Adapted from a presentation by Davis M. Smith
Q: How did you gain an international interest?
A: When I was four years old, my family moved to Latin America, where we lived for the next nine years. I had that early exposure to living internationally, but upon returning from my mission in Bolivia, it took me a while to decide what I wanted to study. I ultimately decided to major in international studies. After making the decision, my first priority was to land an international internship. I found my first internship through the Kennedy Center, working in Peru with the Employment Services program. It was the first year of the program, since the Perpetual Education Fund had just been announced, so there was a lot of excitement about it. My wife and I went together, which was an incredible adventure for us. We had just gotten married, so it was like an extended honeymoon, only not so glamorous. We lived in a low-rent, second-floor apartment belonging to a wonderful LDS family in Lima. We had a lot of fun together, and I learned a lot about myself during that period. During the internship, I realized I did not want to become a lawyer and discovered I enjoyed business. I threw away all of my LSAT books in Peru and committed myself to do something in business.
Q: How did you gain business experience?
A: After returning from Peru, I began looking for my next internship. I wanted to do something international, but I wanted it to be business related. I started showing up at internship offices around campus, pouring through binders, and I found this startup in Salt Lake City—Del Sol—with retail stores throughout the Caribbean, Mexico, Alaska, and Hawaii. They had these little niche retail stores targeting the cruise ship industry. I met with the company, and my wife and I were offered an internship together, working in the Cayman Islands, where we spent eight months running a store with twelve to fifteen employees and managing inventory for this little $2–3 million store. It was a great first experience. We had a kayak on the beach, we went diving all the time, but at the same time, I was developing real skills in business and learning about myself and what I was good at.
When I finished the internship, Del Sol (their corporate office is in Salt Lake) offered me a job and said, “We want you to come work for us at the corporate office. We want you to help us open additional stores around the world.” I said, “I have a semester left of school though.” And they said, “No, we need you to start working right now.” I said “okay” and started working and extended my last semester over two semesters at BYU as I was traveling back and forth. I ended up having a great experience with their company and graduated about a year later. One of my assignments was to make sure stores opened up on time, but there was a lot of inefficiency. When one of our fixture suppliers was late, it would delay the opening of the store. I thought if I could consolidate the fixture manufacturing into one factory, maybe we could get better pricing, and we would have more consistency on our store openings. I found this company in California—flew out a visited them, and they said, “We can make all of these fixtures for you. In fact, this one fixture that you use twenty to thirty of for each store, we might want to consider making that in China.” For me, it was like a light flipping on. “You can make stuff in China?” This was in 2004. Now of course, everything is made in China.
Q: How did you make the move from Del Sol to entrepreneur?
A: My cousin, Kimball Thomas, and I explored ideas, and because of this exposure to doing something in China, I came up with the idea of manufacturing pool tables in China. Pool tables had been sold the same way they were a hundred years ago with little mom and pop retail stores. And I thought if we could manufacture pool tables in China with our own brand and then import them to the U.S., it could disrupt that market. After coming up with the idea, I took a vacation from my job, and we flew to China. I had arranged to visit two factories. The first was in one of the largest cities in China, the second was in a small town many hours from any large city. Our first stop was at the factory in the large city. When we arrived, I was shocked. There were dogs running around, dirt floors, and guys sitting on these stools, hand carving pool tables. I thought, “I don’t know if this is going to work.” We started to get scared, after all, this factory was the one in the large city. We were scared to think of what the one in the small town looked like. My cousin said, “Let’s not go to the small town.” We found a hotel, and we were going to stay there for the night and leave, but I had to call this other factory and tell them. The guy who answered the phone spoke English pretty well. And he said, “We are going to come pick you up right now.” I could not say no. To our surprise, this guy shows up in a chauffeured Benz. We go to the factory, and it was legit—a real factory this time, and we started placing orders. We first started by selling on eBay with a ten-week lead time for a custom-made pool table. And to our dismay, they actually sold! We started selling more and more, and we used the money to finance the pool tables we were making in China. We did not have a showroom, but we had people contacting us saying, “I see your location is in Utah; I am in Utah. Can I come see one of your tables?” So we convinced my aunt to let us put one in her basement. We painted the basement, made it look like a showroom, and we gave her a cell phone. My cousin was still in college; I was working my job. We told my aunt, if anyone calls, sell them a pool table. And she started selling pool tables every day. It was enough validation for us to open up our own store—it started booming. A few months later, I moved to Georgia with my family and opened another store there. Our first year, we did $1 million in sales. We ended up disrupting this little industry, and we found that we loved business—loved entrepreneurship. I feel lucky I discovered this love at a young age, because a lot of people do not figure out what they love until later. My advice is to find something you love. If you do not love what you are doing, find something else. Life is too short to be working at something you do not love and are not passionate about. We did this for about six years, and we became the largest pool table retailer in the U.S.
Q: With that kind of success, why did you decide to go back to school?
A: After about five years, we said, “Okay. We are ready for a change.” So we decided to go to business school. There was this great program at Wharton, called the Lauder Program, where I could get a dual degree with an MBA from Wharton and an MA in international studies from the Lauder Institute at the University of Pennsylvania. You have to speak one of nine languages at an advanced level, which they test through a standardized oral exam. They admit about sixty students per year to the Lauder Program out of the 850–860 students in the MBA program. I was fortunate enough to be accepted, and the program exceeded all my expectations. I traveled to thirty countries during my two years in business school, including North Korea, Cuba, and Brunei. My cousin chose to attend Harvard Business School. While we were in school, we sold pooltables.com and decided to start another business together. Most of our entrepreneur friends thought we were crazy to go to business school when we had a business doing well. We believed we could do something bigger and better. We spent the first year in business school coming up with sixty ideas. During the summer, we met in Palo Alto and spent the summer on Stanford campus cutting the sixty ideas to four. We spent the bulk of the summer on those four ideas, testing them, vetting them, experimenting with them in different ways until we finished our summer convinced we had identified the most promising idea, which was moving to Brazil and starting an e-commerce baby business.
Q: Why Brazil and why a baby business?
A: I had never been to Brazil and did not speak Portuguese, but I speak Spanish, which is pretty similar. I grew up in Latin America, served my mission in the region, and discovered I had a real passion for Latin America. I did my master’s degree with an emphasis on Latin America and Spanish. So I was interested in the region, but I did not know a lot about Brazil. However, I knew it had 200 million people. The more I researched Brazil, the more I was blown away by the progress the country was making. It just felt like a perfect moment to start a business in Brazil. Why the baby business? In 2007, I was introduced to the founder of a company called diapers.com, who also happened to be a Wharton alum. I watched his business over four years absolutely explode and he ultimately sold his business to Amazon for $545 million. I already knew e-commerce and had definitely changed my share of diapers, so I felt I knew the space and believed the same business model would work in Brazil.
Q: When did you launch baby.com.br?
A: We launched in October 2011. We knew we needed to find a way to establish credibility early, so we struck a deal with the biggest female celebrity in Brazil—Angélica and her husband Luciano Huck. He has more Twitter followers than the New York Times and together they have more than nine million Facebook followers. They are the powerhouse celebrity couple in Brazil, and the parents to three beautiful children. Angélica became our CMO, Chief Mommy Officer, and our business exploded.
Q: How did you get this Brazilian celebrity to be the face of your company?
A: For any CEO, your first job is to “sell the vision” of your company to investors, employees and the market. We knew we were going to revolutionize e-commerce in Brazil and build a billion dollar company; we just had to sell that vision. We raised $4.5 million when we were in business school with nothing more than a Powerpoint and the domain name baby.com.br. With that kind of money and the track record from already building an e-commerce business, the story was a little more compelling. When we were raising this money, we ended up in a situation where we were could pick and choose which venture capital firms we wanted to receive money from. One of them was a Brazilian firm called Monashees Capital. It is the leading VC in Brazil, but their valuation of our business was a little lower than some of the Silicon Valley VC’s. We made the decision to go with them, because we are not Brazilian, and we felt we needed that local expertise to get started with the business. It was the best decision we made. It was through Monashees that we got in touch with Angélica. They knew her and her husband, and they recommended we talk to them. At first, we were not that interested. Then this investor told us, “Hey, they live in Rio de Janeiro. If you will go out there and meet with her, I will fly you in my private jet.” I said, “Oh! Alright, I want to fly in the private jet, so let’s do this!” When we met her and her husband, we were blown away. We discovered we shared a lot of similar values. They are good people, and they have a great family. We saw they believed in us, so we ended up striking a deal.
Q: Where are you one year later?
A: On day one we had six employees. We have 180 people now. We are believers that your business is only as strong as your team, so we focused our efforts on building the best team in Brazil. We needed someone to handle the logistics for e-commerce in Brazil. It is a lot more complex than shipping in the U.S. where you have Fed-Ex and UPS. So we hired the head of logistics from Wal-Mart. We did this same thing in every area of our business. The growth has been incredible. We have over two million moms who have registered with us and who we communicate with on a daily basis.
Q: What advice do you have for someone wanting to do what you have done?
A: I want to touch on internships, because I would not have come up with the idea of doing something in China had I not worked for Del Sol. And I never would have gotten that job had I not done an internship for them. Even the way we operated pooltables.com was similar to what I had seen at Del Sol. It was through that internship experience that I learned how to lead people and how to manage inventory that helped us grow our business. You have to start working your network. Go on LinkedIn and start searching for people. If you served your mission in Taiwan and you want to do something in China, start searching for people who studied at BYU and live in China. I was married as a student, which at BYU is normal, right? That is not normal everywhere else. I would say, do not let that be an excuse to not do an internship. I was married, and I did both of my internships with my wife. I also hear about the lack of money. Well, I paid for all of my BYU education; I did not have help from my parents. And I paid for my entire mission. As a teenager I worked to save for my mission. You have to be resourceful. Do not use the fact that you do not have money to not do an internship. Another challenge regarding internships is time. There is no rush to graduate. Of course, you need to graduate, but taking one semester off to get an internship experience or taking the summer off to do an internship—this is the kind of thing you need to be doing in school. These are also educational experiences.
Q: What about the business angle?
A: If you are considering a business career or a career in something international, I would recommend a minor in management at the business school. Over half of the Kennedy Center alums end up working in business after graduation. You can do the Global of Management certificate. I enjoyed that. Take some of these business classes to build your background. One thing I did not take advantage of, and I regret this, is that I did not establish deep relationships with my professors. Professors are always there to help, always willing to help, and they have tons of experience. I have tried to make up for that. While visiting BYU, I met with a handful of professors I had heard of or met in passing over the last couple of years and had a great time talking to them. Reach out to your professors and take advantage of their mentorship.
Smith had previously been an Entrepreneur in Residence (EIR) with Alta Ventures Mexico, an early-stage venture capital firm in Monterrey, Mexico, and a project manager with Del Sol, LC, directing the opening of twenty retail stores. He received a BA in international studies with minors in management and Latin American studies and a Global Management Certificate from BYU, an MA in international studies from the University of Pennsylvania’s Lauder Institute of Management and International Studies, and an MBA in entrepreneurial management from the Wharton School at the University of Pennsylvania.