UPDATED 13:30 EDT / DECEMBER 10 2018

THOUGHT LEADERSHIP

Poshmark founder shares lessons in scaling startup too fast

The slog from launch day to profitability is often a storied one for startups. Many entrepreneurs instinctively want to scale with abandon right out of the gate. This may lead to some ugly surprises down the road if they haven’t worked out kinks in the foundation, according to Manish Chandra (pictured), founder and chief executive officer of Poshmark Inc.

Entrepreneurs ought to get the hard work out of the way in the early days. And they should also get to know their users like family, according to Chandra.

“In the first, probably, eight, nine months of the company, I answered every single customer service email,” Chandra said. Back then the platform for buying and selling clothes had about 100 deeply immersed users. Even today, Chandra interacts with about 80 to 100 customers every day. 

Responding to user feedback is an invaluable means for tuning a product, Chandra pointed out. Other hiccups in venture-capital funding and logistics are best dealt with at the start.

Chandra spoke with John Furrier (@furrier), host of theCUBE, SiliconANGLE Media’s mobile livestreaming studio, during the Mayfield People First event in Menlo Park, California. They discussed The hurdles Poshmark faced in its early days and how it overcame them. (* Disclosure below.)

Too big to fail? Not so fast

What could possibly be the downside of rapid growth for a startup? Premature scaling bust through Poshmark like a wild beast, according to Chandra.

“We quickly realized that that scaling was breaking everything, was breaking our shipping system, was breaking our technologies,” he said. The United States Postal Service came to the offices and informed them had to pay a multi-million-dollar fine or they had the right to arrest them.

Imagine what Chandra felt when he had to tell the venture board he needed to slow growth by 60 percent. One of Poshmark’s backer’s, Mayfield Fund LLC, mercifully heard Chandra out. They worked out a plan, cut the marketing budget by 80 percent, built out new systems and sealed a partnership with the USPS. By 2014, Poshmark began scaling again and hasn’t stopped since. 

If these problems weren’t worked out in the early days, they might have been even bigger and harder to correct later on, Chandra explained. Therein lay the chink in blitz scaling.

Watch the complete video interview below, and be sure to check out more of SiliconANGLE’s and theCUBE’s coverage of the Mayfield People First event. (Disclosure: TheCUBE’s coverage of the Mayfield People First event is presented by Mayfield Fund LLC.)

Photo: SiliconANGLE

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