From Selling Wristbands to Being Backed By Multi-Billion Investors with Nathan Resnick | #011
A lot of times at a young age, things just fall into place. You’re creative, you’re young, you don’t know what the right answers should be for certain things and you’re willing to try whatever comes your way. Nathan Resnick was hit by the entrepreneurial bug at an early age. He started selling Livestrong wristbands when he was in middle school. Nathan is the CEO and founder of Sourcify, the fastest growing B2B sourcing platform that makes it easy for any company to bring new products to life, to extend their product line, or to cut through unit costs. Nathan tells the journey from when he started selling wristbands to being backed by the multi-billion investor, YCombinator. Nathan says you have to see what kind of opportunities are there for your business and what programs can help you grow, and YCombinator is an amazing program.
From Selling Wristbands to Being Backed By Multi-Billion Investors with Nathan Resnick
I just jumped off my interview with Nathan Resnick of Sourcify. Sourcify was backed recently by YCombinator, one of the premier startup incubators and investing funds for startups. Nathan has such an incredible story. I was introduced to him through a mutual connection. When we jumped on this interview, I learned why he got into the idea that is driving Sourcify. He has a fascinating story of how he went from selling LiveStrong bracelets when he was in middle school and how that then led to an incredible journey that sent him to China and ultimately flying from China to a quick interview with YCombinator. It completely transformed his business.
All of these episodes are focused on opportunity shifts and how you can seize opportunities in your business, how you can create opportunities and ultimately seize them. That is what we went into this episode trying to discover and Nathan over-delivered. After this episode, go connect with Nathan and let him know that you heard him on Experts Unleashed. Let them know that this is an incredible episode and just give him some love.
Nathan, welcome to the show.
Thank you so much for having me, Joel. It’s a pleasure to be here.
We discovered we had some mutual connections that we didn’t even realize we had from your time at YCombinator with the investors that you’re working with. For those who don’t know what Sourcify is, Nathan, give a background about what is Sourcify. What makes you guys so awesome? What are you doing in the world today?
I’ll give the quick elevator pitch here. Sourcify is the fastest growing B2B sourcing platform backed by YCombinator. We make it easy for many factory products around the world. We have a platform that streamlines the supply chain. We connected the right factories and walked through a production run. If you have an idea or if you’re producing products, feel free to go to our website TrySourcify.com. We’ll be happy to help you make manufacturing easier.
Tell me the one big problem that Sourcify solves.
We make it easy for any company to bring new products to life, to extend their product line or to cut through unit costs. We work with over 700 factories around the world, which enables us to produce about 100 different product categories. We have that ability to see what kind of price you should be paying, how long you should be taken to manufacture these items, all of that insight we have through the data elected on our platform. It’s super streamlined and makes it a lot easier to manufacture your products.
The whole purpose of Experts Unleashed is to talk about not even just the genesis story but talk about the journey of how you discovered opportunities, how we can connect the dots with what your history is, with life and how your experience got you to where you are today with Sourcify. I want to go back to the first experience you had with any entrepreneurship and we’ll start to piece together the dots to what led you to where you are today. Take us back to middle school. What happened in middle school?
I grew up in Maine and on the East Coast. I’m now based in San Diego, California. I’ve got to say the West Coast is usually better than the East at least for the weather and the lifestyle. In middle school, there was that trend of these LiveStrong bracelets, these silicone bracelets, everyone was wearing them. I realized as a young kid that I could buy these bracelets in bulk online and resell them to my friends. All of us had twenty bracelets up our arms that we were rocking for different causes, whether that said different slogans. I buy these bracelets in bulk, in packs of 100, 200 or 300, and resell them for a pretty good margin. As a high school student or as a middle school student, I was making some cash. I would probably make a few hundred dollars off some of these orders which for a middle schooler is not bad money. It enabled me to have a lot of candy in middle school and have a budget for all of that junk food.
How long did you sell those bracelets? Was this something that you did just to spur the moment for a month or two or did you do it for a few years? Those LiveStrong bracelets I remember they were popular for a while.
It trended it into this thing where at the time too, my mother was working for the Autism Society of America doing their fundraising and they ended up creating bracelets as well. That became the most successful fundraising campaign where they sold these bracelets online for a few dollars and they raised a few $100,000 off these bracelets. There was that trend at the time that a lot of people in a lot of nonprofit catching onto. It wasn’t just a side business, but it also inspired other nonprofits to take hold of this trend and raise more money for their cause. It spurred into this ability for me to understand that you can buy things in bulk and then resell them for a bit of a margin in there.
How did you figure out that you could buy them in bulk? Most kids aren’t thinking about that. Where did that come from?
I was always active on some of these online marketplaces and realized I might have just been scrolling one day and said, “I’m going to buy these for my friends and then sell them for a bit of money.” It just clicked to my head. A lot of times at a young age, things just fall into place. You’re creative, you’re young, you don’t know what the right answers should be for certain things and you’re willing to try whatever comes your way. It was one of those things where I’m pretty sure I just asked my mom, “Mom, I want to buy these for my friend. Can I have $10 to buy 50 or a 100 of these?” We bought them and then I realized, if I sell 100 for a dollar each, that’s $100 and it only costs $10. It’s a pretty good deal.
Was it that cheap? I was assuming that maybe the order would be like $50 or something like that.
I don’t remember exactly but I do know in the eCommerce world, most eCommerce stores want to shoot for about a 75% to 80% gross margin. Maybe a little higher than $10 but at the end of the day, I’m sure we had a decent margin.
Somehow you stumbled across buying these in bulk. You’re in middle school, fifth, sixth, seventh grade, something like that, super young, making a few hundred bucks on the side, which is cool because it turned into a pretty successful fundraiser that. Your first adventure is reselling these LiveStrong bracelets. Keep taking me down this journey. What was the next big opportunity?
After the Livestrong bracelets, I became very into sneakers. I became what they call a sneakerhead early in high school. I would print out photos of different sneakers, go around my school and show friends and whoever would look at these catalogs, these shoes, and say, “I can get these shoes. Which ones do you want? Let me know.” I would become someone’s sneaker hunter almost where I’d find the shoes for them online. People would either pay me to find them the right shoes and the right size, or I would buy for them and then resell them for a bit of a margin as well.
Looking back on it, I didn’t realize how big this market was. Now you have websites like NiceKicks.com and Flight Club that has created multimillion-dollar companies through the sneakerhead market. I was somewhat of an early and young sneakerhead that was into Nike SBs especially. I never realized the potential of that market because I was just printing out catalogs and selling secret sneakers to friends and attending some different sneaker trade shows that at the time were very small. Now you have multimillion companies that are really a stronghold in the industry. It’s always cool to look back on what opportunities potentially would’ve come up if I had realized the potential of each industry rather than thinking a little bit smaller.
After the sneakers, it was early in high school and so my sister was studying Spanish. You always got to be different than your sibling, so I decided to study Mandarin Chinese in high school. I was always very interested in the language and culture. Something hit a chord with me about China and the growth of the global economy where I ended up committing to spend a year in China fully immersed as one of 48 American high school foreign exchange students living with a host family that didn’t speak English and I was attending a local Chinese high school during my junior high school. I went over there having never been to Asia, let alone China before. I spent a full year wearing my Chinese high school uniform every day and riding my bike to school every day. I learned the language. I speak fluent Mandarin and have a great understanding of the culture by living with a host family for that long. I still keep in touch with them today. It’s amazing to have this global international connection with the family. I became fascinated by the power of these factories to produce all sorts of products. On the weekends, my friends and I there would go to the local markets and there at the time and it still does, you have a lot of knockoff items.
To be honest, one of our hottest selling products that we ended up selling was the Beats by Dr. Dre Headphones. We’d go to these factories where if you’re producing 100,000 or 200,000 units, there are always going to be runoffs. There are always going to be more units than they need to produce because you can’t just produce 100,000 units, you’re going to produce 110,000. You’re going to produce more. We can take those runoff units and buy them at a steep discount, probably $30, $40 for these pretty much legit Beats headphones and then resell them on eBay and Amazon for a very hefty margin. The Beats headphones were going for about $300 back then. In high school, you’d probably make a few thousand dollars just off that product alone. It wasn’t a ton of money but for us, in high school, it was pretty fun. It enabled us to see on the ground floor how these products are being produced. As that dynamic crew, I always wanted to create my own product and felt the urge to. I didn’t want to sell someone else’s product.
Early in college, I ended up inventing the first leather watch strap without holes. It worked like a zip tie, like a belt buckle. We grew that to a six-figure store on Shopify in the first year. The company is called Yes Man Watches and I think it’s still around today. I ended up selling it a few years ago. The process of bringing that product to life where you have an idea in your head and you want to turn it into a product is amazing. It’s something that you have to experience for yourself. I remember, I was in my sophomore year at the University of San Diego, I was sitting in class and I’ve got a notification from DHL that said, “Your package has arrived.” This idea that was just in my head a few months ago is now at my doorstep. I ran out of class and I told the teacher I’m going to the bathroom, ran out, and drove home as fast as I could.
There it was. Unwrapping the package, opening the box and seeing this product that was just once an idea in my head come to life. It was fascinating and amazing to me. As that company grew we got a lot of attention across the media, we were in all the big media outlets like Huffington Post, Entrepreneur and all that, it made me realize how powerful that concept was. Companies and people began to ask me, “Nathan, how do you produce products overseas faster and more effectively?” I learned at the credit markets, and I didn’t feel comfortable recommending in Alibaba or Global Sources. There is a lot of fraud. We realized there was a huge, huge opportunity to create a platform that would streamline that manufacturing process. That’s how Sourcify started. We since helped thousands of different companies to manufacture products.
I want to take a step back because that story was amazing. There’s so much that happened between when you went to China as a foreign exchange student and where you are in Sourcify. I know that you became a sneakerhead junkie. I had no idea that market even existed. I know as entrepreneurs and as experts, once you catch the entrepreneurial bug, it never goes away. When you were in China, were you still doing make money opportunities? What were you doing to do side hustles or were you just focused on going to school?
Yes, I always had a side hustle. I was rarely focused on going to school. I didn’t spend much time in class and didn’t spend much time focusing on the homework. I was always thinking outside of the box and figuring out different ways to grow and learn. In the classroom you can learn about things but learning about a thing doesn’t teach you how to do things. I realized that a huge opportunity to understand how to do things, you’ve got to actually do them yourself. You can’t wait for it to happen.
You’re talking about runoff and Beats by Dre being as one of your best-selling items. Something has to happen in China. Do you just walk into these manufacturing plants and start asking questions? How do you discover that there is a runoff? What’s happening while you’re in China that gets you these connections with these suppliers or manufacturers? Tell me a little bit about that.
The whole dynamic behind our factory relationship stems, number one, from my experiences manufacturing in Asia. Number two, we have a team that has years of manufacturing experience from trade shows and word of mouth. The nice thing about how we got Sourcify is we become one of the main leads of business for these factories to produce products. There’s a huge opportunity for them to grow their business and that’s when I tell their friends. They tell their friends about it Sourcify and get excited by the power that we put in their hands to expand our business. We’re becoming one of their main lead flow sources for these factories. That enables them to grow and they start to tell their friends about Sourcify. That’s been one of the ways we’ve been growing.
You mentioned that you’re a lead flow source for the manufacturers. There has to have been a problem there on the manufacturing side.
Here’s what a lot of people don’t understand about manufacturing is if you’re in a factory, how do you get new business? You either go onto these marketplaces like Alibaba or Global Sources, or you go to trade shows around the world. You’re spending $50,000 to $100,000 to get this new business. The problem is the quality of those leads that you’re getting is horrible. There are a hundred of these in Alibaba, less than 2% actually end up in a production run. These factory bosses go fed up so much money in ten, twenty, 30 plus sales reps trying to see which company is adding up production. For us, we decided to align our platform in the marketplace with buyers and connect all these buyers until we know that you’re ready to go on a product and produce it. That enables us to limit the back and forth and ensure that the leads that we send these factories are the highest quality possible.
How did you discover that they had that problem in the marketplace? Did you discover that when you were in China? Where did that problem come up? How did you discover it?
Number one, I discovered it myself where if I’m an eCommerce entrepreneur going on Alibaba or going on Global Sources, I’m messaging maybe 30 or 40 plus different potential companies to work with and trying to judge who responds fastest, who looks the best risk company that I think is legit. Whereas, on the factory side, it stems from my meetings with hundreds of different factories because I’m able to understand both sides of the table by dealing and talking to hundreds of factories and by being an eCommerce entrepreneur myself.
What do you think is more important for the problem to solve? Being on the eCommerce side or on the manufacturer’s side? Meaning, they need good leads. Where was the bigger opportunity for your business to get more of the manufacturers lined up or to get more of the product eCommerce orders?
It goes hand in hand, these factories want to grow and want new business. These buyers and eCommerce entrepreneurs, they want to work with the right factories and so it’s a win-win that we bring to the table. That’s been the beauty of our business that we create such good synergies between a company or a factory that it enables them to both have a better process.
It seems like there’s such clear value proposition there that it just makes perfect sense if you’re in a product based-business and you want to create your own product. I have some experience in the Amazon world in private labeling. I’ve got involved with it, so I know a little bit about the issues with that. I can totally see where the value-add is. You’re in China, you’ve got this experience with working with these manufacturers and launching your own products. When did YCombinator come into effect?
YCombinator is this amazing program where they run you through the fastest process you can have to grow and start a company. It depends what stage you’re at. YCombinator is based in Mountain View. They’ve got an office, they’re by the most famous startup investor in the world. They’ve been behind Airbnb, Stripe, Dropbox, a lot of billion-plus dollar startups. I always thought about applying to YCombinator and it’s an amazing opportunity. We applied for the winter 2018 batch and the process is pretty straightforward. You apply online. I had two friends that have been through the program before, so I asked them about it. They told me about the program and said that I had to do it, we applied.
I’ve got an email back while I was in China and they wanted me to fly to their office for an interview. I said, “I’m in China. If you want me to fly for one interview can you wait until I’m back in America a bit?” I had to reschedule once but I went over there for the interview. The interview process was fast. They’ll tell you that you’re in the room for ten, maybe fifteen minutes and they dive deep. They ask you any questions they can think of and deep dive your business to see if you understand it. They call you the same day. They call you within a few hours if you got in. We’ve got a call within a few hours after our meeting. They said, “We want to invite Sourcify to join YCombinator.”
It was an easy decision for us. We knew the value that they were providing. We understood how they could help us grow. It’s been an incredible process. We wrapped up recently. They had their demo day, which is an incredible event that all the YCombinator companies in the current teach at. A lot of investors watched. It has enabled us to not only connect with some amazing entrepreneurs and companies but also, we’ve become a part of the biggest network of founders around the world. It’s an incredible experience and YCombinator is an amazing program.
It’s extremely difficult to get into. The article I read said that it’s more difficult to get into YCombinator than it was Harvard. Don’t quote me on that, I’m just trying to explain that.
That’s what I’ve heard too. At YCombinator the acceptance rate is extremely low. It’s very difficult to get into, but when it comes to their process, they either want you in or they don’t. About 30% or more of the companies in there have applied more than once. They have applied twice or three times to try to get in. A lot of times, if you don’t make it your first time you try to apply again.
What we’re doing at Sourcify is very special because we got in and I can tell you, I don’t think I would have gotten into Harvard if I applied. It’s a great opportunity and it’s one of those things that you have to ask more about and have an understanding of what’s going on with the world that you’re living in. See what kind of opportunities are there for your business, what programs are out there that can help you grow, and YCombinator is an amazing program. There are a lot of other programs as well that help startups grow. You’ve got to find what’s right for your business and not every incubator program is going to be right. It’s an interesting dynamic in the startup world and there are a lot of opportunities.
Why do you think knowing what you know about the eCommerce world, product-based world, the problem that you solve in that marketplace? Maybe this is naive of me to think, but I can’t think that you’re the only sourcing assistance service or product out there. Why do you think YCombinator was so excited to have Sourcify onboard?
There are a lot of ways to manufacture products. We’re not that first company that help other companies manufacture overseas, but our approach is different and our mindset behind what we do is a lot different. That’s what sets us apart. Every other marketplace in our industry started by charging the supply side of the marketplace. When you charge the supply side and by supply side I mean they charge the factories for the business, it means that if you’re a bad factory but you’re willing to pay me $5,000 a month out of my marketplace, I’m going to bring you on board.
For us, you make from the bottom side of our marketplace. It’s sane advice that always have fires back. Our business model is such that, there are a lot of opportunities too. For example, finance for these production runs for an eCommerce entrepreneur or for a retail company. You oftentimes have to put a 100% of that even before you have the inventory. Production payments terms are typically 30% down and 70% before shipment. You have 100% of that cash in inventory before you even see the inventory. That hurts your cash on some sense because the payoff upfront for the inventory so financing is a huge opportunity in the supply chain.
You flipped it on its head, meaning you charged the buyers to get access to this network and market it to the suppliers. The manufacturer is saying, “Great.” Manufacturers, we know that the big problem in your industry is you get really crappy leads. You have to fly your teams over to trade shows and spend $100,000 to go to one of these trade shows and your conversion rate is super low.
What if we provided you with higher quality leads and we’re not going to charge you anything or maybe you do charge them something? The main revenue stream for you is charging the buyers. When did you come up with that business model, that approach? What was the light bulb moment saying like, “When we’re going to launch Sourcify, this is what we’re going to do.” What was that instance that said this is what we’re going to do differently from everybody else?
For me, being in the eCommerce world for a long time and understanding the method behind manufacturing, it helped me understand what approaches out there hadn’t been taken. That’s the dynamic that we brought to the table. Looking back on our process, for me when I was thinking of starting Sourcify, it took me probably a few months to dive in and convince myself that this model was going to work, that we could grow into a billion-dollar company using this model.
That’s been the approach that we were continuing to prove, improve, and continue to build out. I was thinking about the concept for a time before I said, “Let’s start building this out,” because every billion-dollar startup you see out there didn’t happen overnight. You look at everything from Slack, to GoFundMe, to Dropbox. It took Dropbox over eleven years to go public. A lot of these billion-dollar companies that people think happen overnight happened over ten plus years.
What do you think is the primary growth channel for you? It looks like you want to get more of those buyers onboard. I’m assuming that’s your primary revenue stream. What’s your primary growth channel? How are you getting the word out there for Sourcify?
It’s fueled through content. We have partnered with over 50 software companies that sell software to eCommerce stores; everyone from Freightos and Flexport to ShipBob and Optimizely. We run webinars together. We run a blog. We focus on the value that we provide on the manufacturing side. Then for our audience, we enable these companies to share their strengths. If people have questions about fulfillment, freight forwarding or returns, we’re going to hit up these specific companies to have them answer those questions on our blog. It’s fueled through content marketing, SEO and try to build a more outbound sales strategy as well.
Sourcify is on this incredible growth trajectory. There’s a huge opportunity in the marketplace. YCombinator is behind you. Knowing what you know, where do you want to take Sourcify? Looking back on where you were in middle school and in all of your experiences through entrepreneurship in the young stages of your entrepreneurship career, can you single out the most impactful experience that you had that led you to be successful with Sourcify?
Specifically, with Sourcify and with entrepreneurship in general, it’s resilience. People are going to say no all the time. People are going to turn you down. People are going to say that this isn’t going to work, and you have to be the one that continues to get up. You have to be the one that continues knocking on the door. Companies fail because founders quit. There are a lot of pivots that companies take that people don’t realize. If you fail, a lot of times it’s because you quit. I think that having the ability and drive to continue to push forward is going to make you a success. People talk about passion, motivation, and determination, which is all great, but if you don’t have to the ability to get back up when someone says no to you, then you’re not going to be successful.
It’s all about knowing when to make the pivot points. Where was the major pivot point that you made that was almost like, “I can either quit or we ran into a serious roadblock?” What was the most difficult pivot point that made the biggest impact in any of your entrepreneurial ventures? Just the one that comes to the top of your mind.
The decision for me to go to China in high school had a major impact on what I do. Without having lived in China and immersing myself over there, I wouldn’t have been able to have the eCommerce experience and have the manufacturing experience that would enable me to start.
Let me clarify the question. Did you ever have points of conflict? We’re focusing on pivot points. You said companies fail because founders quit. Was there ever a moment where you thought about quitting any of your ventures, even Sourcify or anything prior to it?
For one of my eCommerce companies, you asked me if I had founder’s fatigue, where you just don’t get as motivated and as excited about what you’re doing. That’s something you have to figure out. How do you continue to build the excitement within the company? That’s an ongoing question. You have to be excited about what you’re doing. Otherwise, you aren’t going to be determined to work as hard.
Nathan, I had an amazing time learning all about what you’re doing with Sourcify and your journey as an entrepreneur. Your journey through your expertise and your opportunity to launch Sourcify and get back by YCombinator started. You’re selling LiveStrong wristbands in middle school. Your sister got you interested in studying a foreign language which leads you to learn Mandarin Chinese, which led you to travelling overseas to China for a year. Getting all this different experience talking to manufacturers, uncovering the opportunities that exist with sourcing products and also on the manufacturing side.
You had the brilliant idea to create a business model that was completely different than what all of the other sourcing professional companies were doing. They were charging, the big companies access to leads and you said, “I want to get more qualified leads because that’s the real big problem in the marketplace. These companies are spending hundreds of thousands of dollars and getting really crappy leads.” Let me be the lead qualifier for them. You pitched the idea, or you created it, went to YCombinator, they loved it, and you’re on this incredible growth trajectory.
I appreciate you having me on. Thank you so much for your time.
Where can people check you out? Where can people find you?
Nathan, it’s been a pleasure. I love connecting with super smart, super intelligent people. You have an incredible story. I appreciate you taking some time to explain your journey, talking about your pivot points, talking about your opportunities. Go connect with Nathan. Follow what he’s doing over at Sourcify and let them know that you heard him on Experts Unleashed. Thank you.
About Nathan Resnick
I’m a 22 year old entrepreneur, writer, and traveler, who has brought dozens of products to market, been a part of a lot of Kickstarter projects, write for a few different media outlets, and used to live in China.
My first real business was Yes Man Watches. At Yes Man, I learned the ins and outs of turning an idea into a reality. Here I invented the first leather watch strap without holes that worked like a zip tie.
I know about sourcing, ecommerce, public relations, social media, growth hacking, and more. I also know what I don’t know, and love the quote, “One who knows all the answers has not been asked all the questions.”
I’m a firm believer in learning by doing. You can read more about this here.
Here is my favorite growth hack to date, titled “How a $5 Investment Got Me Into Shark Tank”.
I’m not sure where this website will lead, but what I do know is I appreciate you reading it!
If there is anything I can help you with, from finding you the right manufacturer for your business to getting you in any of the top media outlets, feel free to reach out!