How I Built This with Guy Raz

Episode: Diapers.com: Marc Lore – The Ecommerce Visionary Who Lost to Amazon but Still Made Billions

Original Interview: May 2021
Summary covers content beginning at [04:35]

Overview

In this episode, Guy Raz interviews Marc Lore, the entrepreneur behind Diapers.com and Jet.com. Lore shares his unconventional journey from a struggling student to a Wall Street executive, reluctant banker, and eventually to building and selling two landmark e-commerce companies—one to Amazon and the next to Walmart. The conversation unpacks early failures, bold bets, relentless competition with Amazon, and the mindset shifts that took Lore from “mercenary” to “missionary” entrepreneur.

Key Discussion Points & Insights

1. Early Life and Drive

• Upbringing and Influence:

  • Raised in New Jersey; his father ran a computer consulting business, his mother was a personal trainer and bodybuilder.
  • Early entrepreneurial ventures: newspaper delivery, car washing, baseball cards ([08:24], [09:05]).
  • Academic struggles and family dynamic shaped his ambition.

    "I was the first person to go to a four-year college… I didn't do homework. I didn't pay attention in class. I was the class clown. I just didn't take school seriously."
    – Marc Lore [09:45]

  • A pivotal moment was realizing, as a high school sophomore, that getting into college required acceptance, not simply paying tuition.

• Competitiveness and Transition to Focus:

  • “If I had to turn it on… I got the highest score in the class.”
    – Marc Lore [12:58]
  • Used competitive drive to prove himself, motivated by familial validation.

• College and Athletics:

  • Attended Bucknell University, leveraging athletic prowess despite lackluster grades.
  • Coach challenged him to maintain straight A's; Lore delivered ([11:41]-[12:37]).

2. Wall Street: Ambition vs. Fulfillment

• Banking Career:

  • Rose quickly, reaching Executive VP at Sanwa Bank by 28 ([16:51]).
  • Focused on financial goals: "Goal: six figures by 26, seven figures by 37, eight figures by 48."
    – Marc Lore [16:19]

• Athletic Feats:

  • Qualified for the U.S. National Bobsled Team ([17:18]-[20:25]).
  • Chose not to pursue athletics full-time—remained money-driven.

• Something Missing:

  • Despite financial success, Lore felt unfulfilled—attributed to a clash between his "mercenary" upbringing and the "missionary" values from time spent with grandparents ([21:06]-[22:53]).

3. First Startup: The Pit

• Concept: Online sports stock market using baseball cards as proxies for athletes ([23:36]-[24:43]).
• All-In Mentality: Invested all his savings: "Why 390? Why not 400? Because that's all I had."
  – Marc Lore [24:50]
• Initial Success and Sale:
  • $10M in transaction revenue in 10 months ([26:24]).
  • Sold to Topps for $5.7M after the dot-com crash ([27:01]).
  • All investors got their money back, modest gain ([27:12]).

4. Diapers.com: Founding and Early Struggles

• Idea Genesis: Noticed "diapers" had high monthly search volume, little online availability ([29:28]-[29:56]).
• Obstacle: Diapers as notorious “loss leaders”; impossible to make money due to price competition and high shipping ([31:26]-[31:58]).
• Vision: Use diapers to drive traffic and upsell high-margin baby products ([32:19]-[32:49]).
• Bootstrapping:
  • Couldn’t get manufacturers (Procter & Gamble, Kimberly-Clark) to sell direct ([33:42]).
  • Bought diapers at retail price from wholesale clubs and resold at a loss to build customer love:

    "Let me get this straight. So you’re selling a dollar for 90 cents?"
    – Investor to Marc Lore [38:56], [05:02]

• Belief in Value:
  • Focused on repeat customers and delivering great service, despite mounting losses.
  • "The learning… as long as customers love the service and they're repeating… you have something valuable."
    – Marc Lore [39:53]

5. Scaling Up: Growth, Box Optimization, and New Categories

• Breaking In: Finally convinced manufacturers to sell direct by leveraging buying power and clearing out wholesale stock ([40:56]).
• Efficiency: Brought in a PhD physicist from his banking days to optimize shipping with "Boxem"—minimizing wasted space and cost ([42:42]-[44:13]).
  • Still couldn’t make a profit on diapers alone; needed to upsell additional items ([44:37]-[44:49]).
• Expansion:
  • Launched multiple niche retail sites (Soap.com, Wag.com, BeautyBar.com, Yoyo.com) under the Quidsy umbrella ([48:05]).

6. The Amazon Wars: Growth, Showdown, and Sale

• Amazon’s Reaction:

  • As Diapers.com neared ~$300M revenue (2010), Amazon slashed diaper prices 30%. Lore confirms it was direct retaliation, not coincidence ([50:02]).
  • Growth slowed, but customer loyalty remained strong ([50:22]).

• Strategic Pressure and Acquisition:

  • Fundraising became impossible as investors were wary of Amazon’s involvement ([51:06]).

  • Amazon launches "Amazon Mom" and leverages pricing as a competitive weapon ([53:01]).

  • Threatened to cut diaper prices to zero if Lore accepted a higher offer elsewhere ([54:05]-[54:41]).

    “They said… we're gonna take the price of diapers to zero, and… made some analogies to some other… use explicit language. And it was pretty scary stuff. I’ll just leave it at that.”
    – Marc Lore [54:34]

  • Sold Quidsy/Diapers.com to Amazon for $550M, citing lack of choice ([54:54]).

  • "We didn't want to sell the business… we basically sold out."
    – Marc Lore [57:55]

7. Life at Amazon & Culture

• Post-Sale:
  • Lore describes depression, not celebration, after the acquisition ([56:58]), feeling a sense of unfinished mission.
• Cultural Priorities:
  • Stresses culture at Diapers.com was everything—employees’ well-being and fairness ([55:56]).

8. Jet.com: The Rematch

• Motivation: Unfinished business and the desire to build a formidable Amazon competitor ([61:47]).
• Innovation:
  • Jet.com used dynamic pricing to encourage customers to build efficient order baskets, saving on supply chain/shipping ([62:04]-[64:02]).
  • Raised $750M; planned on Amazon/Costco-like hybrid ([64:08]).
  • Attempted a membership model but dropped it after VC skepticism ([67:43]).
• Rocket Growth:
  • Hit $1B run-rate revenue in 10 months ([65:31]).
• Strategic Mindset:
  • “Vision, capital, and people” are the three levers that determine business success ([64:57]).
  • Honed company culture with transparency and salary equity ([66:28]).
• Amazon 2.0:
  • Difference: Now a mass merchant, not single-problem company; less susceptible to Amazon’s surgical attacks ([67:06]).

9. Jet.com Acquisition by Walmart

• Acquisition:
  • Walmart acquired Jet.com for $3.3B, the largest e-commerce startup acquisition in U.S. history ([71:58]).
  • Lore accepted after alignment of mission and values with Walmart’s CEO, Doug McMillon ([72:30]).

    “We didn't sell out. Yes, we sold the company, but the mission was very much intact…”
    – Marc Lore [73:43]

  • Given broad autonomy to transform Walmart’s e-commerce ([73:47]).
• Culture Shift:
  • Walmart seen as more empowering for Lore than Amazon ([75:34]-[76:11]).
  • Creative acquisitions (e.g., Bonobos) to rewrite Walmart's image and attract top digital talent ([76:38]).

10. Reflection, Legacy & Next Steps

• Retrospective:
  • Lore attributes success to “values creating value” ([80:22]).
  • Admits luck played a part, but persistent drive and not accepting failure crucial ([79:19]).

    "The drive to keep coming, like the Terminator, I wouldn’t accept failure. You know, I just would keep going and going and going until the luck turned my way."
    – Marc Lore [79:19]

• Future:
  • Lore, now nearly 50, sees the next 20 years as a chance to have real, disruptive global impact ([78:49]).

Notable Quotes & Moments (with Timestamps)

• On Early Sacrifice

  “Because that's all I had.”
  – Marc Lore on investing his life savings [24:50]

• On Selling at a Loss

  "Let me get this straight. So you're selling a dollar for 90 cents?”
  – Investor [05:02] / [38:56]

• On Competitive Drive

  “If I had to turn it on… I got the highest score in the class.”
  – Marc Lore [12:58]

• On Values & Mission

  "Once I made the transition from mercenary to missionary, I let values create the value. That's what happened. Values created the value."
  – Marc Lore [80:22]

• On Facing Amazon

  “They said, well, yeah, we're gonna take the price of diapers to zero... use explicit language... pretty scary stuff. I'll just leave it at that.”
  – Marc Lore [54:41]

• On Not Celebrating After Big Success

  “We were depressed. We were depressed.”
  – Marc Lore [56:58]

• On Jet.com’s Team Culture

  “Everybody in the company at the same level made exactly the same amount, to really prevent unconscious bias from creeping in…”
  – Marc Lore [66:29]

Important Segments (with Timestamps)

• Marc Lore's Childhood and Competitiveness: [08:24]–[14:13]
• Early Interest in Finance, Wall Street Career: [14:41]–[21:06]
• First Startup Experience "The Pit": [23:36]–[27:12]
• Origin of Diapers.com: [29:28]–[31:09]
• Bootstrapping and Buying at a Loss: [37:45]–[40:49]
• Box Optimization & Supply Chain: [42:42]–[44:13]
• Amazon's Direct Attack: [49:47]–[54:41]
• Selling to Amazon and Aftermath: [54:54]–[57:55]
• Launching Jet.com and Rationale: [61:47]–[66:14]
• Walmart Acquisition and Integration: [71:58]–[76:38]
• Reflection on Mission, Luck, Lessons: [79:08]–[80:58]

Final Thoughts

Guy Raz and Marc Lore’s wide-ranging conversation provides an honest look into the risks, emotional costs, and strategic thinking behind building businesses in Amazon’s shadow. Lore’s journey—a blend of work ethic, vision, resilience, and shifting from money-centric to mission-driven entrepreneurship—offers unique lessons for founders navigating fiercely competitive, capital-intensive industries.