The Ultimate Guide to Start-up Success: Surviving the First 3 Years Without a Salary, Living in a Warehouse

Magix Packaging Solutions JSC (Magix) has recently been awarded the I-Star 2024 Award by Ho Chi Minh City in the Innovative Enterprise category.

Starting from Scratch

After winning the I-Star 2024 Award, Do Huu Tan (born in 1989), Chairman and CEO of Magix, invited me to the company’s warehouse in District 12, Ho Chi Minh City. While many were busy with the year-end rush of orders, Tan was no different from his employees, even though Magix is valued at about VND 70 billion, and he holds more than 65% of the company’s shares.

Tan assessed that the present and future hold many challenges. Thus, he must be prepared to overcome them instead of resting on his laurels.

Tan is an electronic and telecommunications engineer, a graduate of Ho Chi Minh City University of Technology. He has participated in many student startup competitions and won, but most of these were just startup ideas.

Tan’s first idea was to design an online shopping box that could also be assembled into a clothes hanger. This idea intrigued many people, but it could not be commercialized.

After graduating, Tan worked for a German technology company while pursuing a master’s degree in business administration in his spare time. He also pursued his passion for designing packaging with criteria to reduce production costs, shorten packaging time, enhance product safety, reduce the risk of damage, and facilitate recycling.

Tan used his designs as “gift boxes” to pitch to online retailers and e-commerce platforms. Surprisingly, they didn’t buy his designs but instead placed orders for new products according to their requirements.

“For example, a company specializing in T-shirt sales ordered a box for family T-shirt combos that could also be used as a family photo frame. An e-commerce platform specializing in book sales requested packaging that could be turned into a bookcase or optimized packaging. Not only did these new designs add functionality, but they also reduced costs by 10%, sped up packaging by 15%, and saved on filler materials…” Tan recalled.

A turning point came when Tan posted some of his improved box designs on his Facebook page and received a message from a tech industry leader. This person invited Tan to work on a project for an e-commerce platform as an expert in packaging optimization, offering a higher salary than his current job. He accepted the offer to challenge himself in his passion field.

Difficulties arose when the project was halted before Tan’s probation period ended, resulting in job loss. Unable to find another job and with his savings of VND 70 million lent to a friend, the following year was challenging, forcing him to live frugally to complete his master’s degree.

In July 2016, after graduating with a master’s degree, Tan, along with Le Hong Duc, founded Magix. They rented a warehouse to start selling improved boxes online. Tan lived there himself to save on rent.

In March 2017, Magix was officially established. Even as Magix grew, Tan continued to live in the warehouse and went without a salary, channeling all his energy and resources into the company. It wasn’t until 2019, when the business stabilized, that he started drawing a salary, initially set at just VND 10 million per month.

Investing in Internal Strength

Tan believes that in today’s e-commerce landscape, continuous expansion is necessary; otherwise, one risks falling behind or losing market share, which could lead to project termination.

Initially, Magix sold packaging solutions customized to the needs of enterprises and also offered accompanying products. While this approach yielded higher profits than the market average, the company faced price competition as more traditional packaging enterprises entered the e-commerce market, willing to incur losses in pursuit of opportunities.

To remain competitive, Magix built on its strength of designing new-style packaging for e-commerce and also developed packaging for traditional commerce. In 2024, Magix focused on product development and expanding its range of packaging solutions, including environmentally friendly food packaging. The company achieved a gross revenue of approximately VND 70-80 billion per year, with an average profit margin of about 4%-5%.

With its stable growth potential and transparent finances, Magix has attracted multiple investment sources and secured favorable loan terms from banks. From his experience, Tan observes that entrepreneurship is a path others dream of entering, but those within dream of exiting due to its harsh realities. Founders must have sufficient passion to persist with their projects for an extended period before achieving stability and profitability.

“Countless projects fail because founders lack perseverance, don’t invest in internal strength, and fail to adapt to customer needs. Magix, however, aims to become Vietnam’s largest retail packaging enterprise, with 70% of its products manufacturable, the rest outsourced or traded; over 50% of its products will be environmentally friendly,” Tan expects.