Boxed’s Chieh Huang Talks Luck, Responsibility for Employees at December NJ Tech Meetup

At the December New Jersey Tech Meetup, Aaron Price interviewed Chieh Huang, CEO and cofounder of Boxed ( New York) which started in New Jersey. The wide-ranging conversation covered Huang’s entrepreneurial journey, his reputation as a compassionate leader, and some of the ins and outs of building Boxed.

Rumors are swirling around Boxed right now. A recent Forbes article said that Boxed is now weighing competing acquisition offers from Kroger (Cincinnati, Ohio) and a number of other retailers for more than $500 million. However, in a recent interview, Huang seemed to cast doubts on that report. During a session at the National Retail Federation’s Big Show, held over the past few days in New York City, Huang “alluded to another possible development for the pure-play e-tail wholesale club. There may be standalone brick-and-mortar stores in Boxed’s future,” Matthew Stern reported in RetailWire.

Huang’s journey towards entrepreneurship took a circuitous route, he said, and luck played a big part in his success. After he completed college, the Internet bubble burst. He had been an economics major at a mostly engineering school, and “there weren’t a lot of folks recruiting for economics majors.” So he decided to teach English in Japan for two years. That decision proved to play a large role in his initial success, he said.

Rather than being sent to Tokyo to teach, Huang wound up in a rural area. “Outside of my apartment, there was literally a rice paddy.” Huang wrote that time off, came back to the States and went to law school. “I started my career at the law firm September 15, 2008, 9 a.m. It was about ten hours after Lehman Brothers had collapsed,” and employees were streaming out of the building, crying. Lehman happened to be right across the street from his law firm. “I put in a few hard years at the law firm,” he said, but he knew he wasn’t cut out to make partner.

Then a group of friends came to him with the idea of forming a company that would make games. People were making a lot of money on games like FarmVille that didn’t use a lot of CPU power or advanced graphics chips. “We made a game … we were going to be billionaires in about 60 days.” They uploaded it to the app store, but nothing happened. They couldn’t even get their parents to play the game. Just as they were thinking they’d failed, Apple featured the game on its front page. When the sudden demand for the game stressed their servers, they thought they were being hacked!

After a while, the group was approached by Zynga (San Francisco, Calif.) to talk about an investment. One of the founding members of the Zynga team was a woman who happened to come from that small town in Japan where Huang had taught several years before.

“The moral of the story for all of you entrepreneurs is that you’ve got to put in the hard work, you have to grind, you have to hustle, you have to go to the meetups, you have to go out there and propagate your vision and the mission. But at the end of the day, I believe most folks get one chance. Sometimes it’s disguised and sometimes it’s not. And you really have to take hold of that chance. It’s as much hard work as it is luck. And we were really the poster child for that!” Later, Zynga debuted on NASDAQ, and for a while it looked as if the founders would have a spectacular windfall. Then the stock fell.

“I learned a few big lessons,” Huang said. “One was that the world is really small, which we found out from that funding story. Also, Silicon Valley and the [venture capitalists] that you work with, it’s really a small world. So when the stock was getting destroyed and we actually stuck around and stayed until the stock leveled,” they remembered.

Asked how his team got into the wholesale e-commerce area, Huang noted that gaming had become competitive. “You actually had folks from a Chinese click farm trying to mess your CPM up. It was the dirtiest, nastiest industry at the time. So we felt we could take our crazy knowledge and our crazy competitive spirit and go after the largest industry we could find: mobile commerce.”

At the time, Huang thought they had “a decent shot at figuring out retail faster than the incumbents [Costco, Walmart] figured out technology.” So they threw their hats into the ring.

Getting the domain name for Boxed involved some luck, Huang said. “We felt like we needed a five-letter URL.” One of the top three they thought about was “Stuff.com,” but “when we talked to them, it cost about $2 million. Well, we had just raised $1 million in the seed [round],” so that didn’t work. Then they reached out directly to the guy with the “Boxed.com” URL. One of the cofounders wrote him, offering $1,000 for it. The owner wasn’t impressed, so the founders told him that they knew it was worth a decent amount of money, “but do you really want to watch this thing for another 15 years before you sell it?” They settled on $35,000.

The Boxed founders debated whether they should create a custom technology stack or use the Shopify platform, Huang said. However, they realized that they weren’t just building in e-commerce capability; they also needed to build software for their warehouse. “We hold inventory, so we had to build inventory-management software.” Later on, they built all their segmentation tools. “We’ve always been totally custom,” he told Price.

Boxed is known for covering the costs of tuition and weddings for its employees. Asked why they do it, Huang said, “We do it because I grew up in a working-class family. So basically, we were really poor. It was my mom working minimum wage supporting me, my sister, my dad and herself. And so it was not fun times when we were growing up. This was when we were in Baltimore, and I still remember.

“My family got a lot better. That was one of the reasons we moved to New Jersey.” Huang’s mom was promoted. She went from being an administrator in a company to being one of two executive vice presidents. “So she worked her way up.” When he started Boxed, he began training and promoting from within. “Even to this day, there are less than 10 people who were hired from the outside. They all started as a packer. To this day, when you start at Boxed, you actually have to work in the fulfillment center a little bit, so you know how the sausage is made. And it’s not a Universal Studios tour. You are really working.”

The management used to take workers who were promoted to dinner; and for many of them, it was the first time they had ever been celebrated by a company. Huang told the Tech Meetup audience a story of someone who got up to speak at one of those dinners. The employee said that he had started as a box loader at Boxed after 25 years as a paralegal at a law firm. This was in 2008, when paralegals couldn’t find work. “Not a lot of folks would want to hire a guy that was my age and of my seniority,” the employee said. He had taken the job as a box loader so he could prove himself and get a chance to join a tech company.

Considering this person’s experience, along with his mom’s experience, Huang realized that “for the rest of my life, at Boxed or elsewhere, it would be my mission to make sure that the people who entrusted their livelihoods with me would be taken care of.”