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SPEAKER_02: It's probably the darkest moment of my life.We were running out of money and I couldn't do anything about it.But like many things, it turned out to be a blessing in disguise.For the first time since I started, I had a lot of time to think.I tried to replay everything in my head.What started as something really promising, how come it went horribly wrong?
SPEAKER_03: Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.I'm Guy Raz, and on the show today, how Larry Liu went from being an eBay reseller to building the online Asian grocery platform, We, now valued at over $4 billion. Imagine you start a business and you pour your heart and your soul into it for a few years.You watch it gain early momentum, and then shortly after, you begin to see it spiral and flail.At a certain point, you have to come to terms with the reality of that failure. Now, if this sounds like you or something you've experienced, today's episode might be particularly helpful because Larry Liu failed.He started a business that seemed really promising.And about three years in, he had to shut it down and start all over again. But the failure of that business and the painful process he went through was almost like an act of God or fate or whatever power you want to believe in.Because it led to a much better and much bigger idea.
And that idea is called WE.That's W-E-E-E. It's now one of the leading grocery delivery brands that specializes in Asian products.If you're looking for A5 Kobe beef or a pint of perfect white strawberries from Saga Prefecture in Japan, Wii is where you can find it.But you can also find staples like dish soap from Taiwan or vinegar from China. Larry started WE in 2015 as a completely different company.The original idea was a platform to help people buy large purchases as a group and save money.But that idea nearly sunk the business and it left Larry with barely a month of funding just before he made a hard pivot into grocery delivery. Larry actually came to the U.S.in 2003 to work at Intel.
It was always his dream to live and work in the U.S.In fact, as a kid growing up in Wuhan, China in the 80s and 90s, Larry was obsessed with American culture, in particular basketball and the NBA, which is actually how he got the name Larry.
SPEAKER_02: My legal name is actually Min, M-I-N. Last name is Liu, but I go by Larry.I started learning English when I was 12 years old.So our English teacher asked us to pick our own English name.So we got to choose.So I chose Larry because I was into MBA at the time.And I really like Larry Bird.That's why I chose Larry.
SPEAKER_03: As a Lakers fan, I really wish you would have loved the Lakers because I'd be talking to Magic Lou right now.You would have said, I want my American name to be Magic. And that would have been your name.You'd have been Magic Lou.So Larry Bird, the great Celtic, that's how you became Larry.I love it.And this was like right around the time when you were a kid and probably.So was the NBA, American basketball, like were you really obsessed with it as a teenager?
SPEAKER_02: Yeah, absolutely.That was the first years that China started to broadcast NBA games. So a lot of kids became really fascinated about NBA.And there was not other American sports broadcasted, right?There was no baseball, no football.It was just basketball.So that's kind of our impression of America.And we all felt like, oh, these players were just so amazing and best in the world.And yeah, a lot of people were like me.We really admired those stars.
SPEAKER_03: Did it feel like – do most kids growing up in Wuhan dream of like one day living in Beijing?Like a kid who grows up in Omaha might think of moving to Chicago or New York or obviously LA.Growing up in Wuhan, is it like I'm getting out of this place?I'm getting out of this town and I'm going to Beijing or to Shanghai or something.Is that how you thought growing up?
SPEAKER_02: Not really.I think most kids were – not like the kids today, they didn't know what to do.When I was a child, I did not know what I want to do.So we all kind of followed this pattern our parents or teachers told us, right?You just be really good at school, then you apply for a good college, then... It seems the past was drawn for everyone.So as kids, we didn't really think a lot about what we wanted to do in the future.If you really ask the kids, they all told you, oh, I want to be a scientist.This kind of generic answer, right?
So it's very, very different from America where kids from early age are encouraged to think about what they want to do.
SPEAKER_03: But from what I understand, you did really well in school and then you end up getting a bachelor's degree in electrical engineering.And I guess you were planning to go to the U.S.for graduate school.But I guess 9-11 sort of got in the way and sort of derailed your visa.Is that right?Yeah.
SPEAKER_02: Yeah, so 9-11 happened.So the year after, the visa rejection rate was extremely high.I don't know if it's true everywhere, but in China, it was extremely high.So my visa application got rejected. Like many other people in that year.
SPEAKER_03: So, all right, so you stay in China.This just coincides with the beginning of what in the U.S.became the dot-com boom and bust, right?But it was early days for things like e-commerce and like eBay.And I guess there was a similar kind of site in China, or there might still be, called EachNet. And it was like an eBay.And you started to sell things on, like buy things and then sell them.Tell me what you would do.
SPEAKER_02: Yeah, so EachNet was created by one of the alumni of my university.So they went to campus to recruit.But I didn't apply.Instead, I became a seller on EachNet.I thought it was fun.So we didn't know what to sell.So we started by just... posting, putting posters in those apartment buildings, asking people, oh, do you want to sell some used goods?And then people call us, for example, they would call us, oh, I have this microwave I want to sell, or I have this refrigerator I want to sell.Then we listed on each net and
Yeah, sold those secondhand electronics and appliances.
SPEAKER_03: You'd basically buy these things, whatever they were, secondhand microwave ovens.What else would people sell?
SPEAKER_02: It was very small scale.We were just a bunch of kids.We didn't know what we were doing.We were just having fun.We thought, oh, this is interesting.We have never seen this kind of thing before.And there was no e-commerce in China, only each net.
SPEAKER_03: Were you making money by doing this?
SPEAKER_02: Not much.We didn't make money.We didn't lose money.It was more like a hobby.We never thought, oh, we're creating a business or anything.It was more like, oh, it's interesting.Oh, you can sell things on the internet.It's cool.So let's try it.At the time, three of us, actually now they are all the co-founders of WE.
So that was like more than 20 years ago.Three of us, we were just having fun.
SPEAKER_03: So, all right, so you're doing this on the side, and this is just something that you're doing.Meantime, you graduate, you finish university, and you couldn't get to the U.S.because of visa challenges.But you did get hired by an American company, by Intel, to work in an office in Shanghai?
SPEAKER_02: It's actually in Intel's factory in the suburb of Shanghai.My first job was to write test programs for semiconductor chips.
SPEAKER_03: So, all right.So you're at Intel and you start there in 2002.Within a year, you get an opportunity to move to California and work for Intel, which you, of course, you took up that offer.Paint a picture for me.It's 2003.You moved to Folsom, California, which is closer to Sacramento.You were 23 then. How was your English?I mean, you'd studied it since you were 12, but you'd never lived in the U.S., probably didn't have much interaction with English speakers until that point.
SPEAKER_02: Yeah, my English was pretty terrible.I remember going to McDonald's.I just couldn't understand what they were saying.They asked me a question, for here or to go. They said it very quickly, just, for here to go, for here to go.I asked five times.They repeated it.The employee repeated it at the same speed for like five times.I still didn't get it.So I had to learn the practical English.
And also when we were in China, the English we learned was like, I don't know, it was British English or something.Just a lot of expressions were very different from the American English today.
SPEAKER_03: So when you got to Folsom, I mean, I'm assuming that Intel probably helped you out.They helped you find an apartment and kind of helped you get a driver's license.What did you make of it?I mean, it's 2003.What was your impression of the place?
SPEAKER_02: It was very quiet and very clean.That's my impression.People were super nice and polite.Intel took very good care of us, so I didn't feel like the generations of immigrants from China before me, right?They had to probably went to New York City and got into the basement on the first day. The only thing I felt a bit uncomfortable was about my inability to find the food I like to eat.So the only thing remotely Chinese in Folsom is a single Panda Express.
SPEAKER_03: One Panda Express.One Panda Express.
SPEAKER_02: Yeah, I actually had my very first meal there in Panda Express because one of my colleagues, the day I arrived, he said, okay, let me take you out to a Chinese restaurant.So we went to Panda Express.I actually like Panda Express food, but it's just different.And also the selection. is very limited.Any Chinese restaurant you walk in in China, they offer you at least hundreds of choices, right?Any Chinese restaurant.Hundreds.Yeah.Then you walk into Panda Express, everything was pre-cooked and
You can choose from like 10 different options.It's just very different.And the closest Asian supermarket, Chinese supermarket to Folsom was in Berkeley, the 99 Ranch in Berkeley, which is about two hours away.There was a Vietnamese supermarket in Sacramento.It still took us 40 to 50 minutes to to go there.So that Vietnamese supermarket became the place I went a lot.
SPEAKER_03: All right.So you're working as basically as an engineer at Intel.And There's kind of a side project from what I understand that you started kind of engaging in while you were there, which was similar to something you did in China, but this time you did it with eBay.You basically became an eBay seller on the side to make extra cash.Was that the reason that you just were like, hey, I can make extra money selling stuff on eBay?
SPEAKER_02: I learned about eBay already when I was in China.So when I came here, I started to sell things on eBay.I remember I went to Costco and I saw this backpack, Jansport backpack.These backpacks were super expensive in China.And I saw, oh, it's only $15 in Costco.Then I looked it up on eBay.Oh, the lowest price on eBay is around $40. So I just bought that backpack and sold it on eBay for about $40.That was my first transaction on eBay.Instant arbitrage.
Yeah.Instant arbitrage.Wow.I remember after I bought the first one, I sold it.Then I went back to Costco.I bought like 10 more.Wow. From backpacks to what else did you start to sell on eBay?So I started to sell a lot of electronics, for example, digital cameras, even iPods, Nintendo Wii.I sold a lot of Dell computers.
SPEAKER_03: Where would you buy them from and where would you buy them cheap and then sell them for more on eBay?
SPEAKER_02: So I bought them either online or in local stores.That's very early days of e-commerce.So a lot of the companies were not very savvy.So they would give you coupons that can be reused many, many times.For example, I remember OfficeMax had this coupon 50 off $250 and can be used over and over and over again. I bought online.I didn't even need to go to the store.They had online.So I bought online.I would, for example, buy two cameras that's like $130 each.
So I would apply the coupon and then sell them on eBay.And the coupon can be applied to on-sale items also.So when they were on sale, plus the coupon, you can make a profit.
SPEAKER_03: I love it.And were you making like a marginal profit or were you making significant profit?Because you still had to deal with the shipping and handling yourself, right?
SPEAKER_02: Yeah, I think it was decent.It was not insignificant.And I was pretty good at it.So pretty quickly, I became one of the top sellers in the Sacramento area. And eBay even sent me a plaque, yeah.
SPEAKER_03: A plaque?
SPEAKER_02: Yeah, yeah, yeah.
SPEAKER_03: Wow.Top seller.Can you estimate how much money you would make a year or a month from eBay sales?Like $50,000 a year?$25,000 a year?More?Yeah. Like in profit for you?
SPEAKER_02: It's probably between $30,000 to $50,000 a year at the time.Wow.
SPEAKER_03: Wow.That's pretty impressive.I know I'm kind of fast-forwarding a bit, but I know that eventually your girlfriend from China moved out to the U.S., and you guys got married and worked together.And she, I guess, was a grad student at UC Davis, and you decided to pursue – an MBA at UC Davis outside of Sacramento.And also in the meantime, the two of you would have a kid, which was probably going to change the way you started to look at life.
SPEAKER_02: Yeah, it was a scary thing because all of a sudden, you are not just responsible for yourself.You're responsible for this human being.I remember I was thinking to myself, What do I teach this child?That's the thing that really got me thinking about my own life.Up until that point, I still felt like I was pretty much following the playbook for a lot of Chinese immigrants.Just apply for a graduate school here, find a job.But having the child really made me make me think what I wanted to do for my life.
SPEAKER_03: So when you graduated, when you finished, when you got your MBA, I think you kind of pivoted because you had really been doing engineering work at Intel.But from what I read, you went and worked for a computer networking company initially, but you worked in finance, right?That was your job out of business school.
SPEAKER_02: Correct.I worked for two companies initially. three years each in the finance accounting function after I graduate MBA.I chose finance for the reason, which is I need to have visa sponsorship if I want to stay in the US.So I could have chosen marketing, but at the time, if you chose marketing, Your chance to get a job in the U.S.was almost nothing because no one would sponsor Visa for a marketing position.
SPEAKER_03: Meanwhile, you still continue to sell things on eBay, right?Like at a certain point, and I'd love for you to explain how you do this, you started to automate the arbitrage, like buying things from one site and selling it on eBay or vice versa?Yeah.
SPEAKER_02: Yeah, I kept this hobby up.Fast forward to 2012.I had this idea that I realized, oh, how about just automating the whole thing?Because it's very easy to write programs to scrape the internet.You can find the price on Amazon of the same thing on eBay, on Walmart.Wow.Wow.
SPEAKER_03: You wrote a program that would scrape Amazon and eBay and vice versa.And if it found a lower price for the same product on one of the sites, it wouldn't buy it.It would just list it on the other site.Somebody would see it for lower, buy it from you.It would automatically order it from Amazon or eBay, depending on what it was ordering from, ship it, and you would just get the difference.Correct.After the commission was paid.Yeah.That's brilliant.Yeah.
I mean, I wonder if you could still do that today.Is there still that kind of arbitrage between Amazon, eBay, Walmart, Target?I wonder if that still exists.
SPEAKER_02: Absolutely.It must, right?Absolutely.You can still do that today.And you can do even more, right?So now there are cross-border companies.You can actually scrape those companies and list them on eBay.
SPEAKER_03: Yeah.I mean, people must do this all the time.
SPEAKER_02: Yeah, at the time, I thought my idea was quite original.But after I did that, I realized, oh, some people were doing exactly the same thing.
SPEAKER_03: I'm just curious, at its peak, how much money were you making from this?
SPEAKER_02: So at its peak, we were doing about $2 million in sales and a little more than 10% net profit.
SPEAKER_03: And when you say we, it was you and a couple of friends, right, from China.
SPEAKER_02: Remember those two friends?I sold secondhand things in China.
SPEAKER_03: In Shanghai?
SPEAKER_02: Yeah.So I recruited them.So one of them came to the U.S.also to pursue PhD.The other one stayed in Shanghai, got his master in computer science.So the three of us, two were in the U.S., one was in Shanghai.We were doing this together.
SPEAKER_03: And what happened to the business?
SPEAKER_02: So we thought this was a fun project, but deep down we knew that this was not going to be something significant.It's a good vehicle to probably make some money, but we fundamentally did not solve any problems or create much value.
SPEAKER_03: Larry, you were working in finance for a different company at this point called Atmel, which was a semiconductor manufacturer. And at what point do you remember thinking, you know, I don't want to do this anymore.I want to start my own business.Like, I want to do my own thing.Do you remember when you started to feel that way?
SPEAKER_02: Yeah, I did.I actually remember exactly which date I had this epiphany. It was January 2nd of 2012.I had this epiphany that I really wanted to start my own company and I wanted to pursue e-commerce specifically.I remember watching this video by Jeff Bezos. It was a very early, I think you can still find it, very early TED Talk Jeff gave.He made the analogy, he said, oh, now the e-commerce is like the electrical era in the early 1900s.So he just basically said e-commerce was in the very, very beginning.So I really believe that.So I felt like e-commerce would have a really bright future.
And I also remember I read this book, Good to Great.So it had this concept called... Oh, Jim Collins.Yeah, yeah.Classic book.Yeah, yeah.It has this concept called hedgehog concept.The hedgehog concept, yeah.Right.Like a business, you have to choose something you're passionate about and you're good at.
So for me, I think it applies to your personal career choice as well.I wanted to choose something... I'm really passionate about.I also want to choose something I'm good at.And also the third factor is this industry I'm choosing needs to be so much bigger and has a really bright future 30, 50 years down the road.So e-commerce.
SPEAKER_03: Something you can make money from it.
SPEAKER_02: Exactly.I think that's a third principle.Exactly.So the three things just converge to e-commerce for me.
SPEAKER_03: So basically, you came to the conclusion that just like doing this arbitrage thing, you could have a nice, small lifestyle business, but you couldn't really scale it.Like you hit you were making 200 grand in profit a year, you and your partners.But you kind of realize that you might have hit the limit of it.
SPEAKER_02: Correct.Correct.We can probably 10x it if we're doing it full time.Again, deep down, we didn't feel like we created much value.Yeah.
SPEAKER_03: So, all right.So you were searching.It sounds like you're searching for ideas and reading.I mean, so clearly you were and reading like business books, right?You're reading Jim Collins.And were there other books that you got a hold of that you started to read?
SPEAKER_02: Yeah, I started to read books when I was 25.So in 2005, I started to read a lot of books.I actually listened to a lot of books.I like business books.I like entrepreneurial stories.So I also started to get interested in U.S.history.I really like... Robert A. Carroll's The Years of Lyndon Johnson that became my favorite.What was it about reading about or learning about him that was interesting to you?
I think... Carol is just this amazing author.So he wrote Lyndon Johnson's life more interesting than a novel, right?And also the complexity of him is really fascinating.I felt like by reading the book, I felt like I was living the life.And also I think Carol basically wrote the entire U.S.history, right? from like the 30s to the 70s, right?I remember any character that appeared in the book, it was a huge chapter about it, right?Sam Rayburn, you know, Dick Russell, people I have never heard of and were not like known by probably non-Americans at all, but I was able to learn their stories as well.
SPEAKER_03: I don't think most Americans know who Sam Rayburn or Dick Russell is, by the way.It's really like most Americans don't even know who those guys are.It's just fascinating because here you are just like really, really curious about this new country that you have adopted as your home.And I guess you were still – even though you were now in the Bay Area proper – with a pretty significant Chinese population and a historic Chinese population, right?San Francisco, the center of kind of Chinese life in the United States for really arguably even to this day.You had a hard time getting the ingredients and the products that you missed from home.Is that right?
SPEAKER_02: Yeah. So I was able to get Chinese food, but I had to drive like 20, 30 minutes to a Chinese supermarket.The closest American supermarket was always one minute away from me, right?But the closest Chinese supermarket was like 30 minutes away.Quite inconvenient.
SPEAKER_03: I want to sort of – it's a bit of a digression but it's important because there's a part of your life at this time and maybe even to this day that is almost uniquely Chinese in that you were on WeChat.And WeChat is and was and is a huge Chinese-based like messaging platform.It's e-commerce.It's an everything platform, right, which is – It's like everybody in China uses it.And in the U.S., fewer people know.But this was, I mean, you used it to communicate with people, to like have, you know, sort of text chains with people.And WeChat was also a place where people, certainly like Chinese expats, would talk about like things going on in the area or, oh, you know, if you're looking for this product, you can find it at this store.Is that right?Am I kind of describing that accurately?
Yeah.
SPEAKER_02: I remember in early 2014, seemingly overnight, WeChat became super popular among Chinese immigrants.And WeChat in the early days allowed you to add people to groups without their consent. So not only I was on WeChat, I was added by my friends to so many different groups.For example, I was in this added to like a San Jose moms group by my friends.And then I saw something really interesting.I saw people were trying to buy things together in those groups. I remember one night a mom in the group posted some information.She said, oh, I went to this harbor called Half Moon Bay.There was a fisherman's market, right?She said, I talked to this fisherman because I really liked the fish, the Pacific black cod.
And he If you guys want to buy together, I can actually ask the fisherman to go out and catch the fish and then deliver to our local community.And then in one night, right, she got an order of like $10,000, like hundreds of people.
SPEAKER_03: So people were like, I want some of that.So people, and she ended up getting $10,000 at the borders to go to this fisherman in Half Moon Bay and say, hey, can you catch, we'll give you 10,000 bucks.Can you catch all this cod for us and we'll buy it?
SPEAKER_02: Yeah, so she named the price, you know, roughly how much per pound.And, you know, the Pacific Blackhawks, like 10 to 20 pounds each.So she asked, okay, do you guys want any, right?So people just text in the group, I want one, I want two. And just, you know, more than 100 people sign up.Very, very new to me.So I was very surprised to see that.And it was like just incredible.And then after people got the fish, the whole WeChat group exploded again because everyone loved the fish.They said, wow, this is the best fish I've ever had in the U.S.
When can we buy again?People posted recipes, posted pictures. It's just such an incredible experience.All right.
SPEAKER_03: So this happens.And she wasn't, like, making money off of this.She was just organizing the purchase, right?Correct.Correct.But this, I guess, got you thinking about group purchases.Like, maybe there's a way to, like, organize big group purchases around big items and create a business around it.Is that what you started to think about?Yeah.
SPEAKER_02: So first of all, I saw this happening in many different groups, right?Not just this one group.And also I talked to my friends in other cities in the U.S.People were doing this in Boston.People were doing this in Seattle.So Chinese immigrants were doing this everywhere.And My eBay experience taught me something about e-commerce.My understanding of e-commerce was always, it's going to be a search-based model.What I mean by that is, as the customer, you have to know exactly what you want.
So I thought that is a completely different e-commerce model.This really intrigued me because this is something new.No one... was doing this.So I thought, wow, this could be a big opportunity.
SPEAKER_03: So how, I mean, you're still working for this company, right?In finance at the time, you still have a job.But as you started to kind of think about it, how were you going to turn that in?Like, it's not clear to me how you were going to make money off of it.You would, you would create like a platform where people could organize, self-organize group buying things, but then because it would be on the platform, you would get like a 10% commission or something?
SPEAKER_02: we didn't know how to make money at all.So first of all, I saw a lot of pain points in the group buying process.The organizers had a lot of work to do. They didn't make any money, so they couldn't just do this as a volunteer for very long, right?So our initial idea was, okay, let's create a platform to solve these pain points, to make order super easy, to find vendors for the group leaders, to enable the group leaders to make some money.And by making them match, we can also make some money in the process.That's what we thought we could do, but we didn't think through the business model at all in the very beginning.
SPEAKER_03: And it was when you say we, it was the same friends that you, your friends from China, from college.Yeah, correct.So, all right, first of all, how were you going to finance this idea?Was it, I mean, could you do it with the money you had?
SPEAKER_02: So, you know, living in Silicon Valley, obviously everyone was familiar with, you know, startups and raising money. I remember at the time I knew that my background was not strong enough.I'm not this whiz kid from MIT or Stanford.My track record was not impressive enough to raise money.So we decided to... run the business using our savings from the eBay days and to self-fund the business until we see significant traction, then we can try to raise money.That was the thinking at the time.
SPEAKER_03: And at what point were you comfortable quitting your job to pursue this idea full-time?How did you get to that point?
SPEAKER_02: I couldn't quit my job because I didn't have a green card. So in 2014, I was very fortunate that I finally got my green card.So I quit my job in September of 2014.When I quit my job, we still had no product at all. We didn't write a single line of code yet for the group buying thing.
SPEAKER_03: But you also, your wife was still working at Yahoo at that point?
SPEAKER_02: My wife still had a full-time job.I think by the time she probably was working at eBay or LinkedIn.I don't remember which one.
SPEAKER_03: All right.So you basically, you were going to depend on her salary and her health insurance and all those things while you started this thing.Were you nervous about it?Were you like, was any part of you worried?
SPEAKER_02: I think so.I think deep down, you know, by the time we had three kids already.So we didn't just have one kid.We had three kids.It's expensive to live in the Bay Area.But we felt like, I think it's important, my wife and I are very aligned all the time, is that what kind of life we want to live, right?What kind of adventure we want to have.So we were aligned that we wanted the opportunity to do something different. significant and meaningful.So we were willing to take the risk together.
SPEAKER_03: When we come back in just a moment, how Larry with a brand new green card, but no job leveraged his eBay and WeChat experiences to build a new kind of group buying online business.Stay with us.I'm Guy Raz and you're listening to How I Built This. Thank you for having me. By creating software like Jira and Confluence to improve companies' workflow, Atlassian is on a mission to make impossibility a reality.And now, they're ushering in the next era of teamwork with Atlassian Intelligence.When you think of AI, pizza may not be the first thing that comes to mind. But global pizza chains are actually using AI to scan their pies and make sure they meet their quality standards.From space exploration to making pizza to producing podcasts like the one you're listening to right now, Atlassian thinks there's a lot about AI that companies should be excited about. Atlassian Intelligence transforms teamwork by empowering AI-human collaboration.
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I'm Guy Raz.So by 2015, Larry and his friends figured out how to leverage the group buying experiences on WeChat into a streamlined e-commerce platform.But they needed financing in a name.
SPEAKER_02: So we wanted to create a different type of e-commerce experience.We felt like there were two important components.One is it's a social thing. People didn't buy along.People buy together.So that's why W-E means social.Then the second thing is people were super excited.And I have three kids, and whenever they slide down a slide, they were like, whee!So I thought, oh, that's a very exciting sound.So that's why we picked this name.
So we want to create a company that's social and exciting.Cool.
SPEAKER_03: All right, so you've got this name.And by the way, when you say group buying, was it going to be for food only or was it going to be for anything?
SPEAKER_02: So for group buying, we didn't set to just do food because people were buying different things.People were buying pianos together.People were buying minivans together using our application.So we wrote the first version of software. by using our own money that we made from the eBay business.So we gained traction very quickly.So we released the software, I remember it was January of 2015.By mid-2015, we had tens of thousands of users already using our software to organize group buys.
SPEAKER_03: All right.Well, help me understand how you would connect a buyer to a seller.For example, let's say somebody wanted to buy a minivan with a bunch of people that they would share.Right.Which sounds really complicated to do.But all right.People want to do that.You guys would find you would find the minivan for them.You would find the deal for them.
SPEAKER_02: Yeah, for minivan, for example, we just call all the Honda dealers in the Bay Area.We just call, hey, we can have an order of 20 minivans.What deal can you give us?
SPEAKER_03: Oh, 20 minivans.Oh, so like a mass order of a bunch of minivans together, like almost like a scaled order to get a group discount.
SPEAKER_02: Yeah, exactly.Okay, got it.Okay.
SPEAKER_03: So you call the dealerships and say, we can buy 20 minivans.What's the best price you can give us?
SPEAKER_02: Exactly. But for minivans, we don't make any money, right?We basically turn around and just tell the groups that, hey, you know, here's the deal.It's a way for us to attract users.So people, oh, see, oh, you can buy minivan in such groups.We did a lot of pianos.You know, we talked to like Yamaha Piano.We talked to Kawaii Piano. Chinese people like to buy pianos.Sold a lot of pianos that way.
SPEAKER_03: And you would basically source the deals, and then initially you weren't making money off of this.It was just to generate interest, right?
SPEAKER_02: We made some money when the wholesalers didn't want to deal with the group leaders.For example, I remember one of the things we sold really well is pork belly.You wouldn't imagine... We can sell pork belly this way, but you walk into any American supermarket, you cannot buy pork belly.They just don't sell pork belly.Then during wintertime, Chinese immigrants make sausages.They need a lot of pork belly.So then we talk to a wholesaler of pork belly.We say, okay, do you want to sell to these groups?And they said, no, we don't want to sell to these groups, but we can sell to you.
We said, okay, then you sell to us.We resell to the group leaders. Right.That's how we got into like handling some of the products ourselves.So we start to have warehouses.We can just be the intermediary between the wholesalers and the group leaders.Right.So you would store things at the warehouse.We started to have physical warehouses in later part of 2015.
SPEAKER_03: And this was entirely through WeChat.You could promote it through WeChat and word of mouth?
SPEAKER_02: Yeah, yeah, exactly.And because we add value to the group leaders, so we basically pitch to the group leaders, hey, you don't need to organize group buys the old way.You can use our software.You can create a very simple HTML5 page.Then you just send the page to the group chat and people can click your link.People can place order. on the link, and we also help you find suppliers.So once one group leader sign up, hundreds of users in that group became our users, right?So we had this pretty strong growth engine in the beginning.
SPEAKER_03: All right.Tell me how you raised money from investors.I mean, was there enthusiasm for this idea?It seems like a novel idea and interesting.This is 2015.There was a lot of money going around, certainly in direct-to-consumer, the direct-to-consumer space.What did investors say when you brought them this idea?
SPEAKER_02: I didn't want to raise money until we achieve some scale.So my first investment actually came to us.She reached out to me on WeChat.She said, do you want to talk to my husband? he may be able to invest.I asked him, who is your husband?She said, he's one of the co-founders of Hotmail.I was like, yeah, Hotmail.I grew up using Hotmail.So I was like, wow, that's huge.
So I said, yeah, of course.So I went to his office When I walked into the meeting, I felt like he probably wasn't very interested in the beginning.But two hours later, he committed to write the first check we ever received, $250,000, because he really liked the scrappiness and the creative ways that we approached this project. I also asked him, I said, but Jack, his name is Jack Smith, but says, Jack, $250,000 is not enough.I want to raise more than $1 million.Then he taught me a lesson, right?He said, look, Larry, raising money is one of the most important skills a CEO needs to have.So I'm not going to give you more money.You need to raise the rest to prove that you have the ability to raise money.
Just do cold email and cold phone call.That's exactly what I did.
SPEAKER_03: The cold email.You just go on their websites of venture firms and just email their information at whatever, capital.com?
SPEAKER_02: Exactly.I went to all the early stage investors' websites.I tried to find their email.If I couldn't find their email, I tried to guess their email and just sent a bunch of cold emails out.
SPEAKER_03: And I guess eventually you started to pitch some of them, including, I guess, one called Amino Capital.And you did.You were able to raise a little over a million dollars in seed funding.
SPEAKER_02: Yeah, seed funding.We were able to raise that.Amino was not from cold email.It was also from a customer who used we.So you see, like our seed round was all from the husbands of customers, right? So we were very lucky.
SPEAKER_03: All right.And tell me a little bit more about what people were, I mean, pianos, minivans, but was it still mainly food that people were buying in large quantities together?
SPEAKER_02: Yeah, mainly food, fresh vegetables, fresh fruits, restaurant food. Some imported food, not a lot, but mostly food.
SPEAKER_03: And it was still mainly Chinese expats who were using it initially.
SPEAKER_02: Yeah, more than like 99.5% of the users actually use Chinese language on our application.So almost all Chinese immigrants.
SPEAKER_03: All right.So you managed to show enough momentum that by April of 2016, you raised a very big round, $7.5 million.And that was led by Goodwater Capital.And at this point, just a year and a half in, you raised a $35 million valuation.So tell me about what that enabled you to do.I mean, this business looked like it was heading in the right direction at that point.
SPEAKER_02: Yeah, at the time we thought, oh, it's not so hard to start up a company, right?A lot of stories were like, oh, you raise some money and then boom, you became a huge success.That's what we expected.So... So we just kept doing.We didn't really think a lot about the more fundamental things.We just, okay, let's just keep doing what we're doing.But then all of a sudden things start to slow down.It felt like we couldn't find enough group leaders and the growth just very quickly slowed down to a halt.So by...
early 2017, we were really feeling the pressure that the growth was a lot slower.
SPEAKER_03: I would imagine that at this point, like one of the things that you might try, right, is, okay, well, I mean, maybe we need to just expand beyond the Chinese expat community and But clearly, that wasn't that turned out that wouldn't be enough.But was what were what were some of the things you were thinking about on how to, you know, get the business back on track?Because you say two years in, it starts to grind to a halt.So how are you thinking about I mean, were you were you panicking?Or were you just kind of calmly going through a list of like different things you might try?What were you doing?
SPEAKER_02: Now looking back, we were doing the exactly wrong thing, which is when something is not quite working in a smaller geographic area, we try to make it work in more areas, a wider range.So we were, oh, maybe we need to find more group leaders outside of California.Maybe we should... you know, try to bring it nationwide and even internationally.Or maybe some people do group buys in Singapore or Australia, right?When we didn't know what to do, we just tried to bring it to a wider audience, hoping to sustain that growth or momentum.But that didn't work at all.So, yeah, I was trying to raise money.Also, by the time, by mid of 2017, we were running out of money. We had less than $1 million left.
SPEAKER_03: Tell me what your costs were.I mean, presumably you had to hire employees.You had warehouses.Where were you spending your money?
SPEAKER_02: Mostly people. So we had to hire business development people.These are basically people to recruit group leaders, right?We also had a small warehouse.We had people who have to deliver some orders and we didn't think hard enough about the business model.So we didn't try to make money.We just thought, oh, you know, we just grow the users and we can raise more capital. And then with more capital, we have time to figure out monetization.
SPEAKER_03: But meantime, that $7.5 million that you raised, you were burning through that fast.Because you're saying by the middle of 2017, you were close to bankruptcy?
SPEAKER_02: We had less than $1 million left, and we needed cash immediately. So I was trying to raise money.Again, you know, I'm good at cold email and cold calls.So I reached out to almost all the investors I could find in the Silicon Valley. I remember just driving up and down Sand Hill Road like every day, right, meeting investors.But I had no luck to raise money in the U.S.
SPEAKER_03: Investors were not interested in giving money to the business because it looked like it was about to go under.Was that what they were saying?
SPEAKER_02: Yeah, I think partly the momentum was slowing down a lot.Partly, most investors couldn't understand The phenomena, most investors couldn't understand why people would buy things in WeChat groups.It just something sounded so absurd, right?
SPEAKER_03: So you could not raise any additional money.You were like, it sounds like you were like on the precipice here.Tell me about your own, the stress that you were feeling about this.Did you feel like... This is not going to make it.Or were you convinced, absolutely convinced you could save the company?
SPEAKER_02: I was not absolutely convinced.That much I know.But I wasn't giving up.Because from the very beginning I started the business, I always told myself, I'm not going to be the one who shut it down. I will give my last ounce of energy to make it work.So we were in danger, so I didn't give up.I couldn't raise money in the U.S.I thought, oh, maybe I can raise money from investors in China. So I flew back to China.I tried to raise money from Chinese investors.
SPEAKER_03: And what did investors there say?
SPEAKER_02: They said a bit different things.So U.S.investors said, oh, this is a social thing, a Chinese thing that we don't understand.Chinese investors said, oh, this is in America.We don't understand what's going on in America. Although it seems promising, but, you know, we don't know about America.So, yeah, I had no luck.I couldn't raise any money from Chinese investors either.Wow.
SPEAKER_03: So you're in Shanghai trying to raise money.No luck.Probably feeling pretty low.And then it gets worse.Yeah.
SPEAKER_02: Yeah, so it was a rainy day.I probably had something on my mind, so I didn't pay attention, and I slipped and hit my back on the stairs.I couldn't get up for a few minutes, and it hurt really badly. But I didn't think much of it.I just went back to my hotel room.The next day, it hurt even more.So I went to the hospital, and they found I fractured three bones around my spine.So my co-founder then just took me to the airport.So I was flown back to Wuhan because my parents lived in Wuhan.So I stayed in my parents' house for four whole months.
Laying in bed and couldn't move.
SPEAKER_03: Wow.Because there's really nothing you can do.There's no like, you can't, you just have to lay there and rest when you break a bone in your back, in your spine.
SPEAKER_02: Yeah, exactly.It's probably the darkest moment of my life.We were running out of money and I couldn't do anything about it. But like many things, it turned out to be a blessing in disguise.For the first time since I started, I had a lot of time to think.I tried to replay everything in my head.What went wrong?What started as something really promising?How come it went wrong? horribly wrong.
I also read some books.You know, I reread Sam Walton's book.I read the IKEA story during that time.And all of a sudden, I don't remember which day, but I started to realize what was wrong about our approach was that we tried to make this group buy thing work better. But the fundamental reason why people were doing these group buys in the US was actually not because it was fun.It was not fun.The fundamental reason people were doing this was because they couldn't have easy, affordable access to the food they love.I remember that's what I felt like the fundamental problem was. People were trying to solve using this group bias.But it was not the right solution.
It was not the best solution.The best solution is to address the issue at its core, which is to give the Chinese immigrants easy, affordable access to the food they love.That's the most fundamental problem we need to solve.
SPEAKER_03: And when you say it was a low period of your life, or maybe even the lowest period, Because, you know, when your health is affected, of course, that can really, I mean, that takes over everything.I don't know, did you just think, were there moments during that period of time where you just kind of wanted to give up entirely and just fold the thing and start over, start something different?
SPEAKER_02: After I started WE, I started to understand this word, faith. the meaning of this word.You know, China, most Chinese people don't believe in God, right?So when we grew up, we never spent, you know, it never occurred to us or nobody taught us about this word.But I started to develop my own sense of faith.So I felt, okay, since this is something I'm really passionate about, I started it. So I'll do my best.I'll give my all and let the outcome to show itself.But I'm not going to question so much every day whether I should continue or not.So I start to develop this faith.
And also... I didn't know this.I knew this later from a very wise mentor from me.I asked him the question.I said, when should I give up?What's the criteria if I pursue something?He said, it depends on whether it's the right thing to do or not.So he said there are two ways to look at things.One is, is this the right thing?The second question you ask yourself is, are you doing it right?
So if it's the right thing and you are just not doing it right, you should not give up.You should try to find a way to do it right.However, if it's not the right thing, You should not try to make it better because it's not the right thing.You should stop right away.You can never make it right.So I think deep down, I knew that I couldn't summarize as well as he did.But deep down, I knew that it was the right thing to keep up.
SPEAKER_03: So, all right.So you are thinking about... what to do.And you realize that you're not really solving a problem that many people have.Because the group buy was interesting and maybe fun, but it wasn't really the problem.The problem was access to the things that you needed.And how did that translate in your mind to, okay, we need to completely change the business model here.We need to completely change what our business does.
SPEAKER_02: Yeah.So once I realized that making group buy better is not the solution, then I ask myself, what is the ultimate solution?So I think the ultimate solution is to deliver the food to people's home.And we have to dramatically expand the selection to cover not only the hard to find exciting products, but also the more staple products that can be found in Asian supermarkets. But it's very, very different from what we knew how to do.So we have to completely change the business and restructure the team, everything.
SPEAKER_03: When we come back in just a moment, how Larry reinvents his business to save it, even driving forklifts and delivering orders, all while serving as the CEO.Stay with us.I'm Guy Raz, and you're listening to How I Built This. Audible is the home of storytelling, and it lets you enjoy all of your audio entertainment in one app.You'll always find the best of what you love or something new to discover.As an Audible member, you can choose one title a month to keep from their entire catalog, including the latest bestsellers and new releases.In fact, I've been really into thrillers and true crime lately, and I just got back from a long car trip where I was listening to the latest zombie fallout book, Bridging the Gap. And I swear, I had to keep checking the backseat for any glowing eyes as I drove home on that deserted highway.In fact, on so many of my journeys, Audible is there for me, with comedy, bestsellers, history, exclusive originals, and more.New members can try Audible free for 30 days.
Visit audible.com slash built or text built to 500-500.That's audible.com slash built or text built to 500-500. We've all been there.Maybe we used one or two misleading words in a shared document, and then the whole team spends a lot of wasted time trying to get on the same page.But we don't need to make those mistakes.Grammarly is a trusted AI writing partner that saves your company from miscommunication and all of the wasted time and money that goes with it. I spend a lot of time writing.I write scripts, emails, speeches, proposals, you name it.And Grammarly helps me find the right tone.It does so much more than correct grammar.
It's almost like a trusted writing partner.And when every word your team writes is clear, concise, and on brand... Everything gets better.Teams that communicate better with Grammarly report 52% less time spent writing sales emails and 66% less time spent editing marketing content.Join 70,000 teams who trust Grammarly to work faster and hit their goals while keeping their data secure.Learn more at grammarly.com. Hey, welcome back to How I Built This.I'm Guy Raz.So it's 2017 and Larry realizes that on top of having to completely reorganize and change his business, he also needs to offer more food and products, free delivery and the best prices around.
SPEAKER_02: We believe that to become the go-to grocery shopping app, we cannot be more expensive than brick-and-mortar stores.We had that belief very early on.Maybe because, you know, the Chinese communities, people in that community is very price sensitive. We knew that no one wants to pay 20, 30, 40% more to get the process delivered to their home.So we couldn't follow the Instacart model because that model will be more expensive than you buy from brick and mortar stores.So we had to create a new model.
SPEAKER_03: So the idea was you had the warehouses, but you would basically have a bunch of products, food products in those warehouses, and then people could go on a website and order what they want, and then you would deliver it.
SPEAKER_02: Correct.That's the new model.
SPEAKER_03: All right.So you still have not raised the cash to save the business.I mean, you're still teetering on the brink of bankruptcy.This is the summer, because the summer is the summer of 2017 when you break your back.
SPEAKER_02: Right.
SPEAKER_03: You come back to the U.S., I have to imagine the first thing you need to do is get more money just to stop the business from going under.So how did you do that?
SPEAKER_02: Right, so I think I tried a couple new pitches to new investors.Obviously, I expected no one believed me because the old idea didn't work.We had no credibility that the new idea would work, right?So my only hope was to turn to our existing investors.I pitched this new direction.Our investors were highly skeptical, of course. and i'm really appreciative that they decided to put in some capital partly because you know they want to give us a try partly also because otherwise all the investment they put in just went down the drain the three co-founders we also put in some capital to to show that we had faith in this new direction So with that, we were able to raise a little bit of capital from existing investors.
SPEAKER_03: So this was your – one of your investors is Goodwater Capital, right?Yeah, Goodwater Capital.They agreed to give you more money.But I think that you – in exchange for that, you had to give – there's a major dilution, right?You had to give up a significant percentage of the company to them.
SPEAKER_02: Yeah, yeah.So by the end of 2018, they ended up owning more than 50% of the business.
SPEAKER_03: Wow.And that was your only option.You had no other choice.That was the only way to save we at this point.
SPEAKER_02: Yeah, we had no other choice.So I'm really appreciative what Goodwater did to us. That's kind of the cost we have to pay by not able to realize our ideas the first time.
SPEAKER_03: Yeah.But it was still risky.You also put in your own money, right?Can you explain this to me?I guess you guys had like a... like an investment property that you rented out and you sold it or something?
SPEAKER_02: Yeah.Yeah.So we had two houses.We lived in one.We had another one.So I was making very little money still from we, even after I raised the $7.6 million, right?I still made very little money from we.
SPEAKER_03: What was your salary?Under $100,000 or under $200,000?Yeah, definitely under $100,000.Okay.
SPEAKER_02: So I discussed with my wife, and she was very determined.She was very supportive.So with her together, we said, okay, let's do this.Let's sell the house so we can have our personal finance in order for some time.
SPEAKER_03: So this was a – there's a lot going on in your life at this time.And with this new model, what did it mean for – like you had people working for a company that was designed for group buy.So did you have to reorient everyone around this new direction or did you have to basically lay people off and find new people?
SPEAKER_02: Yeah, we had to – lay people off because all the people whose job was to recruit group leaders, we had no jobs for them.So that was pretty tough.I remember I flew to LA and I had to deliver the news.I said, I'm here to close down this site.And it was really, really tough.
SPEAKER_03: Yeah, I'm sure. because obviously, you know, you were reorienting the company.So when you when you, you know, when you began this, this kind of massive pivot, how many once once you had to do the layoffs and restart the company, how many people were working for we at this point, after the layoffs?
SPEAKER_02: We had about 30 to 40 people, including all the warehouse workers and drivers.So very small already.And everybody had to do everything.I remember every day. around 11 a.m., I would come to the office and say, OK, everyone, drop everything we're doing.Let's go to the warehouse to pick orders.So everyone picked orders for two, three hours every day.And in the afternoon, we do deliveries.So I deliver a lot of orders.I delivered more than a thousand orders myself.
because I had to figure out how to do delivery, how to write the software, how to design the driver experience, and how to figure out the delivery part.So it was a very, very tough period of time.I worked in the freezer, in the cooler.Sometimes I was in a meeting, for example, then someone in the warehouse came in and said, hey, Larry, we need you to... receive the order because you are the only certified forklift driver still on site.Everybody went out to deliver.So I had to like stop the meeting, go drive the forklift to get the pallets from the truck and receive the goods and then come back for meeting.
SPEAKER_03: And how did you know what the, you know, what to keep on site?Like, how did you know what the most, I don't know, 500 or a thousand most popular products were?
SPEAKER_02: This is when our own experience as Chinese immigrants comes in, right?So every day we just gather everyone and say, what do you guys want to buy?You know, what other people are selling but we don't have, right?What do you guys want?We basically just ask our employees, what do they want?And we felt like if we serve ourselves well, we actually serve the customers well.So I think that... is a very important advantage for us.Like we are serving people just like us.
SPEAKER_03: So you had a sense of what the most popular products would be and what you could store.Now the question is, how were you able to offer it at a lower price?I mean, there were Chinese markets around, places that presumably had some scale and could offer pretty good prices.How could you compete on price at this point?
SPEAKER_02: We compete on price by being more efficient.Our purchasing price was definitely higher than these larger supermarkets pay, for sure.So we could never compete on the purchase price.But what we could do is we could run a more efficient operation.
SPEAKER_03: So your markup was lower.
SPEAKER_02: Yeah, bar crap was lower.Our warehouse operations were very few people.And from day one, we knew that we couldn't do the on-demand delivery because on-demand delivery is so expensive.So we did what we call scheduled delivery. That way we can aggregate a lot of orders and we can do the route planning.In the beginning, we only deliver once a week.Then as the demand pick up, we started to do twice a week, three days a week, five days a week, until 2019. We finally was able to do seven days a week delivery.
SPEAKER_03: So this pivot really happens.It starts in the fall of 2017.I imagine it didn't turn around right away.You still have to get users.You're still targeting mostly Chinese expats, right?That was still the target market at this point.
SPEAKER_02: Correct.So the thing that did keep us motivated and hope very high is the moment we pivoted to this new model, the business started to grow.And started to grow very steadily.Even once a week delivery, people started to embrace that.And also couldn't really have any hiccups in the process. months, we had to rise to a different level.Otherwise, the capital would dry out.
SPEAKER_03: You had to grow.You had to grow every month.
SPEAKER_02: We had to grow every month.And our model did work.So our model did work.So the growth did happen.I remember summer of 2017, we were only doing $100,000 a week in sales.Not bad. A year and a half later, we were doing half a million dollars a week in sales.
SPEAKER_03: Wow.So you basically are hitting $2 million a month in sales, which is pretty great.And that growth is fueled almost entirely by Chinese expats?Or did you start to see it growing beyond the Chinese expat community?
SPEAKER_02: I don't think there are aspects.They're Chinese, mostly first-generation immigrants living in the U.S.A lot of people have been here for some time, but their most comfortable language is still Chinese, and their diet is primarily still Chinese food.So in terms of language of choice, almost all the customers we had at the time prefer Chinese language over English language when they order food.
SPEAKER_03: And was WeChat mainly the sort of the platform on which people learned about We or were there other places that people found out about it?
SPEAKER_02: So WeChat was our main user acquisition channel.We did not have money to do any advertisement.So we had to rely on word of mouth. So the foundation we built during the group buy days paid off because we still had those groups, right?We still had those group leaders who in each of the groups, there were hundreds of people.So they just help us to advertise to those customers, say, hey, now we does delivery.And so we developed a feature we called order share feature. So for example, if I place an order, I would be prompt to share the order with my friends.Usually people share into WeChat, right?So Guy, you are my friend.
You saw in WeChat that, oh, Larry just purchased these products.Click the link to get a coupon.So after you click the link... I would get a little bit of money back as incentive.
SPEAKER_03: So what you're saying is people – you would get a – if you made an order, you'd get an email that said, hey, if you share your order on social media or WeChat or wherever, we'll send a coupon.Like people who click on it will get a coupon to basically order and save money and we'll give you a refund of your purchase.
SPEAKER_02: Yeah, we call it WePoint.So we give you some WePoints that can be used as cash for your next order.Basically, this is a way to acquire users.People, other e-commerce companies spend probably $50 to $100 to Google and Facebook to acquire a new user.So instead of giving the money to Google and Facebook... We leverage our communities.We give our benefit to our customers.And it's much more authentic.And our customers appreciate this kind of incentives.And they genuinely recommend WE to their friends.
SPEAKER_03: And I guess around this time, that momentum allowed you guys to expand really for the first time outside the Bay Area.Yeah.
SPEAKER_02: Yeah, we expanded to Seattle in 2019, early 2019.So 2019 compared to 2018, we grew 2.5x in one year.And that year, I know that in 2018, you were doing about $2 million in revenue a month, $24 million in revenue a year.But I have to imagine you were not yet profitable. We were not profitable, but we didn't burn a lot of money either.So without burning money and grow 2.5x year over year, it was a good result.
SPEAKER_03: All right.Now comes 2020, which we know what's about to happen, which was the pandemic.And I guess even before the pandemic kind of started, started or became clear, it became clear that it was a thing in the United States, you already knew what's happening in China, you were following that.But I guess you even started to see an uptick in purchases by Chinese Americans or Chinese first generation Chinese in the US who already before the pandemic were not kind of started to avoid going to the to the markets.Is that right?Yeah.
SPEAKER_02: Yeah, so Lunar New Year every year was always the pick, right, for us every year.But the week after Lunar New Year was the really worst week for the first half of the year.
SPEAKER_03: Because it would slow down.Everything would slow down.
SPEAKER_02: Exactly.But that year was really surprising.The week immediately after Lunar New Year was even higher than Lunar New Year week. So we were like all surprised.How could this happen?Then we knew just by reading the data that, oh, our community, people in our community is probably worrying about the virus.
SPEAKER_03: You could see that.You could see in how people were using the... We could see that clearly from our data, yeah.
SPEAKER_02: And then since then, every day, sales just went higher.
SPEAKER_03: I mean, I read that you saw 700% revenue growth year over year that pandemic year, which seems just unsustainable.I mean, how did you manage that?
SPEAKER_02: So it was very hard.So we had to add capacities constantly, meaning warehouse capacities.And wherever there's a warehouse, we just couldn't wait.We have to get the warehouse and move in to that larger warehouse immediately.And by moving the warehouse, we actually did not shut down the business, not even for a day.We shipped today's order, then we put... away the inventory, we disassemble the shelves, then overnight we move the shelves and inventory to the new warehouse, we reassemble the shelf, put the goods on the shelf and deliver from the new warehouse the next day.And people from our community, they really appreciate what we did because they were like, okay, this is the only place we can actually get the products.
SPEAKER_03: And I guess at a certain point that year, you started to notice that it wasn't just Chinese folks who were buying from you.It was many other Asian communities and even non-Asian communities, Latino, Hispanic populations, communities who were ordering.How did you start to notice that?
SPEAKER_02: Actually, in the process, I asked myself why nobody was doing online Latino food delivery. So I start to remember, I'm a student of U.S.history.I learned that actually there was a very important piece of legislation passed Congress.It's called the Immigration Act of 1965.So that Immigration Act actually changed the demographic shift of the U.S.completely.Before 1965, only people from European countries can more freely immigrate to the U.S., For example, people who were born in China, before 1965, the quota was 100 per year to immigrate to the U.S. So that's why before that, there wasn't many immigrants from Asian descent or Latino descent in the U.S.
But that Immigration Act changed everything.So people from Asian countries, Latino countries started to come.And by about 1980, all these offline brick-and-mortar, ethnic brick-and-mortar stores started to emerge because there were enough immigrants to support some offline ethnic stores. So after I read the history, I realized that the problem Chinese immigrants were facing was not unique for Chinese immigrants.It's actually the same for every immigrant group.They are the same.They are even more underserved than Chinese, right?For example, Koreans, Japanese, Vietnamese, Filipino, Indians. They face the same thing.It's a complete, very, very diverse group of people.
They're not just Latinos.They are very diverse and they all want to eat their own food.They all want easy, affordable access to the food they love.That's when I started to feel like, oh, this actually can be a lot broader, much bigger business and can have much broader appeal.So we start to expand to other ethnicities to solve the problem for more than just the Chinese people.
SPEAKER_03: This really, I think, in a sense, kind of was a third pivot because it had begun really as a Chinese-focused brand.I mean, not only were you starting to understand that you had this huge opportunity to serve all kinds of communities, it was almost like you start to think about – making this website hospitable and familiar to any ethnic group that came there?
SPEAKER_02: I think it's a very important expansion of the concept.I think for a startup business, one of the biggest challenges, you can't have prior market fit among a small group of people.But how can you have a prior market fit with a bigger group of people, right?Eventually, any startup that wants to grow to a bigger company, You have to consistently tweak your offerings so you have the bigger and bigger product market fit.So for us, we accomplished that by expanding to more ethnic communities that share the same struggle, same problem as the Chinese.
SPEAKER_03: All right.After that COVID year, even during that COVID year, you had to raise tons of money to fund the expansion.And I think you actually hit profitability in 2020 for a period of time.
SPEAKER_02: Yeah, correct.
SPEAKER_03: I know that you probably – I mean anyone doing anything.I mean most of – I think most of us are focused on – or where we've been, where we've come to.Most of us are focused on where we are at the moment and the anxieties ahead.I think that's just normal.I have anxiety all the time about – things come around the corner or unfinished work.But I wonder if you ever did that by 2021.You raised $315 million that year.I mean, your valuation that year was $2.8 billion.Did you breathe a sigh of relief?
Were you like, ah, now we're good.We're in a good place.Or did you still, as a CEO and a founder, still feel anxiety?
SPEAKER_02: I use this analogy when people ask me that question.I said, when we were small, we were kind of like, let's say a basketball team, right?We were playing with other regional teams. basketball team, then when we get a bit stronger, we start to play, say, national college basketball.Then we become a bit stronger, we play NBA.Which one is harder, right?Is it harder to play NBA?Is it harder to become NBA championship?Or it's harder to play a regional player.
I think it's always, it's probably harder when you raise your game to the next level.So all the success we had basically only earned our ticket to play the next game.And the next game is going to be harder.That's how I felt.I felt it's definitely harder than the early days, simply because we have bigger vision, we have bigger dreams, and we are competing at a different stage with much stronger players.
SPEAKER_03: Tell me about, I mean, when you kind of reflect on your story, right?Here we are in 2024.You got here a little over 20 years ago to the U.S., and you built a billion-dollar brand, right? I mean, I guess because they're a multi-brand.And here you were, a kid from Wuhan, who really didn't speak much English when you got here 20 years ago.And now you're running a company that is very successful. and could go public.I mean, I don't know.Do you ever reflect on that or do you just feel like everything's just moving forward and I just have to keep my head down and keep grinding?
SPEAKER_02: It's very amazing that we were able to do what we did. I asked myself this question when I listened to your show all the time.I said, okay, what made these people successful?My summary after listening to so many episodes is I think each of them were uniquely positioned to see the opportunities that they saw.It doesn't mean that they were the smartest people or they were the best problem solver.They were uniquely positioned to see opportunities the problems and they did something about it.So in a sense, you can say they chose to do those things or you can say history chose them to do those things.So it's kind of how I feel, right?I feel like looking at me, right?
An immigrant coming to this country I had no idea what problem I was going to solve here in the US, but it's kind of this thing chose me to do it.And I was lucky enough to assemble a team that are passionate about solving this problem.So it's an amazing feeling.It's the feeling that you felt like your life is meaningful.You were brought to this world to do something that's meaningful.That's a really good feeling.
SPEAKER_03: So when you think about where you are now, how much do you think has to do with the work you put in and how much do you think has to do with luck?
SPEAKER_02: My dad once said I'm the luckiest person in the world because he went through cultural revolution. He didn't have the opportunity to study.So he felt like my generation was the luckiest generation in China.And among those people, I was the luckiest person in the world.So I think luck has a lot of impact. Or maybe it's the destiny.You know, hard work is a given.So to me, I feel like maybe the hard work and the talents are just necessary.But how high you can go, how far you can grow, really has a lot to do with the situations you are in, what happened to you, what people you met.And you can loosely say those are all luck or fate or destiny.
SPEAKER_03: That's Larry Liu, co-founder and CEO of WE.What's your favorite thing on WE?
SPEAKER_02: I love dumplings.I love dumplings.You get the frozen ones?I get the frozen ones, although they're not as good as the ones my mom made.Unfortunately, you cannot buy what my mom made.No, you can't ship those out.But those frozen ones are pretty good.
SPEAKER_03: Hey, thanks so much for listening to the show this week.Please make sure to click the follow button on your podcast app so you never miss a new episode of the show.And as always, it's free.This episode was produced by Kerry Thompson with music composed by Ramteen Arablui.It was edited by Andrea Bruce with research help from Catherine Seifer.Our audio engineers were Josh Newell and Gilly Moon. Our production staff also includes Alex Chung, Chris Messini, Carla Estevez, Casey Herman, JC Howard, Eva Grant, Sam Paulson, John Isabella, and Malia Agudelo.I'm Guy Raz, and you've been listening to How I Built This. If you like how I built this, you can listen early and ad-free right now by joining Wondery Plus in the Wondery app or on Apple Podcasts.Prime members can listen ad-free on Amazon Music.
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SPEAKER_01: Are you looking to add a new podcast to your ever-growing podcast schedule?If the answer to that question is yes, or even if it's maybe, or really anything other than a hard no, let me suggest my podcast, Life is Short with Justin Long.In every episode, we peek inside the heads of actors, musicians, authors, and thinkers to find out what makes them tick and how they find meaning in life.I'm also very curious about some of the heavier, more existential stuff, like what emoji they use most often and... what their favorite form of a potato is, you know, the important stuff.So join us because, you know, life is short.If you like Life is Short and Life is Shorter, you can listen ad-free right now by joining Wondery Plus in the Wondery app or on Apple Podcasts.Prime members can listen ad-free on Amazon Music.
