Entrepreneurs

This e-commerce founder's company went from $40,000 in sales from his parents’ garage to over $100 million in 3 years

Starting a company out of your garage sounds exciting — invoking visions of Silicon Valley greats Hewlett Packard and Apple, and Jeff Bezos starting Amazon in his Seattle garage circa 1994.

That is, until you actually start a company in your garage.

So says Chieh Huang. He knows this from experience. He launched Boxed from his parents' garage. He got long, unsatisfied glances from his mother-in-law.

"Everyone wants to start a business in their garage — they think it's sexy — but when you actually sit as a 30-year-old in a garage — it's not so sexy," Huang tells CNBC Make It. "My mother-in-law was like, 'I told you he's not the one!'...

"[T]hose are tough times ... but really powering through that has become a life-changing moment for me and our co-founders and for a lot of folks that work at the company."

Boxed started in CEO Chieh Huang's parents' garage.
Photo courtesy Boxed
Boxed started in CEO Chieh Huang's parents' garage.

Huang, now 36, launched online warehouse club Boxed in the 2013 out of his parents' two-car garage in suburban New Jersey — "the cradle of civilization," jokes Huang. (Previously, Huang held stints at the law firm Proskauer Rose and Zynga and launched co-founded his own gaming company, Astro Ape.) Boxed ships bulk, things like seltzer, Oreos and toilet paper, to individuals' homes and small and large businesses.

Growth has been unbelievably quick.

"So we did about $40,000 of revenue in 2013, high-fiving each other in the garage, and from there on out, less than 36 months later in 2016, we actually cleared over nine figures — or over $100,000,000 — in revenue," says Huang. "It's been a really wild kind of roller coaster ride and we've learned a ton since the days in the garage."

"Everyone wants to start a business in their garage — they think it's sexy — but when you actually sit as a 30-year-old in a garage — it's not so sexy." -Chieh Huang, CEO of Boxed

Currently, the New York City-headquartered company has about 400 employees all over the United States and has raised $160 million in venture capital funding.

And yet, even as Huang is having the ride of his life, Boxed is playing in competitive territory: It is, after all, an e-commerce company in the era of Amazon's near-total domination. Amazon founder and CEO Jeff Bezos has recently overtaken Microsoft founder Bill Gates as the richest person in the world and he was even briefly worth $100 billion thanks to a surge in Amazon's stock price after Black Friday, according to data from Forbes. Currently, Bezos' net worth is north of $98 billion.

Chieh Huang
Adam Jeffery | CNBC
Chieh Huang

"Yeah, I would say [Bezos is] in my dreams often, but you couldn't be any entrepreneur nowadays — you can't help but think about what Amazon is doing in your industry," says Huang. "And so for us, of course we think about Amazon. Of course, we think about Walmart, Target, Costco, Sam's Club. We think about everyone."

So far however, Boxed is surviving the Bezos era. "Luckily, the business that we've built, I would say, has a few natural moats," says Huang. "Really, there's no other private company doing what we're doing.

"So we have seen our position become the eye of the storm that is swirling around retail," he says, referring to Boxed's enviable position amid a retail industry that's at times hemorrhaging jobs and is experiencing bankruptcy filings and store closings at a record pace.

Here's why Huang says he has been so successful in such a short period of time.

Boxed is focused

Boxed is relentlessly focused — it does not try to sell everything like Amazon. Rather, Boxed only sells large, warehouse-sized packages of goods.

"We really have built that 'stock up and save' platform where folks come solely [for that]," says Huang.

"As a business owner, you want to be naturally everything to everyone so you can build a really big business. But we have found it is probably better for us, and a better way to build a big business, if we are really disciplined. ... [W]e're not 'The Everything Store."

The strategy allows Boxed to concentrate buying power on just a limited inventory, so Huang has leverage with suppliers to get competitive prices. Boxed can then turn around and sell goods at low prices to its customers.

Boxed is high-tech

The basic nature of the goods that Boxed sells (dish soap, granola bars, diapers) belies the technical sophistication of the company. The fulfillment center depends heavily on robotics to keep costs down and for business customers, Boxed uses predictive analytics to advance ship whatever goods Boxed has calculated the customer is likely to need.

It's "one of the most advanced consumer packaged goods fulfillment centers in the world for [business to consumer] deliveries," says Huang.

Employees are treated well — really well

Just because a company embraces robots does not mean that employees have to lose their jobs. Boxed is a case in point. "On its surface, I 100 percent agree it seems like it's a little bit contradictory" to both widely implement robots and take care of employees respectfully, Huang admits.

"So, we struggled with it.... But we stuck true to our roots and so we told everyone in these fulfillment centers, you're not going to lose your job solely because of automation — in fact we're going to train you on how to interact, how to troubleshoot and how to work with state-of-the-art software and state-of-the-art robotics."

"Twelve times out of 10 we're going to do the right thing for the employees of the company — it's a fundamental belief." -Chieh Huang, CEO of Boxed
Boxed employee Weslee Berke, who married David Podgor, benefited from the company's policy of paying for life-changing events.
Photo by Kevin Liang Photography
Boxed employee Weslee Berke, who married David Podgor, benefited from the company's policy of paying for life-changing events.

Boxed also offers unique perks: Chieh personally pays for employees' children's college tuition (with no limit on cost) and the company pays for life-changing events like weddings up to $20,000, depending on how long the employee has been with the company.

Taking care of employees like Boxed does is not cheap.

Huang himself personally paid for employee Joe Bobko's son's college tuition.
Photo courtesy Joe Bobko
Huang himself personally paid for employee Joe Bobko's son's college tuition.

"[T]his may seem pretty crazy ... you can't say what line of benefit do you really get for doing all these things, but it shows up elsewhere in terms of increased morale," for one, says Huang.

Thinking long-term about employees is the right way to operate, says Huang. "[W]e get investors that have pushed against the systems, but what I tell them is that as long as I'm at the helm and our management team is at the helm, 12 times out of 10 we're going to do the right thing for the employees of the company — it's a fundamental belief."

Boxed runs lean

Even though Boxed is generous with employees, the young company doesn't splurge on unnecessary luxuries. "We're a very frugal company," says Huang.

The margins selling toilet paper in bulk are thin, but also, Huang was raised in a self-described working class family — his mother supported a family of four with a minimum-wage job at a fast-food Chinese restaurant — and so he has built a company that reflects the spending habits he became comfortable with growing up.

"We have really interesting policies, which I have to adhere to myself. So I'm fresh off of a four-country trip over 36 hours across the world, where I flew economy on each leg," says Huang. He left New York, flew to Dubai, Dubai to Germany, Germany to London and London to New York in under two days.

"And so it's the reason why I may not be as good looking as I should be, but the what would be an example of a policy where we are frugal," says the CEO, laughing.

"There's policies like that that we need to stick to because they're the same policies when we were in a garage, and now that we're big doesn't mean that you know we deserve the luxuries of being a bigger company."

–Video by Andrea Kramar

See also:

Boston Dynamics CEO: 'Robotics will be bigger than the Internet'

How this mom turned a $2,000 loan from her mother into a $260 million fortune

How this mom turned $775 into a $65 million company in only 5 years

Google billionaire Eric Schmidt: People want dish-washing robots to clean up the kitchen more than any other kind