Chieh Huang walks the 150,000-square-foot floor of a Boxed fulfillment center. Nestled between the New Jersey Turnpike and a quaint residential neighborhood — just 20-odd miles from his childhood home — this place could comfortably fit more than 400 of the garages where he started this business in 2013. Pallets of V8, Polar seltzer, and Cheerios are stacked three stories high. A series of seemingly endless conveyor belts ferry tubs filled with thousands of products, like a roller-coaster ride of household essentials.
But Huang nods toward the front door. To him, that’s where the business really starts. “All employees and management walk through that door,” he says. “There’s no executive washroom, and we all use the same break room.”
In a perfect world, there would be nothing interesting about that fact. A door is a door; a human is a human. But in our actual world full of executive privilege and dollars measured in microseconds, this isn’t always the case. Especially in Huang’s industry.
In theory, e-commerce is a beautiful thing. It’s the height of convenience for consumers and a liberating marketplace for entrepreneurs. But e-commerce is also a great collector of data, and data can be cold and ruthless. Data can show that if, say, warehouse workers move three steps faster, they will shave seconds off every fulfillment, and when replicated at scale, that will result in millions of dollars saved. Efficiency is hard to argue with, and it often wins at human cost.
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Huang knows all that. He is a systems nerd who revels in the logistics of the warehouse. And he has used data to great effect, driving the growth of an e-commerce platform that sells a wide range of goods. But perhaps against the odds, Boxed has thrived by being a kind of anti-Amazon retailer. It is not the Everything Store. It is not here for your one-off, last-minute, deliver-a-single-pair-of-underwear-to-my-front-door-tomorrow needs. And it now employs 500 people. In December, it went public with a special purpose acquisition company (SPAC) valued at $900 million, proving something that Huang has long believed but for which it isn’t always easy to make a business case: “To build a successful company in the public market,” he says, “you don’t need to squeeze every last penny.” Or every last employee.
In our moment of “Great Resignation,” where employees have backed away from thankless jobs with thankless pay, Huang is showing that a helpful hand works as well as a squeeze.
Boxed offers a $12- to $15-per-hour starting wage in its fulfillment centers (dependent on location and cost of living), a $500 emergency fund, college tuition for employees’ children, subsidized “life events” like weddings, and a number of other benefits. Those programs cost money, of course, and early investors were skeptical. But Huang doesn’t see prioritizing workers as antithetical to the bottom line. He sees it as part of a mission that differentiates his company in a crowded space.
When he decided to take Boxed public, he looked to partner with an acquisition company that viewed workplace culture as central to the business — and found it in the SPAC Seven Oaks Acquisition Corp. “This business is traditionally low-margin, and it’s easy to be shortsighted and focus on pennies,” says Gary Matthews, CEO of Seven Oaks. “But the cost of replacing and retraining people—that’s far more costly than college tuitions.” As far as the New York Stock Exchange is aware, Boxed is now the only public company with a majority-minority board.
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“We are a different way to do business,” Huang says. “What drives me personally is to show a future generation that you can be kind to the folks in your company and still do well. You can offer free health insurance and still be profitable. That’s not without its own stress. But we are a pioneer in some of these ways to do business. Sometimes pioneers make it, and sometimes they don’t.”
Now, in its new life as a public company, Boxed is setting out to show there’s more at stake than its stock price.
Image Credit: Courtesy of Boxed
Huang, 40, was born in Taiwan and immigrated to the United States with his family when he was a baby. His mom worked the register of a Chinese takeout restaurant near Johns Hopkins Hospital, and his dad sold odds and ends at flea markets. Huang went on to attend Johns Hopkins University for undergrad, before getting his law degree and working unhappily as an attorney for three years.
In 2010, he cofounded a mobile gaming company called Astro Ape, which made the kind of real-time social media-based games that were popular at the time. He and his partners sold it a year later to Zynga. As he looked for what to do next, he was inspired by toilet paper.
Huang was living in Manhattan at the time, which often meant paying $3 a roll at a bodega. He recalled his suburban upbringing, when his parents bought bulk at Sam’s Club to save money. (In fact, they had to borrow a friend’s membership card because they were unable to afford their own.) Nothing like that existed in Manhattan because there just wasn’t the space for it. But what if he could build it online? He’d just seen the success of gaming with smartphones. He saw a future for mobile e-commerce, too.
It’s hard to imagine now, but nine years ago this was still a relatively novel concept. Huang started with proceeds from selling Astro Ape, seed money from friends and family, and funding from investors who had passed on his first company but didn’t want to be left out this time around. When conceptualizing Boxed, Huang was deliberate from the start about limiting the scope of products that he would sell, a decision driven by the data he saw in gaming. “We found when you put too many pink virtual cows in front of folks, people tend to not buy anything,” he says. “It was the classic paralysis by analysis. We adapted that to commerce. We said we’re not going to give you everything, but we’ll give you enough that you’re happy with the selection. Then there’s less fatigue.”
Huang focused on a few thousand evergreen household items like toilet paper, cleaning products, and pantry staples. He quickly figured out a shipping hack: Because customers tended to build larger baskets with an average of eight items, he could send everything in one big package and save money. But for a while, he struggled to actually source those items. At one point, Huang was buying products himself from box stores and reselling them, which wasn’t sustainable.
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He knew he had to partner with manufacturers, so in 2014, he went on a tour to pitch them. “I got a ton of rejections,” he says. One day, at an industry speed pitching event in Cincinnati, his last meeting was with Procter & Gamble. “I’d been giving a very polished presentation, but by that point, I just wanted to get out of there. I decided to just tell them what was on my mind,” Huang says. That translated into a no-frills pitch: “It may seem stupid that we are trying to sell laundry detergent on your mobile device today,” he told the P&G executive, “but in 10 years, there’s no way people won’t be ordering stuff on their phones.”
The exec had probably seen 40-some decks that day. “I think he appreciated that authenticity and getting right to the point,” Huang says. It was a yes. Soon after, one of Boxed’s early customers raved about the company in a segment on the Today show. That did it: Boxed was unboxed.
When you’re running a technology business, you will inevitably face the existential question: What should be done by humans, and what can be done by robots?
It’s a dilemma Huang still grapples with.
At the very beginning, technology supplemented human workers. The Boxed team was packing boxes themselves, and they needed to develop systems to keep track of inventory and quality control. They started sending customers a picture of the contents of their box, which customers thought was a cute personal touch. Then as the company grew, an engineering team figured out how to automate the images. They built a self-driving car robot to navigate the warehouse. More automation followed, with robots that pick items from the warehouse floor and software to streamline operations.
This created new business opportunities. Boxed had long declined to sell its technology to other retailers, but when COVID struck, Huang started to think about ways to diversify revenue. He decided to license the company’s software to Aeon Group, the $83 billion Malaysian grocer, and other retailers soon after. Now its software licensing side, which Boxed projects to earn $12 million in the coming year, makes up 5%-10% of the company’s business. “I had no idea we’d go from selling bulk items out of a garage to licensing technology internationally,” Huang says. But he’s learned that the greatest opportunities are sometimes the least expected. “So many entrepreneurs just want to get it right, but you aren’t able to see what lies ahead of you.”
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Still, at a company that’s explicit about how it treats workers, automation can feel like a tricky subject. In many cases, Huang says, artificial intelligence creates more upwardly mobile positions for people: “Sometimes we retrain people to work with the latest technology, like servicing the robots.” But that’s not always the case. “I want to be very clear about the fact that it’s not all roses. In some cases there’s no retraining them,” he says. “But we have moved people into office roles like management and admins. We have a training program for former fulfillment center workers where they just learn the skills of how to manage people. My executive admin, Angelica, most recently worked at the fulfillment center. At a growing company like ours, there are a lot of new roles to fill.”
As Boxed has grown, Huang has had to center himself on this employee-focused mission. It’s easy to get swept up in P&L statements and demands for efficiency. So he’s come up with a mode of thinking: Every employee should be treated like his parents. This is easy to visualize because, as it happens, his now-retired mother and father spend time packing and cleaning in his warehouse for fun. His mom, Huang reports, is a speed demon at the job.
And the longer Boxed has been around, the more time he’s had to see his policies improve his workers’ lives. Julio Valencia, who grew up down the street from the New Jersey fulfillment center, started at the company in 2015 as an hourly warehouse employee. He is now an operations manager and will be hiring a live band for his spring wedding, a touch he says he wouldn’t be able to afford otherwise. He has also used the company’s emergency fund to pay for an unexpected veterinarian bill when his family dog got sick.
Joe Bobko, the vice president of transportation (or “trucks and stuff,” he jokes), was the first to take advantage of the college tuition program. As the 17th employee hired and part of the management team, he assumed he wouldn’t be eligible. But when the program was announced in 2015, his son needed a costly surgery that medical insurance did not cover in full. The tuition benefit was a godsend. “For four years, tuition came from the bank of Chieh, from his own checking account, with no exclusions,” Bobko says. “I was in a better position than most to start with. For a lot of people, that program is the only way their children will get to college.”
Early investors did question whether these costly programs were the best idea. “Some people were like, ‘What are you doing?’ ” Huang says. “But I come from a similar background as a lot of people working in our fulfillment centers. I am trying to right some of the wrongs my family suffered through. I grew up with just one minimum wage income for a while. So now that the shoe is on the other foot, how could I not try to make things a little better?”
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Huang also sees his worker policies as a long-term strategy that benefits the company’s bottom line. The average tenure of a Boxed floor worker is three years, a number that is “unheard of in any retail or any fulfillment center environment,” he says. Not having to train new employees saves the company money, a theory that was tested in the early months of the pandemic. “If we hadn’t treated people well throughout their employment, they could have said, ‘You barely cared about me before, why would you care for me now?’ But team members showed up,” Huang says. “Toilet paper was like gold at the time. The lost revenue of not being able to fulfill orders, even for just one of those days, has paid back.”
Like many entrepreneurs, growing a business from a startup to ringing the opening bell at the Stock Exchange was always Huang’s dream. But he doesn’t see this as the ending. “Success will be other companies doing what we do.” And they are: In 2021, Target and Walmart began offering college tuition programs for employees. Huang believes embodying your values is the entrepreneur’s job. “I think the most powerful thing you will do as a founder is set the culture of the company,” Huang said. “Too many people think culture needs to be written down on a piece of paper. It doesn’t. None of our core values say treat fulfillment center staff as if they’re corporate staff, but you would be so out of place at Boxed if you tried to cut their benefits. It’s not in any handbook, but it’s what I brought to work and it’s what we instilled. That’s my lasting legacy.”