Day in the Life is a CoFounder Weekly series about the routines and philosophies of founders on the startup journey.
Who doesn’t love Japanese snacks? They’re salty, spicy, sweet, sour, bitter, umami, and…. weird (the good kind).
Founder Danny Taing realized there were tons of snacks that are artisanal and regional to Japanese prefectures — but nearly impossible to find in the US.
So he spent some time in Japan, filled his suitcase with speciality snacks, asked his friends on Facebook if they wanted to buy them, and boom…he launched a DTC snack box company called Bokksu that now has tens of thousands of subscribers each paying $39 / month.
Danny: Absolutely. You can see it in the proliferation of sushi restaurants, ramen restaurants, and other types of Japanese food here. Japanese exports are on the rise with a 7% CAGR each year. They’re the 3rd largest economy in the world, so that’s a huge increase. Food is a significant part of that.
We’re riding that trend and trying to introduce things you can’t normally export.
Danny: Hokkaido Cheese Mochi Puffs: A mochi puff, that uses real Hokkaido cheese. So it’s almost like a more light Cheetos, but not as heavy and artificial tasting.
Seaweed tempura chips, which also contains Japanese citrus called Sudachi. It’s my favorite in the box.
A white strawberry, which is an organic strawberry from a local farm in Nagano where they freeze dry it to remove all the water content and then re-infuse it with their own patented process with liquid white chocolate. So it’s not a chocolate covered strawberry, it’s actually in the damn strawberry itself instead of water. It’s very unassuming looking little dry strawberry, but then you bite into it, it’s crunchy, it’s smooth, it’s tart.
Danny: In the very beginning, we would directly cold email thousands of makers throughout Japan. When we were small and unknown, the vast majority wouldn’t respond.
We’d find manufacturers through Google; and now we rely more heavily on social media. We find a lot of them on Youtube, and see what the people in Japan are eating and talking about. Then we contact the manufacturer directly.
We now have 2 employees in Japan. They frequently go to stores and talk to people about what’s hot, and we reach out directly to those manufacturers too.
Danny: We actually don’t export — we’re creating new channels direct from those makers to the world.
Generally, the export/import wholesale channel is slow and you can only get very specific types of products because of expiration dates and because mass importing may not have enough appetite. So they generally import Pocky, Hi-Chew, and mass produced stuff at Japanese marts. Our stuff is artisanal and regional.
Everything is sourced directly from the manufacturers. Then it’s shipped to our fulfillment center partner in Osaka. It’s packed there, then shipped directly from customers.
Danny: Not impossible, but very hard to find.
There’s a good example in this month’s box: a rice cracker (Kabukiage) that is Okinawa limited and citrus flavor. This is only sold in Okinawa. We directly contacted that maker and they gave permission to buy it.
Even in Japan, you can’t get this unless you go to that prefecture.
Danny: It is a significant part of our costs, since we bake in the free shipping.
However, because it’s the same price to ship to the US than to the rest of the world, it’s helped us expand globally. We have customers in 70 countries around the world. Canada, Sri Lanka, Singapore, Brazil (we have a lot of customers in Brazil). Because of that we offer free shipping.
When I first started Bokksu, we were US only. I was bringing back snacks in my suitcase, I was sourcing it from importers, and I was buying retail/wholesale. Then I’d ship it to my friends apartment, who would ship it to me. We we’re being so scrappy.
At the time, it was US only. I wanted to make sure to get the process down, understand how shipping worked.
Then we shipped to Canada charging $5.
Then we did international shipping for $15, which was a tall order for a lot of people to pay.
So it was only about a year and a half ago that we outsourced fulfillment to Japan. Which enabled us to ship to the world.
Now 40% of our revenue is US. But the majority is the rest of the world. It really helped diversify our revenue stream — if something goes wrong in one market, it doesn’t hurt us too badly.
Danny: Personally, yes. Which is why we hired a country manager, Mayumi. She is amazing.
Before she started, I was managing both the Japan office and the NY office, supply logistics, marketing & design, and product life cycle. Now I have someone taking on more responsibilities with supply chain.
Danny: I was born in New York, and grew up in New Jersey. My parents are immigrant refugees. I came into the city all the time. I was really familiar with the Asian markets and food here.
I went to Stanford to study Psychology and Japanese. After graduating, I got a job at Google working in ad sales and learned about digital marketing. I had always wanted to live in Japan so after about a year I quit and moved to Toyko. I studied Japanese at a university there called Waseda. Got fluent, job hunted, and got a job at Rakuten, the Amazon of Japan. They hired me with other foreigners in Biz Dev to expand globally (open offices in SE Asia). After 2 years I quit and moved back to New York to study Computer Science at Columbia University. I had been working in tech on the sales side and wanted to get technical skills to become a software engineer and never had a goal of becoming an entrepreneur. I kinda stumbled into it halfway through my program when a good friend of mine asked me to start a company together. I dropped out of my program, started a different company in early 2015 — an Uber for X. The idea was a marketplace for job seekers to find paid mentors in the tech industry.
Danny: One of our big ethos and mission of this company is to not only elevate 200-year-old family artisanal snack businesses from Japan to the world, but create this worldwide community of food, snack, Japanese culture lovers, and all in between.
One of our big initiatives recently was to create a Facebook group. Which, obviously has been around for years, however recently, people have been really getting into Facebook groups. Like having a place they can connect with other like-minded people, and kind of voice their opinions and concerns or love or whatever it is. We started ours less than a month ago and now have over 1,000 members. People are just joining en masse, it’s amazing. It’s people that have been two-year, three-year long Bokksu subscribers members and they’re kind of talking about stuff they love or new potential people that are interested and want to ask about it or people that are like “My shipping took a long time this time, anybody else in the same boat?” And people just are really engaged. Like each post will have easily over 30 comments.
Once a day, we’ll post a question in there so they’re not necessarily all snack or Japan-related. We’ll be like “It’s travel Tuesday, where would you like to travel in the world?” Just to get people engaged and forming these connections with each other. Sometimes we’ll do snack-related things or we’ll post memes or whatever and just get people engaging with each other. I think people are finding a lot of value in that.
Every day we’re getting an extra 50 to 150ish people to join.
Danny: The first three years we were bootstrapped with some investment from my own money.
Then we did debt financing — we worked with Clearbanc based in Toronto. They fuel your marketing spend by funding your ads. They’ve gotten really big and have raised over $70 million.
They’re really close partners of ours.
Danny: Yeah, I don’t think it’s actually a secret by any means, although I think we’re grandfathered into these terms so don’t hold me to it. We worked with them for about a year now — they were kind of young back then.
In June of 2018 they lent us $230,000 for a 6% flat fee paid back with 20% of our revenue every day. And so it does pull on your revenue, but it also allows you to grow. That’s a big chunk of money that, what did we end up paying on that, $13k or something? It’s not a ton for the fact that I’ve talked to banks and they’re all just like “We won’t loan any money to you.”
Danny: No dilution, exactly. Purely just that 6% fee and it’s not just the money. What they’ve been really great at is they are creating content for their portfolio companies. I don’t know if they’re doing that for all of them, but they do it for the ones that are early or they like working with and see a lot of growth with.
I’m actually on their website if you go to Clearbank’s website, I’m in their testimonial on their homepage. So I’ve been reached out by a ton of other companies because they saw us on there and I love that. And they’ve featured me in articles, they’ve invited me to speak on panels, they’ve really elevated our company and made us seem like a really big deal, which is really great. So I appreciate that about them. And they’re piloting a lot of stuff.
There’s also PayPal, who has a working capital loans and business loans. Business loans have better terms but their working capital literally hits your bank in like a day, a few hours. Their terms are pretty much on par with Clearbanc’s. I think the main difference is there is not extra added value with PayPal. However, there is only so much money you can get from one source.
So if you need to diversify where you’re getting stuff from.
Danny: The first three years I didn’t.
But then we wanted to accelerate our growth. I also wanted more partners and people batting for us.
I was very fortunate because I went out fundraising with a lot of traction and leverage, where I was actually oversubscribed on my round because I waited that long.
If I went out and fundraised two years ago (I tried a soft raise) there would be little to no interest. But then three years in on a $3 million ARR business at the point last year and all this traction, people were lining up to kind of invest, which was exciting.
I got Grand Central Tech here as my lead investor. They bought up pretty much most of the round and they’ve been great. They’ve been introducing me to people, crafting my strategy, they’re getting me ready for series A for next year so that’s not stuff you can potentially get from a non-dilutive financing.
Danny: Good question. Actually this is something that GCT said to me before as well (Mike Milstein, specifically). He truly believes that in five years time, people are going to look at Bokksu and think it’s cute that we started as a snack subscription box company, that we’re going to be expanding way more than that. And since at our core we’re still going to be this subscription box to introduce people to our ecosystem, this really friendly custom designed way with a lot of kind of origin story explanation.
But in five years time, not only are we going to have our digital media side be much stronger where we’re producing documentaries about our makers but I would love to even expand to create a documentary about food types or flavor profiles or kind of origins of prefectures of Japan to really get people into this rich culture and history and eat the foods at the same time that they’re watching and learning.
I see us expanding to other channels, not just the subscription box — we have a one-stop shop though, the Bokksu Market where you can buy things on demand. I would like that to become the majority of our revenue, not just the subscription box.
The subscription box becomes a hook for them to learn and buy whatever they want from our market.
Also, I see us expanding to B2B channels where we’re going to get into corporate gifting, office snack supplying, getting into the shelves of Whole Foods around the country.
We can become the go-to marketplace for Japanese food and beverage products. I plan to stay within the food and beverage space for a while. I’m personally really passionate about it. I think it makes people happy. It’s an easy way to connect to the culture and it’s consumable so you can renew it every month. And so with that, on the B2B side, we will become an importer. Currently we’re not, but when we start importing for resale, we’re going to become that. And because we now have all this data on what our customers like, we can pick and choose which ones to import that we know will have impact in the American market. And so all of this kind of feeds into each other. And once this whole Japan deep-dive has really been perfected, and we’re running this gorgeous $100,000,000 revenue business from different parts of the world, that’s when we’re going to take that model and replicate it in another country.
I personally want to do it with an Asian country. Especially because Asia is rising globally, economically from China to India to other parts in southeast Asia. So China and Korea would be my next two markets to look into for sure.
Danny: I’m going to speak about several industries: Subscription box, E-commerce, and just direct to consumer in general. It’s all kind of stepping up.
Within the subscription box space, we’ve seen booms and busts, where there was a big rise in the BirchBoxes of the early 2010’s. Investors came in, got really inflated, a lot of them crashed and now investors are wary. However I’m going to be bold to say that we’re going through a bit of a second renaissance in subscriptions right now. I mean Harry’s just sold for $1.4 billion dollars and FabFitFun is now a billion dollar company.
The differentiator is that in the beginning there was all this, forgive my bluntness, trash in the industry where it was just kind of value boxes with derivative expiring products that people would just shove in a box and put a label on it and ship it out to people and say it’s a value.
Consumers are smarter than that.
Consumers can go to Amazon and buy any kind of CPG stuff if they really need to. And so the boxes that are doing well are, kind of broadly speaking, personalization, customization and discovery. And then there’s the kind of renewable stuff, like what Harry’s did with razors.
But we fall into the discovery aspect, where these are things you can not get on Amazon and any type of typical e-commerce or market setting. We are planning on expanding into personalization as we grow larger. And as long as your box is within one of those spheres and has value, you can storytell about your product, you can give them something that they can’t get normally, there’s a market for it. If you’re not just sending people trash in a box then you can keep growing.
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Danny: In the e-comm space, I would say overall it’s all about storytelling. Why would consumers buy from you over Amazon? They want to feel a connection to the founder or the brand or the makers or where the products are coming from and if they fall in love with that, they’re going to evangelize the heck out of you, which is what we found with our niche markets where we started niche and now we’re going mainstream.
Where people, especially when I first started this company, had kind of poo-poo’d us and was like “Oh yeah, that’s a cute little side project where you’re never going to expand beyond your little nerd base.” That’s totally not true, we have customers that are like 70-year-old grandfathers in Arizona who have never been to Asia before but love the actual food products that are just so delicious. Another customer has been gifting it to all of his friends and family. And because it’s food, it’s very approachable, even if it is non-American.
But we would not have succeeded if we hit the mainstream right away. We needed to first build up our core audience for people to evangelize us and people to look online and see that “Oh my God, there’s all these reviews of this box, and it’s a thing that I should get into.” Our Instagram hashtag is growing exponentially. People are just constantly videoing and snapping their boxes.
Danny: I did so many scrappy things, some of which was kind of gray zone but I don’t know if I could talk about that.
Danny: Everybody does the gray zone. Here’s what we did:
Danny: We’re definitely a very non-conventional team in many regards.
One, we do not have a full-time developer engineer at all, which is pretty rare, even for tech-enabled commerce companies. I’m grateful for this new movement of platforms like Shopify and beyond where the need is a lot less, you can just plug things together. But also, it is because I personally have a little bit of a background in studying CS, although by no means am I a professional programmer because I haven’t programmed in a while now. But it’s enough for me to know it, to kind of speak with developers and hiring them freelance to just do stuff for the site if I need to. And that’s pretty unconventional in the space. There’s a lot of e-commerce companies even now that think they need to hire a developer or be on retainer and then they don’t understand that the more custom work you do, you have to pay them on a monthly basis and you can’t stay nimble. We’re super nimble because we have very little custom code on our website, so everything we could just change in seconds on Shopify and that allows us to stay ahead of the flow.
Two, we’re a very diverse company. 90% of the company is some type of minority. In terms of Asian, or mixed, or LGBT, or women. I think we’re like 80% female. But what’s been really great for us is we’re able to kind of get these people that have been under-appreciated. Most of my team have worked before at other, bigger, established companies and the same kind of theme I’m getting during the hiring process with them is that they were under-appreciated at their jobs. Whether they were women, or they were gay, or they were Asian, or any of these things, or intersectional of all those. And they felt like they couldn’t move up, it was like a kind of a boys club and they were never appreciated. But in my company they’re thriving because I let them reach their full potential and beyond and they’re all loving it.
At least this is what they tell me, but everybody’s really happy here and our retention of our employees is really high. From what I know from other friends that work in startups in HR — you’re lucky to have an employee stay for like a year, apparently in the startup world. Granted we’re a young company, but people have been staying for a year or two already and nobody has any plans to quit.
Danny: Thank you. Yeah I should probably not be so humble.
The question I’ve gotten before is what keeps me up at night? And besides the cash flow and the growth and the investors and all that stress, actually the biggest thing that keeps me up at night is my team. In addition to all that, my biggest hat I wear is, I feel like, I don’t know what it’d be, people ops or manager. I make sure they’re happy and motivated. I have one-on-ones with them on a monthly basis, all the key members of the team. Especially when when we’re small. I make sure that their concerns are heard, I mediate things, I make sure that they are finding value out of this job because they’re not getting paid as much as if they went to a bigger company because there is no way we could pay them that but I make sure they have enough equity to make up for that and that they have an impact on the company and the service. And I think they all feel that and that’s why they’re really motivated.
Danny: I’m not a morning person. I know some, and there are all these stories of CEOs that wake up at 6am and they exercise in the morning and do all these things, but I can’t.
I wake up shortly before 9, get ready. I recently have been doing intermittent fastings so I don’t eat breakfast and I just drink coffee. I haven’t had as much time to exercise as I used to and I work in a Japanese snack box company. So in order to stay healthy and moderate, I kind of use this strategy to help maintain my diet and try to be in shape and everything too.
I don’t have official company times because I believe everybody should be self-starter enough to fix their own times. But we have a 10am stand up every day. So I get in around 9:30am. I only eat starting from 1pm or something.
Every Monday morning I will also have a strategy meeting with my executive team to kind of plan out the goals for the week. And talk about things that may have happened the previous week. And then we kind of break out into all of our work from there.
I try not to fill my day with too many meetings because I’m still very much in the day-to-day operations of the company, being that we’re only 10-12 people and we’re kind of small but I also enjoy it.
I like working on the product, I like working on expanding the website and relationships, and doing these types of interviews. And so I am still very much involved.
Some CEO’s I know constantly fundraise, that’s just what they do 80% of their job. I fundraise 10-20% of my job and I still get to be connected to the team and the expansion of the product, which I love and you can kind of see it that I still touch a lot of parts but that’s not sustainable and scalable for long-term but for now that is what I do. I know that eventually I’m going to have to hand that off.
If there’s some type of decision that needs to be made on the final approval route, I’m still there for that. I have offloaded most of the beginning work — whether it be writing the copy, coming up with the design of the guide, coming up with the curation of the box — I used to do all of that. Now I have my teams and leaders that do that and then they come to me with the final proposal and then I check through everything. I get to eat the snacks and I decide if I like them or not, it’s kind of fun.
And then usually it’s just things constantly happening back to back. I might get a few hours to actually sit down, answer emails and work on stuff. And then 6:00pm or 6:30pm rolls around, people start kind of finishing up, I try not to overwork my employees — work/life balance is important. I don’t want to burn anybody out, I want them to be with us in the long haul. And so I tell people you work eight hours, whether it be here remotely, whatever it is, you can leave early just work a little bit at night or make it up the next day. So people start to filter out around then.
The executives usually stay a little bit later…because we’re executives.
And then around 7:00pm or 8:00pm, I’ll go rock climbing. It’s my main thing. I rock climb like four times a week. That’s my one time to put my phone in the locker, I’m totally disconnected, I don’t think or talk about work, I just try and hit those goals and just feel like I’m progressing my own skills.
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