Editor's Note: This transcript was automatically transcribed, so mistakes are inevitable. You can contribute by proofreading the transcript or highlighting the mistakes. Sign up to be amongst the first contributors.
Support for this podcast and the following message come from the Glenn Lovett's new Caribbean Reserve expression, a new single malt with a bold tropical twist. Learn more at the Glenlivet dotcom 20-20 imported by the Glenlivet distilling company, New York, New York. Hey, it's guy here.
And before we start the show, I just want to tell you about the how I built this book. It's coming out in just a few weeks. But if you preorder before September 30th, I will send you a signed book plate for free. If you love this show, if you love the stories you hear on it, if you're inspired by them, if you're looking to start a new business or just thinking about it, well, you may want to check out the how I built this book.
It's full of inspiration, ideas, stories and insights. Preorder your copy of how I built this by visiting Guy Raz Dotcom or how I built this dotcom for more details.
Hello, everyone, and welcome to how I built this resilience edition and these episodes, we're talking with entrepreneurs and other business leaders about how they're thinking creatively during such a disruptive time.
And today we're going to hear from the co-founders of RINs, AJ Prakash and James Junn. Rense is a laundry and dry cleaning service that picks up, cleans and delivers clothes right to their customers doorsteps.
Rinse was founded in 2013 when a wanted to start a business. So he approached his college friend James, who'd worked at his parents dry cleaning shop as a kid. This year, Rents has seen a drop in dry cleaning orders, but their laundry service has stayed steady and they've been able to avoid layoffs so far.
I spoke with Jay and James from their office where they're practicing social distancing in order to keep their essential business running.
Explain what what is what is Rentz? How does it work?
Yeah, I mean, rents in its simplest form is pick up and delivery of dry cleaning and laundry. We started in 2013 to give you a little bit of background. At the time, I was looking to start a company and I was excited about a couple of trends. One was the idea of bringing technology to old school industries. And then James actually came to me with the idea of doing something in drycleaning. You guys are college friends, right?
Yeah, exactly, A.J. for 20 years and my background was more than health care, but my first job in life was all about my parents and the dry cleaner store. So they put me to work when I was young. My uncles and aunts are also in the industry. And so for as long as I can remember during family gatherings, we would talk shop, we would talk Dry-Cleaning all the time. More recently, the discussion was really focus on why is business so slow?
Why isn't there as much business as there used to be? And so in 2013, Jay and I were meeting up for breakfast to discuss ideas, start businesses, business. I just come back from my parents store and it's wanting to hear that business is slow and then just seen in person is just stark. And so I was I was prepared to see customers and machines running and it was silence. And so that image stuck with me. And so it was going to eat breakfast with the J.
I said, you know, what can we do to help dry cleaners?
Yeah. And that was a moment for me where the bells kind of went off and I thought Dry-Cleaning was perfect for the trends I was looking at. I'd always viewed James as a potential co-founder. But, you know, I think it was too good to pass up that unique advantage we brought to the table with him understanding the Dry-Cleaning side of the equation. And so we ran out a week later that a test with 11 of our friends, we picked up their clothes.
We cleaned them at James's parents shop, we delivered them back. And from all of them, we got this unanimous response of, hey, this is awesome. When you guys coming back?
Well, I mean, I love that because the business model, right. For Dry-Cleaning has been more or less the same. It's been small mom and pop shops like James, like your parents. Or maybe they've got you know, some people have a few dry cleaning shops and there's like Zip's and some of these small chains. But really, it was an industry ripe for a completely new approach.
Absolutely. And I think the biggest thing is that as consumer behavior has shifted, what's become very clear in drycleaning is that it's just it's full of a ton of friction. And it's not one big point of friction. It's a lot of little points of friction along the way. So if you think about the Dry-Cleaning experience, historically, you don't know who is a good dry cleaner. So you just go to the nearest one. You're held hostage to proximity.
You can assess quality until after the clouds come back. So it's a bit of a crapshoot for us as customers. The model is very vendor centric in the sense that they're open nine to five closed on weekends, which doesn't work if you're actually at work during that time. And there's limited technology, limited customer service, limited transparency. We call that internally death by a thousand cuts. And when we were getting started, our idea was let's systematically create a seamless experience from start to finish work with the best cleaners out there who are struggling.
They don't know how to get volume, let them do what they do best, which is clean the clothes and then manage everything else. And so that's that's how things got started.
So essentially, I mean, you've get you get an app and you put in your order and then somebody comes, picks it up and then you partner with different dry cleaners to clean it. You don't you don't own your own facilities, your own cleaning facilities. That's right.
Yeah. So you schedule a pick up. We only serve the customer and we continue to serve the customer between eight p.m. and 10 p.m. because that's more in line with the customer schedule. It's more customer centric. We send our valets to come pick it up. They're all W2 employees. You know, they're the front lines of the customer experience and they'll come get your clothes, answer any questions similar to what a counter person might do at a cleaner. And then we bring it back to to our facility and our cleaners will clean it.
And our goal is to work with the best cleaners. The reality in the industry is that all cleaners are underutilized. They all have excess capacity and they don't want know how to get volume. And then to because of that vendor centric approach, their world tends to be very spiky during the week. You know, they'll get that Monday morning rush and then the rest of the week is kind of quiet. What we've done is. Built a model where we're going to send our cleaning partners a predictable, steady stream of volume, allow them to clean the clothes, fill their capacity, but then also allow them to grow and actually be able to plan for growth because we're we're sending volume seven days a week, know a lot of a lot of dry cleaning shops, don't clean on site.
They just collect the clothing and then send it off to a central location that cleans dry, cleans for a hundred different shops. I'm curious, James.
I mean I mean, did your parents initially say, hey, you know, this idea might put people like us out of business?
You you know, for them, they almost had the opposite reaction in the sense that their generation, as Jane mentioned, they're very good at planning clothes. Customer acquisition has totally transformed. So there's a whole class of entrepreneurs who don't understand that customer discovery is going online. And so what's happening is that volume is decline because people are searching for companies and services online. So we found that as as a niche that we could help fill. So it's our job to partner with the best dry cleaners and then give them volume.
You know, we're good at acquisition. We want to partner with those who are really good at cleaning and make that a win win situation.
So you don't I mean, really, you don't need your own facility. You don't you don't need to build a cleaning plant or a processing center for clothing at all right now.
And I think when we started against the idea here was to really build a process and technology layer on top of an existing infrastructure. You know, recycling has been around for a long time. There are some cleaners out there that aren't very good, but there are a lot of very good cleaners out there and they just need help getting volume. And that's that's really why we stepped in.
Yeah, I note that you made a point of saying that your drivers are two employees. You're in California. Obviously, California state legislature passed a law clearly targeting Uber, left that so-called gig workers need to be W2 employees. Those companies are challenging that law. But you decided to make your your drivers employees of the company. It sounds to me like that was a conscious decision, that you were very intentional in deciding on that, because that's more expensive.
They've been W.T. since the beginning of 2013. As I said, they're effectively replacing the counter person. And if you as a customer are using RINs and you have a totally normal service experience, the only person who should ever see is your valet. And so for us, we wanted to make sure we were able to hire the best people and train them, develop them, invest in them. And certainly it's more expensive to employ valets, but it's better for them.
It's better for rent. It's better for the customers. So it was a it was a no brainer decision up front. I know.
I believe you've raised close to twenty four million dollars since you launched in 2013. And then here here we are in this really odd, unusual, challenging situation. I have not done any dry cleaning since March. I've been doing my own laundry and I, I imagine a lots of other people have. So I imagine you've also seen a drop in your business.
Yeah. At a high level we're holding up OK. And I think the key thing to understand is that we offer dry cleaning and laundry and the way those two services have behaved during the pandemic are a little bit different. So Dry-Cleaning has certainly taken a hit. You have less people going to the office, less traveling. You know, weddings and graduations and formal events aren't happening, but laundry on the other side has remained pretty stable. And we have a subscription laundry service as well, which is actually been growing a little bit during the pandemic.
So, you know, there's all things considered, we're we're holding up OK. We've been able to ensure financial stability, ensure job security for the whole team. And I think, you know, even more importantly, when when all of this hit in early March, we sent out anyone who could work from home, work from home starting March 5th. We're an essential service. We've remained open this entire time. The first thing we had to do is really take a hard look at our operations and make sure that every step of the way was maximized for safety and reducing the risk of transmission.
And so, yeah, we basically, you know, day one started to look at every every piece of it, just just like said, James, how is your parents business doing right now?
You know, I think they're holding up. You know, it's similar to what AJ said. It's definitely down there in a position where they're, you know, wanting to retire for a while, but rather keep the routine. You know, there's not really customers coming in just for routine sake. Yeah. Like many other dry cleaners, they're probably running their machines once a week. Wow. You know, it's definitely take a hit, especially in the Bay Area where we've had shelter in place longer than most parts of the country.
And so, yeah, you know, it's it's tough. And we've done a lot as a company, though, with the cleaning companies that we have provided them with relief resources, directing them to programs that can help them out because we have cleaning partners. Not all of them are fluent in English. You know, there's a lot of remission out there changing every single day. So we've spent a lot of time directing them towards relief programs. And so that's helped.
Yeah, and the cleanup as we work with most of the cleaners, it's not easy for them just to say, hey, I'm going to start doing delivery or hey, I'm going to. Offering laundry, it's there totally different businesses, and so for us, when we were looking at our cleaning partners, we weren't sending them as much volume on the cleaning side and on our cleaning partners. We have partners that are specifically for dry cleaning and specifically for laundry.
So one thing we did starting in April was we actually spun up the production of reusable cloth masks. We ordered them from our cleaning partners for our own team and then decided to extend production to sell to customers. And we found, you know, for it at least for a couple of months, we were able to offset the decline in Dry-Cleaning revenue with the sale of mass. And that that's interesting.
Need to continue operating when we come back in just a moment. Jay and James, tell us what to look for in a business partner and how they've been ready for this moment since 2013. Stay with us. I'm Guy Raz, and you're listening to how I built this resilience edition from NPR.
Support for this podcast and the following message come from the Glenn Levitt's new Caribbean Reserve expression, a new single malt with a bold tropical twist that is selectively finished in barrels that previously held Caribbean rum, offering a sweet and smooth taste. Learn more at the Glenlivet Dotcom, the Glenlivet Caribbean Reserve, single malt Scotch whisky. Enjoy our quality responsibly. 40 percent alcohol by volume 80, proof 20 20 imported by the Glenlivet Distilling Company. New York, New York.
Support for this podcast and the following message come from the American Jewish World Service, working together for more than 30 years to build a more just and equitable world. Learn more at A.J. W.S. Dog. Hey, welcome back to how I built this resilience, Ed. I'm talking with AJ Prakash and James June, the co-founders of Rence, about the big lessons they've learned from building their startup.
Let me get to this question from SEMO on YouTube. It's a good question. How did you guys attract customers at first? This is a question that we always deal with on the show, the chicken and egg problem. Right? Like you're going to dry cleaners and you're saying, hey, we want to partner with you. We're going to bring you a lot of customers, but you don't have any customers. Then you go to customers and saying, we're going to get you the best cleaning, but you need the cleaner.
So how did you start? I mean, James, you had you had an advantage in your family, had a family business. But how did you get customers at first?
Yeah, I mean, we did have an advantage because one thing you do want to do is you need to get the supply side up and running before you start bringing demand in. And we actually chose not to work with James's family to start. It was more finding business partners. And we got a lot of skeptical looks at the time. But the credibility that James brought to the table allowed us to sign up some early partners. And then in May 2013, we signed up ten of our friends and then we started just testing out the operations.
We put a circle around three zip codes in San Francisco and said, hey, let's prove it out here before we prove it out anywhere. And then in June and July, we got more friends or their friends, and it was all very much word of mouth early on. And then we really started kind of added zip code by zip code. But it's important to remember in 2013, it was a very novel concept. The second we introduced the fact that we were going to pick up and delivery of dry cleaning and laundry and you could do it with some form of technology.
It was we had a large email list right away, and that was part of the, you know, early signals that we are striking a chord. And it was worth continuing to pursue this.
I'm curious, I mean, now that we're in this sort of covid period and it's likely we're going to be in this place for a while, right? I mean, presumably you probably cut things like marketing. And I know you didn't you didn't lay anybody off. So what other things are you doing? Like to kind of steel yourself for a, you know, a period of time where your growth may not be what you had projected it to be in January of twenty twenty?
You know, the path of a startup, I think builds resilience the whole time and the past 12 months. We as a company prior to the pandemic, we're focusing on on getting to profitability. Right. We are working on reducing our expenses, improving our margins, taking those steps. You need to reduce cash, burn. And and we made a lot of progress. So going into the pandemic, we were actually well suited from a financial stability standpoint to to weather the storm.
And Dry-Cleaned take a hit. The laundry's held up. And that certainly helps a relative to companies maybe in travel or live events. It's a different impact. I think for us. The big question, you know, it's not if Dry-Cleaning will come back, we know it's going to come back. The question is when. And so what we're doing is we have as a very operationally complex business, we have a mantra of always be paranoid, never be complacent.
It couldn't be more important than right now. And so even though we are operating in covid is kind of normal for us now, we need to continue to maintain that vigilance. And then I think it's just taking various steps to reduce costs, continue to drive growth where we can, so that we're extending runway as long as possible.
I'm curious about the competitive landscape, right? I mean, there are other businesses that are offering a similar service. And is there a world where we're heading towards a door Dash versus GrubHub versus caviar? Like is there a world where there's sort of a race to I don't want to say the race to the bottom, but a race where you're constantly undercutting other competitors to offer the best price to keep keep your customers where it becomes very difficult to to become profitable.
We don't think that there's a world like that in our space. I think the one thing we've found I mean, we started when Uber and Lyft were the arms race was going. And I think we recognized early on that this isn't a land grab opportunity. It's really about providing a high quality service. The second you use us, if you don't have a good experience, you're not going to stick around and come back a bunch of times. And so for us, it's really about nailing the execution.
At the end of the day, this is an industry where the barriers to entry are super low, but the barriers to scale are incredibly high because there's so much operational complexity. And so for us, you know, we spent the last seven years really mastering that operational complexity, implementing technology to be the most digitally advanced company in the space and really focusing on as we scale. How do you scale quality, how do you scale the customer experience? So, you know, right now, from a competitive landscape standpoint, a lot of the startups that maybe started around the same time as we did are no longer around.
And the interesting dynamic we might see in this space is less about an arms race and more that there are a lot of dry cleaners that don't want to continue. Dry-Cleaning, you have a lot of people who want to retire. You have kids who don't necessarily want to take over. So there's a lack of generational transfer. And, you know, there is some opportunity potentially for consolidation, but it's not an easy path.
Let me ask you guys on your entrepeneur hat. I think a lot of people will consider starting a business right now. People, especially people. Lost their jobs or people who are kind of looking at at the world and saying, what do I have to lose? Do you think actually now is a good time to start a business in the midst of a financial and economic crisis? And secondly, if so, what should somebody thinking about starting a business look for in a potential co-founder?
Yeah, it's a great question. I mean, on the first part, I would say I think when you look at starting a company, you have to ask the question, why me? Why now know why am I the one who should be starting a company in this industry and solving this problem? And why is this the right time? So for Rentz, you know, I've been focused on consumer startups. James grew and Dry-Cleaning, there was a good story for us to do it.
And the why now is that Uber and Lyft had basically made the consumers realize they could use the mobile phone as a remote control for their life. And I think being excited about it is really important. And then when you start working on your idea, if you're excited the next week, keep going. And if you're excited, then next week keep going. What you have to do is you have to be excited, not just by like the hey, the glamour of what starting a company might be, but then like doing the research and building the model and looking at the numbers and all the stuff.
That's not as fun. If you're still excited, it's certainly worth trying, regardless of the the macro environment.
It's and it's a grind, as you have alluded to. James, what do you think when you think about finding a partner and clearly you guys have a strong partnership. And from what I from what I deduce, do you sort of focus more on operations and and business, the business side? I'm James. You focus more on product and development. Is that is that fair?
You know, the way I think about it is, you know, from my parents shop, my mom focused sort of from the house and I'm on the back of the house, so I'm in the operation. Godse So, OK, I got you.
OK, so I reversed it. Right, OK, you know, and I think that was fortuitous for two reasons. One is a jury found for me, I had this deathly fear of losing my job and taking the leap. And I'm fortunate to have found that because he's kind of done it before. Yeah. And that was comforting and really building my confidence actually to make that leap. Secondly, you know, in terms of finding a good co-founder, one exercise that we did early in 2013, which I didn't really understand at the time, the wisdom of Veejay made us do this, is that we went through a set of questions to really align our expectations and values.
Why are we doing this? What are your goals? How do you work together? And those have now translated to our core values which guide our company to this day. And so if you're trying to co-found a company with someone else, go through that exercise. You could be with the friend. It could be with someone you don't know that well. But you really need to align on your values and what your goals are. I think that is a critical step because like going don't have that conversation and say, hey, this is my friend, I'm going to trust him or her.
It may not work out that way. And just I mean, it is like a marriage. We've been in this now for seven years and there's still hopefully a lot more years ahead of us. And I've known James for twenty one years now. We're very good friends. But we still went through that exercise to say, like, what do you want out of this? What are your expectations? You know, what is your working style? All that's of I think having a lot of those conversations up front are incredibly important because you need to have aligned values just like a marriage.
You need to have a line of expectations. But then also, I think there's an important factor of if you can have implicit trust in the individual, that's really important because the you want to make sure that the the people beside you are going to be rocks and they're going to be there with you as you go through a really quick before I let you guys go.
When you look back at this moment in five years from now, what are some ideas or values or approaches that you want to take with you into the future of the business?
Yeah, you know, it's certainly been a challenging time. Just like the second time you start a company or the second kid you have, it becomes easier. I imagine the next time we have to go through this, we'll make fewer mistakes and we'll do everything better and faster. But I think, you know, you can't predict what's going to happen tomorrow, right? In February. There's no way our plan factored in navigating covid and doing what we're doing.
And so it's really important to have guiding principles that help you during the good times and the bad times. And for us, you know, we wrote our core values in March 2013 and they've been the same core values for the last seven years. And two of them that we've used are, number one, make mom proud, which is an ode to James, his mom, who helped us so much at the beginning. But really, whatever action you take, you need to be proud to tell your mom about.
And then the other is embrace change and ambiguity. And that one is really it applies to every every day of a startup's life, but certainly applies. And it's even more pronounced in this time period. So the importance of having core values, the importance of having guiding principles so that when you get into situations like this where things get blurry, you can stay rock solid and focused on the goal, I think is a is a really important takeaway. Awesome.
Guys, thank you so much for joining us. Awesome. Thanks for having us. Thank you.
That's an excerpt from my conversation with AJ Prakash and James Jun, the co-founders of RINs, to see our full interview. You can go to Facebook, Dotcom, how I built this. And if you want to see all of our past live interviews, you can find them. There or at YouTube, dotcom, NPR. If you want to find out more about the how I built this resilience series or other virtual NPR events, you can go to NPR presents, dawg.
This episode was produced by Candice Limn with help from Wil Mitchell, Tirah, Lockhardt, Matt Adams, Jeanna Cappadocia, John Isobella, Julia Kanae, Neva Grant and Jeff Rogers.
Thanks for listening. Stay safe and I'll see you in a few days. I'm Guy Raz and you've been listening to how I built this from NPR.