Jan. 11, 2023

Rag to Riches: How I Built a Successful Business from Scratch

Rag to Riches: How I Built a Successful Business from Scratch

E13: I'm taking you on a personal journey of how I moved to the Bay Area 11 years ago with just one suitcase. I had no job and no place to live. So how did I bootstrap my business to where it is today?

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TOPICS:
First Side Hustle (2:46)
My first side hustle was in freelance writing. I wrote for a popular personal finance blog. I was paid $25 per article.

One Way Ticket to San Francisco (8:59)
I landed in San Francisco with just 1 suitcase. I slept on the floor in my friend's tiny apartment. My back hurt after 2 weeks. I had no choice.

Partying with Coolio (10:15)
I attended SXSW in Austin, Texas. Coolio was performing at one of the parties hosted by our company and he needed a place to stay so he stayed with us. It was out-of-this-world.

Crazy Bootcamp (12:06)
For 12 weeks straight, I studied from Mon-Sat, 8am-9pm. At the end of those 12 weeks, I was fluent in Javascript. I was seeing code in my sleep.

Working at Ripple (14:56)
Ripple hired me as an early employee in early 2014. I worked with some of the smartest people I've ever met. The technology was advanced for its time. I knew I was working on something that could be huge one day.

Crypto to Knives (17:01)
Blockchain Engineer to Online Knife Seller. My colleagues thought I was crazy. I worked tirelessly day in and day out and launched on October 9th, 2015 to crickets. Not a single sale for the first 3 days.

Celebrity French Bulldog (22:20)
We took home a French bulldog named Humphrey. His videos went viral. He quickly gained more than 100k followers on Instagram.

Launching Dog Boutique (22:56)
My wife quit her job and launched Spotted By Humphrey, a dog boutique selling playfully curated dog accessories and apparel with Humphrey as our Chief Marketing Officer.

Launching a 3PL (23:56)
Our colleagues kept asking us to help with their fulfillment. We started taking on clients. Before we knew it, we had paying clients for a company we hadn't even named.

***
LINKS:

Episode 1
Episode 5

Spotted Humphrey IG
Spotted Humphrey TikTok

Spotted By

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DESCRIPTION:
World-class entrepreneurs have one thing in common: they master the art of decision-making. Influential thinkers like Charlie Munger, Jeff Bezos, and Elon Musk all use mental models and frameworks to simplify complex problems. Join host Yong-Soo Chung as we dive into powerful frameworks covering entrepreneurship, self-improvement, and wealth-building that will unlock hidden growth levers in your business one week at a time. Listen & follow!

***
🔗 FOLLOW / REVIEW:
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💜 Leave 5-star review

***
🔗 JOIN MEMBERSHIP:
🔓 FCF Membership

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🔗 CONNECT WITH YONG-SOO:
🐦 Twitter
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📬 Newsletter

***
ABOUT YONG-SOO:
Yong-Soo bootstrapped his business from $0 to 8-figures over the past 7+ years. Now, he's on a mission to help creative entrepreneurs unlock the hidden growth levers in their business. Join us!

***
Our Portfolio Companies:
UrbanEDC.com
GrowthJet.com
SpottedByHumphrey.com

Transcript

What's going on everybody? Welcome to the First Class Founders podcast. The goal of this show is to equip you with powerful concepts and frameworks to help you on your entrepreneurial journey. My name is Yong-Soo Chung and I'm the Founder of Urban EDC, an e-commerce brand selling everyday carry gear, and GrowthJet, a Climate Neutral Certified third-party logistics company. For the past 7 years, I bootstrapped an 8-figure personal holding company and now, I'm ready to pull back the curtains and take you backstage with me to discover how I operate my own business.

Today, I'm going to take you on a personal journey of how I moved to the Bay Area eleven years ago with just one suitcase. I had no job and no place to live. So how did I bootstrap my business to where it is today?

I shared this story on Twitter a few weeks ago and it blew up. So, I decided to do an extended version of it today. The format of today's episode is a little different but I know you'll enjoy it.

I don't want this episode to be just about me and my journey so, at the end of the episode, I'll highlight 3 key takeaways from this journey that I think are absolutely critical for building your own business. So be sure to stick around for that. Okay, let's dive in!

Let's travel back in time to May 2009. I had just graduated from Bowdoin College, a small liberal arts college in Maine, with a degree in Economics. The economy was teetering on the brink of depression. Just the year prior, I had applied for jobs at two of the most prestigious banking firms on Wall Street: Bear Stearns and Lehman Brothers. And now, they were bankrupt.

The future seemed uncertain. I somehow landed a job as a trader on Wall Street making $45,000 a year. This would be considered exceptionally low for a finance job in New York City. But in this economic environment, it seemed like the greatest graduation gift anyone could have given me.

So, I moved to the Big Apple. Crazy yellow cab drivers, flashing neon lights, overcrowded streets, and of course, who could forget the football-sized rats in the subway train tracks? I was living the life.

I worked as a Market Maker at a trading desk on Wall Street. I specialized in ETFs, or Exchange Traded Funds, a fancy term for a basket of stocks. I worked from 8:30 am to 4:30 pm. Then, I came home and my real hustle began.

I always knew I wanted to become an entrepreneur. But first, I needed a side hustle to increase my income living in one of the most expensive cities in the world.

My first side hustle was in freelance writing. I wrote for a popular personal finance blog. I was paid $25 per article. Each article took me about 2 hours to write. If you do the math, that's $12.50 per hour. I was definitely in full hustle mode.

After a couple of months, I decided to try another side hustle: iPhone app development. The App Store economy was just beginning to boom. I sketched out user interface mockups late into the night using my trusty No.2 pencil and eraser sitting on an uncomfortable faux wooden chair and desk from IKEA. The app was called SilenceMe. Using location services and geo-fencing, it would detect your location and silence your phone automatically when you entered a library, a church, or any other quiet environment.

I looked for a development team and found one out of Ukraine. After a couple of design mockups, we ran into an issue. Apple did not allow developers to control silencing a user's phone. So, I pivoted.

Using the same development team, I had the idea of a simple chat app with different groups for different parts of your life: your family, your friends from school, your work colleagues, or your camping friends.

Remember that this was back in 2009 before Facebook Groups, before Whats App, before Telegram, and before Discord. There were no group chat apps at the time.

I used any extra income that I saved from my day job to pay my development team. I didn't know where this project would go. At times, it felt like I was just throwing money away during a time when I should be saving each penny I could. But it gave me hope that I was making progress on my dream of starting my own company.

Meanwhile, at my day job, things weren't going so well. Our trading group within the company was under a ton of pressure to perform financially. I sensed that things would head south pretty quickly so I started looking for another opportunity only a year into my first job out of college.

My sister proofread my resume as I began my search for a new job.

Then one day, I was called into the Human Resources office. I had no idea what was happening. Then, the HR Manager told me that the Compliance Team had caught my outgoing emails to my sister with my resume attachment.

She asked me why I was sending emails with my resume attached to them. I couldn't believe what was happening.

She gave me two options: resign now or they could let me go with severance with the caveat that this would be on some sort of permanent employment record.

I was scared to death. I began to sweat and I could feel my voice shaking in fear. My adrenaline was pumping and I could feel my heart racing.

Naively, I decided to resign instead of taking the severance package fearing that this employment record was the equivalent of a police report for employers. When in reality, the firm was just trying to save money by forgoing a severance package.

I remember as I left my first job out of college, I told the HR Manager that I would be shocked if this group still existed in 6 months. She was in disbelief as I said this, but my gut instinct was right. Within 6 months, the rest of the class that was hired along with me was let go.

So now, I had no income and I was living in New York City, one of the most expensive cities in the world. What could go wrong?

At this time, I decided to shut down my group chat project. It was the only sensible thing to do. I still had my dream of starting a company, but it would have to wait.

I started applying to other similar jobs and fortunately found myself at another trading position at a hedge fund within a few weeks.

This was a 24-hour trading desk and my shift was from 2:30 pm until midnight on normal days.

During holidays, since the trading desk was open for global trading, each team member was responsible for covering one holiday every year for the entire team. This meant that you had to come in and be on call for 24 hours at the trading desk.

As the youngest on the trading desk, I always had last pick: July 4th. So on July 4th that year, I worked for 24 hours. I brought in an air mattress onto the trading floor so I could nap for 15-20 minutes with my phone next to me on standby. I didn't end up getting a lot of sleep anyways.

In the morning and afternoons during lunch prior to coming into work, I started tuning into podcasts that focused on entrepreneurship. I knew I had a lot more to learn if I wanted to start my own company one day.

Week after week, I became more obsessed with startups. I was fascinated by its culture: the open, fun work environment, the excitement of launching a new product, the creative benefits of each company, and so on.

So, I started meeting other like-minded professionals who were also into startups. After failing to work with an outsourced development team, I wanted to join startup communities that would perhaps lead to another opportunity to start my own company.

Back in 2010 in New York City, the startup scene was pretty much non-existent. So after thinking hard about my next steps, I made one of the most difficult decisions of my life: I left my finance job in New York and bought a one-way ticket to San Francisco.

The economy was still barely hanging on with unemployment rates through the roof.

My parents thought I was crazy.

They told me not to go.

Maybe I was a little crazy.

But deep down inside, I knew I needed to move to San Francisco to immerse myself fully in the startup community. New York didn't have the community I was looking for.

So, I left my New York City life behind.

I landed in San Francisco with just 1 suitcase.

I had no job and no place to live.

I only knew two friends. One from high school and one from college.

I slept on the floor of my high school friend's tiny apartment in Berkeley.

I ate burritos for lunch every day.

My back hurt after 2 weeks.

I had no choice.

I looked for a job and an apartment at the same time.

If you know anything about renting, you need proof of income. Something that I didn't have.

I got rejection after rejection for both jobs & apartments.

I was starting to question my decision to quit my job in New York City and move to San Francisco.

But then, things started to turn in my favor.

Finally, after 3 months of searching full-time, I was able to land a job at a mobile advertising startup.

Then, I found myself a tiny 250 sq ft apartment in North Beach, an Italian neighborhood in San Francisco.

I nicknamed it "treehouse" because of its size and how it was built in the backyard of another house.

I had a great time working at this startup. I met so many great people and firmly established myself within the startup community. 

We even went to SXSW in Austin, Texas, where we hosted Coolio, the rapper. He was performing at one of the parties hosted by our company and he needed a place to stay. It was out-of-this-world. I woke up one morning from my air mattress in the living room of an Airbnb we had rented to Coolio rapping to one of his own tracks on iTunes.

The night before, he cooked pasta for us.

Just two years ago, I was pulling all-nighters as a trader at a hedge fund. Now, I was not only hanging out with Coolio, but I was enjoying a meal that Coolio had prepared for us. This was wild.

At another party at SXSW, I saw Ashton Kutcher. Then, I met Mark Cuban and told him how much I admired him for all he's done with the Dallas Mavericks. I was high on life.

But then, two years after landing my first job at a startup, I was let go.

The company's performance wasn't great and it was time to tighten up.

I found myself back at square zero.

All right. Real quick, before I continue, if you're enjoying this episode about how I made it, please consider sharing it with a friend who might also find some inspiration. Word-of-mouth referral is the single best way to grow the show to reach a larger audience. I really appreciate it! Thank you so much.

Now, let's get back to the show to find out how I recovered from my latest setback.

After I was let go from my first startup job, I did some deep reflection and reminded myself why I decided to move to San Francisco in the first place: to meet other like-minded entrepreneurs and eventually, start a company.

But for me to meet other talented engineers, I needed to speak their language. I knew nothing about programming so it was challenging to convince an engineer to jump ship and start a company with me blindly.

So after a couple of months, I decided to apply for a bootcamp for software engineering in San Francisco.

I convinced myself that this was the right next step for my career and I was going to do everything in my power to get into the program.

So I studied every day and every night for 2 months straight by myself.

Ironically, I lived near Whole Foods and ate their burritos for lunch every day, again.

Just like when I first moved to the Bay Area to look for a job and an apartment.

I don't know. For me, there's a strong correlation with burritos and hustling.

Feeling confident, I applied for the next cohort.

Then, I got rejected. I was absolutely devastated.

But I didn't give up. In fact, I doubled down.

I reached out to a couple of alums of the program and told them I would do anything to get in.

They gave me some great tips and told me to teach myself some more basics of web development and create a couple of simple programs.

So I studied my tail off for the next two weeks and somehow developed a simple game of hangman online.

I reached back out and they were impressed enough to accept me into their next cohort. 

I was thrilled. I couldn't believe it. This was my chance.

Attending this software engineering accelerator was an experience like no other.

I studied from Mon-Sat, 8 am-9 pm, sometimes even later.

For 12 weeks straight, I drank way too much coffee.

I worked tirelessly with no guarantee that I would even land a job.

At the end of those 12 weeks, I was fluent in Javascript.

I was seeing code in my sleep.

I thought of every action I performed in real life as a programming function.

Function Brush Teeth.

Two variables. Var Toothbrush and Var Toothpaste. Input Water.

Okay, that's enough. You get the idea.

I learned more during those 12 weeks than I ever did in college.

At the very end of the program, I had my first interview with a startup.

I felt great about my chances. This was my chance to shine.

But with each technical question asked, I grew less confident.

I could sense that something was off.

I was right. The interviewers literally told me to leave in the middle of the interview session.

I absolutely bombed the interview.

I walked away shocked & ashamed.

How could I recover from this?

I had no choice but to move on quickly because I had another interview in 2 days.

This time, it was with a blockchain company.

Thankfully, this interview went much smoother.

They liked my finance background.

They hired me as an early employee in early 2014.

Working here felt like I was part of a university research team filled with academic professors.

These were some of the smartest people I've ever met.

The technology was advanced for its time. I knew I was working on something that could be huge one day.

Each day was filled with interesting problems to solve.

I had a fantastic team. Although we were small, we were scrappy and we moved quickly.

We worked incredibly hard to build out a new platform and made great progress.

We were gaining momentum as a team and the entire company was starting to take notice.

I was busy working with a money transfer provider in Mexico as we moved thousands of dollars worth of Mexican pesos into US dollars.

I was thrilled. We were starting to move real value on the blockchain: a huge accomplishment for our team.

We were firing on all cylinders and it seemed like nothing could stop us.

But then, cryptocurrency regulation hit us like a wall of bricks.

A year and a half into my new job as a software engineer, everything stopped.

We were instructed to halt our project indefinitely.

This was very challenging for our team and we never recovered.

In fact, I remember on one Friday, we were allowed to go on a team field trip to go watch Inside Out, the latest Pixar movie that was released in 2015.

Now, don't get me wrong, I love Pixar movies.

But something about watching an animation movie in the middle of a work day when we had so much momentum going just a few days back seemed.... odd.

So, I started planning my next move.

I don't know what came over me, but I knew deep down inside my heart that it was time.

I was ready to go out on my own again.

But, where do I start?

I could try starting a cryptocurrency company with a few of my peers.

This would require a lot more resources to build out a talented team of engineers, which meant raising venture-capital funding.

The upside here would be huge but it would be a lot riskier with more added pressure from outside investors.

Here, I would be exposed to technical risk along with regulatory risk, let alone execution risk.

Technical risk because I would need to build out a successful product with the highest level of security for our users.

Regulatory risk because crypto regulation was murky at best.

And execution risk of carrying out the project successfully to completion. 

Or, I could start something by myself in a more proven market using no-code platforms that were already available.

Here, I would only be exposed to execution risk, something that I could take on.

With financial regulation shutting down our team, I didn't want to take another chance.

I wanted 100% accountability for both success and failure of my company.

So I made the conscious decision to bootstrap my business from scratch and grow slowly.

I published an entire episode dedicated to the pros and cons of bootstrapping vs. VC funding if you want to check that out. It's episode 5. I'll link to it in the show notes.

So out of everything that I could have started, why did I start Urban EDC, an e-commerce brand, selling everyday carry gear?

It seems a bit random, doesn't it?

Here I was, a software engineer at a blockchain company in 2015.

And now, I was pivoting my career once again to... what?

Selling pocket knives online?

Yup, and just like that, I went from software engineer to online knife seller.

My colleagues thought I was crazy.

Was I making the right decision?

I told myself that I just needed to get started and I'll figure out the rest later.

So, here is how I came up with the idea of Urban EDC.

I took a look at the two constraints with the biggest impact on my life: time & money.

I took a look at my credit statements and realized that I was spending money on small, pocket-friendly items without even realizing it. 

Then, I tracked my time and realized I was spending way too much time searching for my next gear purchase within the everyday carry community.

Back in 2015, e-commerce was just starting to boom with the rise of platforms like Shopify.

So naturally, I gravitated towards e-commerce serving the everyday carry community.

I talk about this extensively in the very first episode of First Class Founders if you're curious.

Before launching the shop, I built an audience through Instagram by re-posting captivating photos of other people's everyday carry gear and giving them credit.

Within a couple of months, I had 10,000 followers and decided to launch the shop.

But first, to test market demand, I purchased a few items from Amazon and resold them at the same price. The goal wasn't to make money but to see if a store dedicated specifically to everyday carry gear would have enough interest.

I worked tirelessly day in and day out and launched on October 9th, 2015.

Surely, with 10,000 followers and a growing email list, the launch would be a success, right?

Not exactly. I didn't make a single sale for the first 3 days.

Then, a high school friend who was visiting me that weekend asked what I had been up to, and I told him about my new shop.

Later that weekend, he made the very first purchase in our shop, without telling me.

I was both humbled and relieved.

And that's how my entrepreneurial journey began.

Let's fast forward a couple of years. Urban EDC was gaining momentum and everything seemed to be going great.

Except I had one big operational problem: shipping & fulfillment.

I had done a lot of research prior to selecting my fulfillment partner and chose the one with the best reviews.

But I found myself having a lot of issues with theft.

At one point, I lost over $5,000 worth of goods.

I received customer complaints stating that when they opened up their package, the box was empty.

I found out later that the employees of this fulfillment provider was taking the item out of the box, pocketing it themselves, then shipping the empty box to my customers.

I couldn't believe it.

Based on the reviews, this fulfillment service provider was supposedly the best on the market. How could this be?

I made the difficult decision to bring fulfillment in-house.

I was able to lease a tiny 100 sq ft storage space at a local self-storage building.

We set up shop here and did all of our shipping & fulfillment out of this tiny rental storage unit.

Around this time, my wife and I brought home a French bulldog and named him Humphrey.

We started posting cute puppy videos of Humphrey and a few of them went viral.

We had no intention of having a celebrity French bulldog, but all of a sudden, we found ourselves in the presence of the great Spotted Humphrey, our dog, who quickly gained more than 100,000 followers on Instagram.

Humphrey was more famous as a puppy than I'd ever be in my entire lifetime.

As Humphrey's puppy videos spread like wildfire across the internet, everybody kept asking us where we got his leash, his harness, his bed, his toys, everything.

So, my wife quit her job as an Accountant and launched Spotted By Humphrey, a dog boutique selling playfully curated dog accessories and apparel.

Because we already had our fulfillment operations figured out, it was a lot easier to launch a 2nd brand versus starting from scratch.

Spotted By Humphrey, run by my wife and business partner Sandy, began to grow quickly.

Sandy, Humphrey, and I were even invited down to Los Angeles for a professional studio shoot for a segment on Shopify's YouTube channel. This was a high-production show with an entire camera crew, hired actors and actresses, and a professional set.

Humphrey was a hit. Everyone loved him. 

At this moment, I realized that being part of unique experiences like this made all the struggles of entrepreneurship worth it.

When we got back to San Francisco, we started getting inquiries about our business, and in particular, about our fulfillment operations.

It turns out that shipping & fulfillment is one of the biggest pain points for an e-commerce store owner.

We started getting asked by other store owners if we could help them with their fulfillment operations.

Initially, I didn't think that we should expand into the third-party logistics business.

But in the end, the demand was too strong for us to ignore.

We started taking on other brands to handle their fulfillment operations.

Before we knew it, we had paying clients for a company we hadn't even named.

We didn't even have a website yet.

All of our business came through word-of-mouth.

By now, we needed more space and a nice open space had just opened up on the 2nd floor.

It was a beautiful 3,000 sq foot space on the 2nd floor that used to be a dance studio.

There were nice hardwood floors and fixed mirrors all around the room.

There was even a view overlooking the water.

We took it without thinking twice.

Big mistake. Being on the 2nd floor turned out to be a disaster.

Here's how we operated:

We unloaded pallets onto a dolly.

Took the dolly onto an elevator.

Unloaded the dolly in the dance studio.

Then, when we had packages ready to ship, we would bring all the packages downstairs for carrier pickups.

As you can imagine. this was incredibly inefficient.

At the end of 2019, this is how GrowthJet was born.

Then, the pandemic hit us hard.

We received notice to vacate our dance studio within 1 month.

Someone else had signed a long-term lease for the entire building.

Guess who?

Amazon.

How ironic.

Our fulfillment business was being pushed out by none other than Amazon for their own warehouse operations.

Fortunately, with a lot of uncertainty during the early phase of the lockdown, we were able to find an incredible deal on a new lease in a warehouse with 3 roll-up doors, which meant that we could load up pallets onto a truck within minutes instead of using a dolly and an elevator.

Our business boomed as e-commerce volume spiked due to the lockdowns. We couldn't keep up with demand so I was also on the warehouse floor picking and packing shipments and loading them onto trucks.

I was so busy packing wellness beverages into boxes that at one point, I had to see a hand therapist for a torn muscle in my forearm.

From software engineer to online knife seller, to now, order packer.

Was I regressing in my career? It certainly felt that way.

This was the beginning of what GrowthJet is today.

Looking back, the pandemic forced us to grow quickly.

Today, we operate out of a 40,000 sq ft warehouse.

Our team across all 3 brands has grown to 25.

Our business has scaled to 8-figures in annual revenue.

Looking back, it's hard to believe how far I've come in 7 years.

It's true that you overestimate what you do in a year, but underestimate what you can do in a decade.

Knowing what I know now, would I go back in time and do it all over again?

Absolutely. Owning a business is one of the most challenging yet rewarding experiences that I've ever done in my entire life.

You get to see your business as a baby, as a teenager, and finally, as an adult when you can finally take a step back and reflect on your crazy journey.

I encourage every single person listening to this right now to start something. Anything.

All it takes is just one small action every single day.

All right, before we end, I want to leave you with three key takeaways from my own journey as an entrepreneur.

But first, I want to take a moment to tell you about the First Class Founders Membership.

Okay, we're back. Here are the three key takeaways from today.

The first is seeing change as an opportunity. The world is unpredictable. Who could have predicted a worldwide pandemic just 3 years ago? Nobody.

But what will never change is that things are constantly in motion. Change is a part of life.

So instead of being fearful of change, learn to embrace it and new opportunities will come knocking on your door.

For me, instead of panicking when we were forced to move during the lockdown, we acted quickly and locked in an incredible lease that we're still in today. Without the uncertainty and the fear in the commercial real estate market, there was no way we could have locked in our lease at such an incredible rate.

So start seeing change as new opportunities.

This leads us to our second takeaway which is to be a contrarian.

When everyone zigs, you want to zag.

When they zag, you zig.

When everybody was reducing their workforce during the early phase of the lockdown, we hired aggressively, and found top talent to build GrowthJet's founding team.

Some of our best employees today were hired during this early part of the lockdown.

When everyone pulled back during the pandemic, we expanded our business and took advantage of the weak market by signing a long-term lease.

Don't be afraid of going against the grain.

Be bold. Be a contrarian. Be a leader, not a follower.

Okay, finally, the last takeaway is never give up.

Don't take "no" for an answer.

My journey was filled with obstacles and all kinds of "no"s.

But I kept going and didn't give up.

Obstacles are all part of the journey.

There's no cheat code in life or business.

Besides, what's the point if everything came easy?

And remember, you can't lose unless you decide to quit.

So keep your head up and keep going.

Okay, that's it for today! I hope you enjoyed my own personal story of how I bootstrapped my own business from scratch.

On the next episode of First Class Founders, I'll outline 3 stages of a business using the "I / We / They" framework. This powerful framework has helped me see what I need to work on at each stage of my business to level up. You don't want to miss this one!

If you're a new listener and you enjoyed this episode, you can subscribe to the show by going to FirstClassFounders.com. If you're a repeat listener, I would really appreciate a 5-star review on Apple Podcasts and Spotify. You can head over to FirstClassFounders.com/review to leave us a 5-star review. Thank you so much!

If you want to connect with me, I would love to hear from you. You can follow me on Twitter at @YongSooChung and let me know if you liked this episode. I love hearing your feedback to improve the show. You can find links to all my social accounts in the show notes.

All right, I’ll see you on the next episode of First Class Founders!