Well Made

Manish Chandra, Poshmark: Letting Community Lead the Way – Well Made E89

July 17, 2019 · RSS · Apple Podcasts

For the last 15 years, Manish Chandra has motivated pivotal shifts in how and where we buy things. Manish is the CEO of Poshmark, a social marketplace for people to buy and sell secondhand fashion and home goods. Long before founding Poshmark, he was creating social shopping experiences online. An engineer and marketer by trade, he believes in connecting community and technology, with people at the platform’s core. Community guides all the decisions that he makes for his company.

“When we are looking at categories and expanding, our community leads the way.”

 Manish Chandra, Poshmark: Letting Community Lead the Way – Well Made E89
 Manish Chandra, Poshmark: Letting Community Lead the Way – Well Made E89
 Manish Chandra, Poshmark: Letting Community Lead the Way – Well Made E89

On this episode, Manish talks about the logistics of online consumer-to-consumer resale (7:39). He shares how Poshmark negotiated PoshPost, the first-ever USPS shipping label designed for the marketplace economy (9:19). Most ecommerce plays start on the web and then move to mobile — Poshmark bet on an iPhone app first. Hear how they design their app as the expectations for selling pre-owned items evolve (12:21). He talks about challenging linear growth (15:56) and the Marie Kondo effect (23:46). Manish wants consumers to rethink the merchandising for social (31:50), and how Poshmark facilitates discovery amidst millions of items on the platform (33:04). Finally, Manish shares how he’s fostering an authentic community (36:59) and steadily growing their big ideas, even when it means taking a step back (43:27). Full transcript below. 

Also mentioned on the show:

Follow Manish on Twitter.

Stephan Ango: You're listening to Well Made, a podcast from Lumi about the people and ideas behind your favorite online brands. I'm your host, Stephan Ango. Manish Chandra, welcome to the show.

Manish Chandra: Thank you Stephan. Thanks for having me.

Stephan: So you're the CEO of Poshmark. People probably know Poshmark, but how would you describe it these days?

Manish: It is a social marketplace which allows anybody to buy and sell anything in fashion and now home decor as well.

Stephan: So you started working on Poshmark in 2011?

Manish: Yes.

Stephan: And so describe a little bit, cause that's a long time in the mobile world and you've been doing a lot in the mobile area in particular. I was amazed kind of doing some more background research. You're like in the top two or three apps in this area and you've got like hundreds of thousands of reviews and five-star, really positive stuff. Give us a sense of the scale of Poshmark today in terms of whatever numbers you're putting out there.

Manish: Sure, we have 50 million users. We're primarily in the US right now. We took our first baby step to go into Canada just four weeks back. We have 5 million sellers, so we call seller stylists. Our average active user in a given day, spent somewhere between 23 to 27 minutes a day using our app, opens the app five to seven times. We also have roughly about $100 million dollars worth of inventory that gets uploaded every week on the platform. And at any given point, there's little over 75 million listings on the platform. And last year we announced that we've distributed over $1 billion to our sellers. That's how much they've earned on the platform.

Stephan: Wow, that's incredible. And you've also got a website, so like what's the distribution? Are most people mainly using the app or how does that work?

Manish: So we kind of inverted the pyramid in the sense that when we started in 2011 we were just mobile. So we were only an iPhone app and our website sort of slowly came online and really didn't become really very good 'til 2016 or so. And so our web traffic is a growth engine. It's been growing. It started obviously with almost 0% of the traffic. And today, you know, still the bulk of the focus is mobile. But web is now a reasonably interesting part of our business.

Stephan: So 50 million is a lot of people. But when you think of a Poshmark user, who do you think of? Who is the typical Poshmark user?

Manish: Well, we think of a person as someone who's just engaging with the app to get inspiration. Then you have people who are shopping on the app actually buying, and then you have selling. And so really the life-cycle of someone who's using Poshmark is broad. Users are distributed throughout the country. We service almost every zip code in the country. Bulk of people both buy and sell on the platform. So when we think of a Poshmark user, it really spans the ages. It used to be primarily woman user. Today, increasingly there are male users on the platform as well. In fact, one in five people who join the platform today are male users. And they're really spanning every single state, every single age bracket. Of course we're predominantly Millennial, because our population is predominantly millennial, but you know, you've got Gen Z rising very fast and you've got Baby Boomers on the platform as well.

Stephan: I want to talk about generations. I think term millennial has been used a lot in the media and Gen Z is kind of, I guess the oldest Gen Z people are in their early twenties, I guess at this point. And there's now Gen Alpha, like the next generation. Those kids are, I think the oldest, maybe like eight or nine or something like that. And so you have a lot of users who, for them, this is like their first kind of entrepreneurial gig or something. It's like their first way of selling something. What are you learning about how those youngsters, like the people who are like in their teens thinking about commerce? Like how is it different from millennials?

Manish: Well, I think if you go back 10 years, when we started eight, nine years back, mobile was just emerging. The mobile social media was just emerging and mobile social media took the participation rates and social media to a whole new level with Instagram and Snapchat. And you know, saw sort of a little bit of an extension there with Poshmark, but what's happened in eight, nine years is that effectively engaging with clothing as buying and selling, owning something, getting rid of it, or buying something that you see someone else's wearing even directly from them is just mainstream now. So if you are a 15, 16 year old or your 20 year old or maybe 13, 14 years old, that's just normal and you don't feel like you have to go to the store. In fact we did an experiment with a physical store recently. Very many of our users who ride with the store, even though there was a cash register five minutes away wanted to buy it on our app in the store. So that's sort of how app usage and sort of mobile usage has transcended over that time period.

Stephan: So are you saying the expectation around the things that I own and buy is just like way more fluid now than ever before?

Manish: Absolutely. I mean you think of how many people are actually buying a car. Think of the first thing that we all check when we are going to a city and things are how sort of we are consuming clothes and what's happening even in physical retail where retail is turning and adding resale kiosks in sort of their stores and a really resale as a group is growing way faster. Like many orders faster than retail. So sort of that convergence of clothing or fashion and of items is increasing in its velocity, which doesn't mean that each side is not a beneficiary of the other because in order to have resale you need to have retail and a resale ultimately also ends up driving retail. So it's a very nice symbiotic engine. If you can participate on both sides, it's very powerful. So for us, 70% of the items we sell are used and about 30% is new.

Stephan: What's your point of view on business models like Rent the Runway where, talking about fluidity it's just a subscription and it's just like all you can eat clothing.

Manish: Absolutely. I think, for a lot of people it is a way of consuming clothing where they don't want to think about it, they want to just engage with it and they don't want to buy and sell, they just want to sort of use it and return it. So I think those models are very successful. Than you've got subscription services where you get clothing in a box and we have some sellers on our platform who run subscription services with using our platform as a community.

Stephan: Interesting.

Manish: And then you've got people who buy and sell, who actually go buy sale. And there are people who just buy used clothing and that's sort of the only way that they live for their own personal values. So you have sort of this whole spectrum, but if you think about it today, you can buy an item and really think about it with a residual value point of view. And sell it and then buy another item. That whole process hasn't happened for clothing in a meaningful way, in a broad category, not just luxury, but across every price point ever. And that's sort of the value we are creating.

Stephan: But it does require the user to have enough time on their hands that they're willing to go through the logistics of actually doing that. Is there a certain profile of a person where that works better for them?

Manish: So for us from day one, the goal was to make selling super simple. And so we've reduced it to the point you take a few photos of the item and you price it and you describe it and that's it.

Stephan: You have to price it.

Manish: You have to price it, but you can research the pricing. It's fairly transparent on the platform. And then everything that happens after that from a transaction point of view is taken care of by us. So when the item sells, you get an email, you get a shipping label attached to the email, you print it out, you can package your item in any box and ship it. Once the buyer receives it and accepts it, you get your money and the money just comes to you directly deposited in your account and you can transfer it or you can spend it back on Poshmark, whatever you want. So all of the steps of thinking through how do I pay for shipping? How do I collect money? Charge backs. All of that hassle disputes as taken away from you. And that is something that really has turned off a lot of people to online selling. And we've made it easy. And that's why people have been engaged because it's not just simple. There's a lot of positive energy. Underneath Poshmark is a very active community that helps you, that supports you, that encourages you. And that's why so many of Poshers have become also full time sellers or resellers, own their own boutiques and are building their own brands today.

Stephan: How many out of your 50 million users can you estimate are actually like full time? That's their main income?

Manish: You know, we don't have an exact number on that. We have about 5 million sellers. My estimate would be that there's at least 10% to 20% of them who are using it in significant phase for their income, whether it's their sole source of income or partly a part of their income is something that you don't have an exact stat on, but there are a fairly significant number that are engaged in the platform.

Stephan: What so I was reading a little bit about this thing that you did with USPS, but can you explain more about how that works?

Manish: Yeah, so for us the key has been to really just take one simple system and apply it so that it's available to all the sellers. So for mailing we created something called a Posh Post where for all the packages up to five pounds, doesn't matter what the sizes are, you can really use the single label we send you back to any box and it goes two to three day USBs priority. As we branch out to Canada we are offering a similar setup, it's not exactly the same. Again for a flat fee you get to ship fairly variable packages because when you think of shipping, one of the daunting things for most casual sellers is they don't know how much this thing is going to cost to ship and what method should we ship. That's all eliminated. You don't have to worry about it. At the same time, what it also gives us is a fairly predictable fast behavior for the buyer as well.

Stephan: I want to hear about the moment you talked to the USPs. I love that there's a title, which is the postmaster general. I feel like that's like the best title of any job. Didn't Ben Franklin have that title? That is the best job title I've ever heard of. But did you have to go to the postmaster general to talk about it?

Manish: Ultimately it goes there as well as the postal board. Yeah, we started the platform. We were really back in 2011, 2012. And at that point nobody wanted to listen to us in terms of our idea. And so we just used the given API that USPS had and created sort of a label that we would ultimately use the underlying systems to generate. And as our volume shot up between 2012 and 2013-

Stephan: Then they're interested.

Manish: Yeah. Then they came knocking and what they said is that, "Well, there's a whole bunch of labels that you are underpaying us for". And I said, "Well, there's a whole bunch of label that we are overpaying you for". And they didn't like the rub because the postal inspectors didn't have any way of sort of amortize it. But ultimately the matter reached the chief marketing officer of USPS and postmaster general and they realized we could be a great partner for them. So in partnership with them we created something called Posh Post, which allows us to have this amortized rate across all sizes and we charge the same rate to all of our customers. So simple for the buyer, simple for the seller, simple for USPS and simple for us to run. So simplicity is one of the core principles of our platform.

Stephan: I think one of the things that comes with starting with mobile is you are forced into a certain amount of simplicity because it's just like the patterns and the UI. It's s just, you can't do so many crazy things as you can on the web. And it forces a certain amount of simplicity. And I think the patterns that you have in the app are very familiar to people. You know, I think the navigation, if you've used Instagram or Facebook is very similar. Not that that's a bad thing. I think that is something that back in 2011 wasn't so established yet, I don't think those patterns had completely evolved. How has the app evolved and how have you tried to stay at bay of the complexity that can come up over time?

Manish: Yeah, well some days we have some places we continue to struggle. We've kept the basic architecture of the app pretty consistent from the beginning. What we've done is added things that are needed to support the scaling. So for example, last year we added something called Posh Market that allows immersive experience for different kinds of shopping. If you're a male shopper, you can go into the men's Posh market or if you're a mom and you're shopping for yourself, you can go into the women's shop market, but if you're shopping for your kids, you can go into the kids' shop market. We launched home, you can go into the home Poshmark or if you just want to just shop everywhere at the same time, you go to the default all Posh markets. So that's something that we use data and technology to power that experience. We've kept the navigation and avoided a lot of sort of cool tricks and too much animation to keep the process fairly simple. We've kept the basic architecture of production and consumption relatively straight forward in the platform. We kept the form factor of the photos very consistent and sort of allows us to scale. So there's a bunch of things that we have not changed and there's a bunch of things we keep evolving based on the state of the mobile technology, the resolution of the pictures, the usage of the screen size, you know, using of sort of up and down area over time. The key thing for me at the beginning was that you need to be able to do everything in mobile with as few steps as possible, as little typing as possible. And that paradigm has led to a very simple metaphor and we constantly keep on thinking, you know, where are we making the life of a user hard? Cause sometimes it's not even in the tap tap, it's really more where we are creating cognitive overload. So you have to keep simplifying that aspect and narrowing down the use case. We were talking about how your platform, you've kept the use case very focused and that's sort of key to scaling the business.

Stephan: Well I was going to ask you about that because on the one hand you're pretty narrowed in on the fashion market. You've opened up home goods recently, but compared to say eBay, it's way narrower. But then you've also got companies like GOAT or like Stock X that are super focused on the sneaker market for example. And they have a community that's extremely tight. How do you balance that? How do you find the happy medium?

Manish: So I think it's really a great question and I think what you find is that even with hyper focus, people are creating really big businesses. So that tells you the scale of the market. We're playing in a trillion and a half dollar market, which is both geo and physically sort of scalable. So it's pretty massive. And we started very heavily focused on women's resale market and branched out from there. And there are other players who have started, you know, either just focused on luxury or just focused on sneakers and they're doing a very valid job, we certainly have those offerings included in our platform. For us we were hyper-focused on mobile women's resale for the first four or five years and then we started to sort of diversify from that and only in the last 12 months when we felt that our core platform is really solid and servicing the needs have we started to branch out to other areas. You know, most recently this month or last month we branched out to home decor and then also opened up our Canadian office. So I think at different points you have to expand and we have to expand you have to sort of integrate the core assumptions. But for a long time if you remain focused on your core mission and what you're doing is also synergized, then you can serve your core customers and also adjusted customers.

Stephan: And you never felt that pull to be like, I mean eight years in like finally opening up home. Like you could have probably done that three years ago, but why not? How did you decide that this was the right time?

Manish: I think two things: One is you have to be ready as a company, as an organization, even as a leader, I have to be ready that these things are there. Your platform has to be an idea as a technology. And in many cases you need that for your next phase of growth. So you start to see different growth drivers and you start to open them up and you bet on a bunch of different areas that you can grow in. Some work quickly and some take a little bit longer time to work. So some you have to persist for longer period of time. And that's sort of the general journey of growth. It's not a linear picture. You have to keep experimenting, you have to keep sort of innovating. But you know, in our sort of broad focus as a social commerce platform focused on style there's still massive room to grow in so many different dimensions.

Stephan: When you first set up the app and you're going through the onboarding and profile, it's asking you what brands are you interested in shopping? And a lot of the big names that people would recognize show up there. But I'm curious, we have a lot of listeners who are in the direct to consumer market. They're more up and coming, emerging brands. They're only selling online, some many of them. Do you find that you're starting to see that DTC movement kind of show up in Poshmark and how is it different if at all than traditional brands aside from the scale of them?

Manish: Yeah. So for us the focus on both exposing and discovering and sort of scaling the smaller, lesser known brands has been there partly deliberately and partly just how it organically grew on the platform. So very significant portion of our GMV comes from smaller brands that either exist independently or have been created on our platform. So for example, there are brands that primarily grew out of our platform and now have sort of an independent existence as well. We have brands that grew out of us and now are primarily sold in retail and have a smaller online presence. So we've been both the creator and the distributor of many of the smaller brands. We also have a wholesale marketplace where brands can come and distribute their product to our seller community and get sort of additional distribution on our platform.

Stephan: And who is doing that? What are the brands that tend to like working with you that way?

Manish: So we've had brands like Electric Yoga. We've had brands like Infinity Rain. We've got sort of a wide variety of, I would say clothing brands, accessory brands, and now a lot of jewelry brands are happening. We've also done some partnership with some of the larger brands on the platform at various points in time. And so what we believe is that when you create a social experience, it naturally exposes both the big brands and the small brands in an upcoming brands. And that's the power because you're not just searching, you're also discovering and discovery is really part of the power for direct to consumer brands because initially nobody's looking for them. So you have to get exposed and then you get exposed and you build a brand and people start to look for them.

Stephan: So let's say I'm Outdoor Voices or I'm Allbirds or something like that. They're so involved in controlling the experience of how their shoppers work with them. Poshmark sort of exists outside and they sort of don't try to get involved with it too much or are some companies like really looking at what's happening in on Shop Mark and are happy to see their products resold there or how do they think about it if they do at all?

Manish: I think for a lot of brands that have grown outside of Poshmark or sort of existing bigger brands, they are all starting to think about how do you interact, engage and sort of integrate with the community like Poshmark. I think on the reselling side, really what you're getting is additional exposure ultimately for your brand and you're getting new shoppers who will ultimately integrate and scale with your brand. And it also shows you the joy and sort of the full life cycle of that brand. So I think ultimately reselling is an extension to the brand. And when you have a very massive collection of users and shoppers, I think you'll start to see the bigger brands also integrating with a platform, the right models will emerge. I don't think the right models are quite there yet. So we are working on building some of those models and I think as they do you'll see it being much more lively.

Stephan: Are you familiar with Patagonia? They have this thing called Worn Wear. Do you know about that?

Manish: I'm not familiar with it.

Stephan: It was a great episode, I think about a year ago with Nellie Cohen she's the founder within Patagonia, this thing called Worn Wear which is basically just a resale marketplace for Patagonia. So essentially if you have a used Patagonia product you can bring it to either a store or ship it to Worn Wear, they'll like fix it and resell it on your behalf. So it's not, peer to peer type of model. It's centralized. But I think it's really powerful because it kind of continues the story of Patagonia people think of. Patagonia is a very sustainable brand and they like the idea that their products can have a second life that way. I guess like two questions emerge: One is how does sustainability play into what you're doing? And the second is, would you ever think of, not white labeling necessarily, but like enabling other brands to have that same type of benefit that Patagonia enjoys of really creating a place for their community, for their own users to go and kind of like resell or upsell kind of upcycle their good's somehow?

Manish: Well sustainability, you know whenever you reuse something or you extend the life of a product, sustainability is inherently a value prop point you're creating. And for some people it's foremost in their mind. For some people it's secondary but they are effectively doing that when they're using and you think of sort of more durable goods like shoes or jackets, you start to think of sustainability. But in Poshmark, even something more flimsy like a dress or a skirt or a shirt will find multiple life cycles. And even brands that are not typically associated with sustainability find a much longer life cycle because our usage of a lot of products is very light in today's world. So that's happening. And I think we actually have many folks, many designers using Poshmark under pseudonyms to use it as a way to sort of sell. And I think direct integration with brands in a way that they can have their own sort of more direct to consumer outlets for used items. They can do that today. There's like no restriction to do that. But to do it in a more strategic way is definitely something we are exploring. And I think it's something that's going to continue to happen whether you want to sell it directly, you want to give it to someone who wants to consign for you or you can give it back to the brand. And you see that happening in electronics world, you know, where people are directly transacting electronics then they are giving it to a local shop and consigning it or they're giving back to the brand and the brand then consigns it with a third party consigners on their behalf. So all of those cycles have happened in other categories. So why not fashion?

Stephan: And what do you think about this idea of creating tighter bonds with brands and basically enabling them to create a space for their community to go and like actually exchange goods or kind of promote the brand that way?

Manish: Oh, I think it's a wonderful idea. I think it is definitely something that you will see brands do more and more. You're starting to see that even big retailers opening up consignment sections in their stores, certain brands are taking back product, different kinds of product and doing stuff with them. So I think it's both a way for brands to get deeply engaged with the consumer, for consumers to feel that they have almost a permanent bond with a brand. But also it's good for the environment. It's good for the customer, it's good for the brand. So I think it's just something that is good across the board.

Stephan: There should be a filter for this item has been repaired or something like that. Because I think that is another aspect that if you can enable your millions of sellers and consumers to buy or actually sell like things that they have repaired, it can be a kind of powerful story.

Manish: Yeah, yeah, absolutely. We should explore that.

Stephan: What about this story that I read, Marie Kondo obviously had an impact on- I saw this tweet, someone was saying that it was like the best time ever to do thrift shopping because of everyone who watched Netflix and basically is selling everything that they have in their closet. You've mentioned that that had an impact on what you're doing at Poshmark. Can you describe more?

Manish: Sure, I mean I think this movement has been building up for years and in some ways by Marie Kondo kind of came in at the right time and really Marie Condo's distribution through Netflix. And so it's been an extra sort of oomph. This year for our platform and for many other platforms.

Stephan: How do you know that the two are related? It was just like overnight, like within a couple of weeks or something?

Manish: No, I think definitely it's one of the factors, it's not the only factor, but it's definitely was very much coming in with the consumer interest in simplicity. The platforms available for consumers to participate in it and sort of the consumers mindset. And then Netflix as a form of distribution. I think they all just came together wonderfully. So yeah, it definitely cute when you saw a lot of impact from that one of 2019.

Stephan: Yeah. Was there something that was telling you that that was like the Marie Condo audience? Like how did you figure that out?

Manish: I think it's more correlation. There's nothing that I could see that was very specific there. It's more correlation and it may not even be 100% cause because you never know whether it's there. But definitely the timing was there and it was coming in at the time. Beginning of the year is always a big time for us anyway because a lot of people coming off the holidays are sort of in a simplifying mode, you know, fit closet, fit bodies, fit sort of mindset. So there's just that focus, which is very heavy.

Stephan: What's your point of view on fast fashion versus like Marie Condo versus sustainability? Like these all are things that seem to sort of be in kind of contrast to each other. What's your point of view just philosophically, personally around where you'd like to see the fashion industry go?

Manish: I think the fashion industry is really a reflection of our society and I think our society is that reflection of a lot of things that are happening, which are both creating and propagating. So, when you think of social media, which is a form of fast media consumption? When you think of how we are consuming media through the headlines and not bothering to read the article. And that's been going on for years now. It's sort of our consumption of media is very much driven from headlines and pictures. I think it's reflected in how we interact with products, how our relationships with products are shaped. And so I think sustainable, recyclable, high duration fashion is perhaps a better way to engage with the products than just quickly use and then wear at once and then keep it in the closet. But I also think that the quality of manufacturing is also changing, but you think of something like a fast fashion, it actually has a much bigger life cycle than what people realize in a platform like ours. Even gifts or garments that you may have bought for $15 or $20 are much longer, you know, many, many turns of the life cycle. And so I do think that it's hard to predict how consumers engage with a product, but I think it's easier to support and turn that into a healthier sort of a participation. So, that to be my main thing is understanding where the world is going and how can you serve it and make it easier, better, simpler, healthier in that process, it's hard to sort of turn the tide broadly and where the consumer is naturally going.

Stephan: I bet you must have some really fascinating data on what's going on with fashion and the consumption patterns. Like I was just thinking as you're describing that, are you able to detect when the same item is being resold?

Manish: We are able to detect that we are able to also detect when trends starts. So if there's something that's happening, a new emerging brand that people may not even have heard of, you'll start to see both the searches and the recycling and sort of the consumption rise. It may still be a small portion of the GMV, but the relative change, it's pretty significant. I remember there was these pair of eyeglasses and sunglasses awhile back, maybe four or five years back that were being sold through specific outlets. They were born in Australia and suddenly this very unknown brand started to take on a life on its own. And the inventory was always scary and was partly trending because some of the celebs were wearing it. And it was just going through that sort of process. Most recently as Kate Spade passed away, we could really track the impact of that pop event and sort of life event and how the impact it had on the followers of that brand. And even broader people were just influenced by that brand and the consumption patterns. So what you see is that different sort of national events, pop culture events, life events, all tend to get reflected in a broader way just because the depth and breadth of what we have is so wide.

Stephan: Yeah. And I think now that you have eight years, I would just love to see like 10 years from now how that stream. I'm kind of still stuck on this idea. This is something that we talked about with the founder of Greats, which is a really interesting shoe brand. We were geeking out on this term, which is "cost per wear". Like what is the cost per wear of different items. And kind of tells you a little bit about the quality versus the price point of an item. And so, if you could somehow see like what are the brands that you can tell just because they've been purchased and then that same item resold maybe once or more through the platform, like which ones have the most durability or something like that? Is there some nerds like me who work at Poshmark who are spending their time thinking about that?

Manish: That is definitely a lot of nerds like you and me who do work at Poshmark, who do spend time thinking about it. You know what I would say is that durability is one kind of relationship because it's very product centric, but variability is something that is outside of durability that is emotion centric because it could be an item that's in perfectly good shape, but something that you don't want to wear and you don't wear because it doesn't fit you, it doesn't look good or it doesn't meet your aesthetic needs, in which case, and that's the case with a lot more fashion than it actually breaks apart. And so when you look at sort of the modern conundrum, the modern conundrum isn't about the physicality of the product. It's the emotionality and the spirituality of the product. And that's really where a lot of the challenges are. We get worn out of the product faster than the product wears itself out. And so when you think of a cost per wear, it's about how do you create that emotional bond that keeps the product going forward? And that's why when you think of a brand that you were talking about, like Patagonia, which is a little bit fashion, a little bit utilitarian, it can carry on for a longer period of time, but it's something that's super trendy and superhero now may lose its direction. And so what you've also seen a lot of people is play with the brand and modify it and evolve it. You know, where you take an item and you do something to it and it suddenly starts to look completely different. For example, Levi's as a brand has benefited from a revival and a rejuvenating at a massive scale where not only is the original brand thriving, but it's being adopted in so many different ways. But then people modify it and turn men's jeans into women's shorts and mens jeans into something else. And that is wonderful when brands and community engage and it transforms the brand into different ways and different ways of merchandising and evolution happen, not just the physical product but the positioning. That's something that Poshmark really enables. When you think of social commerce and you think of a social way of merchandising, you know the shirt you're wearing or the pants I'm wearing, there's so many different point of views. You have a certain point of view on that clothing. If somebody else merchandisers, they may have different point of view, etcetera. And those point of views can be literally a thousand different point of views on that shirt. So when you start to think of that shirt, you think of those point of view, not only are the different ways of connecting that shirt to a consumer, but they'd also different ways for you getting inspired where you might think of this shirt, it's something you wear to work, but if you see it in a different context, you might think this is a great shirt to wear on a date. If you see it in a third context, you might think it's a great shirt to wear to a party, in a fourth way, great shirt to wear to your tennis court. So the same thing can be transformed in different ways and that's a power.

Stephan: You mentioned this at the very top and we didn't go down that thread, but you're involved in discovery as well. So you're creating algorithms for people, how do you tune those? Because just based on the example that you're giving, how do you figure out how to show people the right thing? Are you trying to surprise them? Are you trying to show them more of what they've purchased? Like how do you figure that out? And it's like user generated content and photos. Like how do you match all those things together?

Manish: Yeah, yeah, yeah. No, it's fascinating. So we used to socialist of the primary graph and then we add to it sort of your engagement graph, which is things like brands and products and sizing and colors and other dimensions and sort of, we call it the style genome together with your social graph is sort of how your discovery is facilitated, but then we also give you pathways where you can choose your own discovery path. So for example, we have parties multiple times a day where you really get exposed to new and different things. Which is not necessarily personalized. Personalization is in the topic of the party. But then actual experiences there is sharing Posh Markets, which gives you exposure to different point of views. We have something called showrooms that get merchandise everyday that again broaden your things. So besides your social core feed, which is of course a core place that people go to, there's at least half a dozen ways in which you broaden that point of view. And then we are also using ML and AI to create recommendations for the users. Some of that stuff is in testing and getting rolled out, which again, tries to delight the user in different ways and broaden their point of views. It's an inexact science. It's something that you continue to sort of broaden and discover. But ultimately for us as a company focused on two things, people and technology. So technology is the dimension we are talking about. The real magic is through people by connecting you to the right people who probably give you a better way of discovering that almost anything we can do.

Stephan: And you haven't put in or I guess it's not as visible, the reviews around the stories. Is that right? How do you think about reviews in this world? Cause that's a pretty important pattern that exists on other platforms but not so much on Poshmark.

Manish: Really a good point. So when we started the company, one of the things we wanted to avoid was really having reviews. We controlled the experience so much in terms of buying, selling, shipping returns that we didn't need the reviews the first three, four years we didn't have the reviews. Then we added the reviews and we got immediately a backlash from the community. Everyone was asking for review. Suddenly we wanted the ability to correct them and modify them. And my vision from day one was-

Stephan: The backlash was from the sellers? They were saying like, oh, these people are leaving me bad reviews. It's not fair. Something like that?

Manish: Yeah, and so we ended up actually having private ratings on the platform, which was there. And then publicly what we produce is something called love notes, which are effectively great feedback that you get. And part of the reason is that the way the platform is designed, if you have any problems, you don't have to go to the seller. We take care of that problem. So we are an intermediary for all problem resolutions. And that was intentional. That was there from day one, which was two fold. One was to create a great buying experience whereby protection is built in and it's always with Poshmark. But the second thing was it was also meant to engage the consumer seller who doesn't want to deal with dispute management. Right? And so it really benefits both the sides of the house. And then for higher end luxury products, which are $500 and over we had built in authentication. So the item first comes to us, we authenticated it, we repackage it and ship out. So we ensure the experience through that process as well. We really taught through that experience from top to bottom in order to create a deeper lasting relationship between the buyer and seller. And the result is in Poshmark, 70%, 80% of the transactions that a seller gets comes from repeat buyers.

Stephan: Yeah. And I think it's fascinating to hear you talk about that kind of both creating the trust with all the parties involved. And also what we were talking about before is just the user experience being as simple as possible. Just reminds me of Amazon being so good at that over the years, you know, inventing Prime and free shipping and just like when you have returns, it's just like no questions asked, all that kind of stuff. What is like the next frontier of all of that in your mind? Like what are the things that are still hard that you think should be easier or the things where the trust isn't there yet?

Manish: I think one of the things that is there is for the sellers to build even deeper relationship with their customers. And we've invested a lot in what would be classically called customer relationship management, although we make it super simple and fun for the sellers to engage. So even deeper sort of tools where they can engage at a deeper level. Because many of them are brands themselves. The sellers themselves are like mini brands. Even though they may not have a custom fashion label. People will buy from Stefan or Maneesh because they trust us, they are sort of there. So being able to build that at a deeper level. And then the second thing, which is there is more dimensions of the product that customers care about today. So for example, there's a lot of customers who care about whether the product is made of animal or has sort of any kind of an animal footprint because they are Vegan, etcetera. So adding those second order artifacts can also be great as customers are relating to the brands in new and different ways than they have before.

Stephan: Yeah. But if I'm a seller, I don't want to have to go in and have to type in all these different things. Like how do you then detect what's the right skew of what the material is it made out of, etc. Like how do you actually do that?

Manish: Exactly automated ad ML, that's sort of the second order thing. So it's still simple for the seller, but they can correct to a broader audience of shoppers out there.

Stephan: You talk so much about community and I think like you've raised a lot of money, like you've raised over $100 million dollars and a thing that I wonder about is like when you have that sort of expectation and you're growing something, there's this need to keep feeding that. And I've seen this happen, Etsy is a great example. Like they started in the homemade handmade goods and you know, I think going public and their push to continue to grow, force them to expand into other markets. Do you find that is something that you struggle with at all? Like where you need to figure out, I need to continue growing the business and meet these expectations but I don't want to compromise like the community. How do you figure that out?

Manish: Yeah, so I think it's a really, really good question. And I think even at the beginning of this journey because I had a previous company called Kaboodle where I did face these challenges as the community scale. So when I was architecting Poshmark, I had thought a lot about from the beginning. How do you build a great community? How do you make it sustainable, and how do you make it scalable? And so there are, one of our core values is lead with love and money follows. So if you focus on love, everything happens. If you focus on money, nothing happens, but they're not disconnected. So if you just focus on love and you haven't thought about money, you will have to, you will be forced to think about money and it may not be in the right way possible. But at the same time, if you just keep it focused on making a transactional system, it becomes a transactional system and there's no love. So there's no community. So in the case of Poshmark, we created a fair partnership with our community. We take 20% of every sale in our community keeps 80% of every sale. That model has been in place from day one, and it's the same model today. If you think about eight year life cycle in marketplaces, think of any major marketplace that you can imagine. How many times have they changed their commission model in that eight year time period? Similarly on the shipping side, we created a fair system where the buyer pays for shipping, the seller ships the item. And we started by charging $7 for shipping at the beginning of the journey. Today, seven years later, our pricing is pretty close to $7, $6.79. In that time period, we've increased the capacity. All the postal services have increased their rates. We didn't underprice, we didn't have a transparent thing where we underpriced the system at the beginning. And at the same time, we didn't over price. And we've avoided charging piece meals for any service, sometimes taking margin hits in the business and scaling until we can recover that margin on the platform. Most recently, we added the ability to automatically collect and remit sales tax from many of the states that are requiring a sales tax to be collected. So each of those things are very thoughtful things that we built. We built a system where the community inherently supports each other. So we're probably the only marketplace where each seller spends a third to a half of their time promoting other sellers and they do it not only just because they want to be a great community member, but it's also good for them and it's good for the other sellers. So that's how the system is architected. And that's been sort of very core. Now we built it for eight years. You know, if you'd asked me four years back, I would be worried about these principles. Today I'm still cognizant, very vigilant about these things, but not as worried because we've scaled it to a level where I feel really good about it. And I feel that we can continue to scale it. But it's definitely always going to be a challenge at every time to make sure that you're scaling the business you can do right by the community. And at the same time continued to grow the business and the platform. Because when the platform is not growing, the community is not growing, that everyone is unhappy. It's hard to just sort of keep it small and make everyone happy because I believe growth leads to happiness for everyone.

Stephan: When you think about the resale and second hand market, is that growing beyond just like fashion as a whole? Is that an area where you think it's like a winner takes all or is it an area where we're still just like trying to grow the pie? What's going on there right now?

Manish: I think it's a massive area. I think it's massively transforming all of the different sectors. Fashion is of course leading the way. Electronics have always been there, but you're starting to see an end cause. Those are areas that have been big, big markets. I don't think that it is just about a winner takes all architecture. I do think that there's going to be multiple points of views, particularly in a space like fashion. At the same time, there is always going to be some big players and we certainly are hoping that we'll be one of the biggest players in this space and working hard to be that. Not by competing or not by being sort of a destructive, but really being constructive and being in service of our customers and our community. For us, we think mostly and all the time about our customer and how can we service them as opposed to how we compete with other folks out there.

Stephan: What are some of the things from Kaboodle that you keep with you that you either decided like, I want to keep doing that or I really don't want to do that again?

Manish: One of the big things that my learning from the Kaboodle days is that any idea can become as big as you imagined it to be. And if it's feeling limiting, you have to reimagine the idea in a different way. And a classic sort of a mini story. I always use this to say that when you see a coffee cup, you can always think of it as just a coffee cup and you drink it. Some people will think, okay, it's a great opportunity. Let me create a coffee card. Some others will create a coffee shop. Some will create a string of coffee shops. But then there's someone who saw a coffee cup and imagined the whole Starbucks in it, right? I mean if you think of some of the interesting things Starbucks, the foundation is a community. It was visualized as a community hub and the monetization of coffee was meant to be sort of a mini tax to sit in that hub and participate in that hub and it sort of taken itself a life of its own. So you know, when we think of Poshmark as a social commerce platform, we think of community and technology and people as its hub. And from there a lot of innovation will happen. You know, you've seen it in fashion, you're seeing it in home, but there's just so much more to come.

Stephan: It's funny that you mentioned Starbucks when I was on your website earlier, I noticed that Starbucks was like one of the top brands selling on Poshmark. It was recommended on the homepage. And I was like, there's all these fashion brands and then there's Starbucks and I was like, what is this? Click on it and it's just like so many different mug designs that they've done.

Manish: Yes, yes. And then Starbucks, this summer has been particularly popular as you know, there've been trending with a lot of innovation that they'd be doing in the mug space. I mean, who would have thought that Starbucks would be a hot home accessory product in the summer of 2019, but that's where it's at.

Stephan: And when you're thinking about doing home, like obviously accessories, these are things that people can ship but furniture and other bigger things. Like how did you decide, like what were the categories that you wanted to launch into? Because you've got a pretty specific, I mean, I don't think that you can get a USPS to give you that same deal for selling my couch on there.

Manish: Yeah, probably not. It was meant to use Posh Post as a core sort of logistics artifact. That's sort of what it was built on. You know, for us when we are looking at categories and expanding, our community leads the way. There were tons of products on the platform already in the home category that people used to either love or complain about, right? And so now with home launching, it becomes codafide that you can really buy and sell home products. The precursor for that was creating the Posh markets experience last summer, which allows you to choose your own journey. So if you don't care about home and you just care about fashion, you can just go to say the women's market or the men's market and all you'll see is fashion products and nothing else. If you don't care about fashion, you just care about home, you can go to the home market and you'll just see the home products. So with Posh Markets, we give people just with a quick swipe to choose their entire journey and experience and eliminate everything else. When we sort of invented that thing, it became easier to launch different departments and categories because we are enhancing the experience without compromising the experience for people who don't care about, you know, if you're maybe young and you don't care about the home products as much. Or for example, we have a sneakers market, you can just go in and do the men's kicks market and only see sneakers day and night. You won't see any other products. So each of these things allow us to offer specific journeys to the customers and they can switch out without having to download a new app, do anything. They can just swap a market. And it's almost like they swipe the app, it's just all within Poshmark.

Stephan: Yeah, you make it sound so easy. Your descriptions of all these different areas sounds so intentional and well thought out. Are there things that you've been wanting to do with Poshmark that you just like haven't figured out or things that just are sort of like in the back of your head and you're like, we haven't figured how to do this out or something that is just like nagging at you that you're trying to solve still?

Manish: Oh, many, many, many, many things. I think one of the big things we are exploring is how to properly partner with the big brands. And I think we've got some exciting stuff that we are thinking of doing. We've also done some experiments with physical retail. How do we integrate and empower our sellers to participate in is something that we've been experimenting, haven't found the right model. So continue to work in and innovate on it and at the right time I think it'll manifest. Recently two big areas that we were focused on, we've been able to manifest. One was, you know, how do we go beyond the United States and stuff, the world. So taking a step in Canada and seeing the early success has gotten us all very excited that we can really start to expand globally. And then how do we go beyond fashion and serve other categories and other enthusiast communities and home. It's very early, but we are seeing tremendous success in that and just beautiful products being bought and sold on Poshmark. I most recently bought something for my shelves which is just this beautiful collection of books that somebody has modified for Poshmark branding and it's just beautiful. So, I think we've made some great strides, but for us, we want to do it right. We want to do it in a way that continues to enhance our community. Sometimes that takes a little longer and once we find the right knobit can go very fast.

Stephan: Cool. Well, if people want to check you out, if they haven't been on Poshmark before, the app store. What else? Just the website .com?

Manish: Just enter poshmark.com and if you're here in Canada, it's poshmark.ca.

Stephan: Nice. Anything you want to point people to? You've been doing a lot of podcasts and talks lately. Well, people should go on Twitter and find you or where should people?

Manish: Yeah, people can find me on Twitter @marrc. I would also just like to recommend Super Soul podcast from Oprah. If you love podcasting, you'll love that. That's been my sort of go to podcast and especially her interview with Eckhart Tolle.

Stephan: Oh, nice. Gotta listen to that. Yeah. If you want some, like a deeper meditative knowledge. Thank you so much Manish.

Manish: Thank you for having me.

Stephan: Oh, one last thing before we go. I'm talking to you at home. What's your favorite brand these days? Is there something that you think is really well made or maybe someone that you'd love for me to talk to? Send us a tweet. We are on @lumi on Twitter. We're making this show for you. So tell us what you want to hear and we'll make it happen. Thanks. See you next time.

You can find this and all future episodes on iTunes, Google Play, and here on the Lumi blog. This episode was edited by Evan Goodchild.

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