How Snack Smuggling led to millions in VC funding

Subscription boxes can be a tough business.

Most of these startups shine brightly as they burn through investor capital and flame out well before becoming profitable.

But there are exceptions. So today we sit down with Danny Taing, the founder of Bokksu, to learn what he and the team did differently, how they obtained substantial VC funding, and where they are going from here.

We also talk about Japan's unique snack culture and the surprising insight is has to offer about Japanese culture in general.

It's a great conversation, and I think you'll enjoy it.

Show Notes

Why the world needed one more subscription box startup What Japanese snacks (and food in general) are different Strategic storytelling: aka "When you are talking about snacks, you are not really talking about snacks." Meet the world's happiest QA team Why Bokkusu could succeed when so many subscription-box startups ad failed Growing from zero to 1,000 and then 1,000 to 10,000 What really goes into the box Which Japanese snacks are most loved overseas The strategic expansion to Bokksu Market and Bokksu Grocery How a food startup can raise real money in a world of software-focused VCs Why "Japanese culture" startups almost always fail

Links from the Founder

Everything you evert wanted to know about Bokksu Check out some amazing snack pictures Follow Danny on Twitter @dannytaing Bokksu's amazing Maker Videos (seriously, these are great)

Transcript Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs. I’m Tim Romero and thanks for listening. Now, I'm going to warn you in advance. This episode is going to make you hungry. Danny Taing founded Bokksu to sell unique Japanese snacks to the world. And we spent a lot of time talking about sweet and savory snacks and all of the unique cakes and the baked goods so be ready for it. Now, both subscription boxes and e-commerce from regional foods are both very hard business models for startups. They're popular but almost all of them fail and fail fast. Danny explains that when he started, almost everyone was highly skeptical. And by the way, that includes your humble narrator as well. I knew Danny when he was just starting. Well today, Danny explains what he did differently. How he evolved from skirting the law as a snack smuggler to growing a trusted consumer base to receiving $22 million in investment to building $100 million dollar company. This episode is a masterclass on how you need to change not only your strategy, but also change who you are at every step of your journey. But you know, Danny tells that story a lot better than I can so let's get right to the interview.

Interview Tim: So we're sitting here with Danny Taing Bokksu, who is delivering tasty Japanese snacks to the entire world. So thanks for sitting down with us, Danny. Danny: Thanks for having me, Tim. It's a pleasure to be here. Tim: That was a really simple introduction of Bokksu. I'm sure you can explain it much better than I can. So what exactly is it that Bokksu does? Danny: Yeah. So our mission is to kind of bridge cultures through authentic Japanese food and snacks and products. We do this by, as you just mentioned, delivering these delicious Japanese snacks worldwide in our monthly curated snack subscription box. We have a whole lot of products from there but I'm happy to get into that later. Tim: Yeah, and I do want to dive into it. You guys have come a long way. It expanded a lot since you started, and you've delivered over a million boxes of snacks, which is awesome. So what exactly is a subscription box? Danny: Many people already know about subscription boxes out there. But what makes box really special is that we directly partner with the centuries old family snack bigger businesses throughout Japan, everything from Hokkaido red bean buns to Kyoto matcha cakes and Okinawa chinsukos. These are products that are all Japan-exclusive, and a lot of times they're even region-specific. We sourced them all there, curate them into monthly themes, and then ship them directly from Japan to about 100 countries around the world to our customers. And what really gets customers excited besides the delicious snacks is the fact that we always include what we call a culture guide magazine that explains that month's cultural background, why these snacks are important, where in Japan they're from, interviews of the makers, there's just like a little discovery travel in a box that people love. Tim: This is something I wanted to get in later but we might as well get into it now. How long did it take you to realize the importance of that storytelling and that cultural explanation? Danny: So it was always something I actually sawed off to do from the beginning. For example, I founded the company in late 2015 and I solo bootstrap launched it in like early 2016. Actually, it was April, so it's our six-year anniversary right now. And at that time, it was just me so there wasn't a whole lot of storytelling I could do. And the first culture guide was like a two-sided postcard, because I did the copy myself and everything. So there was only so much I could really write and fit on there. But like from the beginning, I really wanted to tell their stories because all the snacks in Japan are so special. I lived in Japan for over four years, and every time I would receive one of these omiyage snacks, I would hear like, "Oh, this is like this famous Kagoshima, it's like 200-year-ld family business or something." And I was like, Holy God, we don't have that in America. That's very rare in the West to have something like that. Tim: It is. I mean, both in terms of the cuisine and in terms of like a small family that has been making the same type of snacks for four generations. It just doesn't seem to exist in the US. Danny: Yeah. First of all, US is not even that old a country. Some of our makers are over 300 years old, they're like older than America. And secondly, it's just not that same kind of direct lineage that we have in America. It's a little bit more, you know, Transia in some ways in that more modern and recent, but a lot of people love that. I love that. You see that even on Netflix documentary shows, where about food or people talk about Jiro, right, and his obsession with how long he has been practicing sushi and teaching it, and people get really into that craftsmanship. So from the beginning that was the goal, but I couldn't actually execute on it until probably like a year or two into the business. Tim: You know, there's almost a cliché that, well, we're not selling x, we're selling the experience. It's horribly overused but I think you guys really nailed that. Danny: Thank you. Yeah, we pride ourselves quit on that. It's actually advice I give other founders quite often when they ask me for help is that you have to sell an experience, a lifestyle, a brand. If you sell commodities, then Amazon will beat you every time and so you got to do something different. Tim: When we're talking about snacks, we're not really talking about snacks. Danny: Right. It's not just a box of random snacks, yeah, yeah. Tim: That's awesome. And you guys have worked really hard to kind of maintain all of your marketing, your photography, your storytelling, it's all in-house, right? Yeah, correct. Actually, the creative team is our largest team inside the company. We have two full-time photographers, we have graphic designers, art directors, and all of it is copywriting is all done ourselves. It's very important to us because it's not just, once again, the brand, it's also about the community and the kind of loyal following that our customers have for us and we don't want to disappoint them. We don't want to all of a sudden give them something that is subpar. And so a great example is I actually still final taste test everything that goes in the box six plus years later. Tim: I'd be looking forward to going to work for that. Today is taste test day. Danny: It is, exactly, we have a monthly snack tasting day and we'd like ship everything over to our New York office. Our Japan team curates the samples, we get about 30 samples and they get shipped over. And then a whole team gathers and we taste test it, and we curate it down to 16-ish unique products. And I kind of still final curate the thing to make sure it's on par with what would it should be. Tim: Awesome. Well, let's back up a bit. Because the subscription box model, it's a tough one. Most startups don't make it but you guys did. So let's back up and I want to walk through how you got your first 100 customers, and then how you move to the first 1,000, and then to the 10,000. And then we'll talk about where you're going next with box marketing brochure. Danny: Sure. So as I mentioned before, when I kind of bootstrap launched April 2016, it was just me and I had no funding or external capital, really. I put some of my own savings in and so I couldn't do paid ads. I worked at Google before in kind of digital marketing so I knew that you need a certain amount of budget in order to make paid ads work. And so I didn't want to just waste money for no reason. Plus, I had no brands at that point so nobody would even trust what I was doing. So for the first 100, it was very much like scrappy guerilla marketing. The first 40 were pretty much all friends and family, and then them telling their kind of loved ones, etc. Tim: So I mean, word of mouth can get you to 100 but how are you sourcing product? Were you had friends shipping it over from Japan or bringing back suitcases full of sembe or what? Danny: The early days were scrappy/kind of even maybe legally ambiguous. There were certainly some snacks smuggling. I mean, it's snack so I think it's totally okay, where I did actually bring back snacks in my suitcase from Japan to America.