Editor's note: In our 2024 Startups to Watch feature, the Silicon Valley Business Journal and San Francisco Business Times present startups and founders building groundbreaking products and companies in the Bay Area. The Essential is one of 17 we profiled this year — to read more about our mission and the other startups we're featuring, click here.
What if bigger profit margins weren’t the key to building a profitable business? Chai Mishra is betting that he can successfully take the Costco model online, make it a better experience for everyone along the way, and compete with the king of e-commerce, Amazon.
About The Essential
Founded: 2017
Founders: CEO Chai Mishra
Headquarters: Berkeley
Employees: 12
Total funding: $7.5 million
How did this idea come about?
Chai Mishra: I grew up in the supply chain world. My dad started a manufacturing business from the basement of our house. Fast forward 17 years, I came out here to Berkeley to become a mechanical engineer, and I have always been obsessed with how products are made, how they get brought to people. The first job I got was out in China in supply chains, and that ended up snowballing into my career as a supply chain guide for all kinds of businesses. Around 2017, I started to feel like e-commerce wasn’t going the direction that it could have or should. It seemed to be getting worse, becoming a sh----ier experience. More unethical. I started to think a lot about what another version of e-commerce could look like — a non-Amazon version of it.
Did you pivot at any point?
Mishra: We became a studio for e-commerce and would launch a new company, effectively a new brand, every month or so and just test different pieces of it. We launched in total about 15 or 20 e-commerce concepts. We wanted to get to a place where people are sort of hooked on it in a way and it was significantly better than what they could get normally. By mid-2018, we arrived at the right concept. I don't even know if it's fair to call it a pivot. It was just this long experimentation phase. It's like Costco where we don't make money on the products. We make money by getting you to buy and keep a membership. And the way we do that is by launching really good products at really good prices.
What’s your long term vision for the Essential?
Mishra: Within the next five to 10 years, we want to get to about 10 million members. We’ve very intentionally been pretty quiet about it. Once we have a really good store, then we’ll go and raise $20, $30, $40 million and get it in front of as many people as possible. Our approach has been build it first, and they will come.
Over the last six months or so, we've started to talk a little bit more about AI. And we have started to get a lot of attention from possible acquirers that have that customer base built up. We haven't made a decision on it yet, but we are talking to several people now to basically take our product as it is, maybe work on it for another six months or so, and then take it over to them. Become a part of one of these larger e-commerce companies. Some of them are just consumer focused companies and they want to get into e-commerce. That kind of accelerates our timeline a lot, and within the next year, we could get to 10 to 20 million users.
People usually don't want to talk about exit strategy this early. It also sounds you've taken a deliberately slow approach?
Mishra: I have kind of a strange background here. I'm very much of the Valley. Went to Berkeley. Dropped out. Went to YC. A lot of our investors are standard Valley people. But my instincts are very anti-Valley. To me, the goal here is to build an alternate version of e-commerce. A better experience. More economical. More efficient. More ethical. I try not to have too much of an ego about it. If the best path there is getting acquired by the third or fourth largest e-commerce company, then going and building it over there, or becoming the e-commerce arm of a major consumer company, I'm happy to do it. I just want to get this thing right. And I want to get it to as many people as possible.
