How I Built This with Guy Raz - How I Built Resilience: Ajay Prakash and James Joun of Rinse

Rinse is a laundry and dry-cleaning app started by college friends Ajay Prakash and James Joun in 2013. Since March, Rinse's dry cleaning service has seen a drop in orders, but their laundry arm has remained steady, allowing them to avoid layoffs during the COVID-19 crisis. These conversations are excerpts from our How I Built Resilience series, where Guy talks online with founders and entrepreneurs about how they're navigating turbulent times.

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Content Keywords: values
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Hello everyone and welcome to how I built this resilience edition of these episodes were talking with entrepreneurs and other Business Leaders about how they're thinking creatively during such a disruptive time today for going to hear from the co-founders of rinse a jayprakash and James. June rinse is a laundry and dry cleaning service that picks up cleans and delivers close right to their customers doorsteps rinse was founded in 2013 when Jay wanted to start a business. So he approached his college friend James good work at his parents dry cleaning shop as a kid this year rinse 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 a J and James from their office that's where they're practicing the social distancing in order to keep their essential business running to explain. What what is what is Redd's? How does it work?

00:01:40
Dry cleaning and laundry we started in 2013 to give you a little background at the time. I was looking to start a company and I was excited about a couple Trends one was the idea of bringing technology to old-school Industries. And then James of doing something and you guys are college friends right live with my parents in the dry cleaner store. So they 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 know all the time more recently the discussions really focus on why is business so slow, you know, why isn't there as much business as there used to be in soon 2013 know Jay and I were meeting up for breakfast to discuss new ideas for a business says I just come back from my parents store and wanting to hear that business is slow and then just seen in person is just

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Start since I was I was prepared to see customers and machines running into silence. And so, you know, what can we do to help dry cleaners the bells kind of went off and I thought he was perfect for the trends. I was looking at the founder, but I think it was too good to pass up that unique Advantage. We brought to the table with him understanding that the dry cleaning side of the equation and so we ran out a week later than a test with 11 of our friend. We picked up their clothes. We seen them at James's parents shop. We delivered them back and and from all of them. We got this unanimous responsive. 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 it, you know, some people have a few dry cleaning shops, and then there's like Zips and some of these

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Small chains but really it was an industry ripe for a completely new approach absolutely as consumer behavior 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 the dry cleaning experience historically, you don't know who's a good dry cleaner. You just go to the nearest one. You're not ready proximity. You can assess quality until after the clothes come back. So it's a bit of a crap shoot for us as customers. The model is very vendor Centric in the sense that they're open 9 to 5 closed on weekends, which doesn't work. If you're actually at work during that time and is limited technology limited customer service limited transparency. We call that internally Death By A Thousand Cuts in when we were getting rid started. Our idea was let's systemically 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.

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That's that's that's already been started when 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 even own your own facilities your own cleaning facility. We only serve the cuss when we continue to serve the customer between 8 p.m. And 10 p.m. Because that's more in line with the customers schedule is more customer-centric. We send our valets to come pick it up there all W-2 employees another the front lines of the customer experience and they'll come get your clothes answer any questions similar to a counter person might do at a cleaner and then we bring it back to the darkest hour cleaners will clean it in. 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 to know how to get volume and then to because of that vendor Centric approach their world tends to be very spiky during the week and I'll take a look at that Monday morning rush and then the rest of the week is kind of quiet but we've done is built the model where we're going to

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Send are thinking partners of predictable steady stream of volume allow them to clean the clothes filter capacity, but then also allow them to grow and actually be able to plan for growth because we're sending Volume 7 days a week, you 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, you know location that cleans dry cleans for, you know, a hundred different shot. 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 know, it's as if they're very good at cleaning clothes customer acquisition as totally transform. So there's a whole class and I don't understand that some discoveries online and so it was happens at volume to decline because people are searching for companies and services online. So we found that as a zany that we could have helped fill so it's our job to pay.

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Are the best dry cleaners in and give them volume? No, we're good acquisition. We want to partner with those 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 up cleaning plant or processing center for clothing at? All. Right. Love you layer on top of an existing infrastructure, you know for a long time, but there are a lot of very good cleaners out there and they they just need help getting volume and that's that's really where we stopped. And I know that you made a point of saying that your drivers are W-2 employees you're in California, obviously, California State Legislature passed a law clearly targeting Uber Lyft that so-called gig workers need to be W-2 employees. Those companies are challenging at law. But you decided to make your your drivers employees of the company at the sounds to me like that was a conscious decision that you were.

00:07:40
Very intentional in deciding on that cuz it's more expensive. Absolutely. They've been w2013 and if you as a customer are using rinse and you have a totally normal service experience, the only person you should never see is Your Valet answer for us. We wanted to make sure we were able to hire the best people train them develop them invest in them and instantly is more expensive to employ valets, but it's better for them. It's better for rent is better for the customer. So it was a it was a no-brainer decision of front. I know I believe you've raised closest 24 million dollars since you launched in 2013 and then here we 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 imagine a lot of other people have so I imagine you've also seen a drop in your business at a high level.

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And is that we offer dry cleaning and laundry in and the way those two Services have behaved during the pandemic are a little bit difference of dry cleaning has certainly taken a hit. You have less people going to the office must be right traveling in a weddings in graduation to formal events are happening. But laundry on the other side has has remained pretty stable and we have a subscription laundry service as well which next been growing a little bit during the pandemic. So, you know, there's all things considered we're holding up. Okay, we've been able to ensure Financial stability ensure job security for the whole team and I think you know, even more important that you know a centaur anyone who can work from home work from home starting March 5th. We're an essential service. We 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 maximize for safety and reducing the risk of transmission of 2.

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How's your parents business doing right now? I think they're they're holding up. I know it's going to go to Jay said it's definitely down there in a position where there is no wanted to retire for a while, but rather keep the routine, you know, there's not really customers coming in just for routine Steak Express in the Bay Area where we patch shelter in place longer than most of the country and so yeah. I know it's it's it's worse is directing them to program that can help him now because we have clean Partners not all the Murray going to end in English, you know, there's a lot of remission out there changing every single day. So we spent a lot of time tracking down towards eye relief programs and says that that's how it's not easy for them just to say hey, I'm going to start doing delivery or offering laundries there total.

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Different businesses and so for us when we were looking at our thinking Partners, we weren't sending them as much volume on the dry cleaning side and dry cleaning Partners. We have specifically for dry cleaning and laundry. So one thing we did at starting in April was we actually spun out the production of reusable cloth masks. We ordered them from our team partners for our own team and then decided to extend production to sell to customers and we found unit for at least for a couple of months. We were able to offset the decline and dry cleaning Revenue with the sale of mass and that helps interested in us what to look for in a business partner and how they've been ready for this moment since 2013. Stay with us a guy Roz and you're listening to how I built this resilience Edition from NPR.

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00:11:49
Hey, welcome back to how I built this resilience Edition. I'm talking with Ajay prakash and James June the co-founders of rinse about the big lessons. They've learned from building their start up against his question from Simone. YouTube is a good question. I'm how did you guys attract customers at first? This is not a question that we always deal with on the show the chicken-and-egg problem. Right? Like you're going to dry cleaners near saying hey, we want to partner with you were going to bring you a lot of customers, but you don't have any customers that you go to customers and say we're going to get you the best cleaning virginity cleaners. I had it at his you send me James you have you had an advantage in your family had a family business. But how did you get customers at first 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 we got a lot of skeptical looks at the time, but right about to the table allowed to sign up some early partners and then in May 2013, we signed up 10

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Friends and then we started just testing out the operations. We put a circle around 3 zip codes in San Francisco and said, hey, let's prove it out hair before you put that anywhere and then in June and July, we got more friends or their friends nose 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 II we introduce the fact that we're 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 this right away and that was part of the early signal that we were striking a chord and it was worth continue to pursue this. I'm curious. I mean now that we're in this sort of covered. 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, what. Of time where your growth may not be

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What you had projected it to be in January 2020 the whole time and we're focusing on I'm getting to profitability right we're working on reducing our expenses improving our margins taking those steps. You need to reduce cash burning and we made a lot of progress. So going into the pandemic we were actually at well suited for my financial stability stand .22 to weather the storm and dry cleaning take a hit. The laundry is held up and that's certainly helps a relative to you know, companies may be in travel or Live Events. It is 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 it 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 operating in covid is kind of normal for us now, we need to continue to maintain that vigilance.

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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 about the competitive landscape write me there other businesses that are offering a similar service. And is there a world where we're heading towards a doordash vs. GrubHub vs. Caviar? Like is there a world where there's sort of a race to erase 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 space. I think the one thing we found I mean we started when Uber and Lyft were the arms race was going and opportunity. It's really about providing a high-quality service II 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 a industry where the barriers to entry are.

00:15:49
Hello, but the barriers to scale are incredibly High because there's so much operational complexity and so for us and we spent the last seven years really mastering that operational complexity implementing technology to be the most digital 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 Sandpoint a lot of the startups that maybe started around the same time as as we did are no longer around and the interesting Dynamic we might see in this basis less about an arms race and more that there are a lot of dry cleaners that don't want to continue dry clean and get a lot of people who want to retire you have kids who don't actually want to take over so there's a lack of generational transfer and you know, they're there is some opportunity potentially for consolidation, but it's not easy at a lot of people will consider starting a business right now people special people lost their jobs or pee

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You 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 to ask the question? Why me why now? You know, why am I the one that should be starting something in this industry and solving this problem? And why is this the right times before rinse, you know, I've been focused on consumer startups James drip and dry cleaning. There was a good story for us and the wine now is that Uber and Lyft it basically made the consumers realize they could use their 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 your side of the next week, keep going to what you have to do if you have to be excited not just by like the hey that the glamour

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What starting something might be but then like doing the research and building the model and look at the numbers and all the stuff. It's not as fun. If you're still excited. It is 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 of when you think it's getting about finding a partner and clearly you guys have a strong partnership? And from what I hear from what I'm I do Deuce a ju so focused more on operations and and in business the business side of James you focus more on product in development. Is that is that fair for the front of house number on the back of the house? So I am in the operation founder for me. I have a deathly fear of losing my job and taking a leaf and

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Really building my confidence actually make that leaves secondly in terms of finding a good co-founder one exercise that we did early 2013, which I didn't understand if time vijai me to do this is if we went through set of questions to realign your expectations and values know. Why are we doing this? What are your goals? How do you work together in those of now translated our core values which got her company until this day and so if ever founded a company with someone else go to that exercise with a friend that could be with someone. You don't know that well, but you really need a line on your values and what your goals are. I think that is a critical cycle don't have that conversation is my friend on a trust him or her it may not work out that way. It is like a marriage and I know James for 21 years now, we're very good friend, 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 worth.

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A lot of those conversations up front are incredibly important because you need that a line values just like a marriage you need to have a line of PlayStations. But that 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 the people beside you are are are going to be rocks and they're going to be back at this moment in 5 years from now what are some ideas are values or approaches that you want to take with you into the future of the of the business start a company or the second kid. You have it becomes easier. I imagine the next time we have to go through this what will make fewer mistakes and will do everything better and faster, but I think you know, you can't predict what's going to happen tomorrow February. There's no way our plan factored in navigating Cove in and 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

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What are core values in March 2013 and they've been the same core values for the last seven years and in two of them that we've used our number-one make Mom proud which is an Ode to James's mom. Who else is so much at the beginning but really, you know, 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 everyday of the startup life but certainly applies and it's even more pronounced during this time. So the importance of having core values the importance of having guiding principle so that when you get into situations like this where things get blurry you can stay Rock Solid focus on the goal I think is is is really important takeaway. Awesome. Thank you so much for joining us and thanks for having a thank you. That's an excerpt from my conversation with a jayprakash June the co-founders of Ritz to see our full interview. You can go to facebook.com how I built this and if you want to see all of our past live interviews, you can find them there or at you

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Youtube.com 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. Org. This episode was produced by Candice Lynn with help from will Mitchell Tyra Lockhart Matt Adams, Gianna, Gianna, Isabella, Juliet Kearney Neva Grant and Jeff Rogers. Thanks for listening. Stay safe, and I'll see you in a few days. I'm guy Roz and you've been listening to how I built this from NPR.
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