Podcasts > How I Built This with Guy Raz > Weee!: Larry Liu

Weee!: Larry Liu

By Guy Raz | Wondery

In this episode of "How I Built This with Guy Raz," Guy sits down with entrepreneur Larry Liu to uncover the inspirational journey behind the pan-Asian grocery platform, Weee!. Starting with Larry's boyhood infatuation with American culture and the NBA in China, this conversation reveals the cross-cultural dreams that led to ambition and personal transformation. Adopting his English name after NBA star Larry Bird reflects a young man aligning his identity with his aspirations, setting the stage for a future without boundaries.

Dive into Liu's burgeoning e-commerce expertise, from the early days of eBay reselling to the creation of automated arbitrage software, and explore how fatherhood and Jim Collins' influential book motivated him to pursue a business with lasting impact. Listeners will follow the perilous transition of Weee! from a group buying service facing a dead end to a thriving grocery delivery sensation riding the wave of a global pandemic. As WE adapts and expands, learn how Liu’s vision and commitment to his community drive the company to meet the diverse needs of Chinese American and other ethnic communities.

Weee!: Larry Liu

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Weee!: Larry Liu

1-Page Summary

Larry's passion for American culture and the NBA as a child in China

As a child in China during the 80s and 90s, Larry Liu, legally named Min, develops a deep fascination with the NBA and American culture. This exposure leads him to dream of living in the United States, associating NBA players with the American dream. He chooses the English name Larry at 12, in admiration of the basketball legend Larry Bird, whose influence extends beyond the court and into young Larry's identity.

Larry's journey into e-commerce, from eBay reselling to automated arbitrage

Larry begins his e-commerce venture with eBay reselling as a hobby, learning crucial skills for his future business endeavors. By 2015, he moves on to develop software that automates arbitrage between different e-commerce sites, such as Amazon, eBay, and Walmart. This innovative approach allows Larry's team to make a significant profit by exploiting price discrepancies across platforms. However, they soon hit a profitability ceiling and face the harsh truth that their business model lacks substantial value creation, prompting a fundamental re-evaluation.

Larry's realization he wanted to create an enduring business, not just make money

Fatherhood and the insights gained from Jim Collins' "Good to Great" lead Larry to aspire for more than making money; he desires to establish a lasting business within the e-commerce realm. His personal interests and adeptness in e-commerce mesh perfectly with the potential he sees in the market. The freedom granted by his green card allows him to quit his tech job and fully dedicate himself to launching his own e-commerce startup.

The challenging journey to pivot WE from group buying to grocery delivery

The launch of WE as a group buying platform initially attracts tens of thousands of users, helping them to purchase everything from pianos to minivans in bulk. However, the business stalls as the growth model shows cracks, with increased recruitment difficulties and unsustainable pricing strategies. A serious personal injury then offers Larry time to reflect, leading him to the realization that his customer's primary concern is the accessibility and affordability of their preferred foods. This crucial insight and last-chance funding from investors drive a hard pivot in the company’s direction, transitioning WE to focus on grocery delivery.

WE's perseverance through the pandemic into a thriving pan-Asian grocery platform

WE’s new grocery delivery model finds success, especially among Chinese American communities, experiencing substantial week-over-week growth. It scales from weekly to daily deliveries, quintupling sales in just 18 months. The pandemic drastically accelerates this growth, with the company seeing a 700% year-over-year sales increase. This surge leads to rapid expansion and an understanding that diverse ethnic communities share similar needs, prompting WE to cater to a broader demographic, including other Asian and Latino/Hispanic customers, solidifying its position as a pan-Asian grocery platform.

1-Page Summary

Additional Materials

Clarifications

  • Automated arbitrage in e-commerce involves using software to exploit price differences between different online platforms like Amazon, eBay, and Walmart. This strategy aims to buy low on one platform and sell high on another, leveraging the discrepancies for profit. By automating this process, sellers can quickly capitalize on pricing variations without manual intervention, maximizing efficiency and potential gains. This approach requires sophisticated algorithms and real-time data analysis to identify and execute profitable arbitrage opportunities in the competitive e-commerce landscape.
  • "Good to Great" is a management book by Jim Collins that explores how companies transition from being good to great. Collins identifies key principles and strategies that successful companies employ to achieve long-term success and outperform their competitors. The book emphasizes the importance of leadership, disciplined action, and a focus on sustainable growth for organizations aiming to make a lasting impact in their industries. Collins' research is based on a comparison of companies that made the leap from good to great and sustained that success over time.
  • A group buying platform is a type of e-commerce model where a group of buyers come together to leverage their collective purchasing power to get discounts on products or services. Essentially, customers pool their orders to meet a minimum quantity requirement set by the platform, allowing them to access lower prices that would not be available for individual purchases. This concept encourages social sharing and collaboration among buyers to achieve cost savings through bulk buying. Group buying platforms often focus on offering deals for a limited time or quantity, creating a sense of urgency for customers to participate in the group purchase.
  • Pivoting a business model involves making a significant change in how a company creates value, delivers products or services, and generates revenue. This strategic shift is often driven by market feedback, internal challenges, or external factors to improve the business's sustainability and growth potential. It requires adapting to new circumstances, customer needs, or market opportunities to ensure long-term success. Pivoting can involve changes in target markets, product offerings, distribution channels, pricing strategies, or overall business focus.
  • A pan-Asian grocery platform caters to a diverse range of Asian communities by offering a wide selection of groceries and products from various Asian cultures. It aims to provide a one-stop shop for customers looking for authentic Asian ingredients and goods, serving the needs of different Asian ethnicities. These platforms often focus on inclusivity, offering products from countries across Asia to appeal to a broad customer base. The concept emphasizes diversity and cultural representation in the grocery shopping experience.

Counterarguments

  • The association of NBA players with the American dream may not reflect the complex realities of life in the US for many immigrants.
  • Choosing an English name based on a sports celebrity might not fully capture one's cultural identity or heritage.
  • Automated arbitrage, while profitable, could be criticized for not contributing to the real economy or providing tangible value.
  • The pivot from group buying to grocery delivery might suggest a lack of initial market research or a clear business model.
  • The success of WE in the Chinese American community might not necessarily translate to other ethnic communities due to cultural and preference differences.
  • Rapid expansion and scaling, as seen with WE, can sometimes lead to operational challenges and a dilution of service quality.
  • The pandemic's role in accelerating WE's growth is an external factor that may not be replicable in normal market conditions.
  • Catering to a broader demographic could potentially alienate the initial core user base if not managed carefully.

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Weee!: Larry Liu

Larry's passion for American culture and the NBA as a child in China

Larry's childhood in China during the 80s and 90s was heavily influenced by NBA basketball, which helped shape his impression of America and sparked his dream of living there one day.

Dreaming of living in America from an early age

As the NBA games began broadcasting in China, many children, including Larry, became fascinated with the American sport. For Larry, the NBA players, who he considered the best in the world, symbolized the American dream that captivated his imagination. This fascination with American culture and the NBA was a significant factor in his longing to move to the United States.

Choosing the name Larry after his NBA idol, Larry Bird

Larry Liu's legal name is Min, but when he started learning English at ...

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Larry's passion for American culture and the NBA as a child in China

Additional Materials

Clarifications

  • Larry's childhood in China during the 80s and 90s was heavily influenced by the NBA basketball games that were broadcasted in the country during that time. The NBA players were seen as symbols of excellence and success, embodying the American dream for many Chinese children like Larry. This exposure to NBA basketball not only introduced Larry to a new sport but also played a significant role in shaping his perception of American culture and fueling his desire to one day live in the United States.
  • NBA players are often seen as embodying the American dream due to their success, fame, and wealth, which are aspirational qualities associated with American society. Their achievements on the basketball court and off represent opportunities for upward mobility and success, reflecting the ideals of hard work, talent, and determination. For individuals like Larry in China, NBA players serve as powerful symbols of a lifestyle and level of accomplishment that are often associated with the United States. The NBA's global popularity further enhances the association between its players and the broader concept of the American dream.
  • Larry Liu chose the English name Larry when he started learning English at the age of 12. Inspired by his admiration for NBA legend Larry Bird, he decided to honor his idol by adopting the name Larry. This choice reflected his dee ...

Counterarguments

  • The influence of the NBA on Larry's perception of America might not fully represent the complexity of American culture and could lead to an idealized or one-dimensional view of life in the United States.
  • While Larry's dream was inspired by NBA players, it's important to recognize that the American dream is a multifaceted concept that may not be attainable for everyone, and the success of NBA players does not necessarily reflect the average American's experience.
  • The choice of an English name based on a sports idol could be seen as a superficial way to connect with a culture, and it might overlook ...

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Weee!: Larry Liu

Larry's journey into e-commerce, from eBay reselling to automated arbitrage

Larry's foray into the world of e-commerce began as a hobby with eBay but eventually blossomed into a sophisticated automated arbitrage enterprise.

Seeing eBay and early e-commerce as a hobby and side business

Larry's journey in e-commerce started off simple with eBay reselling. This hobby not only provided him with supplemental income but also set the foundation for his future endeavors. The skills and experiences he gained from using eBay and WeChat were instrumental in helping him conceptualize a more streamlined approach to online group buying and sales.

Developing software to automate online arbitrage between e-commerce sites

Capitalizing on his e-commerce insights from 2015, Larry and his friends utilized the earnings from their eBay business to develop software for a more efficient e-commerce platform. Larry designed an innovative program that could scrape various internet retailers, such as Amazon, eBay, and Walmart, to find the best prices. His software could then automatically list items for sale at a markup on different sites. Whenever a sale was made, the program would order the item from the cheaper retailer and ship it directly to the buyer, netting Larry and his team the price difference minus any commissions.

Hitting limits in scale and value creation in arbitrage business

Despite achieving $2 milli ...

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Larry's journey into e-commerce, from eBay reselling to automated arbitrage

Additional Materials

Clarifications

  • Automated arbitrage in e-commerce involves using technology to identify price differences for products across different online platforms, purchasing from the platform with the lowest price, and selling at a higher price on another platform for profit. This process is automated through software that can quickly scan various e-commerce sites, compare prices, list items for sale, and manage the transactions seamlessly. The goal is to capitalize on pricing inefficiencies in the market to generate revenue through buying low and selling high in a systematic and efficient manner. This strategy requires a deep understanding of e-commerce dynamics, pricing trends, and the ability to leverage technology to execute trades swiftly and effectively.
  • Scraping various internet retailers for prices involves using software to automatically gather pricing information from different online stores like Amazon, eBay, and Walmart. This process helps in comparing prices across multiple platforms to identify the best deals and opportunities for arbitrage. By collecting this data efficiently, sellers can make informed decisions on pricing strategies and product sourcing to maximize profits in e-commerce.
  • Larry's software allowed him to automatically post products for sale on various e-commerce platforms at higher prices than what he sourced them for. This strategy, known as arbitrage, involved identifying products sold at lower prices on one platform and listing them at a markup on other platforms to capitalize on price differences. Larry's program streamlined this process by automatically adjusting prices and managing sales across multiple sites, enabling him to profit from the price differentials between retailers. By leveraging this automated approach, Larry could reach a broader audience and maximize his profits by exploiting pricing variations in the market.
  • In the context of e-commerce arbitrage, "netting the price difference minus any commissions" means subtracting any fees or charges, such as transaction fees or platform commissions, from the profit gained by selling an item at a higher price than it was purchased for. This calculation helps determine the actual profit earned after accounting for all costs associated with the transaction.
  • The net profit margin in e-commerce is a financial metric that indicates the percentage of revenue that remains as profit after deducting all expenses, including the cost of goods sold, operating costs, and taxes. It ...

Counterarguments

  • Arbitrage contributes to market efficiency by capitalizing on price discrepancies, which can be seen as a valuable service in itself.
  • The skills and experiences gained from eBay and WeChat may not directly translate to a more complex e-commerce platform, as different skills could be required.
  • The development of automation software for arbitrage could be seen as an innovative contribution to the field of e-commerce technology.
  • Achieving $2 million in sales with a net profit margin of over 10% is a significant accomplishment that demonstrates business acumen and could be reinvested in other ventures that create more value.
  • The ethical impact of arbitrage is subjective; some may argue that as long as it operates within legal boundaries, it is a legitimate business model.
  • The reflection on long-term sustainability and ethical impact could lead to positive changes in business ...

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Weee!: Larry Liu

Larry's realization he wanted to create an enduring business, not just make money

Through a series of introspections and influences, Larry came to the realization that his true ambition was to create a lasting business, one that resonated with his personal interests and abilities—especially in the realm of e-commerce.

Having kids caused Larry to rethink living life just following others' path

Having children prompted Larry to reassess the course of his life. He no longer wanted to live by simply walking the paths laid out by others. This new perspective on life and the responsibility of fatherhood were catalysts for his entrepreneurial epiphany.

Reading "Good to Great" and identifying e-commerce as meeting Larry's interests and talents

Larry's reading of Jim Collins' "Good to Great" was instrumental to his career shift. The Hedgehog concept, which advocates for a business to concentrate on what it's passionate about, proficient in, and can monetize in a large market, particularly resonated with him. After some reflection, Larry recognized that the e-commerce sector checked all three of these boxes for him: it was an area he was immensely passionate about, had the skills for, and saw tremendous market potential ...

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Larry's realization he wanted to create an enduring business, not just make money

Additional Materials

Clarifications

  • The book "Good to Great" by Jim Collins is a management classic that explores why some companies make the leap to greatness while others do not. The Hedgehog Concept, a key idea from the book, suggests that companies should focus on what they are deeply passionate about, what they can be the best in the world at, and what drives their economic engine. It emphasizes the importance of finding the intersection of these three elements for sustained success in business.
  • Larry's encounter with Jeff Bezos' TED Talk served as a pivotal moment that further solidified his interest in e-commerce. Bezos, as the founder of Amazon, shared insights and success stories in the e-commerce industry, inspiring Larry and highlighting the vast opportunities within this sector. This exposure to Bezos' vision and achievements helped Larry see the potential for growth and innovation in e-commerce, reinforcing his decision to pursue this field for his own entrepreneurial en ...

Counterarguments

  • While Larry's desire to create an enduring business is commendable, it's important to recognize that not all businesses, despite the founder's passion and effort, will endure due to various market forces and unforeseen circumstances.
  • The decision to not follow others' paths after having children, while a significant personal development, may not always lead to success in entrepreneurship; it's also valuable to learn from the paths and experiences of others.
  • The principles outlined in "Good to Great" are useful, but they may not be universally applicable or guarantee success in every industry, including e-commerce. ...

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Weee!: Larry Liu

The challenging journey to pivot WE from group buying to grocery delivery

Larry Liu’s entrepreneurial journey with WE is a tale of adaptation, resilience, and keen insight into consumer needs, leading to a pivot from group buying to grocery delivery.

Early promising traction with group buying platform coordinating bulk purchases

Larry Liu initially set his sight on a group buying platform, releasing software in January 2015 that allowed users to coordinate bulk purchases, achieving quick success and drawing tens of thousands of users by mid-2015. The platform didn't focus solely on food - it seamlessly facilitated group buys for a variety of products, including pianos and minivans. Users leveraged the software to secure discounts on group purchases of items as diverse as 20 minivans at a time.

Business stalled as group leader recruitment slowed and costs rose

The business, however, hit a significant roadblock. Liu had to shut down a site in Los Angeles due to recruitment issues for crucial positions like group leaders. This cessation necessitated layoffs within the company, signaling a stagnation in the business model's momentum. The company initially sought to build user interest by sourcing deals for items like pianos and pork belly, often not making a profit on these deals, an unsustainable path that could not continue indefinitely.

Falling and breaking back gave Larry pivotal time to realize the core problem group buying addressed

Amidst these operational challenges, Larry Liu faced a personal crisis - a crippling fall that left him bedridden with a fractured back for a month. This unfortunate event resulted in a pivotal moment of clarity for Liu. The downtime provided him with an opportunity to deeply reflect on his business. He recognized that his customers' fundamental need was accessible and affordable options to obtain the foods they loved, an issue that group buying failed to resolve effectively.

Last chance funding from existing investors enabled the hard pivot to groce ...

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The challenging journey to pivot WE from group buying to grocery delivery

Additional Materials

Clarifications

  • Larry Liu's group buying platform allowed users to coordinate bulk purchases for various products, not just limited to food items. Users could secure discounts by pooling their orders, such as buying multiple minivans at once. The platform faced challenges with recruitment and sustaining profitability, leading to a pivot towards grocery delivery. This shift involved transforming the business model to focus on delivering a wide range of products directly to consumers' homes.
  • The challenges faced by the company included recruitment issues for key positions, unsustainable deal sourcing strategies, and a stagnant business model. Additionally, a personal crisis experienced by the founder led to a pivotal realization about the core problem the business was addressing. The transition from group buying to grocery delivery demanded a significant overhaul of the business model, team structure, and operations. Despite facing hardships during the pivot, the company received crucial support from existing investors to adapt and survive.
  • Larry Liu faced a personal crisis when he suffered a severe fall that resulted in a fractured back, leaving him bedridden for a month. This event prompted a period of reflection for Liu, leading him to reassess his business strategy and understand the core problem his customers faced. The downtime from his injury gave him a crucial moment of clarity, ultimately influencin ...

Counterarguments

  • The initial success of the group buying platform may have been due to novelty rather than a sustainable business model.
  • Group buying platforms often face scalability issues, which may have contributed to the business challenges WE encountered.
  • The pivot to grocery delivery enters a highly competitive market, where differentiation can be difficult and margins are often thin.
  • The decision to pivot might have been reactive rather than proactive, potentially indicating a lack of long-term strategic planning.
  • The pivot required significant restructuring, which could have led to a loss of talent and institutional knowledge.
  • Relying on existing investors for last-chance funding could indicate a potential risk of limited financial runway if the pivot does not quickly turn profitable.
  • The focus on delivering Asian supermarket items might limit the potential market size compared to a more diverse product offering.
  • Multitask ...

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Weee!: Larry Liu

WE's perseverance through the pandemic into a thriving pan-Asian grocery platform

WE's transition to a new grocery delivery model not only showed resilience during the pandemic but also marked the emergence of a robust pan-Asian grocery delivery service catering to diverse communities across the United States.

Steady growth as weekly deliveries took off among Chinese American communities

Larry Liu shares how WE began with humble once-a-week deliveries and witnessed steady growth. This scaled up to daily service as the demand from Chinese American customer base increased. People embraced the service even with its initial limited delivery frequencies. Liu reveals that by summer 2017, the company was doing $100,000 a week in sales. Remarkably, in just a year and a half, they saw this number quintuple to $500,000 a week. The growth was almost entirely fueled by first-generation Chinese immigrants in the U.S. who preferred Chinese language and food. With limited funds for advertisement, WEChat became their main user acquisition channel, utilizing the app's "Order Share" feature to encourage word-of-mouth promotion, rewarding customers with WePoints for sharing their purchases.

Massive spike in demand during pandemic accelerated expansion plans

As the pandemic unfolded, Liu observed an early uptick in purchases among Chinese Americans – a precursor to the overwhelming spike in demand once the virus officially hit the U.S. After the Lunar New Year, there was a significant daily increase in sales as the community grew concerned about the pandemic. Revenue skyrocketed, boasting a 700% increase year over year during the pandemic. To manage this explosive growth, the company continually expanded its warehouse capacity, ensuring operations ran without interruption even as they moved locations overnight. This period of intense growth propelled the company ...

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WE's perseverance through the pandemic into a thriving pan-Asian grocery platform

Additional Materials

Clarifications

  • WEChat is a popular Chinese social media platform that integrates messaging, social networking, and payment services. In this context, WE utilized WEChat's "Order Share" feature to encourage customers to share their purchases with friends and family, leveraging word-of-mouth promotion. By rewarding users with WePoints for sharing, WE effectively utilized WEChat as a user acquisition channel to attract new customers and drive growth.
  • WEPoints are a loyalty program created by WE that rewards customers for sharing their purchases on the WEChat app. Customers earn WEPoints by using the "Order Share" feature to promote WE's services through word-of-mouth. These points can then be redeemed for discounts or other benefits on future purchases, incentivizing customers to spread the word about WE's grocery delivery service.
  • The Lunar New Year typically sees increased spending on food and gifts as families prepare for the festivities, leading to a rise in sales for businesses catering to these needs. In the context of the text, the mention of a significant daily increase in sales after the Lunar New Year suggests that the holiday season contributed to a surge in demand for WE's grocery delivery services among Chinese American communities. This spike in sales post-Lunar New Year indicates a correlation between cultural celebrations and consumer behavior, highlighting the impact of cultural events on business performance.
  • The 700% increase in revenue year over year means that the company's revenue grew sevenfold compared to the previous year. This significant jump in revenue showcases a substantial increase in sales and business performance within a one-year period. It indicates a rapid and substantial growth in the company's financial success over the course of a year.
  • Rapid warehouse capacity expansion refers to the quick increase in the physical space and resources available for storing inventory and fulfilling orders. This expansion was necessary to accommodate the surge in demand for products during the pandemic, ensuring that the company could meet customer needs efficiently. By scaling up their ...

Counterarguments

  • The growth figures provided are impressive, but they do not account for the overall market size or the company's market share, which are important for understanding the full context of WE's success.
  • While the company's use of WEChat for user acquisition is innovative, it may limit the potential customer base to those who are already using this platform, potentially overlooking other effective marketing channels.
  • The 700% increase in revenue during the pandemic is notable, but it may not be sustainable post-pandemic as consumer behavior normalizes and competition increases.
  • Expanding warehouse capacity is a logical response to increased demand, but rapid expansion can also lead to operational challenges and increased overhead costs that could affect the company's profitability.
  • The pivot to serve other Asian communities and Latino/Hispanic customers is a strategic move, but it may also present challenges in terms of maintaining the quality of service and understanding the nuanced needs of each distinct community.
  • Adjusting product offerings to cater to a wider customer base is a positive step, but it could dilute the brand's identity and alienate the ...

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