Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart and today coming to you from a different piece of software. I’m actually using Google Hangouts live via YouTube something or other. I hate the naming Google gives to all its products. But I had to use Google instead of my usual Skype because Skype is down today. They’ve got apparently an international outage.
So I’m going to try to do this and get to show my guests like this and show myself like that and I’ve got more power within the interview, but I also have to remember to use it. In the past, I’ve actually had the camera on my guest because I was focused on my guest and I was talking, and I realized the audience couldn’t even see me or vice versa.
Anyway, enough about the software. I want to introduce you to today’s guest, which means have to click her face–there she is–Gulnaz Khusainova. How did I do with the pronunciation of your name?
Gulnaz: Well, you actually did quite well.
Andrew: You should say it. Just like I listened to old videos of you to try to pronounce your name right, I know someone’s going to listen to this video to prepare for a meeting with you of some kind. They should know how you pronounce you’re name.
Gulnaz: Yeah. Well, I’ve got a really tricky name to pronounce. My name is Gulnaz and my surname is Khusainova. So, yeah, I’ve been struggling all my life with it.
Andrew: And you’re the founder of EasySize. Let me see if I’ve got the explanation right of EasySize. You know how you to go to a store and you buy a shirt or pants or dress for yourself and you know you’re usually a size small. So you order a size small and you get it home and it turns out it’s not the right fit. Maybe it’s too big or maybe it’s too small because there’s no international convention about what size small means.
So what do you do? You end up returning the product back to the store. The store ends up having a lot of expenses related to people getting the wrong sizes, never mind the frustration that a customer has when they’re planning to get one size and they get the other. So that’s where EasySize comes in. What EasySize does is it makes it easy for customers to know what the right size is, even if they’ve never bought from the store before and never got to try it on. That’s Gulnaz’s business. Am I right?
Gulnaz: Yeah. You actually explained it quite well.
Andrew: Cool. You know what? You just reminded me, I should actually make sure we are on the Rode Podcaster instead of the built-in speaker. This is new for me. Am I sounding better to you right now?
Gulnaz: Yeah, yeah, it’s perfect.
Andrew: Oh, good. I think I was using the wrong microphone a moment ago. If I had an editor, all this stuff would be edited out and I’d be sounding polished. But instead, everyone’s getting to hear all the tech issues I have as I’m doing this interview.
All right. Here’s where I’m not going to have any tech issues, with my sponsors. My two sponsors are HostGator–later on I’ll tell you why if you need a host company for your website, you’ve got to check out HostGator.com/Mixergy. My second sponsor is Toptal. Later on I’ll tell you why if you need a developer you should go to Toptal.com/Mixergy.
So, Gulnaz, here’s the way I understand your story. You grew up in Moscow, right?
Gulnaz: Yeah. I was born and I spent the first 22, 23 years of my life in Moscow.
Andrew: And as someone growing up in Russia, you didn’t have the sense that you should be an entrepreneur, the possibilities of entrepreneurship until you discovered a book in your dad’s library. What was the book?
Gulnaz: Yeah, the book basically changed my life. It was written by Dr. Philip Kotler and it’s called “Marketing Management.” So, the book was actually quite old. I think even at the moment I was reading it, it was published 10 years ago. Basically what Dr. Philip Kotler was doing in the book, he was using examples of all the international successful companies and explaining some different marketing approaches those companies have used when they were launching their products and so on.
Andrew: Is this it? This book, one of these?
Gulnaz: No, it’s actually Philip Kotler.
Andrew: Oh, Philip Kotler.
Gulnaz: His books at some point were recognized as must-have, must-read.
Andrew: There we go.
Gulnaz: Yeah.
Andrew: This does not look like one of the most inspiring books. Look at the cover of that book.
Gulnaz: Well, I had a different cover. It was just a plain black cover.
Andrew: “How to Create Win and Dominate Markets”–what was it about this book that was so exciting for you?
Gulnaz: Well, this is one of the books. What was really great that he will explain all the basic marketing things using examples of successful companies like, for instance, he would say, “Okay, this is how Henry Ford found his first customers,” or, “This is how Coca Cola decided to use that instead of a different ad campaign and so on.”
Andrew: I see.
Gulnaz: What I really liked about that, they were companies I knew and I know and I could definitely relate. I used their products every day. For me, it was just an amazing idea saying, “Oh my god, those big companies, they started one day from a small idea from one person’s passion. That’s something that really made me think like, “Okay, maybe I can do that one day too.”
Andrew: I had a similar experience. I used to go to the Hillcrest Library in Queens, New York and I’d pick up a bunch of business books and realized all these things that seemed so big and so amazing were just started by some dude or some woman somewhere and they often had nothing going for them but an idea and they developed it and developed it and I started learning from them and getting much more motivated.
Now, for me, I was living in New York where people kind of encouraged you to be in business. What was it like for you in Russia, having an idea that you wanted to be an entrepreneur just like these people you were reading about?
Gulnaz: Well, I was born in 1989, right before the crash of the Soviet Union. At that time, the only thing people were looking for was stability. So, I would quite often hear from my parents something like the worst thing you can do with your life is be a singer or a model, like work in show business or have your own company.
Andrew: That’s the worst thing you could be, either a singer or have your own company, an entrepreneur? They lumped them together?
Gulnaz: Yeah. Well, because for them it was something that it’s a place where you won’t see a regular monthly check coming to you. It’s a place where you didn’t know whether you have a job tomorrow or not. Of course, they were really, really looking for some stable place for work. So, they would encourage me to actually think about either working in finance and banking. I actually don’t know why because that for me is like the most unstable economy now there. Yeah, for some reason, they really liked that. Or they would say, “You should work for government,” because government will exist all the time and it means that you will always have your salary and everything will be okay.
And I would also say that I think even for some reason when I had already started my first company when I was 19, starting a startup and having a startup was still a bizarre idea. So, we didn’t really have any places where you could go and talk to people, some sort of, I don’t know, hack-a-thons or workshops and so on.
It was really new for Moscow. So, there would be maybe like one workshop per month somewhere in Moscow. Of course, now it’s getting so much better. So, if you wanted to start a business, you will definitely find the right advice and right people. But at that time, it was still quite new.
Andrew: Is there actually a startup community in Moscow right now? By the way, can you tilt the camera up? I think we’re cutting off the top of your head.
Gulnaz: Yeah. Sure.
Andrew: There we go. Is there a startup community now in Moscow?
Gulnaz: Yeah. There is, definitely. I think it’s getting a little bit better. Of course, at least the trends I’ve seen at the moment when I was living there, like two years ago, I could see a lot of companies not trying to invent something but copy successful stories and successful companies for the US or Europe. So, it would be more or less something similar probably to what’s happening now in China. There will be a lot of copy cats.
But in a way, it was growing quite well. There will be some international conferences with great speakers. Of course, after all, there is all the political situation now in Moscow. I’m not quite sure what’s happening there. I do see that a lot of startups now, they have to live in Moscow and they have to work and be focused on the local market because for them it’s insanely hard to actually go international or even to go to the European market.
Andrew: Why? What makes it so hard to go international?
Gulnaz: I would say because of the sanctions. Some verticals might be hard to get in. I guess also what works against them is that a lot of international investors they don’t want to invest in Russian companies because they don’ think that it’s going to be stable and it’s going to survive and so on. It’s getting a little bit harder, but now there are new ways to do things. So, there are a lot of Russian companies focusing only in the Russian market and they’re doing great things.
Andrew: Okay. And then there was this incident at a Christmas party where you ordered a dress that you thought was amazing and something happened. What was that?
Gulnaz: Yeah. That’s the story of my life. I think it happened to me a few times, but this one was the most thankful one. So, we had a corporate Christmas party. AT that time, I was working in one of the largest banks in Russia. I was the youngest head of [inaudible 00:10:06]. So, it was quite an important party, I would say. So, I ordered this amazing dress. It was supposed to be delivered a few days before the party, but it got stuck somewhere in customs, so I got it like one day before the party. I put it on and I just realized that its’ the wrong size. It does not fit.
So, I started panicking like, “There’s no way I’m going to fix this dress. I’ll have to run to a close by store and by a new one.” But it was a really, really stressful experience for me. That was, I guess, one of the moments I was like, “That has to be something–we should be able to solve this problem.”
Andrew: And that’s what led you to start your company. And I understand the name of the company, EasySize, right? You just want to make it easy for people to find the right size. The first version, though, wasn’t exactly the right version. What you did was you asked people to take photos of themselves.
Gulnaz: Yeah. That’s correct.
Andrew: What was wrong with that?
Gulnaz: Well, I would say first of all we didn’t realize that this topic is really, really difficult topic to talk about with people. So, they find it intimidating. They don’t want to share their sizes and they don’t want to sometimes tell the truth about their measurements and what they were. That was one of the problems. Another problem is we noticed that frankly users are quite lazy. They don’t want to do anything extra. They want to just click once, get the size, get it delivered, no hassle, no work at all.
Andrew: What kind of work were you asking someone to do? You were asking them to go to a store, find the dress they wanted and then take a picture of themselves and send it into the store?
Gulnaz: No. We will ask them first of all to download the app and then in the app to make two photos of themselves and we will recognize their measurements and based on that, make a prediction on what size they need to pick.
Andrew: You could figure that out based on a photo of somebody?
Gulnaz: Well, we used some image recognition technologies available at that time. We will be able to recognize your measurements. Like, “This is your butt, hips and waist and so on.” It sounds quite simple to do, but we noticed it will be a huge drop in customers’ usage and they won’t be doing that because there’s too much hassle.
Andrew: Let me ask you this before we move on to what you did next that did work. Who wrote software that can actually figure out where someone’s butt is? You guys wrote it?
Gulnaz: Well, yeah, at that point I had a developer and he prepared this algorithm which will be able to recognize that. I have to admit though that it wasn’t super, super precise and accurate. So, of course they will be depending on the angle of the camera or depending on the lighting in the room. For example, if you’re wearing baggy clothes, that could be some problems with that.
Andrew: Okay. So, this was just a starting point to see if it made sense and it’s a good thing that you didn’t develop it far enough that it could actually tell where someone’s butt is and where their waist is perfectly because people weren’t into it. Sorry?
Gulnaz: Yeah. I think what was really great when we did that, we realized that people do have this issue. So, we didn’t have problems with downloads. What we had problems with was actually usage of the app. So, we realized people are willing to do something there, we just need to find a better way.
Andrew: How did you get people to download this app that would have required them to do one more thing to find the right outfit. Most people don’t want to download any outfit app. I know I don’t. Look at me.
Gulnaz: I think you look perfect, actually. I think the jacket fits you really well.
Andrew: The jacket looks so much better in person. But because I’ve got lighting that’s not showing off even the flaps, it looks like one big chunk of black on me.
Gulnaz: Well, I still think that it fits you quite well.
Andrew: You know what’s nice about it? It dresses up the t-shirt. This is all I would be wearing in the office. I think just wearing a t-shirt to an interview makes me look like I don’t care enough. So, I throw on a sports jacket and hopefully it looks like I care just a little bit more.
Gulnaz: Okay. Now I feel bad about my dark sweater today.
Andrew: No, you look good on camera. I’m the one who’s working on it still. Okay. So, how did you get people to download the app?
Gulnaz: We had a couple of articles about the app. Basically we didn’t really spend that much money on any advertising. For us it was important just to get the first batch of users to use that and see how they would be using that.
Andrew: I see. So, we’re not talking about massive adoption. We’re just talking about enough people to get a sense that this app is something people want, but the implementation of that is not working out. So, then you went out to the street and you did what? One of my favorite–not one of, this is my favorite story of yours.
Gulnaz: Yeah. After that, we started analyzing the results. It was clear that there is a problem for people. They want to try to solve that. But we have to find the right way to do that. So, we started thinking about what else we can ask customers to add. We quickly realized that one of the things everyone knows usually is the size of things they wear, clothes they wear. So, we decided to test this assumption.
So, we bought the tickets and we went for a week into Malmö, which is a Swedish city 20 minutes by train from Copenhagen. We had a camera and we were standing on streets and taking photos of people. So, of course we knew that it would like creepy. I’m just coming to you and saying, “Hey, can I take a photo of you?” “No, why would you do that?”
So, I had this version saying like, “Hey, I’m a fashion blogger. I’m traveling the world and I really like how you look. Can I take a photo of you?” People won’t have a problem. We didn’t really have anyone saying, “No, I don’t want that.” Everyone would be like, “Yeah, sure. Should I pose?”
So, we’d take a photo and that’s when I ask, “Can you please tell me the brands you are wearing?” Again, that won’t be a problem. They will say, “I am wearing an H&M jacket and Calvin Klein jeans,” and so on. But when I asked them about sizes, no one would be really comfortable sharing that. They would be like, “Oh my god, I don’t remember. It’s actually my boyfriend’s jacket.” I would even say, “Hey, I can literally check it right now. I can just check the label on your jacket and write the size down. Is that okay with you?” Most people won’t really like that.
So, after spending a day there, it was again clear there is something that we can know customers–sizes and brands but there is not something that customers want to share with us. So, I guess that’s when realized and started asking ourselves like, “Who else has that data?” And that’s always been on online shops.
Andrew: Online shops already had that data so if you partner with them you could get that data?
Gulnaz: Exactly. And online shops, they don’t have these feelings we can hurt by asking uncomfortable questions.
Andrew: I love that you were able to get them to answer questions just by saying you’re a blogger or in my case an interviewer. I can ask them the jerkiest questions and people will open up because I’m doing an interview.
Gulnaz: Yeah.
Andrew: If I’m just a guy on the street asking this stuff, forget it.
Gulnaz: Yeah. I think it’s something to do with our egos and everyone wants to be like, “Oh, there’s a blogger who wants to make a blog post out of me,” or something.
Andrew: Meanwhile, you’re just walking around on the street asking questions and I’m just here asking my own questions using Google, YouTube, Hangout, Plus, whatever they’re calling it. Actually, you know what they’re calling it? This is YouTube Live. That’s their product. YouTube allows me to instantly record as soon as I connect to you, even though we’re not broadcasting live to anybody else.
The reason that I say it’s got confusing name is because if I want to include somebody else in here, I think they still on the invite page say that it’s a Google Hangout Plus. I make fun of it, but the truth is it actually works pretty well. It takes me a little while to remember to click your face and click my face and do the work. I know that if I just let the software do it. But if I do the software, it kind of gives everyone whiplash. As soon as you say, “Yeah,” the camera goes to you.
Gulnaz: It’s actually also the funny thing they have where you can adjust some filters, like enhance the image so it gets prettier and so on.
Andrew: Yeah. You know what, actually? Maybe they’ve improved it. Maybe now I don’t need to click on your face. There. It pops over to you and then pops to me. Let me try that. Actually before I do, I’ve got to talk about my sponsor and my sponsor is a company called HostGator. You’ve heard me talk about them for a long time. Let me click to make sure you guys can see them. I think this is actually going to work where you can see their website. This is HostGator, the site you all know.
Let me show you a part of HostGator that you may not be aware of because it’s like this one hyperlink on the top of the screen that says WordPress hosting. What do you get when you do WordPress hosting? No wait, actually, they just updated their site. Look at that. It’s actually now on their homepage. This must be doing so well that they’re promoting. Anyway, wherever you see it, WordPress hosting means that you’re going to get them to host your WordPress site in a way that makes sure that there are no more viruses, no more issues as you use WordPress.
WordPress actually frankly has a lot of problems, a lot of issues where somebody’s going to hijack your site. This just happened recently. Or inject it with malware or steal your customers’ data. This happens all the time. That’s why you hired someone to manage your site. Or you just go to HostGator and they’ll manage your site for you. They’ll make sure your plugins aren’t going to break things down. They’re going to make sure your site is up even if you get a lot of traffic.
This is the link right here. They even protect you from malware. They’ll give you your email accounts. They’ll do the whole thing. They even will migrate you from what other piece of garbage hosting company you’re probably with right now and their prices are really reasonable, in fact so reasonable that they can’t give my audience a discount if you mention Mixergy. So, I’m just going to go on the honor system. If you heard it on Mixergy, please when you check out, tell them that you heard it on Mixergy.
But wait, here’s something else that I want to share. Where is that? Ah, here–you even get Google AdWords credit of $100. If you want to just get started with a WordPress site, just go to HostGator. You’re going to get inexpensive prices plus $100 in AdWords credit–everything you need, unmetered space, unlimited email, protection, the works and customer service that’s so good that I actually had this guy I used to do business with email me and say, “Is HostGator really everything you say it is in the interviews?” I said, “Yeah, absolutely.” So, he tried it out and he had trouble with it.
So, what he did was this guy named Eric just called up customer support at HostGator and they walked him through the whole process and he said he couldn’t believe it. He said he got home and he realized the problem. The problem why he couldn’t sign up with HostGator was he was on hotel internet and they blocked out other sites like HostGator and so he couldn’t use it.
So, it was his own fault for not noticing that’s what’s going on and HostGator was still there for him with tech support and they helped him get started with his website. Now he says he doesn’t know why he waited for so long to get a WordPress site. So, if you’re waiting for a long time, stop waiting, they’ll be there for you. If you already have one and you’re not happy with your hosting company, they will migrate for you, 100 percent free migration. I paid hundreds of dollars to migrate my site. You don’t have to do it.
Go to HostGator.com and select managed WordPress hosting. They’re going to manage your WordPress site so you don’t have any of those headaches that other people have and I’m grateful to them for sponsoring Mixergy.
All right. So now we are at a place where you figured out the problem but you haven’t yet figured out the solution. You know two ways that aren’t going to work. You can’t have people take photos of themselves. That’s one more step that they’re willing to take. You can’t ask them on the street for information so you can create your own database. They’re not going to give you information about their sizes even though they’ll give you anything else about them.
So, you decided let’s try going to retailers that already have this information. How do you get through to a retailer? You don’t have any experience there.
Gulnaz: Yeah. That’s true. To be honest in the beginning when I just came up with this idea, I used my personal relationships. So, a friend of mine, he was working in a fashion company back in Moscow. So, at that time, I was living in Copenhagen but he was back in Moscow. So, I just gave him a call and said, “Hey.” And he was an IT guy, like the IT guy who would go like solving all the issues they had.
So, the fashion company, they had three brands, sports brands for female and male users. So, I just gave him a call and asked him, “Hey, what sort of data do you have from customers? Do you have an idea of clothes or any sort of type information or fabric and anything like that?” He said, “Well, let me check that out.” Half an hour later, he sent me that data. So, it was the data for the previous six months for all these three brands. That was the first data that we got to actually play with.
So, it gave us a really good understanding of what sort of data online shops have. So, we realized that okay, of course they have the most valuable data, which is personal data of the customers and payment information. But it’s not something that we really need. What really need is to see orders grouped by IDs of customers. So, we want to see that you made a purchase this month and three months ago and one year ago and so on.
Andrew: How do you tie all that data back so that you know whether the size is right or not?
Gulnaz: Well, at the beginning we just tried to check them. We were quite lucky because they were analyzing the reasons of returns. So, people were marking down, “The size wasn’t right. The fit wasn’t right,” and so on. So, that sort of helped. The first batch of the data helped us to understand the format of the data we would need and what sort of information we can request from shops.
Of course, half a year later we’ve got the real data, historical data from a real online shop and they were actually running quite a big online shop and they had around 100 brands. So, that was our first data we could really run the algorithm through and see whether the algorithm is working or not. And again, we used the same approach, saying, “Okay, if something is not returned, then we’ll assume that everything is okay. If it’s returned, something was wrong there. In [inaudible 00:24:34] cases, that would be the size.
Andrew: I see. Now, in order to start doing all this, you need some funding, right?
Gulnaz: Well, I had been bootstrapping for almost a year and a half before we got any funding. So, we had been lucky to get selected to Startup Boot Camp acceleration program. So, for the first three months, we got some money from them and office space and a lot of mentorship and help. Actually, after that for the next year and a half we were sitting for free in their office. So, that was quite good. Of course, it’s also they will have a lot of events and free coffee. So, it really helps when you are a startup.
Yeah, but prior to EasySize, I actually worked for almost six or seven years in IT and marketing. Before that, my last corporate jobs was in one of the largest banks in Russia. So, I had a really, really well-paying job. So, I had a lot of savings, which I basically used all of my savings during that year and a half of bootstrapping.
Andrew: What’s a story of you going to an investor who starts asking you all these IT questions and you have to admit that you don’t have the answers to those questions?
Gulnaz: Well, working in the Russian bank, I was actually playing a lot with data. So, my unit, it was called strategic planning unit. So, what we will do, we will have on one hand the behavioral data from millions of users. So, if you have ever been somehow connected or related to our bank, we will have the information about you. Based on that, we will try to analyze that and offer you some tailored products. So, that experience gave me an understanding how we can work with data.
The first purchase, the algorithm we had was written by my. The specifications were done by me and had some help from my developers to do that. But I agree with you, of course. Every time, even now when I go to investors, I’m a sole founder and I’m not a technical founder. I receive all the questions, like all the technical questions. Usually it will start like, “Who’s your IT guy who is doing all the tech?”
Andrew: No, what I mean is that I have here in my notes a story about you. I can’t for the life of me find it. I don’t know why. Maybe it’s because I’m paying attention to the conversation while I’m searching. The story is you went to an investor and you asked for funding. The investor asked you questions. You didn’t have the answers and you just went back to work and not only did you start to know more about the industry but then you actually built a working prototype and you had customers and the person was just amazed. Maybe this is someone who already funded you, right? Does any of this sound familiar?
Gulnaz: Yeah. That was actually my first company, not EasySize. That was my first company.
Andrew: Ah, I see. Okay.
Gulnaz: So, I founded when I was 19 and I had zero understanding and knowledge about how startups work. I had never read a book about startups in my life. I just had a dream to change the restaurant business in Moscow. So, I found an angel investor. To be honest, even now today why the hell he even invested in my company because if I was an investor I would not invest. I was a sole founder with not experience in the industry, no experience in IT whatsoever. I worked before with IT projects, but nothing more and I didn’t have a team.
So, when I met him for the first time, he really liked the idea and that was an idea to optimize the restaurant business by analyzing their bookings data. He was like, “That’s a great idea. I cannot invest. You have nothing.” So, I said, “Okay, give me some time.” I got back to him a few weeks later and I made the simple prototype.
Actually, I even remember that I made it on Keynote. So, I made the interface in Keynote and I added some animations. So, when I showed him he was like, “What is it? Did you actually build the prototype?” I said, “No, it’s actually just presentation.” So, he was quite amazed with the products we got and I also got meetings with all the top owners in restaurants and the best restaurant chain, the biggest one. So, I think that persistence he really liked and that was the reason he decided to invest.
Andrew: That’s the story. That was amazing, actually, that you were able to turn him around so much. Tell me if I’m wrong–it seems like that’s why he invested, right?
Gulnaz: Yeah.
Andrew: You were able to do that. Is this the company called YouReserve?
Gulnaz: Yeah, exactly. That was the company.
Andrew: So, I went on that website and the website says, “From event websites, registration, badges, site check in, surveys and much more, you help event organizers.” So, it’s more of an event site now, right?
Gulnaz: Yeah. I think the domain expired years ago. So, someone else bought it.
Andrew: Oh, I see.
Gulnaz: The company itself existed for maybe like nine months or so. So, we made the first prototype and when we went to test it with restaurant owners, they liked it a lot but they didn’t have money to pay for it. For them it wasn’t a main priority. We ended up shutting down the company and selling the prototype to one of the chains, restaurant chains to at least refund a little bit of money to our investors.
Andrew: What did you end up doing after that and before EasySize?
Gulnaz: Well, after that I had one more online shop which I founded with two of my friends. That was my experience with ecommerce because I really wanted to be hands on with this interesting thing called ecommerce at the time. Between my startups, I was actually working in different companies.
So, I started living alone since I was 18. So, in order to afford living alone in Moscow and paying my rent, I had to work in some corporate boring jobs. So, I would you usually go to work at 8:00, come back at 6:00 or 7:00 and I would have three or four hours working on my startup. So, that was going on and off for five or six years.
Andrew: Is this the site? This was YouReserve?
Gulnaz: Yeah. That was at that time. I can see that now it’s a different on.
Andrew: Yeah. Now it’s, like I said here, since I finally have the ability to show websites in real time, there it is.
Gulnaz: Yeah.
Andrew: Cool. How does it feel to see the old website right now? Usually when I show people their own site, they get excited, but it feels like you’re not that enthused.
Gulnaz: It’s just like, “Oh my god, that does not look good.”
Andrew: I thought I was sensing something.
Gulnaz: Yeah.
Andrew: Okay. So, now what you’ve got is an idea. You found your first partner who’s sending you data. You’ve got a model that seems to make sense. It’s time for you to start getting some real users. How do you get your first users?
Gulnaz: Yeah. Well, I just basically [inaudible 00:31:31] what I did. I tried to find everyone connected to online shops in my network or everyone who would be able to grab a coffee with me and answer my stupid questions about how ecommerce works. I went to around 20 or 30 shops in total.
Actually, the first shops we got on board, they were one of the folks people who actually say, “Yeah, sure, let’s grab a coffee and I will tell you what I know.” I think that’s really good because when I was coming to them, I was not coming for their money but I was coming for their advice. I think people appreciate that and they actually even tell you much more than you expect to hear.
So, the idea we came up with was late October, 2013 and in December we signed up the first [inaudible 00:32:19] from one shop. So, after that, we were supposed to spend like a month or two to actually finish the prototype. But I had some issues with my team at that point. So, three months later, I was alone without prototype.
Andrew: Your team left you?
Gulnaz: No. It was kind of half of it was yes, they decided to leave because they didn’t really see any potential idea and because of some personal reasons they want to go back to Moscow because some of my developers were from Moscow at that time. And with some people on the team, we did not share the same vision of how the company should be developing. So, it was easier for me to sort of say, “Okay, let’s start over and let’s see what we can do.”
So, in March, 2014, that was time we actually finished the first prototype. So, I gathered the live data from one of our partners which wanted to try out EasySize. I got historical data and I decided to run the algorithm to see how the results would be. Yeah. It was quite good. Even the first prototype showed quite a good and high accuracy rate that was around 75 percent, which was the first prototype and the data was quite good.
So, after that, I spent some time trying to fix it. In May, I actually hired my first employee at that time. So, for a long time, there was only me and him. But that was quite interesting because we were able to really dig deeper into the algorithm and the database that we were gathering. And we ended up to have the pilot test with one of the largest companies in the UK. So, it’s actually so-called Fashion Unicorn Farfetch.
Andrew: What is it called?
Gulnaz: Farfetch.
Andrew: Okay.
Gulnaz: They have been valued at around $1 billion recently.
Andrew: Partridge?
Gulnaz: No, Farfetch.
Andrew: Okay. UK. Let’s see them. How did you get Farfetch to sign up with you? This seems like their site.
Gulnaz: Yeah. That’s their website. They are actually quite a big deal in Europe. So, usually everyone in the fashion world and even like in the ecommerce world knows about them. I had one guy whom I knew who I met from a conference and I saw that he’s connected to the CEO of the company. I sent him and email saying, “Hey, I would really like to give me an intro to this guy. Is it possible? Do you think you can do that?”
So, he sent an introduction email and the CEO of the company referred me to the VP of technology, David. And David, he’s just an amazing guy. We spent an hour, I think, if not more just talking about technology and how we can work together and so on. He said, Let’s try it out. Let’s see what we can do together.” So, that was really fun.
I think I was really lucky to get introduced to these cool people who have been through entrepreneurship and who started the company a few years ago and it was just a small, small business. So, they knew probably what I’m going through and that was helpful.
Andrew: They must really need the product in order to take a risk on a new entrepreneur, right? I know one of your challenges is that as a new entrepreneur selling to businesses, you’re dealing with customers who aren’t eager to try the latest thing, not like consumers who always want to try everything that’s new because what do they have to lose. Businesses want to know that you have some track record, that you’re going to be around, know that other people made mistakes with you. What’s the problem? How do you explain the problem to them in a way that makes them say, “Fine, we’ll try this thing because we’re so desperate to do anything to solve our problem.
Gulnaz: Yeah. That’s a really, really good point. That’s a problem we usually face when we do B2B sales. We are still a young company. So, what we really try to do first. Of course we try to show all the benefits and all the track record we already have, saying like, “Okay, this is how much you will be saving. Do you want to save $5 million next year? Do you want to increase your sales by 42 percent?” using all those numbers we have already gotten. If it doesn’t work, after that we will try to say, “Okay, let’s integrate on some limited number of products and let’s see how it works.”
Like, for example, you don’t need to integrate across all the 3,000 brands you carry. Let’s pick one brand and 100 dresses. Let’s integrate there. No risk for you, no hassle and see how it works. If it doesn’t work, then we just try to sort of like convince them and do some demos and go through all the layers that sometimes might be an issue. For us it’s really important to, from the beginning, find the right decision maker, but it doesn’t happen all the time. So, sometimes it takes a little bit of time.
Andrew: All right. Let me talk about my second sponsor and they are Toptal. I want to bring them up on the web. Here’s what you see when you go to Toptal directly. Let me bring them up. This is Toptal’s website. You can see that they’re used by Airbnb, Ideo, Zendesk–companies that you know and respect.
Here’s what you see when you go to Toptal.com/Mixergy. First of all, you see my face. I like that they were able to create a site that’s so personal for my audience. But notice here, “Mixergy listeners will get 80 free Toptal developer hours when they pay for 80 in addition to a no-risk trial period of up to two weeks.” So, they’re clearly giving more to our audience than they’re giving other people.
So, what is Toptal and why should you care about that? Well, you know when you need a new developer fast or set of developers fast to either round out your team because your team is just taking on more than they can handle or maybe you have one project and you need one person who’s going to get to work on it. Maybe you don’t even need a full-time person, just part-time.
Well, all those needs mean that you have to go out and look for a headhunter or look online for the right developer. It means you have to start screening people. It means you have to deal with people who may or may not be the right fit, who may or may not be there the next day. If it’s just part time, especially, you’re going to have a hard time getting a hold of someone who will really be there.
Well, there’s an alternative to the way you’ve been hiring people and that’s to go to Toptal. Toptal gives you the top developers chosen by their peers. They really have an insane process for finding the right people to work for them. You tell them what you’re looking for. You tell them how your team works. You tell them what software you’re using. You tell them everything you need and they start hunting through their network to find the right person for you. If you do, they introduce them to you and if you’re happy with them you can get started often within a day or two.
That’s the way we were able to do it at Mixergy. So, you get your developer, you’re up and running with them and you know that you can count on them because they’re with Toptal. They’re part of the Toptal network. You’ve got a real representative there that can make sure that you guys are working well together.
If you have any issues like maybe the person is not doing the work you want and you need somebody else and maybe you want more people, you’ve got your representative at Toptal who will help you do that. In fact, they have such a person connection that they asked me, would I introduce my audience to them if they want. So, yeah, I will.
If you’d rather not go to this site–and I don’t know why you wouldn’t. Look at that pretty face over there. I always smile with my mouth closed, never showing teeth. I don’t know why. But if you’d rather not come over to this page and sign up, just email me, Andrew@Mixergy-here, let me show you my face–Andrew@Mixergy.com and I will introduce you to my guy over at Toptal and they will set you up with the right developer. I promise.
They are fantastic. I’ve worked with them and so many other entrepreneurs have and so many other big businesses have too. You’ll really be happy if you go to Toptal.com/Mixergy and your friends will be too if you let them in on this super-secret webpage, Toptal.com/Mixergy. Cool.
Do you want to write that down for yourself? You might need them.
Gulnaz: Yeah. I have already [inaudible 00:40:37]. But that actually sounds like a really, really great idea.
Andrew: It really is. They’re such a good company. Andreessen Horowitz invested in them.
Gulnaz: Oh, I didn’t know that. There’s definitely a need there. I sometimes feel like in our team as well, even though we are eight people and we actually have developers in house, but sometimes it just happens. Everything that could go wrong or could go well, it will happen in one week and you all of a sudden realize that you just don’t have hands to do that.
Andrew: Right. That’s exactly where they’re good. Sorry. I’m pouring myself water. If you suddenly need a developer, you don’t want to hire them and you don’t even need them in the office. They can connect wherever they are and work with you. All right. That’s impressive that you’re able to get all these customers. Does it help or hurt that you are, I guess, outside of their country. You’re no longer in Moscow. You moved to Copenhagen, right?
Gulnaz: Yeah.
Andrew: Does it help when that you’re not in the UK when you’re selling to UK companies? Does it hurt or help when you’re not able to see them in person and be in their area code?
Gulnaz: Yeah. Well, I would say that in Europe its’ been working quite well for us so far. So, we usually don’t even need to take meetings with people and we can do everything through Skype. But we’ve noticed that because we’ve been trying to run some tests to see how we can expand to the US market. Of course, that’s obviously on of the biggest markets out there. In the US, it just doesn’t work that way.
For instance, we had a customer we’ve been emailing three months back and forth, had a couple of Skype calls. We couldn’t really realize whether they were ready to do it or not. Last week, I just met them in the US when I was there. And they were like, “Yeah, sure, why not? You guys are cool. Let’s try it.” It’s like, “What was the problem? Why can’t you do that through email?”
So, we do see that at first, every local market has its own mentality and there are some rules you have to follow. So, we know that, “Okay, in order to expand to France and Germany, we have to have native speakers on board in order to go to the UK, we actually have to have some UK case studies that work much better with them and we need to spend some time traveling and meeting with the customers.
In Scandinavia, it’s actually quite, I would say, liberal, so can do everything through email and Skype calls and for them it’s okay that we actually speak English and we won’t have a lot of problems.
Andrew: One of my favorite examples of the problem of working internationally is what happened when you moved to Germany and your language didn’t fit right with the way people speak?
Gulnaz: Yeah, exactly. So, we launched with our first customer in the German market. We, of course, do have all the numbers of how people use our tool and what the conversions are and so on. We started analyzing the data right after we launched and see that it’s twice lower than we usually have. It was really weird for us. That’s not happened before. So, we started testing it, changing the interface and nothing is improving.
After that, we got a couple of native speakers in our office and we said, “Hey, guys, could you please try it out and tell us maybe there is something wrong with that.” After trying, they asked us, “Why are you so formal?” It’s like, “What do you mean?” “Why is everything so formal? Why are you asking, ‘Please, Madam, tell me about your size?’ Why is not like, ‘Hey, tell me your size.'”
What turned out is that the translator who was translating that translated everything in a formal way, where in Germany, you can actually translate also in an informal way. So, we got this formal translation and we were integrated with this millennials website where everyone is super young and like teenagers and so on. Of course, they would just be freaking out when they see that. So, yeah, that was one of the examples of that.
Andrew: Let me see if I can show your site just to get a sense of how it works. I’m actually enjoying using YouTube Live. So, we click live demo. Let me move the video over. It’s this right here, this button that says, “Find my size,” you’re two clicks away. That’s what you guys are doing. So, if I click that, it says–I’m looking for a dress, why don’t I do dress shirt? The brand is Esprit. I only wear Esprit. I am large. I think that’s it, right? And then I do find my size. Sorry?
Gulnaz: Yeah. That’s it. You basically you just already see the size on the screen and you can just select the size and that’s it.
Andrew: I see. So, what it’s saying is if you’re a large, when you buy Esprit dress shirts, then only for these short dresses should you be buying a large.
Gulnaz: Yeah. That’s right. What we try to do here, we really try to minimize all the stuff the customer needs to take. So, it’s two simple questions, “Tell us about something that you like and that fits you perfectly.” And of course, here customers will be usually adding their favorite dress or their favorite t-shirt and that’s what we use as a reference to analyze the entire database we have and find all the customers who have similar patterns to you.
Andrew: I see. And you can even do that for a dress if I give you a shirt size?
Gulnaz: Well, in some cases, yes. In some cases, yes, definitely. Also, the interface you see, it’s our basic interface and the good about it, that it’s so easily customizable. So, with each retailer we integrate, we will be using their colors and their fonts. So, it looks like the website where customers are already. Our main goal here is to not freak out a customer and not to confuse them, but actually to provide an integrated shopping experience so everything goes smooth and fast.
Andrew: Every time somebody buys, whether or not they’re even using your tool, you get data on how happy they were with their size that goes back and informs your software and makes your software better.
Gulnaz: Yeah, exactly. So, we use a machine learning algorithm. So, now we are able to not only see their in general patterns like how customers use it but also a personalized one. Now we are able to recognize the same customer across different shelves. It means that we collect their personal history and we create the sizing profile for you. So, we know how you buy clothes and we know, for example, that you like fitting t-shirts but oversized sweaters and we show the different sizes accordingly.
Andrew: How many users do you have now in your system that are improving your database?
Gulnaz: We have a weekly growth of about 20 percent. So, every week we have 20 percent more users using us. On average, we have about 5,000 to 7,000 users using us every week. So, it’s getting–
Andrew: In total?
Gulnaz: Well, in total it’s hard to say because some of the users, they’re returning ones and they buy again. But the database, the entire database we handle now, it’s a half a million unique users. It gives us a coverage around 10 to 15 percent of our local, domestic market and submitting that 15 percent of online shoppers in Denmark are in our system. So, when they go online in an online shop where we’re integrated, we instantly are able to provide their right side. So, that’s what we’ve been trying to do, get more personalized data so we’re able to see those little tiny patterns in shopping behavior every customer has.
Andrew: Do you know how many sales you’re helping to make or how many refunds you’re avoiding because of your software?
Gulnaz: Yeah. Well, we see that with our solution, online shops are able to decrease their returns by 35 percent on average. So, it usually saves them around 5 to 7 percent of their revenue. Of course, returns, they lead to a lot of costs in online shops.
Andrew: 5 to 7 percent of their revenue?
Gulnaz: Yeah. And what is more interesting that’s something that we didn’t see coming at all–we’ve noticed that by providing the right size, we’re able to ensure customers and they’re buying much more often.
Andrew: So, what kind of revenue are you guys doing?
Gulnaz: Well, that’s something that we don’t disclose yet.
Andrew: Give me a ballpark. Are you doing over $1 million in sales yet?
Gulnaz: No. We’re not there yet. The reason we are not disclosing is we are planning to close our Series A round next year and we are basically now getting all the metrics straight and that’s the reason why we for now decided to not disclose it, but of course we will start doing that and be more transparent about it once we raise the Series A.
Andrew: Okay. Can you say over a quarter-million?
Gulnaz: I cannot. I cannot say that.
Andrew: You can’t say that either?
Gulnaz: Yeah.
Andrew: Okay. Let me finish off by saying this. I know I have a lot of people in my audience who are running business to business companies. Let’s give them some advice based on your experience for how to sell to other businesses. One thing you said is in the US, people want to meet you in person, right?
Gulnaz: Yes.
Andrew: Okay. What else?
Gulnaz: It’s also important if you want to run sales in the US, it’s really important to be present there. So, you have to appear as an American company. If you want to do it in Europe, it’s not that important, to be honest. I think it might even work for you better if you say like, “Hey, we’re an American company and we want to do business with you, a French-based company,” or like a Germany-based company and so on.
I think one of the main advice I got when I started my company, it was a try to be not a seller but a doctor, meaning that when you go to a customer, try to understand their pain and not just push the sales but actually try to solve their issues. It really helps at the stage where you’re just developing your product really to talk to your customers and figure out what actually they’re struggling with. After that, you will be able to tailor your product and providing something that they will be able to buy.
Andrew: Can you give an example of how you did that, one time that you walked in to see a client and you were acting not like a sales person but a doctor and because of that you got your sale?
Gulnaz: Yeah. That’s basically what I do even now. So, I will never start my bidding with actually saying what EasySize does. What I will usually start from is saying like, “Hey, can you tell me a little bit more about the processes you have–how customers buy in your shop, what they usually do and so on?”
After that I will slowly move to returns to understand what sort of returns they usually face and is it because of the size or any other problems. If I see that okay, they actually do have a lot of returns because of the size, I will slowly say like, “Okay, we have this product. Is that something that you would be interested in?”
I do realize that even though the ecommerce market is huge, there are certain types of customers for whom our product probably won’t be the perfect one and I’m okay with not meeting that. I will sometimes even say, “I think our product is not the best one. Maybe you should take a look at our competitors, maybe they will be more useful for you.” I think it’s really important to be honest with customers and they will appreciate that.
That also leads me to the final advice. It’s probably like also quite an important one. Don’t try just to make a short-term sale and leave. Build the relationship, especially if you’re doing B2B sales when your customers are paying you over $150 a month or so, it’s quite important to build a relationship so you’re able to know who they are and be able to fulfill their needs in the long-term. That’s what you are really looking for.
Andrew: What about how you get through to a customer when you’re doing B2B sales? How do you get through to them, especially if you’re not in the same country?
Gulnaz: Well, LinkedIn helps a lot, especially if you’re doing sales in Europe and the US. Usually people have their profiles there. So, now in EasySize, we already know who our decision maker is. So, it usually will be an ecommerce manager on the website. So, we’ll try to find that person. We’ll try to find someone who can introduce us to them or just shoot an email.
Frankly, honestly, something that I’ve noticed for myself personally, if I need to reach out to the CEO of the company and the company is a startup or a former startup or a small company, I will usually write this, “I’m writing to you, my fellow entrepreneur,” email or message saying, “Hey, I’m also an entrepreneur. We’re a small team. I’d really love to have a chat with you and get to know more about your company.” I think that works quite well. People in general, they’re quite okay to share their experience and have a call or a chat with you and try to help you. So, you just need to ask the right person.
Andrew: I see you’ve already got–who is it? Is it Ieva Smitaite?
Gulnaz: Yeah. Well, we have communications. You mean our communications manager?
Andrew: Yes. Is that her name or his name, Ieva?
Gulnaz: No. It’s actually Ieva. It’s I in the beginning, yeah.
Andrew: Oh, I see. So, we had a typo. So, you have a communications person already, even with such a small team. Why?
Gulnaz: Yes. Well, I guess my background in marketing was pushing me to sort of think about marketing and the right message we were putting out there from the beginning. We really needed someone to build this understanding of what the company is and what are goals and visions are and so on.
So, that’s the reason Ieva joined us almost a year ago. She’s been with the company from almost the beginning. I think that’s been really helpful. We’re able to communicate the right message to the market.
Andrew: How? Actually now that I got her name spelled right I can see her on LinkedIn–PR, social media marketing, website content, strategic communication. It’s Ieva who introduced us to you. What’s something that you guys have been able to do because you’ve got a communications manager this early on in your career?
Gulnaz: Well, I guess first of all we’ve been able to get some attention from media. I believe that PR and marketing, it’s all about hard work and sometimes you have a really great story to tell. So, we’ve been building a lot of relationships with journalists and trying to understand what sort of story we need to put out there as well as we’ve been trying to reach out to all the conferences and some maybe awards and so on and trying to apply everywhere. That’s what we’ve noticed with the B2B market. The more you’re endorsed by the conferences, the more you get attention from online shops.
Andrew: Oh, I see. Sorry, go ahead. You finish it.
Gulnaz: We have funny store. There was one shop and they’ve been on my radar for a year or a year and a half. I’ve been trying to reach out to the right person for a long time. But the company was going through a lot of changes and they actually changed CEO of the company three times over one year. I was already giving up. So, one day we got an email saying, “Hey, guys, I would like to have a chat with you.” I saw that was the marketing director of that company.
What happened a week before, we got an award as the best newcomer of the year in the Nordics in ecommerce. This guy, he saw us in the conference and he really liked that. He reached out to me, we had a call and this is how we got that customer. As well as now, for example, we’ve got international business awards as one of the best startups. It also helped us to get some interest and attention from media.
Andrew: I see. So, that’s how you ended up. I’m looking here again at my notes in our CRM. I see Nordic Ecommerce Summit, winner of the Newcomer Award; first place winner, BetaPitch, 2014 in Copenhagen. I see Investor Demo Day, Copenhagen, 2014. I see Investment Lab in Egypt, 2015.
I see–where is that? “Top Seven Interesting Startups from Russian Female Founders” by Forbes from Russia. I see “Top 16 Most Successful Women” in Russian Venture Industry. I see “Successful Russian Female Entrepreneurs” by Google Russia. So, all this stuff helps you as a new entrepreneur selling to businesses because it gives them more trust, more ability to trust you and more confidence in you.
Gulnaz: Yeah. Definitely. That’s something I could recommend also all the young startups to try to do, reach out and try to get that attention from media, especially in fashion ecommerce. That’s a really weird vertical. Everyone is looking for someone who’s endorsed by someone. So, that definitely helps.
Andrew: I see. So, you just have a full-time person who applies to all these conferences, who helps them understand what you do and the more you apply, the more likely you are to win.
Gulnaz: Well, of course it’s not her full job. It’s a part of her job. Also she does all the social media communications, all the press releases and meetings with journalists and arranging the meetings and so on.
Andrew: I see. When I was living in Washington DC, I’d see these entrepreneurs come to town and they’d have dinner with me because they’d be in town and I say, “Why are you here?” Often it’s for some White House event. “You got to speak at the White House?” One person said, “It’s actually not that hard. Just have a virtual assistant apply for anything,” that was an event that was going on, any interview that was going on, any top 20 this under top 20 that list and eventually they start getting hits on them and they end up speaking at the White House, end up getting all kinds of press.
So, I see the value of that and now I understand who contacted us and why. That’s a really good business to business strategy and I’m glad that I asked about it.
All right. The website is EasySize.me, right?
Gulnaz: Yeah. That’s right.
Andrew: What do you think about what Paul Graham said about how entrepreneurs should get the .com. Do you agree?
Gulnaz: Yeah, I really agree with that. I couldn’t agree more.
Andrew: So, do you think you’ll get EasySize.com soon? Let me see if that’s available. Maybe I’ll buy it and I’ll make a killing selling it to you.
Gulnaz: Well, it’s actually not available. We’re in talks with people who actually own the domain because they don’t really use that. But they just like how it sounds. So, we are talking to them. IN the beginning, the reason why I actually registered with EasySize.me, I thought that it will be quite cool at some point to make it a similar thing like, “Oh, just Google it. Just EasySize it.” So, make it as a word. But for now, it’s just the website and the domain and we have. We might change it soon.
Andrew: To a different name or different domain?
Gulnaz: We’re considering both options.
Andrew: Okay.
Gulnaz: Probably EasySize will be the domain, but who knows.
Andrew: Yeah. They’re not doing anything on it. They’re just cyber-squatting for a while. Actually, maybe they’re not cyber-squatting. Maybe they have something in mind. All right. EasySize.me. I’m going to see how this worked out. Maybe what we need to do is start using YouTube Hangouts or YouTube Live. You know what? I am using YouTube Live and I see Google Hangouts at the top anyway.
So, whatever their product is, actually it’s really good. I stopped clicking your face when I need to show you and my face when I need to show me and just trusted the system and they really improved their camera work. They really know when the show you and when to show me. That’s impressive they keep improving the software.
Gulnaz: Yeah. I think it’s a great alternative to Skype. Sometimes it helps, actually, just that a site is down.
Andrew: That’s true. All right. Cool. Thank you so much for doing this interview. If you like this interview, please sign up for Mixergy in whatever podcast program that you like.
There’s another app that I used to hate and rail against here, which is the podcast player that’s built into our iPhones. Actually, they’ve improved that too. It’s not as good as Downcast and Overcast and other software out there, but what’s nice about it is it’s built in, which means you can use Siri. So, if you subscribe to Mixergy on the podcast player that comes with your iPhone. You can say, “Hey, Siri, play Mixergy podcast.”
We should actually try that and see if it understands Mixergy. But it will start doing it. Even if it doesn’t do it for Mixergy, it will do it for others. So, check it out if you haven’t. Maybe like me you’ll become converted to Apple’s built in software.
But whatever app you use to listen to podcasts, please sign up to Mixergy. My sponsors are Toptal.com and HostGator.com. Thanks. Bye, everyone.
