Pressbox and Tide Cleaners: Vijen Patel. The $1.99 Gamble That Built a National Brand
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
In this episode of "How I Built This," Guy Raz interviews Veejin Patel, co-founder of PressBox, a revolutionary dry cleaning service that transformed the traditional industry model through smart locker technology. Patel, a former McKinsey consultant and private equity analyst, didn't chase his passion but instead pursued what he called "the least worst idea" in 2013. (09:52) Together with co-founder Drew McKenna, Patel built PressBox from $340,000 in personal savings and debt from their parents into a profitable business that eventually caught the attention of Procter & Gamble. (26:18)
- Main Theme: How analytical thinking, relentless execution, and focusing on unit economics can transform even "boring" industries like dry cleaning into profitable, scalable businesses that eventually attract major corporate buyers.
Speakers
Veejin Patel
Veejin Patel is the co-founder of PressBox (acquired by Procter & Gamble and rebranded as Tide Cleaners) and current managing partner of The Eighty One Collection venture fund. He graduated from Notre Dame and worked as a consultant at McKinsey and as an associate at a private equity firm in San Francisco before leaving his $300,000 salary to build a dry cleaning business in Chicago. After successfully growing PressBox to 250 locations across multiple cities, he now focuses on investing in "boring" businesses that are underserved by traditional venture capital.
Guy Raz
Guy Raz is the host of "How I Built This," one of the most popular business podcasts. He's an award-winning journalist and former NPR correspondent who has interviewed hundreds of entrepreneurs and innovators, helping to tell the stories behind some of the world's most successful companies and movements.
Key Takeaways
Focus on Unit Economics Over Passion
Patel's approach to entrepreneurship was refreshingly analytical rather than passion-driven. (09:52) He deliberately chose what he called "the least worst idea" by looking for highly fragmented industries with low technology adoption and no branding. Rather than following his heart, he followed the math, analyzing industries like dry cleaning where traditional businesses operated on razor-thin 15% margins. This analytical approach led him to realize that by eliminating storefronts and using lockers instead, he could increase margins to 40% while providing better customer convenience. The lesson here is that sustainable businesses are built on solid unit economics, not just passion or trendy ideas.
Customer Retention Is Everything in Location-Based Businesses
PressBox discovered that the difference between 96% and 98% customer retention was astronomical when compounded monthly. (43:54) As Patel explained, in a building with 220 units, losing even one customer meant their serviceable addressable market decreased to 219 people - they couldn't simply replace customers like other businesses could. This insight led them to prioritize quality control so intensely that they eventually built their own cleaning facility to ensure consistency. The takeaway is that in location-constrained businesses, retention rates that seem marginally different can compound into massive differences in long-term profitability.
Validate Through Direct Customer Interaction
Before spending any money on equipment, Patel and McKenna set up tables on sidewalks in Chicago to survey potential customers about their willingness to use the service. (22:05) They asked people if they would use lockers at their office buildings or residential buildings, gathering crucial data that shaped their entire business model. This direct validation approach revealed that offices weren't the right target - people didn't want to bring dry cleaning to work. Instead, proximity to wardrobes in residential buildings became their key insight. The lesson is that hypothesis validation through direct customer contact is invaluable, even if the feedback initially contradicts your assumptions.
Leverage Existing Infrastructure and Trends
PressBox's success was amplified by riding the wave of new apartment construction in major cities. (51:18) Patel noted that in 2016, there were 55 new buildings coming to Chicago, and they got into 53 of them. By approaching building owners during the construction phase, they could integrate lockers into architectural drawings and create customer behavior from day one rather than trying to change existing behavior. They discovered that revenue per unit was twice as high in new construction buildings versus existing ones. The strategy here is to align your business with larger macro trends and infrastructure developments rather than fighting against established patterns.
Bootstrap Until You Have Negotiating Power
Despite multiple opportunities to raise venture capital, Patel and McKenna chose to bootstrap PressBox using personal savings and debt financing against their equipment. (48:03) This decision, while financially stressful (Patel's bank account regularly swung from positive $300,000 to negative $400,000), ultimately gave them more leverage when acquisition discussions began with Procter & Gamble. They recognized that having alternative funding options on the table strengthened their negotiating position. The lesson is that bootstrapping, while challenging, can provide more control and better exit terms if you can achieve profitability and scale before seeking external capital.
Statistics & Facts
- PressBox could process 26 transactions per hour with their locker model compared to only 4-6 transactions per hour for traditional pickup and drop-off services like Washio. (20:17) This operational efficiency was the core advantage that made their business model profitable while competitors struggled.
- The company needed only 26 customers per location spending $40 per month to break even, requiring just 10% of residents in a building to use their service for profitability. (24:34) This low threshold for success made their business model highly scalable and resilient.
- By eliminating storefronts and going direct to consumers through lockers, PressBox was able to increase margins from the industry standard of 15% to 40%, with their EBITDA margins eventually reaching 20-25%. (39:29) This margin improvement was achieved by cutting out rent and on-site labor costs.
