I’ve got a backpack problem. In the sense that I buy too many. My current bag is one that Charles Hudson turned me on to from DSPTCH, a local SF company. DSPTCH founder Richard Liu saw me talking about the bag online (I love it!) and reached out. We had a blast covering all things gear and tech – while drinking coffee from Ritual, a few blocks from DSPTCH’s first store.
Hunter Walk: DSPTCH started in 2010 as a side hustle out of your apartment. What gave you the confidence to start scaling and make it your fulltime gig?
Richard Liu: There just came a point where I knew the extra time would be quantifiably better for the company. I think the idea of going full-time is often romanticized and becomes an emotionally-driven decision. But for me, I wanted to wait until the last possible moment where I absolutely could not take it further running it in the arrangement at the time.
Practically speaking, the burning need was to begin hiring employees so that I could spend more of my day on product development, partnerships and driving sales. The majority of my hours was previously being spent on the logistical side. At some point along the timeline, it’s absolutely necessary to bring on a team you can trust so that you can focus on other areas that will help grow the business.
HW: For a few years you were online only but now have SF, NYC and Tokyo stores. Why take on the costs of space, salespeople, etc? Do you think about them as showrooms for your brand or does physical retail still matter?
RL: Physical retail absolutely still matters. I’ve spent most of my corporate career in online acquisition marketing and while the numbers always start out nice, there will always be a ceiling of how much profitable marketing one can do through the web. We don’t have a budget that has to be spent so I wanted to think outside of online acquisition. I still believe that people want to get out of their house and experience a tangible buying process. In addition, since we never had a need to show a certain amount of growth (or any growth for that matter), I was able to think and invest in more long term thinking like nurturing and establishing a profitable retail store.
We started small and tested the market for retail before jumping right in to a long term commercial lease. Once I was able to feel confident that we would be able to break even at the very minimum, it felt that the brand awareness and recognition would almost be a residual benefit (less the stress I endured opening these things up).
So the short answer is: the costs and burdens of physical retail are acceptable to us since we have a clear and short path to profitability for each location. Being able to showcase the brand, build awareness, and create more face-to-face interactions are all important ways to build the brand for a physical good.
HW: The last few years we’ve seen the rise of new brands using technology to own their supply chain, create direct relationships with their customers, manage their back office and so on. How have you leverages tech and software to grow DSPTCH? Where has tech fallen short for you?
RL: At a high level, technology has created many ways to increase our productivity while also providing freedom to run the business from anywhere in the world. I’m able to create shipping labels, answer customer emails, coordinate product development from any computer with an internet connection (I’ve actually had to do this many times from various internet cafes while on travel).
As far as where there’s further opportunity for technology in our business, I’m definitely looking forward to better ways to interact with customers. We still rely heavily on email for interactions which can be cumbersome. Admittedly, I haven’t spent much time looking into what our best options are for a company of our size but my perception is most of the solutions are made for larger companies with dedicated support employees. If I could build anything, it would be something like an external-facing Slack channel where a customer could pop in, chat with any of our employees and then disengage once the issue or question was resolved.
HW: How about the role of social platforms in spreading the word about DSPTCH – Twitter, Instagram, Pinterest, Snapchat? Where have you invested energy for a brand presence and why?
RL: We’ve invested most heavily in Instagram by far above the rest. Given that our early products were all in the realm of photography, it was a natural attraction. The viral nature of it has been incredibly fruitful in building awareness and oftentimes conversion as well. We use Twitter also but it’s basically like the digital version of the sign we tape up the store window. Pinterest has been great organically but its long term strategy with brands hasn’t been clear to me, as well as what I’ll get back by actively managing the platform. There’s so much great stuff that happens organically on Pinterest.
Snapchat/Story-based social media has been an interesting challenge. We’ve held back on all forms of that since I’m still not totally comfortable with the idea of an ephemeral marketing channel. Yes, great for adding personality but when you spend most of your days trying to drive sales, not always the clearest path to a conversion. And honestly some(most) days I really don’t have anything that interested to show on it. Somebody wants to look at me going through spreadsheets, Google analytics, and paying bills? It might shatter some illusions that running a company is mostly spent on fun stuff like doodling and coffee with hip people. I heard Casey Neistat refer to this as “forced positivity” which I think can be dangerously misleading, especially to young entrepreneurs. It is a hard, hard road.
HW: So far you’ve bootstrapped DSPTCH but we discussed how you periodically get approached by investors. What factors into your decision to continue without outside capital? Can you imagine taking on investors in the future?
RL: The main factor has been whether I will have the freedom to go where my intuition and research tells me to go. DSPTCH has largely been run with a foundation of trying to stay away from just making what the market is asking for. The financing side is certainly an attractive angle, but I’ve never acquiesced to the idea that our company needs to always grow and try to be a household name. I’m enjoying our current adolescent stage and things continue to chug along without a need to bring outside help in. My main factor would be how it would impact our decision-making process and whether I could continue to lead the company down the path I choose, even if it’s dark and narrow.
I wouldn’t completely write off bringing in some type of investment later down the road but it will take some changes to the landscape for me to bring considering it as necessary to achieve the goals I have for the company.