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Here’s the program.
Andrew Warner: Hey everyone, it’s Andrew Warner, founder of Mixergy.com, home of the ambitious upstart and also home of the host who has a cold. Hopefully people can hear me with this great mic. In the ’90s, today’s guest, Mariam Naficy, ran one of the most one of the well known sites, Eve.com, the online beauty retailer. I remember reading about them all the time because I was so into reading about every Internet company back then.
Today she runs Minted.com, which creates beautifully designed stationery and invitations that are crowdsourced. I want to ask her for some stories from back in the days when she ran Eve.com, how she felt when reporters called this . . . they pretty much made this site into the poster boy of the Internet’s dot bomb period. So, I’ll ask her about that. And I want to find out about this latest company that I’ve been watching and has been growing strong. And I want to find out how she’s building these invitations, how she’s crowdsourcing them. I want to find out how you’re selling them. Mariam, welcome to Mixergy.
Mariam: Thank you.
Andrew: So, first of all, can you give people a little bit more information on what the current company is before we go back in time?
Mariam: Sure. So, Minted.com is a crowdsourced design community. We have a global community of graphic designers who compete to have their designs sold on Minted. The community, they submit it to design competitions that we hold continuously. Our community votes to tell us what to sell, and we then print those designs in the form of stationery products, like holiday cards, wedding invitations, personal stationery, all forms of stationery and greeting cards and photo cards.
Andrew: What does one of the top cards look like?
Mariam: One of the top cards . . .
Andrew: Yeah. Can you just give us a sense of it?
Andrew: Oh, you’ve got it behind you, okay.
Mariam: I actually have them. These are two examples. Here’s one card, I don’t know if you can . . . this is a beautiful chandelier.
Andrew: Yeah. Black and white card, beautiful font, uh-huh.
Mariam: Yeah. And so this happens to be a wedding invitation. We also have photo cards that are behind me. This is a top selling holiday card. You can see it’s a full bleed photo with some snowflake coverage on the edge. It came in number two in our holiday design card challenge last year.
Andrew: Now, are people going to be buying those cards with that family on the cover? Because I might like that.
Andrew: My parents are a little pissed that I don’t have a kid yet. If I send them a card like that with the kid, even if it’s not mine, they might be happy.
Mariam: Totally, yeah. We could also sell you the photo to go in it. Actually, what you do is you take your photo and you upload it online and you put in your personal text over here.
Mariam: So you customize your card. All of our cards are customizable. We print on demand, and we print on very thick premium paper. So we believe in not using the photo flimsy photo paper out there. We use thick stationery quality paper. We offer 100% recycled paper. And we ship them to you. It’s pretty easy.
Andrew: All right, great. Let’s go back in time, and then we’ll come back to where you are now and find out a little bit more about Minted.com.
Andrew: So, 1998, you and your roommate have an idea for a website. I think at the time you were working at Goldman Sachs as a financial analyst?
Mariam: I had been. I was actually coming out of Stanford Business School. So, I was right out of business school, yeah. And then my friend Varsha, we’d been in banking together in New York, wanted to start a business together. We had a couple different ideas. Varsha picked this one. We could relate to women buying cosmetics, and we thought it would be a great replenishment idea. At the time when we pitched VC’s, actually most people said to us that women do not buy anything online. Actually, a lot of well known VC’s would say to us, “Women don’t buy things online. This is not a good idea.” Or, “You need to touch and feel products like apparel and cosmetics, so they will not sell online.” In addition, a lot of brands were not online at all. So we had to convince a lot of New York based, big brand names to trust us with online distribution.
So we out and did that, raised about $26 million in venture capital in three rounds, and then sold the business.
Andrew: So you sold it to, I guess Idealab bought the whole company? Or did they buy a majority stake?
Mariam: They bought the whole company. It was a competitive situation between Idealab and LVMH, Louis Vuitton Moet Hennessy, that at that time was trying to expand Sephora into the US and they only had one store in the US. And we had about double the traffic online as Sephora.com at that time. So, it was advantageous for LVMH to buy us to move us out of the way of Sephora. So they made the initial bid. Idealab outbid them, bought us for cash. Then eventually, there were a lot of things that happened. Subsequently, we actually ended up selling to LVMH after all. So, if you type in eve.com now it actually goes into Sephora after all. So, we actually sold the company twice. The first time was for about $100 million in cash to Idealab.
Andrew: So, I actually saw that six months later there was an article about how Eve.com ceased operations and laid off most of 164 employees? I think it went bankrupt afterwards.
Andrew: I think Idealab was sued for a billion dollars by their investors two years later, a year and a half afterwards. According to “The New York Times,” it was because of, let’s see . . . sued for a billion dollar investment, disappeared in smoke of dot bombs like Etoys and Eve.com. So, did you end up selling it for $100 million and then it was, what happened afterwards?
Mariam: I can’t really say that it was a rational decision that I would make today, but we ended up collectively deciding to shut the business down because it was not profitable yet. We were doing about $10 million a year in annualized revenue. So what, in hindsight, we should have all collectively done probably is slim down the team, and we would’ve been profitable overnight. But for some reason, none of us could see the path to that at the time. I can’t really explain it. It’s a completely, actually irrational decision I think to not be able to see the opportunity.
I think there were some companies about the same size as us who decided to indeed do that, actually slim down cost structure and smartly realized, hey, we could be profitable overnight. Because nowadays, $10 million in revenue can absolutely be a profitable Internet company. But we just, for whatever reason, which I can’t quite explain to you, decided to shut the business down and sell the assets to LVMH. But we could have probably been overnight profitable by slimming the staff down to let’s say 30 people. But we just didn’t take that step.
Andrew: So was it a successful sale for you as the entrepreneur who launched it and built it up?
Mariam: Yes, it was. It was a successful sale for the entrepreneurs, as well as for all the employees as well as for most of the investors. [laughs]
Mariam: So, I mean, it’s interesting how things turn out. I mean, we could’ve easily signed the deal with LVMH, in which case it would have been a successful deal for all of the investors. And I think we could have also taken the path of slimming down operations and making the company profitable overnight, in which case it would have been a different ending. I think financially successful, I’d say as an entrepreneur, it was somewhat disappointing that the brand didn’t stick around.
Andrew: Right. Okay, so you had this idea. Back then, were you able to just launch a company and then get funding, or did you have to get funding first and then go out and build it?
Mariam: Back then, the amount, the type of software and tools available were just not comparable to what’s available today. So it was a lot more expensive to launch an e-commerce site. For example, we bought an expensive software platform, ATG, versus using open source. So, yeah, you did feel like you had to go raise money first to get some traction. Although I will say, our first round was just a couple hundred thousand from Idealab, and we were incubated there. And so in some ways we did what people are doing now, which was we operated on very little to launch the business and then we quickly raised bigger rounds.
Andrew: I see. And how much did you have before you went to raise the next round? I want to get a sense of what the times were like back . . .
Mariam: Yeah. So we raised only about $200,000 in cash the first, the seed round, and then we went and raised about, I believe it was a couple of million dollars in the Series A. Boy, you’re testing my memory now. But eventually it all piled up to about $26 million because we did subsequent rounds. So, the second series was done with venture capital, more traditional venture capital firms up here in the Valley, Menlo Ventures and Charter Capital.
Andrew: So I went back and Om Malik, back when he was working at “Forbes,” covered you a lot. So there’s a lot of information by him on you.
Andrew: It seemed that, somewhere around 2003, a few of the competitors started to go out of business and you ended up being the leader?
Andrew: Sorry, did I say 2003? I mean somewhere around March of 2000.
Mariam: Yeah, 2000.
Andrew: And what did you guys do with that lead? What were you doing back then?
Mariam: Well, it’s really interesting because I think if we had known how many venture firms would back competitors that were exactly the same as us, we probably wouldn’t have launched the business at all. It just didn’t make any sense. But there we were. We had raised money. We were the first in, and we just kept our heads down and just focused. I mean, it really taught me not to think too much about, not to look over your shoulder too much because it’s very distracting to think about all the competition that was, honestly, if you really sat there and thought about it, there was something like six venture-backed firms behind us. And that was a little off putting, let’s put it that way.
So, we focused very much on execution, worked all the time. We did not go to any of the dot com parties. We were just at the office all the time. Probably like 10:00 every night. It was just all around the clock, seven days a week. That’s what our existence was like. And let me think about this. We had a great team. I was focused on some of the activities, and Varsha was focused on others. So my experience was very much trying to build a brand. We raised significant capital and were able to go out with print advertising, significant print advertising trying to build a destination brand, a brand that stood for premium and quality and beauty. And that was big, trying to create a feel for the company brand wise both off line and online. That was what I remember most about what I was doing back then. And of course tinkering and tinkering with online marketing. And Google CPC was not there. So, a lot of the advertising opportunities online were online banner advertising and such.
Andrew: Yeah. It was a lot of online banner advertising, a lot of buying space from portals. What was your big spend?
Mariam: Yep. What’s that?
Andrew: What was your big spend? Where did you guys go and spend the most?
Mariam: So we were, believe it or not, we were 60% online spending and 40% off line spending. And online, we were mostly portaled by AOL, Yahoo, big deals with the bigger portals and tried to sprinkle in a number of other plays. But really, it was mostly AOL and Yahoo at that time.
Andrew: And the idea was that customers were supposed to come from those portals to Eve.com and buy right away, right? There was no content or anything that was designed to keep them there for a bit. You weren’t growing a mailing list?
Mariam: Actually email was starting to become important at that time even. So we were trying to register people, and Bill Gross from Idealab already had this notion of try to get them to register no matter what and then start the life cycle. That’s been an important tenet that’s actually held to now, where you do anything to get them into the database, the customer, and then move them down the life cycle. It’s all about life cycle management. So registration was very, very important to us and getting them into the database.
And I would say the replenishment was an important factor. So what we wanted to do is have repeat purchasers for items like skin care, where you know what you like, you just need to replenish it. You don’t want to schlep down to the department store and get it. It’s such a pain to get to department stores and park and then deal with the women who are trying to sell you everything. So, we were trying to make this really easy and convenient for people who wanted to replenish things like skin care and hair care and their favorite brands and products basically. So replenishment was a big part of that whole strategy.
Andrew: Where did the biggest share of your revenue come from?
Mariam: You mean marketing wise or product wise? Meaning the kind of acquisition or the kind of products . . .
Andrew: The products that you sold, right.
Mariam: Okay. Yeah. So actually, we did a surprisingly big business in makeups, of color cosmetics, which I thought was very surprising given that you couldn’t try on colors on the web. So that was actually number one for us. And then number two was skin care, and fragrance was a distant third.
Andrew: So what about the issue of wanting to see it, wanting to touch it, wanting to experience it? How did that play out once you were actually live?
Mariam: We were really worried about it. And this plays into the larger entrepreneurial lesson of what you were. You can make a lot out of small . . . small can be very big actually online, if you aggregate. So, we were worried, “Gosh, can we get 100% of the brands?” Well, actually we didn’t, but we ended up building a pretty big business with (_______) percent of the brands, and partly it was that users wanted to buy niche brands.
Then you could say, “Well, there’s a big segment of people who want to try something on before they buy it.” Hey, we ended up making a pretty big business online out of people who didn’t care and wanted to just replenish in a much more convenient surrounding. So, that was a lesson actually, I think, applies to a lot of web businesses where, when you do the classical business school analysis of something and it looks like you’ve got a big flaw in your business plan, there are ways to work around it. And that was a big surprise to me that we could make a pretty big business work in a segment of the market, let’s just say.
Andrew: Can you describe one of the highs of that period? I’m sure there were a lot.
Mariam: Gosh, I’ve got a couple. Well, one was going to the White House. We got to meet President Clinton and Madeline Albright and Mrs. Clinton. The issue was Vogue had a pretty big party there to thank its advertisers. Honestly, that was a pretty big high was being able to go participate in an event like that and see Clinton speak and see how incredibly polished he was without any notes at all. The guy got up there . . . and actually the whole event was celebrating women and women’s accomplishments. And this was right after the whole Lewinsky affair, and honestly he pulled it off completely. It was amazing. So that was a big highlight.
I’m trying to think of other highlights. I mean the other highlight was just more on a business standpoint was being able to connect with consumers with our brand. Like actually put a brand out there with very unusual print advertising and build a brand that people responded to. We had two million uniques within a month, within a year, and we obviously tapped into some need. And that was a huge thrill.
Andrew: Two million uniques on Eve.com per month within a year of launching?
Mariam: Yeah, after about 12 months. Mm-hmm. Yep.
Andrew: Wow. Okay. What about one of the big issues, one of the big setbacks, one of the big challenges?
Mariam: Let’s see. Well, honestly we did not intend to sell the business so quickly. We planned to build it into a long, you know we thought we had a long career building Eve. And then when the market started changing and we had an opportunity to sell the business, we felt that we could protect the business by selling it actually. So we were only in business for about a year and a half really before we sold the business. I think the biggest setbacks were just that we were under tremendous pressure to keep performing and growing with five competitors behind us. I can’t say that we actually hit a big setback honestly.
Andrew: What was it like in that environment?
Mariam: It’s very different . . .
Mariam: It’s very different from today. I can tell you more about setbacks that I’ve overcome in Minted. But at Eve, honestly it was a big, huge rush and we did it. There’s not actually one setback that I can think of.
Andrew: What about the feeling of being in business back when everyone else seemed to be going out of business? I remember the year 2000 and the year 2001 being just so painful. Even if it didn’t hit us directly, what was going on in the market was just so painful to watch as other people experienced it. And there was always this fear that it was going to come and overtake our business, this bad economy.
Mariam: Yeah. Certainly the aftermath of selling the business and then having it shut down was a very painful experience, very traumatic.
Andrew: But before then, it didn’t feel like it was going in that direction because so many other companies were going out of business?
Mariam: It was still painful I think. And I think partly because people misunderstood what was going on. They thought that it was being shut down and that it had made no money, that it wasn’t doing well and that it didn’t sell well. But actually, it sold very, very well financially. And people did not know the mechanics of the deal and what had gone on behind the scenes. So I . . .
Andrew: So what did happen, now that it’s been about ten years?
Mariam: Well, so really what did happen is we were actually very successful, and we sold very successfully. But for whatever reason, the new management, new ownership and us combined made the wrong decision to shut it down. That was absolutely the wrong decision.
Andrew: What about the mechanics of the deal do people not understand?
Mariam: Well, just that I think that they did not understand that it actually sold. It sold successfully. I think most people think it just was shut down. I don’t think that people understood that it actually sold and returned very well to investors. I guess that’s what I mean.
Andrew: Sold for $100 million.
Mariam: Approximately. That’s based on public reports.
Andrew: I see. Sold for a reported $100 million.
Mariam: Yes. I can’t actually confirm the actual amount, but that’s what’s been reported.
Andrew: But it’s not outrageously off, right?
Andrew: Okay. And so what share do you end up with as an entrepreneur, roughly?
Mariam: Okay. Well, let’s say that, so we raised $26 million. I had a co-founder and we split things equally. And so generally, when that happens, the entrepreneur ends up with probably less than 20% each because, and that’s very typical even if you talk to people today. You know, if you have two co-founders, three co-founders, you’re going to end up with somewhere between maybe 10% to 20% of the business after that many rounds and raises.
Andrew: Okay. So you end up with let’s say minimum 10% of $100 million sale, you end up with $10 million for yourself and your co-founder, if that reported number is correct? Right?
Andrew: So, I was looking at your LinkedIn profile, and I saw that you went on to work at Movielink and the Body Shop.
Andrew: Why go and take those jobs if you’ve done so well?
Mariam: Well, I just felt that I had not had enough of a learning experience to really understand how to run a P&L properly. I felt like I needed to learn more. And I have a bit of a hungry brain in that I’m just curious about what do I not know? And I felt that if I went to work at a bigger company and work for really seasoned P&L managers, I could understand more profit and loss, I could understand better HR practices and how to be a good manager of a large group of people. And the Body Shop came to me at a time when I wanted to actually have a child. So, I was actually pregnant with my first child, my son, and felt I can learn, I can have a family at the same time, and I can do both and eventually at some point I can return to entrepreneurship. So, it was combination of personal and professional things that came together.
Andrew: I see. So what did you learn working at those companies?
Mariam: I mean, honestly really learned how to make something, tune it, tune the cost structure to make a business profitable, an online business profitable. We had the mandate at The Body Shop to create a business and make it profitable within the first 12 months. And that extreme pressure on cost was an incredibly different experience from having raised $26 million for a company. So it was like the opposite experience. And you had to get super creative and figure out what could you use that was open source and how could you wring the most out of your money. And that has been really, that’s been a really valuable experience for Minted, where we were actually profitable in last Q4. Our fourth quarter was profitable, and last year was our first year of business.
Mariam: Yeah. I highly recommend it actually. To try to do both, do the small thing, do the big thing because the big thing will teach you very, very different lessons and you need both really. Especially if you’re going to try to scale as an entrepreneur and build your business into a big company.
Andrew: I see. You’re saying that don’t think of yourself as just an entrepreneur. Be open to opportunities to go work somewhere else so that you can learn from those experiences.
Mariam: Yeah, because ultimately, if you’re a successful entrepreneur and you’re trying to build your business into a really, really big business, I think you do need to learn some things that are particular to running a really big business so you can scale the operation.
Andrew: What was it like when you got the check from Idealab after you sold the company? Your personal . . .
Mariam: [laughs] You’re very funny. These are very funny questions. It was a big day. Actually, the first check I got was a physical check and my husband came over to the office and we walked to the bank together. It was a big day. I have a photo of it.
Andrew: Of the check itself?
Andrew: Oh, get it out. Where’s the photo?
Mariam: I don’t share it with anybody.
Andrew: I don’t want to see it. I mean, I do want to see it but I won’t ask.
Mariam: Maybe I’ll show it to you offline after this interview. But I do have a photo of the check.
Andrew: Oh, you got it somewhere in the office?
Mariam: I don’t have it in the office.
Mariam: But I have it at home. Yeah, it’s a pretty cool thing. It’s a personal thing. Like I don’t really show it to a lot of people. But it was a meaningful event. It was a meaningful event. It’s kind of a life-changing event. So yeah, I photographed that. And I remember going up to the teller and handing her the check and like it was interesting to watch her reaction.
Andrew: I can imagine. So how did life change after that?
Mariam: Well, you know, I don’t know if selling . . . I’m kind of torn over whether early success is good for you or bad for you. My husband thinks it’s good for you. I think I’m not sure because you kind of get thrown off for a little bit I think. But anyway, I went traveling with my husband for about a year and thought about what I wanted to do next. I think what it did though, on the positive side, was made me more picky about what I’m going to do next. And it gave me the time to really think things through. So I wasn’t feeling desperate. I wasn’t thinking I need to go rush into the next thing. And it gave us a very good fallback. You know, fallback meaning we didn’t have to rush and take things just because we had to and gave us more negotiating leverage actually, both of us professionally.
Andrew: Okay. And you guys stayed friends over the years?
Mariam: Yes, Varsha and I?
Andrew: You stayed close?
Mariam: Yeah, Varsha and I . . .
Andrew: Sorry, right, you were talking about your husband there for a second and I was . . .
Andrew: . . . thinking what happened to Varsha.
Mariam: That’s OK. Varsha and I are very good friends, and we have sons who are almost the same age. And we have been doing, we did play dates for a long, long time in San Francisco together. And now unfortunately, Varsha’s living in Singapore, but we still talk and she’s a very dear friend.
Andrew: Let’s talk about Minted.com then. Man, I am so off today. This is crazy.
Mariam: It’s OK.
Andrew: I’m blaming the cold, and I’m grateful to you for sticking with me. So, Minted.com, where did the idea come from? What were you seeing in the environment that made you say this is what I need to build?
Mariam: Yeah. I mean, I was really excited by . . . so I kept seeing in media and content people mixing things up themselves, creating content that was actually quite interesting to readers and viewers. And then, I started seeing it in physical goods when I saw threadless.com which was the T-shirt competition site that I love that site. And I completely drank the Kool-Aid and believed that their crowdsourcing process had led to better T-shirt designs. Because I think there’s an element of me that is mathematical but really believes that a group of people can do a better job selecting than one merchant sitting in a merchandising office somewhere. And that the Internet was a great opportunity to find creative geniuses wherever they were in the world and bring them together to collaborate and to be found online.
So I got excited about the fact that T-shirts were great, but what I could do is do even more on paper probably on flat 2D surface, I could release even more creative energy onto that medium. And that’s what really interested me. I also really liked the financial characteristics of this industry. The market size was pretty big, the average transaction size at the margins, all these things made it very attractive. And that’s why I decided to experiment and go into it.
Andrew: Can you tell me a little bit more about the financial side of it? I don’t mean about your business but the financial opportunity that you saw in this industry?
Mariam: Yeah, sure. And I think you have experience in this industry as well, right?
Andrew: We did it all online.
Mariam: OK. You were online digital?
Andrew: It was all online digital greeting cards. And I actually saw the TechCrunch article that came out when you first launched Minted, and the comments were all about how it’s not going to work because it’s all paper. And here we are, I don’t know, a couple of years after that article appeared, maybe a little less, maybe a little more, and you’re around. You’re doing well. You hit profitability. They were wrong. You saw the opportunity that they didn’t see. What was it? What was going on that you noticed?
Mariam: Well, I mean, I can relate to this product as a woman purchaser, a female purchaser. And all my friends like getting beautiful holiday cards and wedding invitations and stationery products. And so for me, what I guess, I can relate personally to this product as a consumer. I think that basically physical goods, obviously in many forms are not going away. And there are definitely segments of stationery that will eventually decline. But there are a lot of physical goods that are not going away. We’re all still hopefully going to be wearing clothes over the next several decades and putting nice things on our walls and sitting on nice pieces of furniture. So, what I saw was an opportunity to use digital collaboration and digital sourcing and the crowd to select and create better products, physical products. And so at Minted, we see ourselves as a design community that the designs can be printed on anything. It doesn’t really matter what we’re printing on or what we’re using the designs for, we’re building a community that can create great designs together.
And so I think paper is a little bit of a red herring. If analysts focus on the fact we’re printing on paper, they’re kind of missing the whole point, which is it’s really about a community and it’s about crowdsourcing. And we could end up printing literally on anything.
Andrew: So how did you get the original members of the community?
Mariam: We ended up seeding the site by signing on stationery brands that were respected within the stationery community, believe it or not. So, consumers may not know who they are, but other designers knew who they are. And we signed them on first and populated the site with those brands. And we thought actually that the lion’s share of the sales would actually be in those brands, not in the crowdsource product. And this is where we kind of made an error in our first sort of plan and had to totally shift the brand and the strategy in another direction when we realized that everybody wanted to buy crowdsource product.
Andrew: I see, so the brands weren’t . . . today’s there’s voting on the crowdsource products. Was there voting for the brands?
Mariam: There was not. In the beginning . . .
Andrew: So it was just brands . . .
Andrew: . . . available online.
Mariam: Brands available online plus some side design challenges that we started from the very beginning. But we didn’t realize how much of the business it would actually become, which is like 100% of the business. We thought it would be a combination of both, and instead the crowdsourcing ended up being the lion’s share of our business.
Andrew: How’d you get the early people, the early designers to come in and be willing to go out and tell their friends to come and vote for them and to compete?
Mariam: Yeah. We ended up, it was very personal and organic. So, all I can say is if you’re starting a community, I really think it has to start from the founder. It has to feel genuine and organic, and you need to reach out directly to those first community members yourself and build relationships. And from that, things will happen. And that’s exactly what we did.
We went and found through many, many means online and then through associations, graphic designers who we felt were good and convinced them to try this out. And then they started telling other friends. And soon enough, we didn’t actually have to recruit at all. We actually really haven’t been recruiting a lot. That’s really been a very organic growth, friends telling friends. And usually it’s interesting, they self select better than we can recruit them. The best, the most relevant and appropriate people self select and find us rather then us going and trying to convince somebody who’s not really interested in us to come do this with us, so.
Andrew: I see. How many are you selling now? Can you give us a sense of the size of sales?
Mariam: Uh [laughs] . . .
Andrew: You don’t have to give me anything that’s proprietary. Even if you say more than a certain amount that will give us a sense of size.
Mariam: Well, why don’t we say we’re less than $10 million in revenue.
Andrew: OK. All right. So you hit profitability you said part of the reason is that you weren’t spending so much on technology, using open source. What open source platform are you building on?
Mariam: Well, there are components to our site, like Solar for example for search, that are open source. Then there are parts that are just built, just raw code, original code that is ours. So we are using components throughout the site that are open source. And I’m always trying to find solutions that, you know, let’s say everything from in our customer service department to we might consider for example, SugarCRM for our CRM platform. We might consider an open source ticketing, customer service ticketing system rather then building. So we’re trying to weave that in wherever we can throughout the whole system. But it is a lot of custom code. There’s a lot of custom code built around these things right now.
Andrew: I see. How long did it take you to build the first version?
Mariam: Let’s see, about five months, four or five months.
Andrew: Oh, wow, that’s pretty quick.
Mariam: Yeah. But we did a lot . . .
Andrew: How’d you do it so fast?
Mariam: . . . of rebuilding. What’s that?
Andrew: How’d you do it so fast?
Mariam: Working really hard. I think the team worked really hard. And I think though we also, we did not have the full set of functionality that you see right now. So we had to prioritize and really cut the scope down. And I do think it’s inevitable to have to rebuild. So we have to go back and rebuild. And there are things where we actually invested very little in and built sort of more cheap and cheerful and now have had to go back and rebuild the things that have gotten traction. We have to rebuild those things in a more skilled way.
Andrew: I often ask entrepreneurs about what that first version looked like. What did the first version of Minted look like?
Mariam: Let’s see, it was much, oh gosh. It was very graphical, beautiful images. It was much more I would say traditional stationery web 1.0 retail site then what it’s morphed into, which is edging more and more towards a design community centric site where that functionality’s been built up, and it’s going to get more and more exposed on our site. And it was mostly wedding invitations. We weren’t in any other categories at that point.
Andrew: I see.
Mariam: It felt like a wedding site.
Andrew: Someone called Ruskows in the audience is asking how many people were involved in the first five months?
Mariam: That’s a great question. We had to have a lot of contract help because we didn’t have a lot of money to hire people permanently. So, we had about, I want to say, four or five contractors building the site for about four months.
Andrew: Oh, wow. Danomanion wants to know how much money can a successful designer make? How do you pay them?
Mariam: Great question. Well, they earn a cash prize, plus they earn 5% of net revenue, forever. Our most successful designers, let’s say Q4 last year, the top designer probably earned about $10,000. That ranged into the several thousands of dollars for the top ten designers, let’s say.
Andrew: You said you had some setbacks at Minted.com. Can you talk about some of them?
Mariam: Well, I think the biggest setback was realizing we put a lot of effort into launching branded stationery products that weren’t selling, like opening the doors and hearing silence. Complete silence. That was one of the most frightening things you can possibly imagine. It was horrible. That has never actually even happened to me before. I’ve always launched sites where immediately things start flying off the shelves. There was absolute silence. You could hear a pin drop. It was horrible. That was probably the biggest setback.
I think the biggest thing is to try to, you know, use what cash you have and what runway you have to quickly try other things and see if they work. For example, the crowdsourcing thing. We said, “Okay, I think we see some traction there. Let’s put some money behind the challenges, quickly launch a holiday card product for the holiday season and try to save ourselves.” That is what we had to do. That was, I would say that was a really big, that was the biggest setback of all. Your business is not working. But now it is working. I think it just goes to show you really that the first business plan does not have to be the winning one if you can be fast enough to change and adapt. That is exactly what we had to do.
Andrew: I talked to Jeffrey of Threadless back, I guess, when he was at Threadless, about how they built up the community in the early days. He said that there was an audience of designers on, I forget what forum, but there was a thread that was on that forum, and they ended up taking that thread and moving it to its own website and that’s why it was called Threadless. That’s where they got the original members of the community, the original designers. Did you have a pool of people like that? A community that you guys tapped into?
Mariam: We did go to an association of graphic designers, and we started tapping into them and approaching them. Yes, we did do that, but we didn’t have an online presence at all. We just approached them, you know, offline, or, I mean, by email and such, and invited them in. We did not have a forum or thread that we had started that led to this. Now we have a forum at Minted.com/forum that is actually quite interesting. It is where we get a lot of our product management or product development ideas. These guys way outpace us. We’re trying to enable them. They have to tell us what to do. We have to listen to them. We’re here really to enable them. We are not the experts in design. You’ll notice that these passionate users will be your best product managers. They’ll give you the best ideas you can get. Yes, we do have a forum now. We get a lot of great next step ideas. But we didn’t start that way.
Andrew: Everyone wants me to ask, Bruskowk’s question. Yeah, you’re right, you guys, he does ask great questions. And I would love it if you just told me how to pronounce your name phonetically in the chat room, Bruskowsk. Let’s see what his question is. It is, “What kind of marketing did you guys do before you launched, afterwards, and what were the changes?”
Mariam: Okay. For Minted, before we launched, we did not do much marketing at all. We started working on a business PR effort because we thought we would have to pave the way for some round of financing at some point. Basically, we look at this as PR for two reasons, recruiting engineers and paving the way for financing and acquisition. Otherwise, we are totally consumer focused. Once we launched, we heavily used PR. We started SE optimizing the site from the very beginning. That can be done, that actually maybe could even be done beforehand, before you launch. You need to be crawlable and start to maybe even build links.
We, in the beginning, focused on cheap things. Cheap, cheap, cheap. PR, SEO, we have a very, very low cost of acquisition because we really focused on the cheap. We had no money. Then of course, we layered on CPC. But until we could get out conversion rates up, CPC wasn’t working very well, cost per click. So then we had to work on conversion, getting that up, and then CPC started working.
Now we have a full-fledged, multi-pillared approach to marketing. Very, very balanced. There is not one thing that drives all of our revenue. It is PR, SEO, cost per click advertising. We do some print advertising. Affiliate marketing. I think I am missing one, partnerships. We don’t really do CPM advertising. I don’t really believe in it. I can expand on that if people want, but I just don’t believe in it. I tried it for 12 years, and I can’t really make it work.
Andrew: I noticed that you do SEO really well. I did a few searches in preparation for this interview, and you just kept coming up at the top. Then I looked at some of your artist’s pages. And you give your artists, I guess, widgets, and you make it easy for them to link back to their page on your site. On the bottom of what you give them is a link with the anchor text that you guys want, and that is why you pop up at the top of search engines.
Andrew: It is really well done.
Mariam: Thank you. Thank you. I really appreciate you saying that. I think we could even get better at it honestly. Etsy, for example, does it really, really well. Flickr does it really well. The badging is really great if you have a community because you have all these passionate people. If you give them a reason to link back . . . in this case we have two widgets, one is a “Vote for Me” widget. Once you enter, you want your friends and family to vote for you, and you can put that widget on. The other widget is more of an “I won the competition, yea, I get this badge of honor!” widget, and that links. The other one that might be interesting eventually is a nice commerce widget, where you have a whole number of things you sell on Minted, and now you can display those in a smart widget of some sort. People are doing all kinds of interesting things.
Andrew: You said earlier that one of the things that you learned at Eve.com is to get people into a database and that still holds true today. How do you do it? How do you get them in a database early on?
Mariam: One thing Bill Gross taught me, which I still really believe in, is you make the registration steps super easy. What he used to do even was have a separate page for registration where you just register. Even if then people would drop out of the conversion process, at least you had their email address. He was really influential in helping me understand those techniques. The other thing you can do is run promotions that are very much registration focused. Various offers. Typically, there is significant breakage and no one actually uses the offer, but they register in a big way.
Andrew: What kind of offers?
Mariam: Well, right now, we’re running a, basically, free address labels. It is $20 off or some dollar number off. I don’t actually remember right now what it is, but it is basically free address labels. People are out there, you know, what they do is they pay for shipping, so there is a qualified credit card coming in, but you end up with such a generous offer that it gets spread all over the place. It sounds so awesome. Like, “Free address labels. Of course, I want free address labels from Minted. They’re beautiful I want them.” So, you end up with a lot of traffic, a lot of click coverage. It’s not actually a lot of money to get a name that way. It is actually cheaper for us to get a name that way than to go buy a list somewhere. Then we end up stocking the database. We have a name with a qualified credit card from somebody, and we can now market to them and hopefully convert them down the path.
Andrew: I see. And if they don’t end up giving you the credit card, they’ve still gone through that first step, you’re saying, where they end up in your database.
Mariam: With a registration. Exactly. Some of them might register. At the very least, they have taken a big look at your site to look at what is Minted. At least there is some brand awareness. It is actually, it’s been very cost effective for us. There are all kinds of tricks. Not tricks. I don’t want to say tricks. There are tactics. Let’s say tactics to build your database. It is very important for any e-commerce player and probably actually for other players as well, media, content, to be able to do that.
Andrew: You guys have to check out Minted.com. Even if you are not looking to buy anything right now, you just have to go through and see how the process works and see how well it is designed. I loved going through it. Sometimes I go through a website in preparation for an interview and I say, “It’s not really directly related to me. I have no interest, but I am going to do it because I need to do my homework.” With your site, I just kept getting sucked in and watching, kept looking. It was great. Thanks for linking people to it in the chat room.
Mariam: Thank you.
Andrew: So, final question — what’s next?
Mariam: Well, I love working on Minted. It is a total passion for me. I love design. I love working with these really creative designers from everywhere and feeling like we are helping them professionally in addition to building a good business. I really believe. Many of my family members are actually artists and designers. I have watched them struggle to get their products to market. I have a very strong belief that what we are doing is actually helping graphic designers everywhere break through. We are creating a level playing field for designers to make it based on their talent, not based on who they know or where they went to school or anything except their just pure talent. That really gets me going. So I intend to build Minted into a very big business. So, that’s what’s next.
Andrew: Well, I am looking forward to seeing it. I am also looking forward to the next time I am in your city coming in and seeing the picture of that check. That will be awesome.
Mariam: Okay. I will bring it for you.
Andrew: I’ll bring my iPhone. I might even take a picture and put it up on the website.
Mariam: OK. [laughs]
Andrew: [laughs] No, it will all be private. Thank you for doing this interview with me. Thanks for dealing with my cold. Thanks for being here.
Mariam: No problem. I hope you feel better.
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