Author: Nitish Khadke

eCommerce as an Industry for Disruption

Two companies that immediately come to mind when I think of companies in the eCommerce space are Amazon and eBay. Justifiably, these companies are one of the earliest companies that tried to disrupt the eCommerce industry. In the past few years, there has been a significant rise in the number of startups attempting to disrupt the eCommerce industry as well as an increase in the amount of funds invested in these startups. Examples of these startups are Warby Parker, Casper and the company I worked at this Summer – Madison Reed.

Commerce models at that point of time were based primarily on flash sales and social commerce. These companies needed to raise a lot of money and had high burn rates and because of this phenomenon were rather unsustainable. Some of these companies survived and are currently thriving – like Amazon or Zalora.

The growth model of today’s eCommerce companies seems rather different from that of eCommerece companies when they started back in the late 90s/early 2000s. These new models prove to be much more sustainable in the short term and the company’s growth is driven largely by the technological advances in the mobile industry and the increased usage and reach of social media. With existing analytics tools today it is becoming increasingly easier to acquire customers at a lower cost and also alter strategies to ensure the most efficient method of increasing the conversion rate on websites.

With the increase in the demand for analytics tools and social media advertising, the cost of marketing is getting driven further down thus making it cheaper for companies to access and communicate with their customers effectively. Even then, conversion rates for multiple eCommerece startups still hover around 5%. Therefore, there is an increasing need/trend for startups to develop disruptive models and strategies to grow. After a brief insight into how Madison Reed went through the process of choosing their own model, I realized there are some common strategies used across multiple companies:

Subscription eCommerece

There is much skepticism on whether this strategy would be effective in eCommerce startups but in the past few years, there are some startups that have been able to execute this strategy fairly well. Companies such as Dollar Shave Club and Birchbox follow this strategy and Madison Reed has this strategy as an option when a user wants to purchase a product from their website. This model allows for recurring payments from users which helps to drive a strong revenue model.

Direct to Consumer

Warby Parker is one of the few companies that follow this model where the reduction in the number of necessities gives them the power to push savings to the customer. Another company that follows a similar model is Casper

Peer to Peer eCommerce

This sub-industry has long been governed by eBay and Craigslist – the tool that all of us probably used at some point of time in our lives. With advances in technology, particularly those that allow for people to be connected via different mediums, have allowed for this strategy to thrive. It is becoming easier for people to sell/exchange/buy things from one another by hosting it online.

Rental eCommerce

This space of eCommerce had been relatively untapped until the startup Rent the Runway decided to disrupt the eCommerce industry by adopting the rental strategy. Since then some other companies such as Black Tux (tuxedo rentals online) and Eleven James (luxury watch rentals for men) have emerged.

Clearly, there have been multiple emerging startups with different strategies and often a combination of strategies to establish and build their brand. Madison Reed strives to do that today by mainly adopting the Subscription and Direct to Consumer strategies to establish themselves as the superior hair care brand. There has been a recent rise in the number of investments in eCommerce startups and I hope to see this industry flourish to explore how companies have carefully made use of these strategies or even come up with their own unique strategy to disrupt this industry further.

Entrepreneurship and Technology in Singapore

Being in the centre of entrepreneurship and technology hub of the world for the past 3 months as well as Summer last year, I have gained a few insights into how entrepreneurship differs from that of Singapore.

I grew up in Singapore most of my life (I moved to Singapore when I was around 2 months old) and studied in the local schooling system all the way up till the final 2 years of my high school education which consisted of the International Baccalaureate (IB). The IB program did teach me tons of skills that were critical to the workplace but also introduced me to the entire idea of innovation, particularly teaching me about where it stems from and where to go from the inception of it to the execution of it in various forms. This did lead me into working with 2 Singaporean startups which are now decently successful and are making a significant impact in their respective industries.

That is where I learnt where a significant chunk of the money that flows into Singapore goes to: Innovation & Entrepreneurship. Given the strong financial stability and solid infrastructure in Singapore, it makes sense – let’s start a business here. I was not surprised to find out that multiple True companies were either in talks of being funded by the Singapore government or had successfully expanded to Singapore.

I understood the reasoning behind this from a economic perspective but having grown up in Singapore and having worked with 2 local startups, I realized there are two key differences between the startup world in Singapore and San Francisco. Entrepreneurship does work in different ways around the world:

Source of funding/capital

I quickly came to realize that majority of the funds running startups here in the Bay Area originates from private funds. In countries like Singapore and Israel, it is the complete opposite. Only around 50 out of the 301 VC firms based in Singapore are interested in local investment. Even then, around 70-80% of the investments made in startups originate from the Singaporean government. Singapore is not the only country going through this phenomenon. Other good examples of countries where governments are pouring hundreds of millions of dollars in local startups are Finland and South Korea.

Why this big difference?

This might have to do with the small growth and demand for funding from startups in Singapore given the relatively tiny number of startups operating in Singapore compared to San Francisco. When is the last time you have heard of a Singaporean startup in the news?

However, on top of all these possible explanations I feel that the biggest difference lies in the mindset of investors.

Culture and Mindset

Purely speaking from an economic perspective, all it takes is one day and $260 to successfully register a business in Singapore. Even then, there is a struggle to attract international investment money for local startups. The founder of the company I had interned at claimed that investors in Singapore, and generally Asia, are less inclined to put investments into startups until they show a truly promising product. And by that time – it is often too late. Some companies do not have the necessary resources to proceed with necessary R&D or have to make certain compromises on the quality of their product to deliver.

The concept of entrepreneurship in technology is definitely expanding across the world and the entire process of how it works in each hub of entrepreneurship is different due to many reasons. However, I feel that most entrepreneurs often share similar ambitions and have shared interests. Because of this, I believe entrepreneurs around the world should work together with one another in order to help make their solutions to everyday problems impactful and effective on a global scale. After all, aren’t we all in this to innovate for a better future for all of us?

In Conversation with Dave King & Matt Darling @ Madison Reed®

It has been 5 awesome, fun and enriching weeks at Madison Reed. Madison Reed is a startup like no other I have worked with/visited before and I love it all — the quirkiness, the casualness as well as the technically heavy tasks assigned to me.

When Christiaan first pitched the company to me, I immediately navigated to their website to find myself a little surprised and slightly disappointed, yet determined. The disappointment did not arise because the website was poorly designed (the design was great) or that I had ended up at the wrong webpage but due to the fact that this company was the opposite of what I was expecting – a hair-care/hair product startup. Much different from my expectation of being paired with a typical technical startup.

However, my initial viewpoint of this unconventional startup quickly changed as I spoke to Matt & Dave in an interview shortly after Christiaan’s introduction. They broke my misconceptions about the company being a pure hair-care startup and navigated me to the core of what the entire company relies heavily on – Engineering. The engineering team at Madison Reed is an impressive team comprised of engineers from all backgrounds – front-end development to back-end development as well as infrastructure engineering. At that point, I knew I wanted to challenge myself by stepping into an industry I had never even thought about working in and working with this extremely qualified team to make my Summer a challenging yet enjoyable one.

I got to spend a decent amount of time working directly with Dave & Matt at Madison Reed after starting work there on June 8th. They have been amazing mentors so far and I am truly impressed by their prowess as engineers as well as leaders of the Engineering Team at Madison Reed. This made me want to find out more about what their journey has been like and the different major decisions they have had to make along their career paths as engineers as well as founders. Before I dive into the details of the brief discussion I had with Matt & Dave, below is short introduction of Matt and Dave:

Matt Darling, VP Engineering, Madison Reed

Matt Darling is currently the VP of Engineering at Madison Reed and is an established veteran of startups. He, along with Dave, built Rhapsody together. They joined before it was acquired by Real Networks and had been involved with the company since its inception and were involved in it’s acquisition of other companies (WiredPlanet.com & TuneTo.com) to help build the Rhapsody music service. Matt moved to the Bay Area right after college at University of Minnesota-Twin Cities and immersed himself in multiple tech startups after his exit from Real Networks, serving as Director of Engineering at Meez and then Principal Architect at Outspark and Lab Zero Innovations.

Dave King, CTO, Madison Reed

Dave King is currently the CTO at Madison Reed and grew up in Berkeley and Chicago before going to UC Santa Cruz for college and after a few years working for established network companies joined Matt at Listen.com (before it was acquired by Real Networks) to build the Rhapsody digital music service. Dave then left the startup realm to work at GAP Inc. (Yup – that clothing store everyone knows about) as their Senior Director of Enterprise Infrastructure for ~8 years before returning to the startup hub when he joined Madison Reed in 2014.


Q: So I know that you are both established engineers in your respective areas of expertise. But tell me more about your story.
When and how did you get into technology, computer science and engineering?

Matt: Well, the first class I took fairly relevant to technology was a Pascal class in ’91 back in Junior year of high school in Wisconsin. I then moved on to college and did a few Computer Science electives there to expand my interest and depth of understanding in the subject and immediately fell in love with it. I knew from that point on that after college, I’m moving out of the Midwest and going to San Francisco to work for tech companies there. I spent some time working contracts with a few tech companies and then starting work at TuneTo.com and building Rhapsody. I stayed there all the way till ’98 before I jumped into multiple startups.

Dave: I was an avid gamer back in high school and that was my first introduction to technology. I have always appreciated it and always wanted to contribute to it one day. I actually went to college at UC Santa Cruz as part of their Pre-Law program and hated it. After doing a few CS electives, I knew that Computer Science was what I wanted to do and transferred into the program as my major. I then quit college and consulted for multiple startups funded by KPCB (Kleiner, Perkins, Caufield and Byers).  During this time I worked for Marc Andreessen as his personal tech guru during his last few months at Netscape and his residency at KPCB. I was also introduced to Tsutomu Shimomura as he was launching his first startup, Geocast. Tsutomu asked me build a secure network for his new company to prevent hackers from retaliating after the recent publishing of his book on catching legendary hacker Kevin Mitnick. Being in the heart of the first dot-com boom was where i really started to love working in technology, and I built my career from there. I actually come from a more traditional infrastructure engineering background where I have built multiple infrastructures at companies before I joined at Madison Reed.

Q: Wow, looks like neither of you started with a strong ambition for computer science until much later in college. I know you [Matt] started off at startups and Dave, you moved from a startup out to GAP and then returned to Madison Reed. What was the move like? Why the shift back to a startup? I’m sure there was a risk involved in all of this.

Matt: I have a strong passion for building things and what I really appreciated at startups was the whole concept of product ownership. By being so close to the product and working on it from ground up forms an attachment to the product. I believe I truly enjoy that and that is why I always stuck with startups and small companies driving technology focused product. There was surely a risk but what really mattered during the move [to Madison Reed] was that I was joining the company with my trusted and long time partner and friend, Dave. This proved to be an effective factor in joining Madison Reed.

Dave: I spent many years at GAP, initially running Infrastructure for the rapidly growing eCommerce business, then eventually running Infrastructure for the entire company.  This meant taking on a huge amount of legacy technology from the mainframe to the store network. As I took on more responsibility for these older technologies, I quickly noticed the lack of innovation amongst those teams. But the real change happened when I started spending 90% of my time in meetings and and the rest of my time in email.  I hadn’t built a single piece of technology with my own hands in years.  I realized I needed to get back to building things, not just to stay relevant in my career, but to thoroughly enjoy my life in the office. There was definitely risk involved in moving back to a startup after working with such an established company, but like Matt said, I was joining Madison Reed with trusted friends.  In the end, that was the most decisive factor for me to move to Madison Reed.

Q: What was the biggest change when you moved to Madison Reed?

Dave: There was hardly any software development or dev-ops processes present (compared to today) at Madison Reed, and being from an infrastructure background I knew there was much to be done at the company. The engineering team was still rather small and not as technically strong as it is today. This task seemed daunting but at the same time seemed like something I really wanted to work on and fix.

Matt: Yeah, Dave’s right. There was no process of automation as you see today. There was no concept of deployment and production with local systems being able to test code individually before adding to the main codebase. Dave and I went on to implement this system of setting up the environments for engineers to test and deploy code locally which improved efficiency greatly. This meant that the engineering team could work on different tasks simultaneously. We set up the main databases in 2014, from which we developed a solid system of migrations.  Node.js was chosen before I joined, and I had some hesitation initially.  However, having worked in multiple languages over the years, I’ve really come to enjoy what Node.js has to offer – the academic/pattern driven nature of Java combined with the rapid development of Ruby on Rails.

Q: That sounds like a lot of work. Madison Reed Engineering has definitely come a long way. With all these new startups coming up in the world, what do you think would be the future of startups in say 20 or 30 years?

Dave: I think now we are seeing the shift from software back to hardware and this enters the realm of the Internet of Things. Every device now has a connection to the internet, first phones and tablets, now to watches, thermostats, even custom Arduino devices. I can easily see how this can disrupt many traditional industries.

Q: That is a very interesting insight. I agree with you about things moving to the hardware realm and then entering the era of distributed systems – FitBit and Pebble are good examples of this phenomenon.

Matt: Yeah totally. It’s really funny to see how open-source software, for example, has gone from a hack to the bread and butter of how we deploy and get stuff done now.  I look back and wonder what type of competitive advantage the company, that moved me out to the Bay area,  would have had if they built their product on Linux and Tessels/Arduinos.

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