NVC@25 Fireside Chat: LemonBox Cofounder Derek Weng
To mark the 25th anniversary of the Edward L. Kaplan ’71 New Venture Challenge, a top-ranked accelerator at the University of Chicago, the Polsky Center for Entrepreneurship and Innovation is hosting a series of fireside chats with alums of the program to discuss their startup journeys.
NVC alum Derek Weng, MBA/MPP ’16, spoke with Booth entrepreneurship professor and NVC judge Mark Tebbe about how he built LemonBox, a direct-to-consumer ecommerce operation selling vitamins to Chinese customers. In December, LemonBox, where Weng is CEO, announced a $2.5 million pre-Series A funding round.
Weng, who grew up in China, came to Chicago to get his master’s degree in finance at DePaul University, then worked as a financial analyst at Merrill Lynch and Morningstar. But entrepreneurship was in his blood — his parents were in the retail business — and he was interested in tech startups.
As a student at Chicago Booth, Weng participated in the NVC twice – first with an idea for a social network to help international students start life in a new country, then with a carpooling app. It wasn’t until after he graduated, and his then-girlfriend – now-wife, Cindy Nan – was still a student at Booth that they formed an NVC team around LemonBox.
The idea for LemonBox came, as they tend to do, from solving a personal pain point. Weng said that whenever he returned to his hometown friends and family would ask him to bring them vitamins and supplements from the U.S. He wanted to bring some for his parents, who were getting older, but wasn’t sure what they needed. So he hired a U.S.-based nutritionist to give his parents a consultation about what supplements would be beneficial.
The nutritionist’s recommendations were enlightening, and he asked her to write down the questions she had asked his parents. He used those to develop a survey he sent to 200 friends, then had the nutritionist suggest vitamins based on their responses. Eventually, friends asked if he could just send them the products directly.
“You just have to prove the problem exists and prove that the concept you have can help solve this problem,” Weng said.
While LemonBox was going through the NVC, Weng was working for Wal-Mart, leading cross-border ecommerce business development between the US and China. He chose to work in retail after Booth to learn more about ecommerce.
“If you want to disrupt the industry, you have to become the expert first,” Weng said.
While LemonBox did not make the finals of the NVC, a program that consists of both a class and a business competition, the process taught Weng fundamental lessons about how to structure a business plan that served him well for future fundraising.
Raising money wasn’t easy. Weng said he spoke with 200 investors before he got a bite. His big funding break came when LemonBox was backed by the prestigious accelerator Y Combinator in summer 2018.
It was the fourth time Weng had applied to Y Combinator, demonstrating a tenacity he had earlier exhibited during his three passes through the NVC – and he thinks the repeat attempts helped his cause.
“They want to see persistency in a founder because making something great is not easy, so something you have to have is commitment and formidability and persistency,” Weng said.
LemonBox has now surpassed 1 million customers, and sales are growing 50% each month, Weng said. Run primarily through a Mini App on WeChat, the company offers personalized nutritional advice using an algorithm developed by data scientists and nutritionists, and has a facility in Silicon Valley where it develops its own products.
Most gratifying, Weng said, are the letters he receives from customers in small towns who previously spent much more for vitamins of questionable quality, often from multi-level marketing companies.
“We are selling affordable products to lots of people who need help,” Weng said.
LemonBox is now focused on reaching more people. In a country with a population of 1.4 billion, there is plenty of ground to cover.
Weng recalls one of the biggest lessons he learned at Booth was parting advice from NVC co-founder and professor Steve Kaplan, during their last class.
“He said just aim high and think long term,” Weng said. “I took that into my heart. Whatever I do for my career, now for the company, I always remember you have to aim high. You have to jump for it.”