Yosef Martin on Building BoxyCharm, Selling for $500M, and Starting Over

The Determined Society with Shawn French | Adversity & Mindset

In this episode of The Determined Society, host Shawn French interviews Yosef Martin, founder of BoxyCharm and current CEO of PepNow, about his journey from an immigrant student

Key takeaways

• Yosef Martin started Merchandise Liquidators with $375 to cover out-of-state tuition, using SEO and blind shipping to flip pallets for thousands in profit per transaction
• BoxyCharm took roughly 900 days to gain traction before exploding in late 2017, eventually grossing half a billion dollars in sales with over 1 million active members

Main topics

• Immigrant entrepreneurship & early bootstrapping
• BoxyCharm scaling & direct-to-consumer growth

Notable quotes

"Determination makes something hard look easy."

Conclusion

The episode delivers actionable frameworks for founders on balancing relent

Transcript preview

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Go to butcherbox.com slash TDS to get $20 off your first box, plus chicken breast in every box for life or filet or New York strips for a year with free shipping always. That's butcherbox.com slash TDS. Again, that's butcherbox.com slash TDS. Be sure to use our link so they know we sent you. Speaker 2 (1:20) I'm in a hospital. I'm with oxygen. I think I'm gonna die. I've never been so sick. C-Max completely Speaker 1 (1:28) fixed me. Speaker 2 (1:29) I'm doing 10 million, they're doing 150 million. It sounds far, but my product is generally better. You had the exit of the number everybody's chasing. Why in the fuck are you coming back into the ring? I stopped doing this at the end of 2020. It's been five years of relaxation. Let's go and do it again. I made the money. I like the game. I'm good with the game. But now what can I really do that's Speaker 1 (1:47) gonna keep satisfying me? It takes a whole lot of determination and discipline to do all that stuff. Speaker 2 (1:52) In my case, I had either make it or get out. So I decided to just trust myself because I trust the product. Speaker 1 (1:58) If there's a part of the process that you think is going to work, but it is not, then you need to move right away. Your idea may not work. There could be something over here telling you exactly what needs to happen. Speaker 2 (2:10) Now I'm finally selling something I actually love. This is my true passion. I enjoy it, I'm a user for the first time. What would you rather have? 1,000 people that are fanatically crazy about your product or 100,000 people that know you? Every bottle I had was sold within 14 minutes. Determination makes something hard look easy. The process of climbing that hill It doesn't look hard. It looks rewarding. Every step. It moves your brain. It does not see this as struggle. It sees it as challenging but not suffering. Speaker 1 (2:52) My guest today came to this country as an immigrant and started his first business just so he can pay his tuition. In an industry he knew nothing about. No experience, no nothing. No ad budget, not a thing. Just a warehouse in Hialeah. Seven years later, he sold that company, BoxyCharm, for a half a billion dollars. And the thing that strikes me as very interesting and hit me really hard when doing research on him was when that wire hit, he didn't feel a thing. And now he's back in the ring building again. Joseph Martin, welcome to the Determined Society. Thank you for having me. I'm jacked, man. Jacked to meet you. It's Speaker 2 (3:29) awesome. I heard a lot and now we're finally here. Speaker 1 (3:32) Yeah, we're here, man. So walk me through this. You start your first company just to pay your tuition. What was going through your mind at that point? Speaker 2 (3:41) So the first company I started to pay the out-of-state tuition was called Merchandise Liquidators. And that was kind of like the grassroots, how I started. I had to learn everything. So when you're an international student, you're not allowed to get a job. And you have high payment. You got to pay. It's expensive. Which basically I would say do not change this America that keeps the strong people around and make them be better. In my case... If you gave me at that time green card, I would get a job in Gapol Navy as a clerk, pay my in-state tuition, Speaker 1 (4:19) not Speaker 2 (4:19) the out-of-state tuition, and I would maybe never be here and you would never talk to me. I would have been watching your show fantasizing on building a big business. In my case, I had either make it or get out. Speaker 2 (4:31) So I was trying to find opportunities, buy and sell, and what are you going to do? And I met one time someone that told me, look. If you want to buy and sell something, you need to look at something a little bit more abstract. You can't just go and take this cup and sell it because the producer is already going to sell it online. We're talking 2003. You have to buy a pallet and buy mixer stuff. That's how it all started. So I took the concept of liquidation by the pallet, by the truckload, and instead of selling piece by piece, I flipped the truckload. So every transaction I do is not going to be $15 or so. It's on eBay. I'm going to sell to the eBay and it's going to be a couple hundred dollar profit or a couple thousand dollars. And I had to flip goods. You know, you don't start with a warehouse. You start with flipping goods and you put a picture of a warehouse, which you don't have. But when someone calls to buy something, you explain I'm a broker. So I got a list of all the distribution center that sells everything that was left by Macy's, Sears at the time, Walmart, all that. And you get. lists of truckloads that are available for sale and you don't even know what's in it and you explain look I don't know what's in it whatever you see in the store they pack it up they ship it it's seven dollars let's say my cost is six I'll flip it for seven and you do something called blind shipping so the shipper doesn't know where it goes and the buyer doesn't know where it came from you're the one controlling all this and I would go between one classroom to another classroom and the only thing I needed to understand is how the heck do you get people to know about you Speaker 1 (6:04) So Speaker 2 (6:04) at that time, search engine optimization was the thing. So when I learned about SEO, I said, all right, just an algo. I'll figure it out. So you get so good at that. Because what else are you going to do in life? You come back from school until you fall asleep in front of the computer at 4 a.m., wake up again at 8, you go back to school, school is in the way now. That's all you do. I got to a point that I was ranking in pretty much any term you can imagine. Phone was ringing off the hook. And you start selling. Start flipping goods. And this is still the liquidation company. That was the liquidation. I ran that company for 12 years. That was going from $375, what you had to put into, about $10 million in sales. That was the warehouse you're talking about in Hialeah. And I had a couple employees around 2012. That started in early 2004. Speaker 2 (6:59) 2012, we're getting a call, one of my cell reps, about buying some products to a subscription box. Speaker 2 (7:07) And you have to understand when you're a business to business, like the liquidation, no one ever talks about you. Oh my God, I got this great supplier. You take it to your grave. You never talk to suppliers. But when you're direct to consumer and someone gets something nice, they talk about that. And I remember that I learned about subscription box and big piece of my products were makeup. I'm like, I can do it better. So I got into the space. But at that point, I understood internet marketing. I was really good with SEO. And this time I learned, you know, it is Instagram, YouTube, same thing, algo. In fact, it's easier because it's a younger platform. The adoption rate of people like me is lower. I can figure it out way better than all those makeup companies. I can grow. So we launched BoxyChum, which was a monthly beauty box. I had to understand makeup a little bit better, even though I was a wholesaler, I didn't truly understand. I was just selling it as a... all seller but now you put this direct to consumer you need to know what's good what's not good um i was a three years run until the company really took off and blew up like we really blew up around 2017 so 2014 to 2017 end of 2017 that was our moment where mac a big brands of tart cosmetics all rolled into our program and we exploded it was it was a process it started with couple great ideas how to distinguish your box versus all the other boxes. But it really took on three years until what you thought it's going to explode day one exploded day 900 and change. But eventually it did. And that's when everything took off. And we ended up grossing half a billion in sale in 2020. We had over 1 million active members. We had a flash sale that... The year when we sold it, that was the first year we actually launched it, which just on a flash sale alone, we did $70 million only for our members. It was a closed group. It was just a lot of moving pieces that I still ask myself, how the hell did I make it? Because it's just a lot of moving pieces. Speaker 1 (9:15) I want to back up to the day one to day 900, right? A lot of people nowadays, they have this weird perception or this belief system that they're going to grow in 90 days or they're going to grow in even a year and they're going to be right where they need to be. You just told the whole audience that from day one to 900, it was a very slow burn. And then Speaker 2 (9:41) Yeah, Speaker 1 (9:42) 2017 it took off right? Speaker 2 (9:44) Well, okay when you look back when if you climb a mountain You said well, I mean, where's the motivation come from to keep climbing this mountain? Well, you gotta climb a hill and it looks amazing because you're at the top of a hill But you have no perspective of what climbing in a mountain is So if you say well, I mean, let's keep climbing by the time you finish the Mount Everest He said oh man that bluff I had over there in North Carolina I had no idea. I thought I was good. So every time you have a little success, you think you're that good. Yeah. So you don't need to wait for three years to say, okay, now I made it. What people refer to, what you mentioned, is more of a proof of concept. Does the business really work? But just because it works, you make $10 million a year. A $10 million a year company is not $100 million, and $100 million is still not a $500 million company. You don't know that until you've been there to understand why it's completely different. But for you, $10 million is pretty freaking good. So the motivation will stick around, so you go from $0 to $1 million. Great, now $0 to $10. What you do learn throughout the process is that there is a reason. The reason that you don't see too many... companies that do hundreds of millions, it's because it's just that much different and harder. If that was so easy, then everyone would have done this. You just don't, you have no clue what it takes. But if your ambition is to get there eventually, and my ambition was simply looking at my competition. My competition made a hundred. Oh, I got to be there now. I'm not competing with Jeff Bezos or Elon Musk, who said he's out of reach, too far off. No, it's a small company called Ipsy. They're growing nice. I'm doing 10 million, they're doing 150 million. It sounds far, but my product Speaker 1 (11:25) is genuinely better. Speaker 2 (11:26) All Speaker 1 (11:26) right, a quick word from today's sponsor, Scribe. Here's the thing about scaling a team. It's never really about headcount or budget. It's that nobody documents anything because writing it all down is painful and nobody has time for it. So people end up doing the same process five different ways. And when someone leaves, all that knowledge just walks out the door with them. I've lived this. Every time I bring someone new onto the team, I'm re-explaining the same steps I've already explained a dozen times. That's exactly the problem Scribe was built to fix. Here's how it works. You turn on the extension or desktop app and just do the process like you normally would. Scribe builds the guide as you go, capturing every click and screenshot automatically. What used to take hours of writing and cleanup is done in under a minute, and it's already ready to share. It also... auto-redacts sensitive stuff, names, account numbers, emails out of every screenshot. If you're running a team, you can enforce that company-wide so nothing slips through. And once the guide exists, anyone can launch real-time on-screen guidance that shows them exactly where to click, step-by-step, inside the actual tool. Plus... Scribe doesn't just document your workflow. It actually suggests ways to improve it, like cutting redundant steps or flagging what could be simplified. To see what Scribe could look like for your org, head to scribe.how.tds and mention TDS for your first month of Scribe capture free on select plans. That's S-C-R-I-B-E.how.tds. Speaker 2 (13:06) So I can eventually get to it, but I have, say, 15 employees and they have 150 employees. How do you get to that point that everyone works in harmony and everything is well balanced? And how do you get to that? So that would be, or once you get to that part where you can scale from, say, flat organization and you start tiering the organization in a healthy way, you can do anything, Speaker 1 (13:30) right? Speaker 2 (13:31) And that was one of those parts where you said, wow. I can get to it. If you were telling me, look, you're competing with, I don't know, Jeff Bezos, I would say, too far off. Speaker 1 (13:42) But Speaker 2 (13:42) this is right next to you. This is just another guy that was just like you, a student somewhere. He did some good stuff, but you can beat him. So that was probably a piece of the motivation. Speaker 1 (13:53) It's amazing what you built with essentially no ad budget, right? You had a product, and then you had the social media platforms. And because of that product in your customers or your members, they couldn't stop posting about it. Speaker 2 (14:08) Yeah, you know, the thing is we started spending money when we got to 200 million in sales. And we were profitable all the way through. We improved our profitability and our growth kept scaling. But the thing is when you ask yourself, okay, what is the most important thing, right? The product has to be second to none. It needs to be a jaw dropper. How the heck are they even turning profit? And then comes the experience. The experience has to be really good so you get the cool factor. If you put them combined, one plus one equals five. It's not equals to a test. It's just a reaction that's going to be cool. And people that use your product are the it ones. People that use the competitor ones, like, well, you don't know what's really working. This is much better. So the uninformed use everybody else and the informed ones are yours. Ultimately. Speaker 2 (15:04) It doesn't apply for everyone, right? Because I ask myself, okay, how would I do it in an insurance company or something? I don't know if it can apply. It's not all the same game. Some games are different, and some games might be played better by other players. I'm good in this particular game. So it was all about creating better product market fit every month because every month you have to ship a different box. It's draining. But ultimately, it's very rewarding when you do the job right. It's very rewarding. Speaker 1 (15:34) So, I mean, there's a lot of companies out there, right, that have amazing products. Speaker 1 (15:40) But the user base doesn't have the same, they didn't take the same action as they did with BoxyCharm. What made that call to action for the consumer to just blow up the internet? Speaker 2 (15:55) You have to ask yourself, is my product really different than the rest? But not by a little bit, by a lot. The second thing is, if you think about CoolFactor, CoolFactor is built by community of people that talks about you when they're not. But there's no reason. You're not promoting it, right? It needs to be an organic conversation. So if I ask, okay, but how do you describe for me a community, right? So a community is going to be the baseline explanation of community is a group of people with the same interest in the same space activating together. And you said, all right, now when you look at a community, what would you rather have? 1,000 people that are fanatically crazy about your product or 100,000 people that know you? So you go for those 1,000, Speaker 1 (16:39) right? Speaker 2 (16:39) And then you have to find a space for them. What is the space? Is it only going to be on my feed? Can it be somewhere else? Can they create their own space for those passionate people? And then you inject into them. Just once in a while, you come and say hello over there, and they feel amazing about that. And then more people are going to join that community and let them build. So in our business, in Boxee, and that's what we're doing right now in PepNow, it's just the idea that how do you get people to create pages about you organically? Don't think about you creating different groups. I don't want to control the group over here. I want them to create this organically. I want them to create fan pages organically. And how do you get them to want to do it? How do you get them to say, so by the way, there is no simple answer. Every business is different. Right now, I'm selling peptides that are allowed to take without a prescription. And they're unique that no one's heard of. So then, okay, that community is... really passionate and they'll talk about this but what if I was to sell something else maybe it would be a lot more challenging when I was selling a new box every month it's a lot easier because they want to exchange so there are some spaces that allows you to do it a lot easier in some spaces that you know it's just not going to be the way to grow you need to think of different avenue so in a place where you can do it double down on a cool factor because it would make you have You're going to have an army of people that just want to discuss about you all the time and you need to fuel. You have to throw fuel into that fire all the time. Speaker 1 (18:09) What was the seed that you planted? for them to want to go make their own page or fan page about your company? Speaker 2 (18:17) I wasn't planting a seed. I found out they're doing it already on a very small scale. Speaker 1 (18:21) The Speaker 2 (18:21) way I was able to build it up was, so I noticed at the time Facebook had Facebook groups, and I mean they still have, but at the time it was very, very robust. Well, Facebook was actually kind of like already the ugly girl in the dance floor when you're talking about social media. I liked Facebook because it was all the stay-at-home mom with disposable income. And they were just talking. So I noticed that there were some fan pages that the boxy lovers, boxy this, boxy that. And they had about 1,000 to 3,000 girls talking. And they called each other charmers. And they were just very engaged. And they were just talking makeup all the time, nonstop. So I joined those groups originally just to see the sentiment of a product. And, you know, when you join, they have to approve you. So who are you? I was anonymous. I said, I own Boxee. I wanted to make sure you get good experience. But nothing freaky. I just wanted to make sure the products are good. They were so happy. They announced, oh my God, the owner just joined us. So I started giving them information before anybody else what's going to be next month in a box. And that's when it really exploded. And people were like, how the hell do those girls know before everybody? So one day I went on our platform that had, I don't know, a million followers or so. I said, guys, you want to know how they know? You go on their pages. Anyone that creates their own boxy fan page or their own boxy group, I will engage with you. I will help you. In fact, I will connect you with other brands to do collabs with you. That's when it took off. Those groups that had 3,000 within a few days went to 50,000. And now you're around people that are fanatic about BoxyCharm. You might have liked BoxyCharm, but now you're going to turn fanatic because you're in that group. You connect all of them and all they did. That was mid-2017. Speaker 1 (20:06) Three Speaker 2 (20:07) times a month I would engage with them, give them sneak peeks, tell them what's going to be before, ask them questions, which one is better for me to choose, and they felt they're part of the process. I would send a survey. You know, when you send a survey to people, who the hell wants to do that? We used to send surveys in BoxyChump for products, and we used to say, please do not share this. This is confidential. Of course they shared it. It was all over the Internet. Of course. We had 30 % of the people who got the survey, not only just opening a survey email, they would respond 20, 30 questions. 30%. So we would know in advance what products are going to make it. how do I make great products? And then how are you going to lose like that? Speaker 1 (20:46) Wow. You Speaker 2 (20:47) give them the products, you give them options, and then some of them would get mad. Why am I not getting the survey? Because I would send it to only a few. I don't want to send it to everybody. It's supposed to be a surprise. Eventually, right? So that was the way. So if you get a survey that you had a mega brand in it that nobody thought will ever be in a subscription box, it would go viral. And that was all by design. Speaker 1 (21:10) Wow. I mean. Speaker 1 (21:12) The inclusion part, Joseph, is what really strikes me. Because you are able to build something by showing up yourself. And what that meant to those women was like, he sees us. Speaker 2 (21:27) Yeah. It's not some corporate guy. Speaker 1 (21:30) He's not some guy sitting in the ivory tower, not caring about his