Phillip Akhzar is the Founder and CEO of Arka, a completely environmentally sustainable API that allows users to fully customize their brand's packaging designs. Phillip has over 16 years of experience in packaging and supply chain logistics and hosted a course with Shopify on packaging and shipping your products sustainably. From Boeing Aerospace to Silicon Valley startups like iCracked, Philip has brought his core competency at the biggest companies to businesses just getting their start.
On this episode, Phillip and I discuss what it takes to run a totally sustainable operation, how Arka can source all of their products locally in the United States, the impact his company has on the logistics industry, and much more.
What is Arka
[00:01:09] Philip Akzhar: So we have a component of Arka.com, which if you think, vista print, you can design and order packaging as easy as you would a business card online, catered to direct consumer merchants produced in North America, shipped all over the world.
[00:01:25] Alex Bond: I love that elevator pitch. And so why in principle, right? Do customers respond to more personal packages versus traditional packaging? You know, there's gotta be some reason that this exists. So that's gotta be because of the customers. Why do they respond to something more personalized?
[00:01:44] Philip Akzhar: Totally. I mean, part of it is a brand. So the merchant that buys packaging from us that ultimately gets it in the consumer's hand, they're essentially replacing a store experience, an in-store experience, right? So to be able to display physically, literally their ethos as a business, as a brand, what they stand for, what designs they chose, what colors they chose, all of that is incorporated into the package, which is something that's.
The personal aspect of delivering that product to the consumer, because what else are you going to have to to pick off of that merchant that you went with? You have the product short, but since you're buying it online, you're not getting in a store. That's essentially replacing the in store experience.
So you want to be able to make a good impression, a strong impression, something that's shareable versus just having it show up in a brown box. They forget about you. You better crush it with the product. But even then you're going to have, you're sending mixed signals to, to the end, to the end customer.
Cause let's say you do have a fantastic product that makes up for the fact that it comes in just like a gray poly bag or a brown box. You're kind of telling them this may not be of the highest quality because you didn't care enough to put it in something that you know, relates back to your brand, to the designs that you could have chosen had you provided the product.
And similarly, there are stats around how a customer will perceive your product. If it does come in something beautiful, had it been, let's say a low quality product, they're going to hype up that product. If it came in something nice more than they would have otherwise, even if let's say it's not the highest quality product.
I mean, you got it manufactured in, you know, overseas but you gave such a nice elevated experience that that's all going to tie into how they perceive the product, your package, your brand, and ultimately that's what you want to be able to do.
The Significance of First Impressions in Brand Interaction and Sustainable Practices
[00:03:35] Alex Bond: And I feel like it's human behavior to be extremely impressed with first impressions, you know, judging that there is something very profound to taking the idea and the psychology of how humans meet other people or how humans interact with brands, because that's what a brand is.
At the end of the day, it's just a group of people, even the, even the court of law has said, this is a person that a first impression matters. And that's where the packaging actually is, is the first impression of this is what they want me to see. Something very brand notable about Arka is that your operation is also entirely environmentally sustainable from end to end, which is difficult.
You know, that is not something a lot of companies can say at all, even in any part of their business management, right? And for yours to be environmentally sustainable end to end must be difficult, you know, to start off, what are some of these sustainability methods that you practice? And then why is that so important to you?
[00:04:44] Philip Akzhar: Totally. I mean, you can take the statistical reasons as to why it's important, because you have buyers that are Gen Z and buyers that are Gen Z are X percent more likely to use your product or use your platform. If you have sustainability measures in place, whether it's the material, which we get audited for, we have FSC certification for our paper products or your carbon neutral checkout, which we've integrated through a company called eco cart.
So, allowing that at checkout, and then we have, you know, compostable bags, recycled material, PCR post consent post consumer recycled, which is actually my favorite craft honeycomb mailers where you would have used plastic paper where you have used plastic corrugated inserts where you would have used foam.
But at the end of the day, like, this is a capitalist market that we're working on. So we just give buyers the choice. They can make the choice. They can use us instead of, let's say, like a U line catalog and get the, you know, boring poly millers that are made of plastic if they wanted to, because maybe that's what they can afford from the get go is just like cheap polymers.
That's fine. Use us and then we'll graduate to something a bit more sustainable when you're ready. So for us, it's a matter of giving customers a choice. So that's what's important to us. It's also important that personally I have, I have the choice. I have the choice to sell these products. Sure. So I, I'm going to, like, it's a great way of doing my part.
And our company doing its part with respect to the environment. But again, at the end of the day, it's up to the customer. I'm not going to try to push them one way or another. I'm not going to try to sway them, but I'm going to give them the choice and have that optionality so that if they want to make that type of purchase. They can't be at one way or another.
[00:06:27] Alex Bond: And not to reach too much, but does that include shipping methods as well?
[00:06:33] Philip Akzhar: Yeah. I mean, like you can have your shipping be carbon control. If you wanted to, you just pay extra and again, powered by eco carts. So we appreciate them lending our technology for carbon capture.
You can also do like ground versus air or whatever the case might be. We list all the major carriers through our platform. And we use shipping APIs like Shippo to be able to display the best options so that you can make an affordable purchase on the shipping side. And again, we give the buyer the choice.
Analyzing the Statistical Impact of Packaging on Gen Z Consumer Behavior
[00:07:01] Alex Bond: And you mentioned the importance that this could have statistically to Gen Z customers, right? And the problem I have just in my head with that is Gen Z customers are not yet, to my knowledge, the market for consumers with disposable income, right?
Because packaging is something that is to my opinion, someone who is looking for those extra frills, something even especially more business to business that I can kind of say, you know, I want to make that impression.
I don't know. I personally don't know a lot of Gen Z people in general in my life. So I don't want to make wide generalizations. But I don't know if they care about that. And you're telling me that the statistics might show that they do, or what's kind of the basis there for why it is maybe statistically impactful and important.
[00:08:00] Philip Akzhar: So, I mean, it really just comes down to the fact that they're a growing part of the market when it comes to selling products. I mean, you just look at like TikTok and then TikTok is now enabling sellers on TikTok. It's obviously blowing up. They have a 3PL network that they've partnered with, so it's fulfilled by TikTok.
These, I mean, who do you think those viewers are that are buying those products? Right. And then what do you think they're sharing? They're not going to share the product that came taped up in a box, like you need to sit like at the end of the day, Gen Z, millennial boomer, I don't care what it is. You need to look at this as marketing spend.
It is the one thing you will send to your customer that has a 100 percent open rate. And if you treat it like that. Just consider it as like opportunity costs. Like, yeah, I'm not saying like, don't spend money on Google apps or whatever type of retargeting you want to do.
But when that product ends in the end customer's hands and it comes in a nice box, don't you think they're more likely to share it? Hadn't come in like a boring envelope, but that's really what I'm trying to drive towards and be a thought leader on is like, consider it marketing spend.
[00:09:06] Alex Bond: No, it just kind of like locked into place for me too, especially when you said TikTok, because if you told me eight years ago that there would be a market and a culture of unboxing videos.
I'd call you a liar and an idiot, you know, of that people would literally spend their free time watching other people just unbox things. That almost perfectly one to one proves why to make the box look good. You know?
[00:09:35] Philip Akzhar: Yeah. You're giving yourself a spot on the stage. Otherwise you're not even going to make it up there if it came in something boring. So buy that you're basically buying a ticket to be on stage. So look at it like that.
The Strategic Decision Behind Local Sourcing in the United States for Arka's Sustainable Business Practices
[00:09:48] Alex Bond: I do like the way that you articulated that another selling point for Arka on top of being end to end sustainable business practices is that all of your materials are sourced locally, in the United States. One is difficult to do too. It feels really difficult to do. So what kind of, first off, what brought up that decision of sourcing locally in the US.
[00:10:13] Philip Akzhar: It's easier from like a supply chain standpoint. And to be honest, like again, optionality, right? Like you can go through the website and you'll get all our boxes that are produced locally, but some people knock on our doors and they're like, Hey, I need really high volume of, let's say like poly mealers are really high, really high volume of folding cartons or chipboard, which is the same material as like a cereal box.
And that we can and will produce overseas due to the fact that again, we're giving the choice to the customer. So if it's something super high volume. You know, we can get it done overseas with boxes. It actually financially makes sense to get them made here and buy boxes. I mean, like shipping boxes, because when you calculate in the freight cost of shipping over sea freight boxes from overseas, you're basically shipping lumber.
It's going to be expensive. So not only that, but the timelines, I mean, the entrepreneurs that we're selling to, sometimes they can be a bit, they're not exactly planning ahead in a lot of cases. And that's also what makes them good entrepreneurs in the first place. They're just moving really quickly.
And if you tell them, yeah, these boxes are going to take x number of weeks to produce overseas. And then the 30 to 60, 90 days to ship from overseas, you know, you're missing their deadlines. So producing locally just makes more sense, both financially and from a timeline perspective.
[00:11:28] Alex Bond: Yeah, that would not fly. No pun intended, but so that's from kind of like a logistic standpoint to a lot of entrepreneurs support that venture for the advocacy piece, kind of the same reason of supporting that sustainability because it's, you know supporting local jobs, supporting the local economy, that sort of thing. Is that a selling point or is it really entrepreneurs thinking in zeros and ones? Like, does this make financial more sense?
[00:11:55] Philip Akzhar: So I studied industrial engineering at Cal Poly. And one of the books we had to read was the goal. And at the end of the day, the number one goal of any companies to make money. So it comes down to cost, of course. Yes. Sometimes there'll be some purchase signaling there. And I'll be honest. We played that game too. We're proud.
And we display the fact that we have an FSC certification chain of custody for sustainable paper for our boxes. We're proud that those boxes are made in the USA and we'll display that. But realistically, like, If we're getting priced out because we, for example, would refuse to produce a hundred thousand poly millers overseas, I'm not going to not win that business.
Like at the end of the day, we're business people. We want to make money. We need to keep going. Right. And that'll support the other sides of the business where people, when people are purchasing strictly local off of our website and FSC certified packaging or sys or other sustainable materials. So again, it comes down to buyer's choice. Maybe it is a part of their ethos and we're happy to support it.
[00:12:53] Alex Bond: How have you been able to compete with companies that are importing materials from other countries at a cheaper cost while you continue to source locally.
[00:13:02] Philip Akzhar: Timing really helps. So like Uline basically preys on the fact that you're shit out of luck when it comes to a stock out of boxes and they will deliver same day or next day, right?
The whole reason they win, cause they're super expensive is because you ran out of boxes and they'll send you more almost immediately, but they're a real estate play. They have warehouses all over the country. They don't even make their own boxes. They're producing and then warehousing.
But they be, let's say overseas because of timing, we will actually build out a program for merchants and for warehouses where we can connect to your warehouse management system and send you more when you run out at affordable rates so that you don't have to break glass in case of emergency and leverage one of the big, big catalog box companies.
So timing beats everything at the end of the day, you'll pay whatever, if you have like a certain SLA that you need to meet. So that's something we're trying to capitalize on and make their business model a moot point in the ecosystem. So wish us luck there. They're pretty massive. They do 10 billion a year, not 10 billion market cap. They do 10 billion a year. So that's whose lunch we're taking a bite of.
[00:14:11] Alex Bond: And the importance of expediency reiterates your fundamental conception of time is literally currency to an entrepreneur who is moving with impulsiveness, you know, where, where if they want something and something runs out, they want the quick, fast solution, not the solution that is miles down the road somewhere.
So if you can a price tag on expediency, then why not? I mean, that's kind of what I hear you say.
[00:14:43] Philip Akzhar: Yeah. One of my favorites, like one of my favorite movies is the aviator. Martin Scorsese made it Leonardo DiCaprio. And it's one of his early roles. He crashes one, but it's based on a true story. It's a Howard Hughes story which like Iron Man was based off of and it was like a previous day.
Elon Musk back in the day did a lot of innovation in aerospace, but even at his level, he was thinking in time, he had crashed his plane. He was in the hospital bed. And his lawyer came up to him and was saying how much money he has. And he wasn't even listening to the dollar figure.
He like shook his head and was like, no, no, no. How much money do we have in time? So the answer of like how much money he had was six months, not like 40 million or whatever he was looking at. And as an entrepreneur, it's the same thing when you're doing different rounds of fundraising. If you're taking the traditional VVC route, you raise, let's say, like, 18 months worth.
And that's what you look at. What regardless of it being a seed. So a couple million or a series a double digit million at the end of the day, it's all, let's say, 18 months in this case. And so when you look at your supply chain and what you're able to get from a logistic standpoint for your packaging for your product.
It's all in terms of time, because in that time, you're gonna have to make certain amount of money. So you can get more product and sell more. So you actually have runway. And as a result, thinking in time is so important. So, for us, we show that we value your time. And trying to get things to you as quickly as possible and get back to you as soon as possible.
Like, just as a side comment, when it comes to these packaging companies, dude, they'll respond to you with, like, weeks at a time, days at a time. You're lucky. That's my mind. They're fat lazy. They don't think they need to change. But that's exactly what we, we aim to disrupt in the spaces. Be quick, be sustainable and be affordable.
The Impact of Expediency on Amazon's Success and Arka's Approach to Efficient Shipping Practices
[00:16:25] Alex Bond: I might even argue that I didn't, I used it maybe a few times, but I don't think Amazon becomes where it is without, you know, prime delivery that was. Easily what turned it from, yes, a hundred percent. That's easy, easily to me, what kind of turned it from eBay into like, no one can catch us at all is that expediency.
So there's obvious validity to what you're saying. Another part of the selling point of Arka is you mentioned you help warehouses ship less air. Can you describe what that means a little bit more specifically?
[00:17:06] Philip Akzhar: Totally. So just, it has to do with like right sizing packages with products. So you order something off Amazon.
Speaking of Amazon, they have their pluses and their minuses. That minus is, you know, pretty much everyone listening, everyone listening. If you ordered something off Amazon at one point or another, it's coming to box. That was like way too big. And by multiples of too big, meaning it was probably four times the size that it needed to be on average, right?
A lot of that has to do with two, at least what we've discovered is two main reasons. One, they might've just run out of whatever package that product was originally supposed to go in and the speed at which, and the volatility at which these Amazon warehouses are operating.
It's not a surprise that maybe they just ran out of that package and it needs to go in something bigger because you can't physically ship something in something smaller than it was going to go in otherwise that would have been the box that they selected in the first place, which then brings to number two.
They just had a bad selection. There was just a poor marriage between whatever you were supposed to ship that product in and the package that the product and the package that you paired it with, right? For whatever reason, someone at the warehouse was saying that product a was going inside of the selection of box a that goes to product a is four times the size.
Okay. Why? Where's the rhyme and reason in that? Well, we're able to do is run an analysis of all skews that a warehouse is responsible for. And create like a menu of boxes that they should choose from. And here, here's the problem. And I'll kind of use this analogy, the SKUs or products that a warehouse is responsible for shipping change all the time.
I mean, if they're a growing business, they should be changing all the time. But the problem is the menu doesn't change. The menu of boxes don't change. Like that menu needs to, needs to not be stale. Otherwise you're going to have the same boxes day in and day out. Even though the SKUs that are going in those boxes are constantly changing.
So what we're able to do is have something run an analysis daily for the SKUs that you're responsible for shipping and creating at the reorder point of those packages, a optimal size package. And then we'll phase out sizes that don't make sense anymore. Having something like that run in the background at all times is what really makes us different.
Cause this process, which is called cartonization is not new. Like it's not a new concept of a warehouse asking itself, what am I shipping and what is it shipping in? But the problem is they really only ask that question like once or twice a year. But you're telling me that in that six month, 12 month period, the skews at the warehouse aren't changing?
Of course they are. So to have something asked that question daily. And make a menu for that warehouse every time they run out of packages is what we're able to accomplish. And as a result, the spend that they put into this, meaning, you know, boxes and shipping costs of those boxes accounts for 12 percent of the revenue.
And so we're able to reduce that dollar figure by 20 percent by helping them ship less air, which is massive, right? So being able to target their SKUs, come up with a menu. Is what ultimately helps them ship less air. They won't run out of those packages. So we put it on auto replenish, and that ties back to the first two points, right?
So just to summarize, you get a product in a box. It's too big for two reasons. One, they ran out of the package was supposed to go in. It was never a good, good match in the first place. So what we're able to do is one, make sure they don't run out of package and to make sure that that pairing is optimized. So give them a good menu of packages that they choose to ship products in.
Exploring the Evolution from Packable to Arka: A Journey in Sustainable Business Models
[00:20:42] Alex Bond: No, I think that's entirely valid. Your previous company, packable, had what seems to be kind of a similar business model. Can you tell me a little bit about that company and then how it led to Arka?
[00:20:55] Philip Akzhar: Yeah, totally. So I went through as a founder of that company, actually exited my position there because I wanted to expand the technology from what we were doing there. So it really just came from like a, I think we can do more. And I think we can do better than what we're already doing.
Not to compare myself to someone like Steve jobs who like leaves Apple creates next because he just didn't have like the creative freedom to do what he wanted to do there. But that's really what it just came down to now. Difference being, you know, packable was an Apple size to acquire me shortly thereafter.
But I promise you, if they could, they would due to the fact that we've really taken things to the next level. Like it's the next gen packaging company for direct to consumer merchants and being able to have a universal API that connects to warehouses so that those direct to consumer merchants can have less air in the packages that they ship.
So it's just an evolution on an original idea that started with packaging online that has turned into powering pretty much anything that gets shipped and slaps a label on it and goes out the door.
[00:22:00] Alex Bond: It sounds to me that API is a massive financial achievement and incentive. I think the business practices as well. What are some of the things that you learned at Arka that you wouldn't have learned if you stayed at Packable?
[00:22:16] Philip Akzhar: Yeah, one's an obvious one, which is just like surround yourself with people smarter than you. I think because that was like one of my first ventures, like I had a venture prior to that where, you know, I started an alcohol delivery company in college way before like Bevy and Drizzly and those other guys.
It was too early though. The County of San Luis Obispo tried to shut us down and fine us over half a million dollars. So unfortunately that had an early departure. But yeah recently heard don't try to don't try to hold on to a grape when you could be splitting a watermelon.
And that's kind of what I'm viewing differently now, when it comes to being like generous with equity and, and wanting to give people a piece of that watermelon, just kind of to drive the analogy home and, and, and build out a company. It sounds obvious to just like surround yourself with people smarter than you, but I think early entrepreneurs.
And maybe I'm just speaking for myself and like, How I might have been a bit naive in wanting to build out a company and have as much control as possible to give away as much control as you can, like, let it be not abdicate the responsibility, but delegate the tasks and delegate the things that you're not as good at, or as someone else might be better at.
And just focus on the things that only you can do. I mean, I think you should do that in life in general, like, focus on the things that only you can do delegate as much as you can to someone else. So that you can focus on your core capability. That just doesn't make sense to replace with someone else. I think that can be applied to anything really. And that I wish I'd known that sooner for sure.
Navigating Leadership and Delegation: A Reflection on Personal Value and Responsibility in Entrepreneurship
[00:23:46] Alex Bond: And one of those tough needles to thread is personally, I think that I feel incredibly valued when given the opportunity of added responsibility. You know, so when a task is being delegated to me, depending on how it's done, depending on the task, I mean, there are a bunch of variables there.
There's one thing to say, Hey, take care of this. Or, Hey, would you like the opportunity to take on this piece of this entire project? You run point on it, balls in your court, like without being kind of micromanaged and helicopter parented. There's something about that ability to delegate properly as a leader.
You know, a boss is someone who kind of dictates who does what, while I think a leader is someone who delegates while they're also in the trenches with them. That's something that I've had to see first hand is, sometimes a boss is sitting in the office and spends all day on the phone, while a leader is the one who's like doing the exact same work right beside you, leaning on you and you lean on him.
One is just, you know, has that capacity of a leader. Did you see yourself as this type of leader when you were at I think you said Cal Poly of because that's kind of the fundamental necessity of a lot of entrepreneurs is a leadership quality. Now I think some end up installing a CEO who might be able to be some of that more leadership visionary person. I'm curious about your journey and your relationship with being a leader of a company like Arka.
[00:25:31] Philip Akzhar: Totally. Yeah. We're getting a bit into like the psychology ofofike a CEO and a leader, which I think is one of the most difficult things to manage, but there's having ego and then there's being arrogant.
And I think you need, I mean, you definitely need an ego of some sort, at least a level one as a leader, because you have to believe in yourself and whatever you think about yourself. It's strange how people can kind of see that in you, like how you, how you view yourself I believe, I believe there's a transparency around how you think about yourself.
You're not kidding anyone if you're pretending to be a leader or pretending to be a boss or showboating and trying to, you know, puff your chest versus there are people out there that know how to lead that I try to aspire to be like that aren't there. They're not doing anything for show.
They just want to win. I just want to win. And that's something that's been refined over the years for sure. But I'm grateful to have maybe it was, you know, I mean, it's definitely good, good parenting on my parent, on my, on my folks part to make sure that I do believe in myself. A lot of that came from them and the people that I try to surround myself with.
So having that stay with you can, can allow the longevity and endurance. To do what one has to do as an entrepreneur, because it, because it takes time, like there's so many quote overnight successes that you look at. And, you know, sometimes you get lucky. Sometimes you are in the trenches for years before anything materializes, but none of that is really going to go down unless you believe in yourself.
So lucky that that's something that's been, I think, a part of my DNA since day one for sure. But did you have your down days? Like, I'm not going to say like, this is just nothing but, you know being at the foot of a boat and waving a flag in the air as like a sunshine shines down on you.
Like that's not how it goes. It's a rollercoaster for sure. And I'm not the first person to say any of this, but deep down still, even on those, even on those shitty days, you have to believe in yourself.
[00:27:33] Alex Bond: Yeah, and that's kind of, at least from my personal experience, the needle to thread for me is I am much less likely to, in my opinion, puff my chest out and be arrogant.
I am much more inclined to be self deprecative and almost say, like, I know that I don't know everything, you know, it's one part of the reason why I love being involved in the production industry is because I know that no one knows everything. And so it kind of evens that playing field a little bit of like, no one has it all figured out.
Same with eCommerce. It's a constantly evolving space. So I know that you don't know what you're talking about because it changed today. Different than it was yesterday. So that kind of evens the playing field. I guess the question I'm kind of trying to get to is calculating that difference between humility.
And arrogance while also not, I don't know, being a proponent of temerity of, of taking those calculated risks. You mentioned yourself, Philip, that you learned a great deal in surrounding yourself with people who are smarter than you. I think that I personally think the difference between a good and a great CEO or an entrepreneur is not just surrounding yourself.
With people who are smarter than you, it's knowing when not to listen to them which is, that's so incredibly difficult you know?
[00:29:04] Philip Akzhar: It's so difficult. It's so difficult. That's honestly something I feel like I should, I'm on the side of like, maybe I should listen more than I am, but at the end of the day, I'm kind of just gonna, here's the thing I ask everyone for advice.
Ask everyone for advice, which means that I need to sift even more. I will say, though, I'm not one to just go around confirming bias. There are people whose opinions I might value more than others, and I'll give weight to that. And kind of maybe I'm maybe I'm some cautiously putting putting variables into an equation.
And then coming up with a result on what direction I should be leaning based on the weighted results that I've gotten from questions that I've asked of different people and the respective answers that they've given me, but I mean, I think only time will tell on that end whether or not I should have been listening to certain people more, more than I should have.
But yeah, at the end of the day, it's pretty, I just want the right answer. Like I'll go for the right answer because at the end of the day, I just want to win, but it's not always the answer that I came up with. And that's totally okay. I want to surround myself with people who have the right answer that I didn't have more often than not. Cause that means I'm in the right room.
[00:30:21] Alex Bond: And one of the things that I find is I learned best, not all the time, but I learned best from my own personal experience one, I'm going to learn best when I screw it up or when I didn't find the solution now, now I know the solution it's here, it's locked in. I probably won't do it again.
The second best version is from someone else's personal experience, you know, not I need some sort of witness to like why your opinion is of your opinion because you read it in a book. I can read it in a book and have a different opinion.
So I think they hold equal weight, you know, what your experience, Philip is going to have a lot more weight than what you think and theorize about something. So I think there's something very fascinating about how we categorize our advice and when to listen and when not to. Are you someone who is more inclined to believe it to be true only once you've experienced it?
[00:31:27] Philip Akzhar: I mean, yeah, you got to take multiple factors into account timing might have been different. That's a good environment. The environment might have been different.
But if I'm seeing a lot of things lining up similar to what I'm going through and what the stakes look like, I will listen to it. But you've got to be really diligent about what the difference in someone else's experience versus yours is, and the other thing, you kind of got to be quick to make a decision.
I mean, again, repeating shit that people have already said, but indecision can be a lot worse than making the wrong decision because at least you've advanced to the next stage post making a decision, even if that decision might have taken you a step back. I know that's I know that's counterintuitive, but it's kind of a three dimensional situation we're dealing with. It's not that linear. And sometimes you just need to move forward.
