Name: Founder Friday: Meet Josh Udashkin, Founder and CEO of Raden
Uploaded: 2017-02-17
Duration: 17 min 50 s
Description: This 33-year-old is making high-tech luggage that charges your phone and weighs itself.

[ BLANK_AUDIO ] Great. Hi, Facebook. My name Polina Marinova and this is Founder Friday. We're here with Josh Udashkin. He is the founder and CEO of Raden. Josh. Hey, how are you? Welcome. Thank you. So you've created this smart luggage. What is that, and what does it do? So Raden's the case for better travel. It is a carry- on bag and a check in bag. It comes in thirteen colors. You download an app, you pair it to the bag, and then it's equiped with a battery that's completely modular that you can pull out, you can charge your phone in the suitcase, you can also weigh the cases the suit case will tell exactly how much they weigh, so overweight bags No overweight bags again. Then it comes with Bluetooth so it's within 150 feet. You know where the bags are, and then it connects to a mesh network. So everybody with a Raden bag, everyone with a Raden app, then a couple of other crowd GPS platforms like you'd see with Tile or Tracker, those types of things. You can geo- locate the product. And then all the customer service is nested into the app. So everything from where is my order to any warranty issues we're live- communicating with our customers every day. And I don't think they look too bad. [ LAUGH ] No, they're great. Yeah. And you were a lawyer before. How on earth did you get into luggage? [ LAUGH ] It's a very strange trip. I think the strangest trip probably of all. I was a lawyer. I practiced in Midtown Manhattan. I was a very miserable, unhappy lawyer. I know many great lawyers who love it, so the law is not a bad thing. I just wasn't a great fit for it. I use to spend my days walking up and down 5th and Madison Avenue looking at a lot of products, dreaming one day that I would've Gotten out of law and gotten to do what I really want to do which was be in the retail business. I was fortunate enough to leave law or summon the courage to leave, the massive pay cut, I went to go work in In retail for a company called the Aldo Group. It's a footwear business. Footwear. And I was primarily traveling around the world looking at [ UNKNOWN ] deals for Aldo, looking at Real Estate. I'm trying to place Aldo in new countries. And then after about 2 years of looking at a ton of luggage carousels and staying in so many hotel rooms and looking at everyone's luggage. I realized that luggage was a consumer vertical that had really been untouched by young hands. It really was a product that hadn't been innovated on in many years. And so I set out to learn as much as I could about the manufacturing and design of luggage. And I had a very strong merchandising concept, which was I started to feel in almost every category of consumer, people wanna buy things that feel like consumer electronics. So they're modular. They come in different sizes and colors but the construction is the same. It's easier. We have so many choices to make. It's simpler to accept one shape. Of something and then only have to choose what color or size. And you see that really. [ CROSSTALK ] Super simple. Super simple, so you saw that with Beats, you see that with goPro, you see that with Fitbit, you see that with [ UNKNOWN ]. These are companies Companies that are really selling consumer goods almost a way you would consume electronics. So make it simple. Make it beautiful and make it functional .>> Yeah .>> I think that was really kind of how it got there .>> A new launch in March of 2016 and the first form Four months you guys did about 2 million in sales .>> Yes. Through your, you know, online store and through Yeah. your showroom in SoHo. But you have a pretty strong opinion about direct to consumer businesses [ INAUDIBLE ] I have a strong opinion about crowd funding. I have a strong opinion about direct consumer businesses. I don't love crowd funding for products and I do respect how difficult it is to raise capital to get started, so it's really not about that. But I think one of the problems in the past couple years with a lot companies that have come out and done this crowd funding is it's really easy to make fantastic promises using. Photoshop and everything else, creating these great videos, and then the customer gives you their money and two years later you still haven't delivered anything? Right. So we've really yet to see people, through no fault of the entrepreneurs, they try very hard, but it's just a difficult, but it's really hard to know exactly how much money you're even going to need to build something until you go out and do it. And a lot of these companies are doing it. So, we wanted to launch organically and build our own you know, marketing funnel and PR funnel and everything else and I think that's the big challenge for product businesses, how do you get people to want your product. But we're not a direct consumer business in so far as we work with really great retailers. I don't believe direct consumer retailing, although it's a really nice thing to tell journalists and magazines and everything else You're gonna cut out the middle man and all these bad middle men are going to not make money and I'm going straight to the consumer. But I think the problem with that is that it's very expensive to get attention into market and to bring the consumer to you. And often, and there's still some great retailers out there, Often it can give you a ton of credibility and it can lower your cost of customer acquisition to work with great retailers. So almost from the outset, we started working with great retailers like Net- a- Porter, Mr. Porter, Nordstrom, Bloomingdale's, Selfridges in the United Kingdom. and then Amazon through the Oprah Winfrey Favorite Things partnership. Tell me about the Oprah Winfrey. What happened there, and what is this Oprah effect. What did it do to your business? It was, it's amazing. We launched with a massive retail display in the middle of Soho on Spring Street It was 365 white Raden luggage bags in a floating coliseum. Wow. In a 7, 000- Almost like an art exhibit. Yeah, so luggage stores are really boring. [ LAUGH ] And I don't believe in them. There's a low repeat purchase cycle. And so they're really not your neighborhood store like a fast fashion brand where you're always going in to see the freshness. We make a single product in one construction in multiple sizes and color waves. You're not gonna really come back multiple times. So I believe more in retail as experiential. So kind of the old FAO Schwarz model, the P T Barnum kind of retail. Yeah. You've gotta excite people. And so we built this massive coliseum as almost a spectacle to get people to see who we are. We launched with it on our first day. So it was a bold bet, kinda on making people come to us, but it worked. Because we had unbelievable retailers, we had people on Oprah's team, we had great journalists and people kinda discover us. And that's kinda how it All started from there. Got it, got it. So I want to talk a little bit about your path. It's been very interesting. You want to undergraduate, you got a law degree, you want to business school. Yes, yes. I'm very well educated. [ LAUGH ] You managed to emerge debt free. How did you do that? So I'm Canadian. Okay [ LAUGH ] makes all the sense in the world. That's over that's fine. I'm Canadian and I'm not lucky because I'm Canadian. I'm lucky because I had great parents who could help and I got great summer jobs so I was able to kind of pay my way through a combination of all three of those factors. The tuition and living expenses are lower for graduate schools and undergraduate in Canada. My parents help and I you know got some pretty, fantastic summer internships it banks and law firms and they pay pretty well and so I was able to walk out that that free but I'm gonna scratch my head at the entire student debt. Thing that's happening everywhere, and even in Canada. So I wouldnt' say that Canada is not suffering from that issue. I think it's ridiculous if entrepreneurship and building businesses is the engine of this entire economy. To have young people who are the most able to take the risks to start their own businesses start their lives deeply in debt. And it's not really the financial part of it alone, it's the psychological impact. When you already owe somebody something, it's hard to be mentally free to think about putting electronics in luggage and passes out color, [ LAUGH ], or to any other amazing business. And I worry that there wouldn't be enough, Entrepreneurship if people are so saddled with debt that they don't go into it. And they don't go into building businesses which have a high fail rate and that risk is what keeps the economy going. Instead of chosing kind of a safe path that allows you to make these monthly payments for thirty years. Not buy a house, not start a family and not start a business. So you've taken it upon your self to kind of help. Alleviate this problem of student loans. What have you done? In a small way I think I see all these 401K plans and I see how tax beneficial they are to the companies and to the employees and these matching programs. And I wonder what a 22 year old person that may start out working for us doing You wear a lot of hats when you work at a start up. What they really care about retirement when they have $ 50, 000 in undergraduate debt? So we match student debt payments for our employees. It's not tax effective for us right now because we have to The dollar in order to hit the matching payment but the goal is to get out of debt faster and get to 0. Once you get to 0 you're free and you're free to kind of do whatever you want to go do. And we have a Facebook question. How How hard was it to get funding? It was pretty hard. [ LAUGH ] [ LAUGH ] Tell me about it. Because 3 years ago when I started working on this. The idea that anyone I was 30 years old at the time would be selling luggage who's my age or that luggage could be a tech business or an interesting consumer vertical. Was crazy. I had friends who had started the company Casper, and they really helped me out, both personally, and insofar as they made selling mattresses sexy and profitable and amazing and they're great people. How did they help you? They were my first investors. ( Oh okay ) The guys very small amounts of money, but they said we're going to help you and pull together. They were only in their second or third month of business. And, they said you know, we've been through this before, we convinced people that a mattress in a box, you know could sell. I think that was more than 200 million dollars a year, or something crazy, but we've convinced people this We believe in you. And your prototype is awesome and so they had really kind of help me out with introductions to investors and the like. But fund raising is tough specially when you're selling login Luggage, so. [ LAUGH ] Absolutely. So you've been quoted as saying, I knew that by the time I was 30, I was gonna try to be self- employed. So that's the dream of a lot of millennial entrepeneurs. But what advice do you give people who want to be self- employed but just don't even know where to start? So I think people, this is probably cliche advice, I think people are searching for the idea, the dream idea. And I don't know if it's that. I think you really have to take a look at what your needs are. And if your needs are not to build a scalable $ 200 million business or an electronics business, there are a lot of other ways you can be self- employed by starting a small business. That doesn't need to raise venture capital or open massive stores or paper the world with ads. Self employment is a very wide category. And I think too few people want to deal with that. And I think they need to realize it's not glamorous. Which is, there's a lot of culture out there with WeWork and all these places. And they're amazing because they're filling this need in the market in real estate. But the glamorization of start up culture ->> Mm- hm. Worries me because it's not glamorous. And having all these perks and these beautiful offices and working in the most expensive real estate districts in the world ->> Right That's not the reality of getting started. I couldn't even afford a [ UNKNOWN ] in my first year and I worked out of a hotel lobby, which was good for looking at a lot luggage. [ LAUGH ] That's amazing. But it had free wi- fi, and I was like, I can either pay for lunch of I can pay for a [ UNKNOWN ]. Yeah. It wasn't the glamor thing that maybe it's meant to seem like on social media or TV. We have another Facebook question. Who is your mentor? My dad for sure. Yeah? Yeah, my dad's a multi- time entrepreneur. And still to this day. He's not in the luggage business, though? No, not in the luggage business. [ LAUGH ] Another dirty business, he was in the meatpacking business. But Multi- time entrepeneur, rode the waves, it's not- What did you learn from him? I really learned that you have to stay very humble. You have to stay very lean as long as possible. We don't waste money in our business. Startups can't afford. I always laugh, again, to the last comment at startups, that Work out of Uber fancy offices with all these perks. And they take their employees on trips, and do all this other nonsense. Well, you got to raise a lot of money to do that, and it's wasteful. And it doesn't really build muscle, it builds fat. And if I have to do that then I can't compete with the incumbents because money is gonna be very expensive for me. So And it doesn't build kinda the heart of the brand at the end of the day. And so it's really goes down to kinda your recruiting and your team, and what you look for in people. And we don't really look for good- time Charlies or Charlottes, in our case. We're really looking for people that wanna get experience across A wide range of things, and their unafraid to schlep luggage around the streets of New York City or go to photo shoots or do customer service. We all pitch in. And another question, what was the most influential book when in deciding to build your business. I would say the last book I read has been really influential, which is Shoe Dog. Yeah. The Phil Knight book. Mm- hm. Product businesses are tough. Yeah. How so? Because, there's inventory and there's design and the do- over isn't just writing a line of code. You know, building products requires tooling. You know, our type of product requires tooling It requires a ton of prototyping, you don't get that user feedback right away. How fast does the bag roll, do I like it, is there enough room, everything else. And so the feedback cycle, it could be very expensive and very long when you're doing a pure play. We have a mobile app, so we also have a mobile product. We can get feedback on that instantly. And so we have a great tech team and they can write lines of code to make our app faster and more user friendly. It's not the same on the product side. And then you also have to do forecasting. Which is, how do you forecast How many people are gonna buy your thing when you start? And how do you manage your inventory, and your shipments, and your costs that way? So, much more complicated from that point of view, I think. So I'm Yeah. If you have a very carefully curated brand. I've looked at your social media. Everything is very artistic and simple, and your SoHo showroom is even, you know kind of like an art installation. Yep. So how does art kind of sell luggage? I think we're definitely design conscious and I think that's a big part of who I am and I think that's personality thing. Our Soho store was inspired by Donald Judd who's a famous sculptor and artist. His studio was, in the 70s in Soho, was an art place, about six doors down. And so he stacked boxes vertically and so we're super inspired by that. And I think You know, brands are always being inspired by, and appropriating things in popular culture. And so in order to make luggage interesting, designed focus, tech focus, we really kinda stripped everything down to its purest form. You don't see any logos on our bag, it's For a reason, it's really more about the customer, and kinda their personality. We have people send us of stickers they've put on them, some people like it naked. Right. [ LAUGH ] So, one of the things that's really surprised us is how well lighter colors have performed. Typically the luggage business is a dark color thing, and people are really excited to express themselves with pink, and purple, and So we take risks in that way and continue to kind of evolve the brand this year. And my final question is, what is it like seeing your bag in the wild? The best feeling. [ LAUGH ] That's the best feeling, when you get on a plane and someone has the bag. Yeah. And you get to talk to them. Do you introduce yourself to them? [ LAUGH ] Of course. And you hear the feedback. I think especially in product businesses, you need to, although I talk a lot, you need to listen as much as you talk. And you need to hear what people are saying, and what they would like you to do better so that you continually evolve. We have deep plans to continue to evolve both our physical product and our mobile product which will Kind of you'll see in kind of Q3 and Q4. And so, we're really listening right now as much as we're speaking. You don't get to iPhone 7 or Hero 4 or whatever Beats 12 if you don't keep evolving and investing in your product. And that's the way to make kind of a great company I think today. Got it, well, that's so interesting. Thank you so much, Josh. My pleasure. Thank you, Facebook, we'll see you next time on Founder Friday. Cool, super easy, great. That's great. [ BLANK_AUDIO ]

Founder Friday: Meet Josh Udashkin, Founder and CEO of Raden

This 33-year-old is making high-tech luggage that charges your phone and weighs itself.