Andrew: Listen up, I’d hate to have commercials interrupt this interview so I’m going to tell you about three sponsors quickly now and then we’re going to go right into the program starting with Walker Corporate Law. If you need a lawyer who understands the start-up world and the tech community I want you to go to www.walkercorporatelaw.com.
Next I want to tell you about Shopify. When your friend asks you, “How can I sell something online?” I want you to send them to Shopify and explain to them that Shopify stores are easy to set up, they increase sales and they’ll make your friends products look great. Shopify.
Finally I want to tell you about Grasshopper. Do you want a phone number that people can call and then press one for sales, two for tech support etc. and have all of the calls be routed to the right person’s cellphone? Get your number from www.grasshopper.com. Alright let’s get started.
Hey there Freedom Fighters, my name is Andrew Warner. I’m the founder of www.mixergy.com home of the ambitious up-start. I want to find out in this interview how a founder who lost his father to cancer early on ended up building a site that helps people raise millions of dollars for their medical expenses.
Ethan Austin is the co-founder of GiveForward which empowers friends and family to raise money to help the people they love during their medical crises. I invited him here to talk about how he built up the business. Ethan welcome.
Ethan: Thanks for having me.
Andrew: So how much money have you raised or helped people raise for medical issues?
Ethan: As of today we actually just hit 32 million dollars.
Andrew: 32 million dollars and you guys keep seven percent of that right?
Ethan: Yep.
Andrew: So that’s 2.24 million dollars in revenues for your business.
Ethan: Yes.
Andrew: Okay and of course from that you don’t just pocket that talk about some of the expenses.
Ethan: Sure we keep five percent like a lot of crowd funding sites and about two percent goes to credit card fees and processing and we keep five percent for our overhead.
Andrew: Are you guys profitable now?
Ethan: We hit cash flow break-even last year and we’d raised a small angel round, hit cash flow break-even and then raised another funding round last summer. They do not want us to be profitable right now. We’re spending money. We’re burning cash right now but ramping up more engineers and adding more heads to the team. Andrew: I understand completely why they wouldn’t want you guys to be profitable. When you are doing so well and you have to find ways to spend the money where do you spend it?
Ethan: For us right now one of the biggest ways is really ramping up the Engineering Team. We have a pretty small staff right now and there’s so much we want to do and so much bigger we want to make the website that bringing on really smart engineers is the fastest way to ramp up for us.
Andrew: How big is the team?
Ethan: We have 23 right now. Most of them are not engineers. Of that four are engineers so we really need to get up to speed with more of them.
Andrew: All right it’s a great idea and I want to hear about some of the impressive things you guys have been able to do to help people in ways that weren’t possible before crowdsourcing was an option. What I thought was interesting was how you got this idea. The idea came to you because of a run that you did. What’s so special about a run that makes you come up with an idea like this?
Ethan: My partner Desiree Vargas really across the country had the original idea for this when she was at The Kauffman Foundation for Entrepreneurship and she saw Hurricane Katrina hit and they didn’t have a lot of money then. She wanted to figure out a way they could give small-scale donors an opportunity to give directly to the people. That was her first idea for it.
Later she wanted to start a business and she thought, “How am I going to fund this business? I don’t know maybe I can have an Online Fundraising Page for it.” She realized maybe instead of starting a business this Online Fundraising idea was a better idea. Why not be able to raise money for anything? Whether you want to start a business, or whether you want to raise money for a Scholarship Fund. Anything and medical expenses was one of them.
Across the country I was in Law School and my buddy convinced me to train for a marathon which I’m not a runner at all but decided to do. I figured I’m going to do this once in my life, I might as well raise money for, you know, a cause I care about.
As you mentioned, my father had passed away when I was a kid, actually, 18 years ago this week, two days ago. And I’ve always been involved with cancer organizations and I thought, ‘Why don’t I raise money for a cancer organization.’
And they gave me an online fundraising page and I would send the link out to friends and family and email them. This was before I had Facebook. And, you know, they would send in donations. And it was, like, ‘Wow, this is really cool.’ And I got to about $1,000 and had a goal of $2,500 and raised it to $5,000.
I got to about half way towards my goal and I’m kind of a weird guy. I had this banana costume, and I put on this banana costume and started running up and down the street of D.C., in a banana costume, handing out flyers to people, saying, ‘Hey. Donate. Here’s my fundraising page.’
And it was crazy. Hundreds of people started donating. $10, $20 donations, from across the country. And it just kind of caught on like wildfire. And I ended up raising $6000 for this cause, and, I was just blown away, away at how a goofball idiot in a banana costume had raised so much money.
And I was thinking, for me, I was raising money for St. Jude, for children’s cancer, but my dad had passed away from colon cancer. So for me, if I had the opportunity I would have raised money for that, but you could only choose between 25 official charity partners with the marathon.
I was thinking that everyone has a different cause that’s important to them, whether it’s, you know, battered women’s shelters, or animals, or kids in Darfur, the environment. Why not have these fund raising pages for anything? At the time I was thinking more of non-profits really, and didn’t even know about the opportunity to raise money directly for people with medical expenses.
Andrew: I see. All right, so two different people, similar ideas, different parts of the country, and you end up getting together, which will find out how you got together and how this idea kept building. But I’m curious about your entrepreneurial background, because you had an opportunity to get into a business with your friends back in college. Do you know the business I’m taking about?
Ethan: Yeah, I did. So, I guess in my senior year of college, all of my buddies were in the undergraduate business program. They were all going off to Wall Street. There were a handful of us, these hippy dippy kids, we were out in Atlanta. And there’s four of us, somehow all from California, who hung out together. And we were, like, “What the hell are we going to do?” Because we were graduating soon. We didn’t have any ideas. We were all liberal arts majors.
And we’d all studied abroad, and we were, like, “That was really cool. Why don’t we start our own hostel?” And we’re, like, “All right. Let’s do this.” So we audited an entrepreneurship class in the business school and they let us in. And we drew up a business plan and we ended up looking at different places. Went all the way down to Costa Rica, and then went to Panama, and decided to pick a place in Panama.
Then at the last minute, I decide, I kind of chickened out. I had a serious girlfriend at the time, and decided I’m going to go to law school instead and ended up going to law school with one of my buddies.
They ended up doing it. They went forward with it and started this hostel that was wildly popular. MTV wants to do a reality series on them. They’re probably making more money than my buddies on Wall Street. They ended up opening two more hostels, and I’m in law school the whole time thinking, “Man, maybe I made the wrong decision.”
Andrew: What happened with the girlfriend?
Ethan: The girlfriend, I went to law school and she was a year younger and she came to law school, and then shortly thereafter we broke up. She’s actually the one that ended up introducing me to my partner, so it kind of came . . .
Andrew: He said, “Not a bad idea.”
Ethan: Yeah.
Andrew: I thought the reason, I mean, there’s not really much money in creating hostels, right?
Ethan: I don’t know. They, they were making a good amount of money. They didn’t take on capital. They ended up raising enough money to start an internet business later, based on what they’ve done with their hostels. It was always ranked the number one hostel in Panama. I think they may have made more money from the bars than the actual hostel.
Andrew: I see. I thought the only reason to have a hostel was because women just keep coming in, or vice versa, if you’re a woman, guys keep coming in and you get to meet them.
Ethan: Yeah. I think that was one of the perks of the job. I don’t think they were having a bad time down in Panama all those years. So, you know, I don’t know if I could have handled it down there as long as they have, but they seem to have done all right.
Andrew: All right. So you have this opportunity, you pass it up. The opportunity that you do jump on is being a freelance writer. How do you become a freelance writer then?
Ethan: Yes. So that was actually after Give Forward started. We, it was just my partner Desiree and myself and . . .
Andrew: Oh, this was after you guys started?
Ethan: This was after we started yeah. Andrew: Why did you need to go and be a freelance writer if you were already building this business that we now see is so successful?
Ethan: We didn’t have any investors so this was bootstrapped.
Andrew: To fund the business you went out to become a freelance writer?
Ethan: We each put in a little bit of money. We each put in 25,000 dollars from savings and we raised a little bit of money from our friends and family and scrapped together 25,000 a piece. We weren’t taking salaries for the first couple of years so in order to make ends meet Desiree who was really the brains behind the operation went to Yale, she was waiting tables on people she’d gone to college with.
Andrew: Oh my God.
Ethan: I was like, “I don’t have any real skills what am I going to do?” I couldn’t even get a serving job so I ended up getting this funny job as a freelance writer at a website called Guide Spot which was kind of a funny story.
Andrew: How? By the way before you pass up what you just said there, the pain of being a waitress serving the people who you went to school with who have great jobs is tough. Most people for that alone would give up would just feel so embarrassed, would doubt themselves so much. They’d say, “This idea of starting a business just did not work out I’m going to move on.” Why didn’t you guys move on at that point?
Ethan: In the beginning we thought about moving on right? In the beginning it was hard. It was challenging the first six months, the first year we raised a total of 6,000 dollars in total revenue. Most sane people probably would have moved on. I think at one point we stopped looking at revenue as a metric that we measured and we started looking at something we called hugs. A hug for us was anytime a user would reach out to us and say, “Hey this website was super meaningful to us,” or “It helped save my brother’s life.” Something like that and that didn’t happen often. It happened very infrequently but it gave us a glimmer of light. If we can affect this one person in this way then we can really make this grow and get this out to thousands or millions of people we can affect tons of people across the country.
Andrew: OK I want to get back then into GiveForward but first you said there was a funny story about how you got the job at Guide Spot. How’d you get that job?
Ethan: It was kind of funny because I was looking for a job and I didn’t know what I was going to do. There was a gym across the street from my house that I wanted to go to. It was kind of a swanky gym. I certainly didn’t have the money. It was probably 100 dollars a month. So I took a tour of it and the woman tells me the price and I was like “Oh I can’t afford that.” She says “Are you a student?”
I said, “No, I know I look like I’m nine years old but I’m not a student.” She says, “Are you an artist?” I said, “No, not an artist” “A Musician?” “No.” She said, “A freelance writer?” I said “Give me a week.” So I went on Craigslist and found this position. It said you have to be super- qualified and have to have previous blog experience and have experience in social sharing sites like Dig and Stumble which I didn’t even know what they were at the time.
Somehow I convinced them. I think I used that banana costume again. I said, “If you hire me I’ll run another marathon in a banana costume.” I was eminently unqualified for the position and wrote to them and said, “If you give me a chance just see what I can do give me two shots at two blog posts.” Made all my friends to support it and somehow it stuck around. Andrew: The gym gave discounts to freelance writers?
Yeah I just had to prove to them that I was actually a freelance writer. I remember my boss her name was Alex Freedman. I said “Hey I need you to fax in a copy to the gym that says I’m an actual freelance writer.” She wrote on the thing and said, “To the gym, Ethan Austin the cheap hobo who wants a discount in gym membership or whatever.” She couldn’t believe it. Andrew: Congratulations on the hustle in getting that job.
It was a fun job. It was a good time.
Andrew: You were telling us about how you had two different people, same idea how do they connect? How do you and Desiree meet up and create this idea that became the business we’re talking about today?
Ethan: So I was in California at the time. I couldn’t convince any of my buddies to start this idea with me. I was going to be a lawyer and probably a mediocre lawyer at best. That ex-girlfriend the reason I didn’t go to Panama in the first place calls me up and she’s like, “Hey, I just met this woman at the Super Bowl Party who is doing an [??] and I started in this business that sounds similar to what I wanted to what you wanted to do.” You know, why don’t you give her a call.
And so finally after a couple of weeks gave her a ring and in that instant we just clicked because at the time, you know, this is 2008. Crowdfunding didn’t even really exist as a word back then. So when you’d talk to people, they’d just kind of give you this like nod and that sounds great but you kind of get like a deer in the headlights. And then Desiree she starts talking and they instantly get what she’s talking about. And, I should’ve said like what I’m talking about.
And so it was cool and I said, “Why don’t we see if we can make this work” and went out to Chicago a few weeks later for St. Patrick’s Day. We bonded over some Irish car bombs and two months later I packed up two old suitcases and moved to Chicago.
Andrew: Now, neither one of you is a developer, right?
Ethan: No.
Andrew: No. So what was your plan for getting this site built out?
Ethan: Fortunately, Desiree had already contacted. What was funny is Desiree, one of the things I really most admire about Desiree is she had started this website without any idea of how it was going to get finished. It got started with $25,000 and I think to build this site was going to cost $30 or $40. So she didn’t even know where she was going to come up with the rest of the money, but she had started it. And she has this magnet on her refrigerator that I always loved and it says, “Weep and the [??] will appear”.
So she was kind of [??] and figure something would work its way. [??] And so she hired like a [??] shop in Chicago to start working on the site, probably in January, February or so. We got it up and running by August of 2008.
Andrew: How did you guys get the $25,000 that you each invested?
Ethan: Desiree borrowed some from her grandfather, he gave her a loan. And actually, she actually took out a prosper loan which I don’t know if you’re familiar with prosper but it was kind of like a crowd funded loan. So she actually used crowd funding to crowd fund her business.
Andrew: It’s the site where you go on and say, “I have this idea for a business. My credit is” and you show your credit and you talk about who you are and what are your ideas and people just lend you money to go start this business.
Ethan: Yes. So she kind ate her own dog food.
Andrew: When Jeremy, our producer, asked you what the first version looked like, you didn’t tell him what you thought the first version looked like. You told him what Sam Yagan, the founder of OKcupid and a guy who will soon be here on Mixergy, you told him what his reaction was. What did he say about your site?
Ethan: That this is the shittiest website I’ve ever seen.
Andrew: Sam Yagan just comes out like that and says that about your site?
Ethan: Yes. Well, this is 2010 so this is two 2 years after the original version launched.
Andrew: So two years after it’s looking this crappy?
Ethan: Yes. It looked crappy for a long time.
Andrew: So what did version 1 look then?
Ethan: Version 1 probably looked the same and why it’s so important to have a technical co-founder and maybe a designer on board is that when you don’t have those people on board, you can’t change things very quickly.
So the difference between version 1 and version 2 in two years probably wasn’t very much. For a while it was a pretty crappy website.
Andrew: So then what did the first version look like? What were you guys able to get out there?
Ethan: It was super boxy. There were tabs everywhere, if I remember correctly. It just didn’t look very professional and I don’t know how anyone actually trusted it to put their credit card number in and put money into this site. I think if you opened it on Internet Explorer for the first 6 months, it would just crash. It just wasn’t supported by Internet Explorer.
It wasn’t a good site. He was right. Maybe not the shittiest website, the might be something like [??] but maybe not. I don’t know. It was up there.
Andrew: So there are two people, two groups of people that you need to make your site work. You need to get the people who are looking to raise money and you need to get the people who raise money.
My prediction is that you’re going to say, “If you get the people who are trying to raise money, they will bring the donors on board”, right?
Ethan: Mm-hm.
Andrew: So how did you get the people who are trying to raise money?
Ethan: We tried about everything. We kind of stumbled upon all sorts of things that did not work. I was just talking to someone on the phone about a story and I think one of the first things we tried was it was right around 2008 and we said, “Let’s do the video for Obama.” And my [??] for him and we’ll make this video. I think it was called change For a Dollar or A Dollar For Change. We were like yeah let’s just make a viral video because that will work. We made this video and of course it didn’t go viral. I think we got maybe 50 views on YouTube or something.
We tried all sorts of things early on. We got friends and family to start the initial pages so that they were our earliest testers.
Andrew: You didn’t early on know this was going to be a site that would allow people to raise money for medical situations for a hospital stay for example. You were just looking for worthy causes and organizations that need to raise money. That’s why you tried the Obama thing. You also went after non-profits, right? Ethan: Yeah we started off really raising money for anything. We thought non-profits were going to be the biggest segment and that’s why we went after them first. We were doing everything. We were talking to the local fraternities and sororities because they’d raise money on behalf of non- profits. Ethan: Or even just for Scholarship funds. The first fundraiser I had was for my buddy whose fiancé passed away from cancer. He had a 12-month-old baby at the time and I was raising money for a Scholarship fund for her. It was really anything at first. It wasn’t until about a year later that we focused.
Andrew: You know what? Before we started the interview I did something that I don’t usually do. I ran my first sentence of the intro by you because it had something to do with your father passing away. I asked you because it’s such a sensitive subject that I felt insecure about even bringing it up to you in this interview.
It occurred to me as you were saying you went to your friend and you did this campaign for them to help with the child’s education that it’s tough to talk about this with people. It’s easy for me to experiment on a friend and say, “Hey watch this Mixergy course and tell me if I’m on the right track.”
Or “Teach a Mixergy course,” or “Buy this and tell me,” because at the end of the day no one died around it. How is it to go and talk to a friend about raising money after death? Talk about that a little bit if you could.
Ethan: How is it to ask a friend to raise money after someone’s passed away?
Andrew: Yeah to even bring it up. To bring up the fact that someone passed away. It seems like this is a really tough call to make.
Ethan: Oh so I was raising money on behalf of them so I set up the fundraising page…
Andrew: You still have to ask them permission, “Hey can I raise money?”
Ethan: Yeah and it was tough. I did I asked him and said “Hey, would you be OK with this?” and he was like, “Yeah.” He was totally touched. One of the things we’ve learned in this country there’s this weird thing about giving and people often give at happy times. They give at weddings, anniversaries, First Communions and Bar Mitzvahs.
When our friends and loved ones actually need it the most when they’re sick, most people clam up about it. It’s like this white elephant no one wants to talk about. Maybe they don’t realize what type of financial struggles their middle-class and upper middle-class friends are going through. It’s this weird thing in this country where people don’t want to talk about it and that’s something I think we really need to change.
Andrew: You’re human too and it’s not easy to make a phone call. How do I bring this up? Cold-calling in general is tough. Asking people to participate in your new project that’s not fully baked yet is tough. What do you go through to get the courage or whatever it takes to make this phone call and I ask because I’ve struggled with making cold calls to bring people into a new project.
Everyone who’s listening to us if they’re real entrepreneurs has had to deal with this in one way or the other. Talk about how you got yourself to do it so that we can learn when we are faced with this challenge. Ethan: We had reconnected it was an old friend and we’d gone trick-or- treating not too long before that. I saw it as an opportunity. I’d raised money for non-profits but I wanted to do something that seemed more personal.
I think I just asked him. I said, “Hey would you be okay with this?” I wasn’t sure what to expect because like you said it’s a touchy subject and you don’t really know. But I think sometimes the hardest thing is asking. It’s just putting yourself out there and making yourself vulnerable and saying, “Hey would you be okay with this?” I didn’t really know what his response would be but, you know, it was meaningful for me and something I wanted to do.
Andrew: When I asked you before the interview how I can make this valuable to you, what should we talk about to make it worth your while, you said, “Talk about my failures”. And one of your biggest ones that you told me before we started had to do with email. What was the issue with email?
Ethan: I can think of a couple but one of them, you know, when we first started going back to the [??] website in the world, when we first started we didn’t even have automatic emails that went out when the user signed up. So every night we’d get maybe one or two users and so it wasn’t too difficult but when every night I would be on my computer typing like ‘Hello, Tom. Thank you for signing up for Give Forward’ and it was just kind of funny to think about what the actual website was and talk about MVPs. [??] MVP before we knew what an MVP was. It was such an early version of the site. [??] you got to meet your users and talk to them, get a good understanding about who they were and interact with them.
Andrew: What lesson did you learn because you manually had to email people and didn’t have an automated system that would follow up with them?
Ethan: I’m trying to think of one thing that I learned. I think the most interesting thing that I learned happened when I emailed someone was, one moment was it turned out she was a venture capitalist raising money for her friend. And she said, I’d written here a little joke. She [??] on her page and then just wrote her a quick little joke and said ‘Sending you some positive vibes and hope your friend gets better’ and she was just kind of touched and she said ‘Hey, you guys ever need raising money, call us and let’s talk’.
So, you know, you just never know what’s going to happen when you talk to your users, I guess.
Andrew: And this was a venture capitalist. Can you say what her name was, what her name is?
Ethan: I don’t know if I should. It’s a firm out in California.
Andrew: OK.
Ethan: That really narrows it down, right?
Andrew: Right. To one or two million. So let’s see, what else happened? So you’re just searching around for who’s going to be looking to raise money on your site. At first you were thinking non-profits. You were dead wrong. You thought maybe this Obama viral campaign will work. Not right. Eventually you figured out that it’s individuals who want to raise money for family members, for friends.
When you first started noticing that that was what people were using the site for, because it’s so different from what you imagined, did you fight it at first or were you welcoming of that and said A-ha, we hit it?
Ethan: No, it took us a while. It was what I call a slow [??], maybe even a very slow [??] in the sense that, you know, I think one of the very first times when you saw a doctor raising money for his friend with cancer and he raised at the time $7,500, the biggest fund raising on the site to that date was $2,500. So we were like “Wow, he raised a lot of money”, but we didn’t take much notice of it. And then the next thing I think was actually not a medical fund raiser but it was this fund raiser doing it for my friend and I was in that banana costume again. I was running a half marathon and I was running on the boardwalk in Santa Monica handing out flyers to people. I had $13 to hit my goal for the half marathon the next day and I see this guy and he says to me, when he gets up to me, “You just made my day.” And I was like OK and I just kept running.
I come back like an hour later and there was a donation from an anonymous donor for $500 and at the time that was the biggest donation anyone had made on the site. And for me that was the “A-ha” moment, not that this was a going to be medical but it was, maybe it’s not about people giving to non- profits. It’s about people giving to people. Because there’s something in that story that I’d written in that little that I handed out to him that touched him. Maybe he knew someone who had lost a fiancee to cancer and had a young child. But something touched him about it and I think that was kind of the A-ha moment.
Andrew: You know what? My very first question, I’m even looking here on my notes and it was planned, it wasn’t spontaneous. My first question to you was about money. How much money have you helped people raise? Then I followed up with how much of that do you get to keep? And the reason I do that is because I feel like in our space, in our tech world, revenue isn’t talked about, fund raising is. And so I want to make the point of asking about it at least. But I can’t overlook the impact that we have with these businesses. It’s not just revenue generation, it’s also huge impact.
Can you talk about one of the impactful stories of someone who raised money at this stage in your story? I know that there are tons to pick from today, but at the stage that you are talking about now, where you’re still trying to figure things out, what is one of the touching stories?
Ethan: Yes. I think the one that really hit me the hardest was our second big success story. We had a situation in which two sisters had raised $30,000 in 30 days. The one that hit me the most was a friend from law school whose father had stage 4 cancer, and she had donated to that other campaign. We had done everything we could to promote that other campaign for those two sisters. She reached out, and we set her up with a fundraising event, and they were able to raise $12,000 for her father. They had full insurance but were traveling back and forth for treatment, and all those expenses added up really quickly.
We were able to help them raise $12,000, and that was powerful. I was emailing back and forth with her all the time, and I personally saw what a huge impact it had.
Andrew: Yes. You know, if it was all about dollars and cents, about selling the company, about the big raise, about generating revenue, then we might as well be on Wall Street. Those guys are clearly cleaning everyone else’s clocks, but when it comes to having impact, there is nothing, in my mind, like entrepreneurs and what you can do. You had this idea that came to you on a run, that you hashed out with a friend of yours over shots, and it ends up impacting so many people like this.
All right, now you need to grow this business. It is not enough to just keep running around in a banana costume. One of your early hits, as I understand it, was Desire’s sister being on a reality TV show. Right?
Ethan: Right. And that was actually from our launch party. That was in 2008, but the funny thing about that was called Tim Guns’ Guides to Style. They had needed to have a big reveal, a transformation in terms of giving her new clothes. The big reveal was that her sister was quite the hustler herself, and asked what type of party she wanted to do. She said, “My sister’s company is launching, and they are having a launch party.”
Of course, at the time, we were not having any launch party, but now that we had these people from Entertainment Television that wanted to film we were able to get $25,000 worth of sponsors and everything for free. So, we throw this big launch party. Serendipitously, we met a friend of the two sisters who were the first big success story. He was the reason he met us at that launch party and ended up telling them about the site. That was really the fundraiser that sort of helped give us a little bit of traction.
Andrew: I see. OK. And, you raised $25,000 to throw this party through sponsorship?
Ethan: We had in kind donations of $25,000. I think everyone wants to be on TV, so we did a lot of parties in our early years. We were pretty young, and we did not know how to market. We would try parties, and I do not think we ever came close to getting $25,000 worth of in kind donations again.
Andrew: I suppose people wanted to donate some drinks just so they could say that their drinks appeared on the show, that kind of thing.
Ethan: Yes.
Andrew: Still, you have to make these phone calls. Where do you get the guts to make these phone calls? Where do you get the experience to feel comfortable making phone calls like that? How do you learn it?
Ethan: I think the phone calls are hard. I am still uncomfortable with phone calls, and I absolutely suck at them. I always say I hate selling. I like telling stories, because it is a lot easier to tell a story than it is to be on a 30-second phone call. We went door to door, because it was harder to say “no” to a smiling face than it was to say “no” on the phone. So, we just knocked on the doors of local businesses and asked, “Hey, would you want to participate in this?”
Andrew: Would you want to sponsor us?
Ethan: Yes.
Andrew: Door to door?
Ethan: Yes.
Andrew: That is impressive. All right. I’m looking at the notes, and you are saying at this point that 97% of the people who came to your site thought it sucked. The site was still not where it was when Sam Yagan saw it. How do you feel proud as an entrepreneur when you think your site stinks? How do you confidently explain to people that they should come to it, when it is not great?
Ethan: I do not know how people decided to keep coming. I think, for us, we recognized that we had such a small amount of traffic that even though those 15 people that were looking at the site may have hated it that if and when we could improve it we’re going to have so much traffic that it won’t matter that those 15 people were there. For us I think really the biggest thing early on because our technology was so bad we over-compensated with our Customer Service.
We always bent over backwards to be helpful towards them. Those were the people that would recommend us to their friends even though the site was absolutely awful. If we did something that created a little bit of unexpected joy for them they’d rave about the service and recommend us to others.
Andrew: You got into an incubator right which helped?
Ethan: Yeah.
Andrew: What was the incubator?
Ethan: It’s called Excelerate Labs. It was 2010, first class. Yeah.
Andrew: What did you get out of being a part of the incubator?
Ethan: I think everything. I’m such a huge fan boy of these accelerators. We didn’t know anyone in Chicago. I had no network there. Desiree had no network there. We were heads down the first two years. They introduce you to so many mentors who would later become angel investors and introduce you to the right people.
You really learn it’s not what you know it’s who you know. You have to get lucky to get that right opportunity. We felt incredibly fortunate just to get into that program because they accepted ten people and I think there were 400 or 500 applications.
The only reason we got in was because Sam had experience with a similar situation. Sam Yagan who was running the program at the time had experienced a similar situation just months before, and understood what the problem was.
Andrew: What was the situation that he ran into? What do you mean?
Ethan: His wife’s co-worker’s niece’s friend six degrees away was sick and they were like, “We need to create a fundraising website and we don’t know how to do this. Let’s ask Sam he’s this web geek. He’ll probably know how to do it. Start a blog with a PayPal button on it.” He said it was such a pain in the butt to have to do that.
Ethan: The fact that it was so far away. So many degrees of separation away there has to be an easier way to do this that anyone could do it.
Andrew: I see. That’s what made him feel connected to this project. He said, “Aha, there is a need out there for it and I couldn’t solve it myself.”
Ethan: Yeah I think so. At the time he’d said we’d done a million dollars in transactions on such a shitty website. You figure if you can make it a good website you’ll probably do a lot more. I think it was those two things.
Andrew: Can I tell you that it’s been two years of me just going back and forth with him via e-mail trying to nail down a time to do an interview? This Friday at 2:30 PST we’re going to do it. He’s open to it and it’s just two years of going back-and-forth. Finally I asked a mutual friend, someone I interviewed to send him an e-mail. That got it to work. I can’t wait to have him on. I’m looking forward to seeing his attitude in person.
Ethan: He’s an amazing guy.
Andrew: What did you learn from him? What are some of the big lessons you learned from him?
Ethan: I’m trying to think most recently one of the last things we learned from him. As we did the last fundraising round we put together a fundraising deck and I send it to Sam. Of course, what do you think he says? He says “This is the shittiest deck I’ve ever seen.”
He’s like, “Seriously I’m embarrassed for you why are you sending this deck?” Sam’s very blunt and honest. That’s one of the best things about him. He’s like, “This deck sucks. You have so many great mentors and investors. David Cohen is one of your investors. Why don’t you ask him?”
“He’s seen hundreds of decks. Why don’t you ask him and get some feedback on your deck? Your deck is so bad you can’t show this to people. You have so many mentors around you. Why aren’t you using them as resources?”
Andrew: Why weren’t you using them as resources?
Ethan: I don’t know it was stupid. We use them in every other aspect. Sometimes I think you just forget. We try and do purposeful engagement and engage our mentors and investors frequently because that’s when the opportunities come.
Andrew: I skipped over some of the lows of this. Six months into it you were ready to give up. New Year’s Day 2009 you had one visitor on the site again you’re thinking no more. There was one period there where McDonald’s factored in. What’s the deal with McDonald’s?
Ethan: I became slightly addicted to McDonald’s. It’s happened once in Law School and once again in our first couple of years, just because we were so poor, we had no money, we were typically eating either McDonalds, or one Chipotle burrito and some cereal, as my main sustenance for the day. I was coming home from work super, super late and the only thing that would be open at the L stop in Chicago was McDonalds. I was eating that four or five times a week. Eventually my heart was like, this hurts to get up the escalator.
Andrew: Oh, oh. You know, when you don’t have money that’s one of the things that really is the most painful. You just don’t eat healthy, because for the price of an avocado, of just one avocado, you can get a burger, maybe even two burgers.
Ethan: Yeah.
Andrew: Eating healthy is so much more expensive than just eating quick.
Ethan: Yeah, yeah, that totally. I definitely experienced that, for sure.
Andrew: You got into Werther’s Originals, why? What happened when you got into that?
Ethan: That was the other thing I ate a lot of. We had a shared office space. We crammed eight people into an office for what would be for an accountant or a lawyer. In the shared office space at the counter there was always candy. I’d be at the office until 9, or 10, or 11 and haven’t eaten since noon, and I would eat these Werther’s Originals. What ended up happening was, I had zero cavities for the first 28 years of my life, I went back one time bragging to the dental hygienist that I was the king of the no cavity club, and she was like, “You have six,” I think it was the Werther’s that got me.
Andrew: I interviewed another founder in Chicago whose company you got to know. I’m talking about Groupon. You got to know people at Groupon. What did they think of your idea?
Ethan: We pitched Brad Keywell, he was one of the founders of Groupon, when he first started Light Bank I think in 2010, when they were first starting Light Bank. He gave us 10 minutes to pitch him. It was the day Groupon had its first big national deal with Gap, so he was distracted. Groupon actually started off as The Point, which was very, very similar to what Give Forward actually started off as, which is fund raising for anything. I think Brad said, “If it feels like a nonprofit, it probably should be.” That’s what he learned with The Point. So, they passed on it. For us, I think that was one of our first pitch meetings. It was exciting for us, but it didn’t work out.
Andrew: Why didn’t you make it a nonprofit? I was thinking that when I saw this week the big announcement about [??] being backed by Y Combinator. They’re nonprofit. You guys are very similar. Why didn’t you go nonprofit with this?
Ethan: For a couple reasons, one, we couldn’t actually even if we wanted to. In order to be a nonprofit, you can’t give money directly to individuals. You can, kind of, but you have to do tons of paperwork. You wouldn’t be able to process thousands, and thousands, and thousands of fund raisers per year. It might take a week to process each one. You’re really limited by that, the ability to do this as scale. The second reason, even if we could be a nonprofit, we didn’t want to be. We thought, if you can do good and do well, you really have the best of both worlds. We always say, this is a job I would do for free, and we did for the first couple years. The fact that we get paid is the cherry on top. For us, it makes sense, because nonprofits spend 20% to 40% of their time fund raising, where we can take the revenue that we’re actually earning and grow the business, not being distracted spending 20% to 40% of our time fund raising.
Andrew: I get so lost in that story. I actually was wondering, in the beginning when I was bringing up revenue, is he uncomfortable even talking about revenue, because he’s helping people? Do you ever feel uncomfortable? Do you ever? Ethan: No, I don’t. At the end of the day, people are choosing, just like Kickstarter, right? Kickstarter’s funding dream is in helping people fund their dreams. Our mantra is create unexpected joy. People are choosing to use this, because they know that I can go on a Give Forward page and raise $50,000 in two days, or I can work for a month to set up a spaghetti dinner fund raiser that might bring in $5,000 and work tirelessly. I know if I use this I’m going to raise infinitely more money. So, we’re creating a service that’s really helping people They’re choosing to pay that fee.
Andrew: I learned a lesson from my wife who is a do gooder. Before we met, she went to Micronesia to donate a year of her time teaching there and she thought, “Non-profits are doing good in the world and I’m going to go and be a part of it, not just give money but give my time.” She looked around and she saw these people are missing supplies. There isn’t the stuff you expect when you go into a business even one like mine.
I’ve got pens, paper, I’ve got a printer. If something breaks down, there’s someone who’s going to fix it. She went to work for other non-profits and saw the same thing. They’re constantly trying to raise money, justify their existence and are missing what they need but for-profit organizations have all this power. She went the direction you went. How do you use for-profit companies to do good in the world?
Ethan: Yeah at the end of the day both non-profit and for-profit probably…You know me and Watsie have the same mission to help people we just chose different avenues to get there. I was talking to someone recently who was the CTO of the Obama campaign and we talk about the same issues. What’s challenging is that the companies that win are the companies that have the smartest talent. Right?
Non-profits can’t hire the smartest people. I’m not very smart but we’re bringing on a lot of smart people now and that’s why our company is growing. If you’re non-profit you can’t pay people what they’re worth often times because everything is watched so closely. You have to do your share of duties to keep salaries low. Good people cost money. It ends up with this heart-filled headless problem. Where you have a lot of people with great hearts but you don’t have those super-analytical expensive people to help scale the business or make the business run.
Did you finish Law School?
Ethan: Yeah I did.
Andrew: Did you ever get to use that in business? Was that helpful?
Ethan: This was early on like I said this is one of the 97% who thought our site absolutely sucked and something happened and she wrote this menacing e- mail and signed it whatever her name was but put in Esquire behind her name.
This is the only time I think I ever wrote Esquire back but I returned her an e-mail and I put Esquire behind my name and that was the last we heard of her. So I guess I scared her off with my fancy Esquire title.
Andrew: Esquire doesn’t even mean anything, right? I can attach Esquire to my name.
Ethan: Really? I had no idea.
Andrew: I don’t think Esquire is like doctor where you have to earn it. I could be wrong.
Ethan: Well it was a good hustle then.
Andrew: On both parts.
Ethan: Yeah.
Andrew: What else? Did I miss anything here? No I think I got everything. How about this final thing? First of all let me see about this Esquire. Screw that actually. I’ll look up Esquire later and if anyone’s curious I’ll add it to the comments. Ask me and I’ll add it. Andrew: I’ve got to stay focused. I don’t know how people can, like Leo LaPorte will do an interview and he’ll be checking out websites throughout the interview and he’ll be flashing stuff on the screen. If I lose focus for a second you can tell.
Ethan: I’m the same way.
Andrew: Alright I want to do two things. First eventually things worked out for you. You know it not because you were able to raise money. Not because Sam Yagan finally stopped saying your website and deck were shitty but because of something your mom said when you got back from Washington D.C. Can you tell that story?
Ethan: Sure this was actually my Grandmother. I’m pretty close with my Grandmother she’s a typical 96 year old Jewish lady. As a typical Jewish Grandmother she wanted me to be either a doctor or a lawyer and was really happy when I was going to be a lawyer and for years kept saying to me…
Even though we’re building this business we’re helping thousands of people she kept saying to me, “Are you ever going to use that law degree?” I’m like, “Grandma, we’re helping all these people come on cut me a break.”
In 2011 I think we won some award along with about 100 other start-ups. We got to go to the White House and take pictures and hear people from the White House speak. The President wasn’t there but it was really this neat experience. I sent her a photo from the White House and I think that was the very first time this 96 year old Jewish Grandmother was actually proud of what we’re doing. She’s like, “Oh the White House, very good.”
Andrew: Sometimes it takes props like that for people to accept where you are.
Ethan: Yeah.
Andrew: …people to accept who you are.
Ethan: Yes.
Andrew: That’s the only reason that I have an office. I mean, if I just did this from my home, people would just go, “Hey, he’s interviewing people from his home”. But if I bring him to the office then it’s all “Oh a real business over here.”
Ethan: That’s another piece of advice from Sam here. He says the same thing.
Andrew: Who does?
Ethan: San Diegan.
Andrew: Have an office just so you can show it off.
Ethan: Yes, exactly.
Andrew: I’m looking over your shoulder. You’re working from home though.
Ethan: I am. I’m actually in San Francisco right now and I’m actually moving back to [??] so I spent the past year in San Francisco actually moved my 96 year-old grandmother back to California. My uncle, where she was staying in Massachusetts had passed away and so we wanted her to be closer to family. Moved back here for a year but I’m actually moving back to Chicago in April to be closer to the team and be in the office again. Because it’s been a challenge actually to lead from California.
Andrew: Well, here is the final question. Sam Yagan shot me an email and said “Hey, how long is this going to be? An hour? How about we do a half hour?” You’re a persuasive person. How would you persuade Sam to stay for an hour instead of cutting it short? For the interview.
Ethan: Well, let’s see, let’s see. We can promise to give him, he wants his Polo shirts so you can send him a Mixergy Polo shirt. I’m not sure what’s going to persuade Sam. Maybe just, I don’t know. I’ll think about that and I’ll get back to you.
Andrew: If I give him a Polo shirt. The only, the one and only Mixergy Polo shirt. I’ll have one made. Then we’ll persuade him.
Ethan: Yes, send him the Polo shirt and say, “Hey, we’re going to give you this Polo shirt if you stick around for an hour.”
Andrew: Done. I’m going to do that. And when I get him on here, what should I ask him? I always like to ask founders about upcoming guests and usually I do them in private but since you know him well, what should I be asking Sam Yagan, the founder of OKCupid, the guy who’s now running Match.com?
Ethan: I would ask him, Sam actually gave me a lot of advice I think for someone who is actively running his business from Chicago and he’s in Dallas and San Francisco and New York all the time and he’s running this big corporation how he’s been able to do it. Because I’ve found it very challenging and he gave me a lot of great advice about that. But I think anyone who’s in that same situation will learn from his experiences there.
Andrew: How he’s traveling around and running his business?
Ethan: Well, how he’s been able to run his business while he’s away from his team. You know, his business is headquartered elsewhere from where he lives and he’s been able to make that work which is exceedingly difficult. But Sam has been able to do it. So what’s his secret to success there?
Andrew: All right. I’m going to ask him about that. And one of my secrets to success is to not just sit back and hear people’s stories but to reach out to them and to get to know them and connect with them and I’m going to pass that onto the audience.
If you got anything out of this interview or any other interview there’s on Mixergy or somewhere else, don’t just be a passive viewer of life. Send the person a note and say thank you and when you do that, I think you’re starting a relationship with that person that could eventually benefit you that can lead to partnerships, business development and so on.
The founder of Olark told me in private that he uses these interviews just for business development, you know. He’s not entertained by me, he’s just saying ‘Let me get to know these companies that I might want to work with’ and then he follows up with them and often will start working with them like the founders of Clicky.com hooked up with him that way and they’re software now works together because he heard them on Mixergy and followed up.
All that to say, if you got anything out of this interview, find a way to say thank you to Ethan. Ethan, how can people connect with you and say, “Thanks for doing this interview and for teaching us that shitty websites can eventually become successful businesses?”
Ethan: I’m Ethan@GiveForward.com.
Andrew: All right, awesome. That’s the same email we used to connect with you so I know that they’ll get the results there. Thank you for doing this interview and thank you all for being a part of it.
