Capital Efficient Startup, Venture-Scale Growth: ShipMonk CEO Jan Bednar (Part 5)

Sramana Mitra: Where in California did you open?

Jan Bednar: In Redlands. It’s a DisneyLand warehouse. We were hiring new people and trying to keep the culture. It was a lot of fun. The first couple of years was really tough.

Then in 2018, we went from $11 million to $28 million. We moved to an even bigger warehouse. Last year in 2019, we went from $28 million to $67 million. This year, we’re going to do north of $140 million. 

Sramana Mitra: All of it is bootstrapped?

Jan Bednar: We did take a Series A in 2018, but we’ve never touched any of the money. The rest of it is still sitting on the balance sheet.

Sramana Mitra: Who was the investor?

Jan Bednar: It was two funds – SJF Ventures and Grotech. 

Sramana Mitra: How much did you raise?

Jan Bednar: $10 million.

Sramana Mitra: You took a bit of liquidity out of that?

Jan Bednar: That was my strategy from the beginning. I said, “We don’t need to raise money. We’re profitable. We’re getting by. It would definitely be more comfortable to have some more cash in the bank.”

We were neutral cash flow. Every single dollar we were generating, we were putting back into the business. There were days where we were really low in our bank account. I didn’t have a CFO, so I wasn’t too familiar with how the financial world works. We didn’t leverage that well.

At this point, we had some financing for equipment, but it was very minimal. We didn’t have a credit line. SJF is an amazing fit. They’re not the typical shark-type VCs. They were nice guys. When we did the deal, we brought them on the board. They helped me think strategically in a bigger way. 

Sramana Mitra: What have you seen this year with COVID driving e-commerce through the roof? Have you experienced supernatural growth?

Jan Bednar: It’s been a crazy couple of months. E-commerce share in retail has jumped from 15% to 27%. It’s nice to look at the number on paper, but there are a lot of things on the backend that completely break. It’s one thing when you Shopify and open a bunch more server buildings. It’s another thing to be a fulfillment center.

You combine that with not being able to find labor. People just don’t want to work. They can make more money on unemployment than they can by actually working. We had to change our operations. Our productivity has gone down.

Generally speaking, it’s a perfect storm. We had to do a lot of things to battle it. There’s a lot of demand. It’s a curse too in that there are no people available.

Sramana Mitra: You can’t do this without people.

Jan Bednar: We’re finding people. We drastically increased our salaries. We started paying significantly more. We introduced hazard pay. We introduced benefits and stepped up the game in terms of what we’re offering.

People are starting to realize that the 600 extra boxes for unemployment are not going to renew. You still have massive unemployment. You have 18 million unemployed people, but every single company in our space can’t find people. There’s a huge disconnect. 

This segment is part 5 in the series : Capital Efficient Startup, Venture-Scale Growth: ShipMonk CEO Jan Bednar
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