shopper of fashion, even though in the last 10 years or so, men’s shopping for fashion has actually grown quite a bit as well, but still the dominant fashion shopping is done by women. So our focus was women, our focus was fashion, and really the focus was fashion coming straight from your closet. So we wanted to build the largest closet network and closet community where women could buy and sell from each other’s closets. We focused on the US. We focused on a fashion vision where any kind of fashion could be sold. So you could sell a $10 dress, or you could sell a thousand dollar handbag. And we wanted to make it safe, secure, and simple.
Our vision was that somebody wakes up, they go to an event, they come back from an event. If they want to immediately ship that dress out and sell it, they can do it. If they want to sort of buy something at a discount, they can do that. And all of the friction from shipping to payments, to sort of a resolution of disputes, et cetera, and make the whole experience very much social and as if you were walking into a store and having a conversation with your store stylist.
All of that became unlocked when mobile came of age. So we were one of the first platforms to bet, a hundred percent on mobile, on mobile shopping, mobile selling. And Navin actually was the investor who believed in that vision and backed does because a lot of folks at that time, back in 2010, 2011 thought that you needed to have a website. And when we first launched, we didn’t have a website, we didn’t even have a search function. Everything was very social and interactive in power through discovery.
So if I could just synthesize maybe what you’re sharing, focus super tight on a niche called women who want to either A, monetize their own closet or B, reach into other women’s closets and see if they can find treasures. So that’s the demographic, that’s the avatar, that’s the user, however you want to think about it, that’s the audience. And then, focus a hundred percent on mobile. Those were the two seminal decisions. Am I hearing that right?
Chandra: Yeah. And then the third piece was, make everything else, basically mindless and simple and not trying to optimize anything, but optimize it in the simplest possible way. So for example, we chose the simplest shipping system, simplest payment system, simplest way to add to the catalog or sell. So mobile, women, closets, and then simplicity. Those were the three things that we focused on.
To Navin’s point, we all have wandering eyes, we all hear this new thing, this new area, this new focus, this new technology, this new area of expansion. And so many of us, particularly those of us who are entrepreneurial, like to chase shiny or creative objects, how did you instill the discipline to focus so tightly on that new niche in the beginning?
Chandra: Well, it was learned from my first company – the first company that I built, we were focused on social shopping. It was more a discovery company. If you look at modern day Pinterest, it was a predecessor to that. It got acquired by a large media company back in 2007 and the community was nice and vibrant, but it always remained small. And we were trying to do a lot of things in that. We were trying to do commerce, were trying to do collages. We were trying to do a whole bunch of things. And my learning from that business was that the core thesis we had at the beginning of that journey could have been something that would have been used by hundreds of millions of people, it could have been really, really big, but by actually doing these seven or eight other things, we ended up not realizing its full potential. Now to get to its full potential required us to do a lot of innovation in that niche, but really, really remained focused.
And a way I think about it is that in any idea, even the narrowest of ideas, so even if you look at women’s used fashion, 10, $20 items that are out there today is a massive business, not just for Poshmark, but as an industry, which nobody could have visualized eight or nine years back, even I couldn’t visualize the size and scale of the business that’s happening, not just as an industry, as a scale. However, by remaining focused on it, iterating, innovating, iterating, innovating, we’ve become a fairly large marketplace of scale in US and recently launched Canada. And now we are slowly moving across the world and hopefully soon, rapidly. And that focus allows you to come up with the scale and level of innovation. A way to think about it is that how you think about a problem and how you sort of re-conceptualize the ideas, allows it to scale.
And that’s true for almost every company you look around, whether you look at Starbucks, where somebody saw not just a coffee shop or a coffee carton, a cup of coffee, but visualized the whole scale of Starbucks, or as Navin was talking about, Google, which saw a simple search page and conceptualize this massive operating system for the future. Or in case for us, where we saw a closet and from there, we built a massive social marketplace that is scaling and growing. And today we serve the home products in your house, beauty, and other categories. But for a long time, we remain focused on that area. And today, we are pretty universal. We have men on the platform. In fact, one in five users on the platform is men and men as a community is growing extremely rapidly. We added kids’ products on the platform, so many people are now buying and selling kids products and so on and so forth. But the core and the focus on that social has allowed us to sort of perfect the interaction model that we continue to refine and scale as we go forward and innovate on that.
So as a man, I’m welcome on Poshmark now?
Chandra: Not just welcomed, they’re actually growing really, really rapidly. We launched the men’s section in 2016 and today it is just exponentially growing. And in fact, again, when you expand the community, there’s a natural level of sort of distrust, so back in 2016, people thought as men would join, it would change the nature of the community. And instead of changing the nature of the community, the community has become even more robust and vibrant and not only men finding an amazing collection of products, but you also have cross pollination: women selling men’s product, men selling women’s product. And then people who may not even identify them as men and women are a part of the community as well. So it’s a very broad community where there is really no boundaries and no limits. We saw sort of think of our platform as style, without limits, where you really can buy and sell anything around fashion, around style-based products, and soon, geographies are no limit in terms of what you can buy and sell.
So this sort of brings me to a big point, which is, I know both of you are very passionate about diversity and that if diversity is woven into your thinking, particularly in the beginning of a startup, that sort of big D diversity can actually change the trajectory of the business.
Chaddha: I think it absolutely can. And the main reason is diversity just doesn’t mean it’s diversity of gender, it’s diversity of equality, it’s diversity of inclusion, or even of different cultures. The reason it’s so important having, having all these things addressed is because together, you make great decisions and it’s more important for people with different backgrounds to speak up, why a thing makes sense and why it doesn’t, and having different perspectives just helps companies grow. Because if everybody has the same experience, you’re not going to create great outcomes because if you are a universal product or service, just focusing on having likeminded people are just having nor diversity, you’re only going to serve that community. Right? So for me, as a VC to see massive companies get created, I’m seeing right from day one on how entrepreneurs are essentially thinking about diversity and inclusion and building management teams, which are diverse, whether it’s related to cultural, gender, color, and really giving people an opportunity to thrive.
And as a VC, as Christopher you and I have talked about, we have launched an Access for All program where we are trying to do things on how we can help support diversity, health, hunger, and education. And as an example, 50% of our current founders are from diverse ethnic backgrounds. And as far as gender diversity is concerned, we launched a Female Founder Competition, and it culminated in four winners and this was done with Microsoft Ventures and Melinda Gates’ Pivotal Ventures. So for me, it’s extremely important that your actions speak louder than words. And each one of us leads by example, by doing things because each small thing we do just keeps adding up.
And Manish, from your point of view, 60 million people, there’s a lot of diversity just by the way, the size of the number. And so how do you manage sort of the diversity in this massive community?
Chandra: So, Chris, one of our core founding principles of the company is embrace your weirdness. And that is going to be interpreted in a lot of different ways. But to me, there is just something amazing inside of us. And at the same time, each and every one of us feels misunderstood and different. And so embrace your weirdness is an attempt to really capture both of that. It is recognize your power and your strength, which is unique to you. And at the same time, except everyone, else’s strength and power as they bring it to the table. And that is something which transcends gender, it transcends color, it transcends race, it transcends age, and it transcends one of the things that is a form of elitism in Silicon Valley, which is educational background. And if we can really bring that to the forefront and we can continue to sort of scale it, we can create foundational principles.
And there are many, many things we’ve put in place in our platform and in our company to try to do that. However, are we perfect? No. Is there so much more we have to do? Absolutely. Especially when it comes to racial diversity and inclusion, both in the company and in the broader society, but that’s something that is really endemic and core to how we think about it. To give you an example, when we sort of think about the company, when we think about the people, when I think about the foundation, the very foundational days of the company, one of the things I wanted to do was to combine the tech and the product thinking in Silicon Valley with someone who really grew up in fashion in New York and LA. And in fact, I went and actively sought out that partnership, which was not easy to find, even though I had partnered with companies and I had sold my last company to company in New York, but it was more on the media side.
And in fact, Mayfield was the one who connected me to Tracy Sun was my cofounder, one of my three co-founders other founders are more from Silicon Valley and traditional sort of tech and product background, and combine that to create something that’s powerful. Similarly, a couple of years back, as we started to sort of increase the diversity of our board, I went out in this case instead of just using organic networks, I said, let me use a proper structured process to add that diversity, both gender and racial. And over time, even motivation diversity is what we would like to add. And then same thing in my management team not only sort of having executives who come from the traditional sort of elite colleges we’ve had, we’ve got executives come from obviously a wide variety of different colleges, but also we have executives who have double master’s degrees and we have executives who are college dropouts. So really trying to bring in people who have different backgrounds is super important. And it’s important not just to serve the customers we are serving, but it’s also important to grow us. The other dimension that we don’t talk about a lot, especially as we become sort of more fragmented and individualistic is the age diversity. You know, I find that people are not having intergenerational conversations. It’s almost like if I’m old, I can’t learn anything from anybody new. If I’m younger, everyone old is misunderstanding me. So bridging that gap.
And in Poshmark you see 60 year olds and 20 year olds and 18 year olds and 50 year olds. In fact, my biggest joy is going to PoshFest, which is our annual conference where we have thousands of people come from across the country and sometimes meeting a daughter, the mother, and the grandmother, all three of them coming to the same conference and sharing their stories.
One of the stories I remember so powerfully that brought tears to my eyes was this woman who found me and said, “Mr. Manish, Mr. Manish, I have to talk to you.” And I said, typically when users are pulling me aside, they’re giving me feedback or they have set up some, some things in this case, she wanted to share a very important story. And the story for her was that her daughter, she was from Alaska and our daughter had moved from Alaska to Oklahoma with her boyfriend. And in that process, the mother always had doubts about the boyfriend and what they found was that he was actually extremely abusive and this daughter was taken everything away by the boyfriend in terms of her life. But what he didn’t take away was her phone. And of course, the clothes she was reading and because she was not buying anything, she was just selling, so as the packages were going out and all the money was collected in Poshmark. Plus Poshmark’s amazing supportive community helped her ultimately escape that abusive relationship. And that is not a consequence we had anticipated as we were building the platform. But to me, there’s just unexpected benefits. When you embrace empowerment, you focus on really simplicity and you embrace everyone. It’s just amazing sort of consequences and hopefully power that your actions can bring to the world.
Chaddha: I agree with that. Mayfield has been blessed to have partnered with entrepreneurs who have created hundreds of iconic companies. And we find often the founders who don’t come out of central casting, they have the grit necessary to succeed, against seemingly insurmountable odds. So one of the beliefs we talk about everywhere and it’s even on our website is how does Mayfield embrace the unconventional, the different and the unusual? And we take great comfort in doing that. And one of the things as we build the team we meet, we’ve tried to make sure we have diversity with woman, over 50% of our field as women. And over 60% of our workforce comes from different ethnic backgrounds and the presence minorities.
Those are some powerful numbers. I love this idea of embrace your weirdness. We didn’t hear entrepreneurs and talking about hiring college dropouts, that you didn’t necessarily have to go to Stanford. You roll the clock back not that long ago and most companies were saying if you weren’t an MBA or you weren’t an engineer from a top tier school, there’s some very high profile companies, as you both know in Silicon Valley, that wouldn’t even look at you.
Chandra: Yeah, I think that is one of the key things for me, realization having spent so many years in Silicon Valley, is that we have our own challenges on the racial front and on our agenda front. But one of the other dimensions that we don’t talk about is this real focus on a very narrow circular stream of entrepreneurship and kind of what I would call to some degree classification in a way. So I was listening to your podcast earlier, Chris, and you were talking about how Indians as entrepreneurs have been very much accepted in Silicon Valley. And that is true, but actually being an immigrant entrepreneur and an Indian and trying to do something which is consumer and actually starting out in women’s fashion, I faced a lot of resistance and I’m thankful to Navin and Mayfield for giving me the capital.
And also thankful to the fact that I had little bit of success before that, which allowed me to get some credibility, but we have struggled at, and Navin’s partnership has been really powerful, but I would say you do get into a classification that it’s very hard for Indian entrepreneurs to do something in the consumer space. Something that transcends to the mainstream culture, et cetera, versus say maybe enterprise software out there. So, I think if we can sort of look beyond what the person looks like and really get into the soul of the person, really embrace their weirdness, I feel like we can all rise as, as a society and ultimately unlock even more potential that existed in humanity. It’s not even just about equality. It’s about actually progress and progress not just in feeling better that we are doing something proactive, but I think there’s so much potential by unlocking. When you embrace people from different backgrounds, when you unlock their potential, the joy and the growth that they bring to us, not what we bring to them is so powerful.
Chaddha: And I would say, I see this, even at universities, why do they bring diversity? And as a VC, right? Like my belief is you need to have an open mind because to create iconic companies, right? You need to just be open because if you’re closed, you’re going to become a dinosaur. So as you look at these entrepreneurs coming from different backgrounds, just evaluate them based on who they are, what’s their mission, what is their values. What is the ethos of the company they want to create and just go for a ride with them. And if you can’t do that, your returns will suffer.
Fantastic. Gentlemen, anything else you want to touch on before we wrap?
Chaddha: No. It’s been a real pleasure talking to you both. So really appreciate both of you taking the time. And this is a very exciting topic around conscious leadership, conscious capital and what entrepreneurs like Manish are doing to empower others and trying to change the way they work, live and play.
Chandra: Thank you, Navin. Thank you, Chris, for having me. It’s been a true joy to talk about communities, Poshmark, and the power of entrepreneurship. Really appreciate it.
Thank you both, gentlemen, it’s been legendary hanging out with both of you and I hope we get a chance to speak again soon.
Thanks for joining us with Navin Chaddha, Managing Director of Mayfield, and me, podcaster and author, Christopher Lochhead. You can find me on the internet at Lochhead.com. Conscious VC is presented by Mayfield. Visit Mayfield.com, where you can learn more about the five pillars of conscious capital and much more. Thanks again for pressing play.