Building Businesses in Aftermarket Designer Merchandise: ShopWorn CEO Richard Birnbaum (Part 1)

If you haven’t already, please study our Bootstrapping Course and Investor Introductions page. 

Richard has built several business in the “shopworn” designer merchandise segment. Learn more about the business through his journey.

Sramana Mitra: Let’s start at the very beginning of your journey. Where are you from? Where were you born, raised, and in what kind of background?

Richard Birnbaum: I grew up in Brooklyn, New York. I was born into a family of merchants. My father taught me at a young age that everything is about value. Even when we’d go to a diner as a kid, he couldn’t go on raving enough about what a great deal it is they’re offering us. He’d say, “We get a salad. We got Jell-O for dessert.” He instilled in me, at an early age, that it’s all about value and giving the customer a great deal.

Bootstrapping With A Paycheck to YCombinator and $10M Series A: Ryan Chan, CEO of UpKeep (Part 7)

Sramana Mitra: What kind of numbers did you do in 2016, 2017, and 2018? What was the ramp in terms of free users and paying users? What was happening?

Ryan Chan: We’ve been growing very fast. We’ve hit a true nerve in this market and the completely underserved industry. Over 2,500 paying companies use UpKeep. Each company could have anywhere from a single user to several hundred users in their UpKeep account. Again, we literally had zero about three years ago, which is nuts.

Bootstrapping With A Paycheck to YCombinator and $10M Series A: Ryan Chan, CEO of UpKeep (Part 6)

Sramana Mitra: You have $10 million in the bank. You started hiring sales people and started putting a process together.

Now, let me reask the question. What was the repeatable sales process?Was it that you started putting in a process to take all the leads? Are the free users categorized by companies, company size, and so forth and started having people call those companies?

Ryan Chan: I’ll tell you our story. I think every story is different. So we have always been 100% inbound. We’ve got a freemium product, basically meaning that people can sign up for the app, download it, and use it for free forever.

Bootstrapping With A Paycheck to YCombinator and $10M Series A: Ryan Chan, CEO of UpKeep (Part 5)

Sramana Mitra: Kevin was also doing YCombinator?

Ryan Chan: I was part of the YCombinator class of winter ’17.

Sramana Mitra: But you didn’t hire him through YCombinator. You hired him and brought him into your YCombinator membership.

Ryan Chan: Right. We went through YCombinator. It was an amazing experience. I got introduced to this world of technology, venture capital, growth, and startups.

Bootstrapping With A Paycheck to YCombinator and $10M Series A: Ryan Chan, CEO of UpKeep (Part 4)

Sramana Mitra: What did you learn as you went through the customer base, started getting to know the customer base, understanding the customer base, and understanding who’s converting from free to premium?

What did you learn in terms of who were the ones that were really important for the business from a segment point of view?

Ryan Chan: I had this belief very early on that it is the technicians or the end users that we are building the products for. Our entire product is centered around the maintenance technician.

Bootstrapping With A Paycheck to YCombinator and $10M Series A: Ryan Chan, CEO of UpKeep (Part 3)

Sramana Mitra: What did you do when that aha moment came?

Ryan Chan: I hadn’t talked to this friend of mine in almost three years. He said, “Ryan, I will give you a little bit of money if you quit your job today and start working on Upkeep.” I did.

I quit my job working as an iOS developer. Literally that same day, I sent in my two weeks’ notice. I said, “Okay. I’m going to dive and head in for this company called UpKeep.” I had basically a little bit of money saved up. But other than that, I was pretty much dirt poor living with my mom.

Bootstrapping With A Paycheck to YCombinator and $10M Series A: Ryan Chan, CEO of UpKeep (Part 2)

Sramana Mitra: So you started building. Did you still have your day job? Was this on the side?

Ryan Chan: This was a hobby on the side. I did this from 6PM to 10 PM, three times a week. I love learning things. I love building. For me, it was fun. I loved doing this. I loved not only working as a process engineer that I spent four years in college learning about but also expanding my horizons and learning how to program and code.

Bootstrapping With A Paycheck to YCombinator and $10M Series A: Ryan Chan, CEO of UpKeep (Part 1)

If you haven’t already, please study our Bootstrapping Course and Investor Introductions page. 

Ryan took a hobby project that he bootstrapped with a paycheck and managed to get into YCombinator.

From there, he raised a $10M Series A from a top-tier Silicon Valley firm, Emergence Capital.

Excellent execution thus far.

Sramana Mitra: Let’s start from the very beginning of your journey. Where are you from? Where were you born and raised? What kind of background?