The painful pivots behind the growth of

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Joining me is somebody who has pivoted so freaking much that my notes were out of date just after a few months.

I admire how he’s been able to adjust and pivot and keep growing his business and today he’s got a success.

Shane Kovalsky is the founder of Glue. It is end-to-end employee engagement and connection platform for distributed teams. I don’t freaking know what that even means. We’ll find out in this interview.

Shane Kovalsky

Shane Kovalsky

Shane Kovalsky is the founder of Glue, an end-to-end employee engagement and connection platform for distributed teams.


Full Interview Transcript

Andrew: Hey, they’re freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. And joining me is somebody who has pivoted so freaking much. He fri pivoted so freaking much that my notes were outdated and I corrected them. And this was not like a, an interview we booked years ago.

It’s just months ago. And, uh, I told him how I plan to introduce his company, and even that changed from like what I researched just a little while ago. I admire so much how he’s been able to adjust and pivot and keep growing his business and today he’s got a success. Shane Kovski is the founder that I pronounce it right.

I just saw you do so.

Shane: No, that was right. Yeah. Yeah. Yeah.

Andrew: Okay, good. We were talking about how people mispronounce last names when they’re a little bit different. Um, he is the founder of Glue. It is end-to-end employee engagement and connection platform for distributed teams. I don’t freaking know what that even means. I should know that I’ve done research.

We’re gonna ask, I’m gonna ask you about that, but I, I’m amazed that you started out with dating then, because people couldn’t go out. You did it online, then you went to corporate get togethers to build teams and connection, and now you’ve got something different. Uh, I wanna find out the whole thing. I wanna see how you figured it out.

I wanna know how well you are doing right now. I want to ask you about how you created, what in your name, in your words, was shitty websites for law firms and bakeries early on in your career and so much more. And we could do it thanks to two phenomenal sponsors. At first, if you’re hiring developers, go to the guy that Shane and I both like Alexander.

He is the guy behind If you go to g, they’ll give you a discount and help you hire phenomenal developers. The second, if you’re curious about how to organize a company in a new way, I’m gonna tell you about a podcast I created with, uh, origami. It’s at join

Shane, what is the thing today? What does it mean? End-to-end employee engage.

Shane: Uh, so end, end employee engagement. Employee engagement is the category of, uh, HR tech. That’s basically just how do employees feel and how are they connected to their coworkers, uh, especially for distributed teams. It’s, you know, gone from what was a, you know, silent killer problem. ’em, there were a few people that were disengaged, but generally people felt good in the office to now pretty much everyone’s disengaged in some way or another.

Uh, so it’s a question of like, how do you bring people together? How do you make sure they’re feeling good about what they’re working on, who they’re working with, and build those connections. Um, so for us it’s about giving, you know, people, leaders, all the tools to understand. How other people are feeling and who they’re connected to, and then do something about it through things like virtual team events.

Uh, like you mentioned before, offsites and targeted one-on-ones think like, uh, donut, but if donut didn’t suck, uh, and you actually had some awesome things to be able to bond, bond over. We do a lot of stuff like matching people based on affinity. So if you, you know, the two metalheads of the company, giving them a chance to meet and, you know, actually create a real relationship over a shared.

Andrew: So it’s not just these team building events where a group of people on a company talk together. It could also be in-person meetups and it could be, as I’m seeing on your website, help employees find their new bff. Because if you find two people who like each other at the company, that’s gonna color their connection throughout and uh, the whole experience that they have at the company.

Shane: Yeah, yeah, yeah. Totally.

Andrew: I keep hearing about how much you raise and what your valuation is. Uh, does this sound accurate? You raised 18.5 million last year at about a hundred million valuation.

Shane: Yeah. Yeah, that’s right.

Andrew: Here’s the part that I’m more curious about, like what’s the revenue at the business?

Shane: Yeah, we’ve gone through quite a few different variations of the business. So, uh, you know, like anybody that’s gone through pivots, uh, it, you know, not everything is always up into the right as you might think. There’s, there’s peaks and valleys through the time. Uh, you know, we’ve been as high as, you know, millions and tens of millions of dollars.

Uh, and then, you know, restructure and move back to, you know, more traditional SaaS revenue. So we’re, we’re in the mid single digits, uh, era today. Yeah. Millions.

Andrew: Damn dude. And you were bootstrapped until that fundraise.

Shane: Uh, no. We had raised a couple rounds before. Uh, so we had, we had raised seed capital back in early 2019. Uh, a small amount, like the large, big, crazy rounds that, that started happening in 2020.

We were never part of those. We scraped by on, you know, seven 50 k million dollar rounds, uh, up until that.

Andrew: The first version had to do with dating. Where did the idea come from and what was that first version?

Shane: Yeah. Yeah. It’s funny, it gets, uh, lumped into dating quite a bit, but, uh, the, the idea was basically Stitch fix for a night out. Um, you know, at that point, uh, I, I had worked at two different marketplace companies, porch and Convoy to Seattle companies. Uh, and the basic insight I had leaving both those companies was that most marketplaces post.

2010 ish had lost alignment with their, uh, with their supply. Meaning like, they start with like this beautiful premise. It’s like, oh my God. Do you have a. You can make money. It’s amazing. We’re gonna digitize the modern restaurant like, you know, DoorDash, things like that. They start that way. Uh, but they end in what will be self-driving cars.

They end in ghost kitchens. Uh, they end in a place where they need to capture more value effectively. Uh, and for me, uh, I grew up in small businesses, both my folks and small business. Both my, uh, both my grandparents. Uh, and just kind of hated the idea that my favorite business model being marketplaces was destroying my favorite sector of the economy, being small business, uh, and wanted to try and solve something there.

So the original product was, What we called mystery, it was mystery night out. Uh, it was basically you come to our website, tell us what you like and don’t like, uh, give us a budget. Uh, we wouldn’t match you with somebody else. It was four couples. Uh, but uh, then an Uber would come and pick you up. You’d have no idea where you were going until you arrived.

Uh, and we’d planned book and execute a date night out in the city where you wouldn’t know where you were going until you got there. Uh, the magic behind that. One, the experience design of it, being very thoughtful around not knowing where you’re gonna go before you arrive. Uh, finding out a minute before was actually really, really phenomenal user experience.

Um, but then on the other end, it, we got to load balance effectively across the supply base. Uh, so we got to solve a lot of really painful yield management problems for an industry that, you know, frankly needs it. The hospitality industry is hilariously yield deficient. Um, and so it was a fun product. Uh, we did thousands and thousands of those date nights that was actually going really, really well.

We. Out raising our Series A back in February of 2020. Uh, yeah, go ahead.

Andrew: How did you get so many people to sign up and do that?

Shane: Uh, you know, it started off just me doing it for a friend, uh, just as like a random idea. Like I’m literally on my Uber account, like changing the name to have him pick up and sending him texts as he goes along. And then I did it for another friend, and another friend, and then I had friends of friends ask to.

We set up a, you know, a waiting list and we had thousands of people who wanted to do it. And we never, never did any marketing for that business. It was just

kind of growing by

Andrew: of a friend.

Shane: Yeah. It was all just kind of going from a friend to a friend and it was an interesting enough type of thing to go. And it was something that was so easy to tell people about if as you went on that date night, you know, it’s like, oh, what’d you do this weekend?

It’s like, oh my God. Let me tell you. I went on this mystery date night out. Like I didn’t know where I was going. They sent me to this. And then you always have a nice story to tell all the way through. Um, it was a really fun business. Really, really

Andrew: What kind of things did you send people to? I love this idea as a married guy who has trouble coming up with fun date nights in a new city. I would love for somebody to do that. And every once in a while someone comes up with an idea where they do this and it doesn’t fully take off. I forget there’s a, a reality TV star who was doing it.

I’ve met him at a friend’s dinner and I forget who he was. I forget. I guess the dinner was kind of interesting. He sent us out to see a, a movie someplace interesting, but we never did it again. What, what are some of the events that you did?

Shane: I mean, it could be anything from, you know, great dinners to fencing classes, to glass blowing, to going out on the water, to, you know, a, a wide, wide variety of different, different experiences. We, we found that, you know, in the beginning we thought it was, you know, more like Stitch Fix from, uh, what we need to build, meaning it was, it was gonna be a data science problem and you’d have to get the perfect stop to the perfect person and, you know, collaborative filtering and all this.

What we learned was that, uh, experiences at a certain level of quality. Our commodity, meaning you like a lot more than you think you do. Uh, the delta between what you think you like and what you actually like is, is quite large. Uh, and in fact, expectations. The idea that you, you think you have a, you, you think you like it, you think you don’t like it, are one of the biggest drivers for if you actually enjoy that experience.

Uh, and we know that because we tested it. We, we, we did this test. We had this date that we called the, uh, the salsa and salsa date. It was like, uh, you’d go salsa dancing. And then you go to a Mexican restaurant and you make salsa, like really cheesy. Uh, but it was a really fun date and we had about 200 of these dates and for a hundred and all the 200 of these couples are, you know, similar in some way.

They’re, you know, the pre-op was like, they liked Mexican food and they liked physical activity for a hundred. We ran it like we always ran, uh, mysteries, which is like, you wouldn’t know where you’re going and take out there, so you’d arrive a minute. Uh, the presentation had to be presented well, it’d be like, could like, get ready to get pushed outta your comfort zone, you’re gonna do something really fun, blah, blah, blah.

You’d go into that experience. So they did that, did that experience. And for those hundred that ran it the traditional way where you wouldn’t know where you were going until, got there, uh, 90 rebooked within a month. So they, they had a really, really great time. They rebooked another mystery within a month.

Uh, and 10 rated it very, very high. Only one, only one couple didn’t like it. The other a hundred. We sent them an itinerary the week before. We said, Hey, it’s gonna be salsa and salsa. It like looked nice. It was like well designed, you know, everything like that. Of that 140 canceled 30, hated it. Had a terrible time, uh, and the rest liked it.

And rebooked, the only variable to change was your expectations going into it. Uh, and yeah, that old atom of happiness is expectations minus reality is very, very, very true.

Andrew: All right. Tell me about why you pivoted from that.

Shane: Uh, well, we were running that business, like I mentioned, it was actually going pretty well. We had multiple city launches. Uh, and then, uh, as you can imagine, a surprise date, night out, uh, product as in the early beginnings of a pandemic, not exactly the best product line in the world. Um, so, you know, that that kind of, we went from, you know, a good business to an illegal one in a period of like three or four days up here in Seattle.

Um, and yeah, at the time this was. Early pandemic. I, I don’t think most folks remember, but it was like, ah, this is gonna be like this one, two month thing. Like, no way. This will be here by summer. And if it does come, it’ll be like a second wave was like, the big thing people talked about was like, oh, it’ll, we’ll close down.

We’ll open back up, we’ll close back down, then we’ll open back up and it’ll all be fine again. Um, and you know, for us, you know, we, we worked with a lot of small businesses, uh, in Seattle explicitly at the time, and we, we had just set up all these city launches. Uh, and so the original pivot was like, oh, this is a couple month thing.

How do we make sure that we’re still growing and supporting the businesses that we work with? So we launched what we called mystery night in which was the same value prop, uh, you know, to to people like yourself. Instead of a date night out. You didn’t have to plan. It was a date night in, you didn’t have to plan.

Uh, it was, you know, a hot meal. Local goods delivered to your doorstep. And we did, uh, we did thousands and thousands of those over the next couple months. There’s some horror stories about running a D two C subscription box business of which I will never, ever launch in my entire life, ever again. Um, but we, we were able to save a few, uh, more than a few local businesses.

We were able to, you know, make people a little bit happier in the, you know, the darkest times of the pandemic. Uh, Summer came around, uh, and Covid wasn’t going anywhere. We weren’t gonna go back to that night out business anytime in the next year and a half, especially when we’re talking about, you know, a startup that has, you know, four or five months of runway.

Um, and so we kind of went back to the drawing board. We said, you know, we d this night in thing is, you know, growing and it’s a business, but it’s a subscription DDC box business. It’s not anything I ever intended on building. Have any real, you know, deep-seated passion for, um, and two, like it’s not a venture scale business.

And we’re like, the path of profitability on this is, is a long one. So we kinda went back to the drawing board, uh, said, what are we really good at? What have we, you know, what’s something we’ve learned that. You know, we think is unique to us that we can bring to a market cuz we figured if we only have four months, it’s gonna be on some earned insight, not something blanket, blanket slate.

If we’re gonna be able to save a company. Uh, and you know, we landed on distributed work as the wave to build on. You know, I think the surfing and startup analogy is probably overused, but it’s a good one. The idea that like, you know, you need a big wave to build on. You need a surfboard funding the right team, and then you need to know how to surf.

Well, we knew how to surf on a couple things, right? That was the earned insight. We were really, really good at experience design, understanding how to productize, experience, design, what it means to scale a really quality experience. Um, and when we were looking at where and how we can apply that type of learning, uh, you know, we found distributed work.

We found all these people working from. And we found a lot of people who were just isolated. Uh, and we found a lot of people had moved, uh, and because a lot of people had moved, we thought, wow, remote work’s probably not going anywhere for a very long time. You know, employers are gonna have to full sweep, you know, fire all of their employees and hire brand new employees, or they’re gonna have to force everyone to move, which feels unlikely.

Uh, and so he said this distributed work thing, isolation, feeling lonely not being connected to your coworkers. We think that’ll stick around for a very long time. Uh, and hey, we’re pretty good at experiences. Uh, and man, the current experiences that they’re doing for remote teams. Suck. They’re really, really bad.

Uh, and so we, you know, spent our time, uh, you know, we kind of converted our night in business that we had into a B2B line that we called corporate, uh, that was corporate gifting. Think morale boxes. Swag boxes, things like that. Uh, and then we went out and tried to create a virtual event product that we thought was actually enjoyable.

We took a lot of our learnings about what, what it takes to build up, you know, really, really quality experiences from a first principles approach. Into the virtual team event space. Um, you know, and, and tried to not just shove i l events into a zoom box like wine tasting and all the other events that I’m sure everyone listening to this has done at one point or another and thought that was okay.

So we did that. We did both those things. Um, that business took off right from the very beginning. We had, you know, close to $300,000 in bookings in the first month alone. Um, and you know, from there it’s kind of been a three step journey in, in this category. Um, and, uh, you know, to make it simple, I’ll put it in really simple words.

You know, the beginning it was like, okay, these things are terrible. How do we make sure these things are actually enjoyable? The metric we looked at was like employees that are excited to join the next event. Um, and it was basically like the make it good phase. We spent a decent amount of time there and we left there and.

Close to 95% of people that joined events are excited for the next event. Back then it was only 20. Uh, so that was phase one, phase two of this business was okay, they’re good. But man, these things are really a pain in the ass to book, plan and execute. Uh, the average, we, the problem statement we had was from one of our bigger customers, Amazon at the time.

Um, and they had like 6,300. Each one of those EA was spending five days a month planning, booking, and executing morale spend of any kind. Uh, and they’d go through all this effort and on average, 40% of the people would show up. Uh, because you know, you gotta figure out where people live and where the, where the boxes go and oh, what, you send a Slack poll that’s like what time works?

And everyone emojis a different time? You’re like, well, that’s not actually that helpful. You go through all this effort and you find a vendor who hopefully gets on the video platform you. And then you get in the event, it’s like just a bad event. Generally speaking, if you’re actually planning it as, as one of these ea spend much time making it easy, effectively.

Uh, attendance being the big thing that we focused on, uh, in the beginning it was 40%. Now it’s all the way up to 85%. And the last piece, and this is where, you know, we’ve spent the majority of the business sense was, okay, these things are good, these things are easy to book. Are they working? You know, and we looked at all the product metrics that, you know, a, a typical product startup or a startup would.

We looked at, you know, NPS and CSAT and Raul’s product market FIT score, and you looked at all those things. Everything actually looked really good. You know, we had a 65% would be very disappointed if we left. We had. Close to a 90 NPS on, on the organizers and employees doing it, csat, pre-transaction, everything else looked good.

Uh, but the only thing that wasn’t looking good was did this actually have an impact from a company perspective? Did this actually have ROI that we could bring to the table? And for companies that’s in employee engagement, uh, and ultimately retention in productivity, like is, are the events that I’m doing, do they actually move employee engagement metrics?

And how do those employee engagement metrics tie to. Retention of those employees. And what we found after doing thousands of these things and we sent thousands and tens of thousands of these corporate gifts out of warehouses and everything was paying around that business, uh, what we found was for the corporate gifting product, we actually found an inverse correlation between anyone receiving these boxes and any employee engagement metric you can imagine.

Uh, sense of appreciation, sense of belonging, appreciation for manager. Turns out a t-shirt doesn’t make you feel better about your boss, was a hard earned lesson for, for us to learn. Um, and then on the virtual event side, we found only about 10% actually had an impact. Um, and, and what that meant for us is that we were building a.

A business that was generating good revenue, a business that had good growth potential, but ultimately would die because it didn’t have an roi. And we thought, you know, boom times are a way to build business, but when the bus times comes, anything that doesn’t, can’t defend its value is gonna go to zero.

So starting in, you know, March of 2021, we really, we’ve focused almost the entire business on trying to understand how do we understand how to make these things impactful? And that’s let us down. Building a basically an entirely new platform. Uh, and we still do the virtual events. Virtual events still a big part of our business, but now we, we started building a platform that could understand the people problems at the company in the first place.

What connections do matter? Who should every employee be connected to? How do you understand that? And we, we look at data from calendar data to the slack data to survey data. Spotify data. If somebody connects their account for a Spotify game, you have to, uh, you know, guess who on the team is the, you know, number one Taylor Swift fan.

But now we know your music interests, so you’re in connection to the other people that have music interests. Like you starting to understand, you know, who, what are the connections look like, a and then how do you actually build, you know, a system for a company across all the things that they’re gonna do to actually make sure that what they’re doing is working.

We were able to boost the. Of our virtual events, you know, from back then, really, really poor. Just matching the right content. You know, making sure that if you’re gonna do, gonna spend money, you’re gonna spend money on content, that people can actually find out that they have similarity with each other.

They can actually build connections. Don’t send engineers to a wine tasting class. Maybe send engineers to a Dungeons and Dragons event where they can actually bond over a shared interest, as an example, uh, through to, you know, at the right time. There’s a big difference between forced. And, you know, I feel isolated and disconnected and finding that right mix is pretty tough.

Um, and then with the right people, uh, I think you mentioned finding your best friend is, is core to what we, what we think of as a job to be done for, for Glue. And uh, we’ve spent a bunch of time trying to understand all those things as we’ve built out that software platform. That’s become the business, uh, that’s become the thing that every people leader comes to us wanting to understand better.

And how do you actually take action automatically? Um, sorry, a long explanation to your question, but I, but I figured was, uh, the full pivot story all the way through.

Andrew: There’s a lot to unpack there. What I’m hearing you say though is that what you did wasn’t working even though peop, even though your customers thought it was right, like your customers seem to have thought that sending a T-shirt to their team member or another gift was working. How did, how did you know that that wasn’t worth doubling down on and finding a better version of a t-shirt?

How did you even know if your customers were saying, first of all, do I have that right? That your customers seem to think that that was okay?

Shane: No. Yeah, I mean, I think it’s a question of like, how do you define working? Um, you know, customers, billions and billions and billions of dollars are spent on gift cards every year. They don’t work, but people still buy ’em

Andrew: And they still say they do work. You were saying your NPS scores were high. Your product market fit according to Raul’s thing was good. So how did you know it wasn’t working? If all the data was coming back and saying, this is good.

Shane: Yeah, at the end of the day, we were trying to understand real value creation

Andrew: By talking to customers and then you see that their, that their people don’t like it.

Shane: yes. Sometimes, you know, we, we have a value mystery that we call ingrained empathy. Sometimes you need, and, and you know, I, I look at even some of the companies I’ve worked at and some of these companies that, you know, blow up and eventually implode. At the end of the day, the companies that achieve the greatest outcomes are hyper-focused on value creation, not just the right metric, not just customers loving their product, but you actually need to drive real differentiated value in the long run.

And when I looked at, our

Andrew: at, we keep calling it mystery. It’s now the new name is Glue. What does that mean for glue though? When you say value creation?

Shane: Totally. So, so, you know, value creation can be, you know, an employee feels happier for an hour after an event. You know, we look at the majority of offsites as a good example. 90% of offsites have almost no impact. Uh, and what does that mean? What do I, what do I mean by no impact? Well, people show up to an offsite and you know, you feel really good after that offsite for a week and a half, actually, it’s two and a half weeks on average.

Didn’t you see these amazing interaction bumps? But what was the point of the. Why did you do the offsite in the first place? Well, you did the offsite because you’re a distributed team and people feel a little isolated, disconnected from the mission. They haven’t built cross team cohesion is one of the bigger reasons people do offsites.

Okay. Like how do you measure and understand like the impact of that offsite on those things and not just, I had fun, not just, it was a good time. While you can start understanding, hey, pre and post, what do cross team interactions. Are they higher? Are they lower? What is the sentiment of your employees towards the other teams?

You know, oftentimes you hit, you have these big problems between sales teams and operations teams. As an example. Have you built more trust on those teams afterwards? Well, you can measure these things. You can, you can actually see the impact and draw causal impact across this event, this tactic, this strategy, and say, is this working?

Is this not? And the reality is, even though employees loved our virtual events back in the day, they weren’t working. You’d go and you’d have fun and the next day you’d forget about it. A good virtual event. Oh, go ahead. Yeah.

Andrew: You know what I, I know what you mean. I’ve watched my wife go through virtual events, virtual cooking classes, virtual wine tasting. The package gets delivered. It is exciting. The whole family gets to see if people wanna know what it’s about. Then she does the thing with her team. I do feel that there’s value in it, but I also see what you mean, that there’s also a little bit of emptiness, and I especially feel that when you say getting a gift, it’s, it’s rarely the right thing.

For some reason, people think that tea is a really special thing. Well, I drink tea. She doesn’t drink tea. If, if you don’t drink tea, it’s a waste. Um, so I, I hear what you’re saying. I guess. What I’m trying to understand and extrapolate from your story is how did you know that this wasn’t, that this wasn’t valuable for the end user if your NPS was right?

And then, and then how do we then come up with something that’s better than nps that’s more like value, uh, based.

Shane: Yeah. I mean, I think at the end of the day you need to start defining. You know, because certainly there, there are plenty of products that have blown up with great nps and ended up dying. And the question is like, well, why did they end up dying? Well, like you can build something that’s fun for a minute.

And nps, I don’t think it’s a great evaluation of product in the first place. Neither is, are any of these specific metrics? I think the question for any business is to understand the root of how do you measure the value creation that you’re bringing to market for your customer? And at the end of the day, for a business, if any business works with mystery, what.

What is the works with Luo? What, what is the goal of, of that interaction? What do they want? If they spent, if they looked at, I spent a hundred dollars, what is the outcome that they’re looking for? Well, if you logically work your way through that tree, they want their employees to be productive and retentive, and if they’re gonna spend money on morale, is to improve overall retention and improve the ability for these teams to connect and work well together.

Well the goal, the ultimate goal for any company should be how do I understand and measure my impact towards those metrics? Obviously that’s hard. There’s a lot of steps, you know, for us, we have to go to connection first and understand connection units and then we work. How does connection units impact towards retention and productivity?

Uh, and yeah, we can get really, really advanced now and all the stuff we can do now we can, we can forecast retention, we can do all these unique and creative things, as we started digging and building kind of the product to build roi, the product to the, as we under, as we started trying to figure out how do we build ROI for virtual events, we realized, man, we need to understand the connection graph at this company really well.

That’s data that nobody had, uh, and a large, large enterprise at like the biggest scale companies. Have observability data. They’re, they’re looking at all this input from, you know, the tools we use every day, slack teams, things like that. But now we look at all that data and we can pick up on the, you know, the smallest of signals.

You know, even something like an employee who used to accept calendar invites from their manager right when they got ’em, and now they’re waiting until right before the meeting and they’re pressing except right before. It’s a feature in a model. It’s a small signal of disengagement. We’ll st our system will start picking up on a lot of those small things and then actually take action, not just automatically, but proactively to say, oh, this person might be disconnected.

We’re gonna make sure they do a meetup with the leader of their org and bond over something that they both have in common. Maybe it’s the fact that they both love guitar, cuz what we found at the end of the day is that connection. And, you know, sense of social safety and sense of an ability to build trust with somebody is, is usually a social construct.

And secondly, like that’s how you build trust in the business. You know, if you start getting to know your leaders as people and not just as, you know, a leader talking head, you’re gonna have a little bit more empathy for ’em. You’re gonna have a little bit more trust in them, and you’re gonna, you’re gonna be a little bit more aligned to kind of what, where they’re going.

And at least if you’re not, you’re gonna tell them. Uh, and, and that’s, uh, you know, how we view. Job to be done of glue is to build that connection for folks.

Andrew: All right. Lemme take a moment and talk about my first sponsor, and then I wanna come back to the early days and see if what you did there would work for somebody else who’s listening to us. But first, my first sponsor is What do you know about Alexander? Before we got started, you and I were talking about him.

Shane: Yeah, for whatever reason, we’ve just chatted on a couple random groups, whether it be, you know, Twitter or I think some, uh, some Slack groups that we’re both in, uh, and he’s just been building, he’s been building in public for a while, as far as I know. Um, and yeah, I just think he, he’s just a hustler that guy’s just building all the time.

Andrew: What I admire is, like you said, he keeps talking about what his financial goals are for the business, and then he talks about how he gets there and he is not. Reluctant to talk about his goofiness and how he’s, uh, how he’s failing on his way there. And also not too embarrassed to talk about his financial successes on the way there.

And the reason that he’s able to do all that is because helps match businesses like the ones run by the people who are listening to us with, uh, developers. They’ve got a matchmaking system. They make sure that you’re happy, and if you’re not happy, then they’ll, they’ll correct it and they’ll get you somebody else who’s good.

I’m not suggesting that anyone who listened to me go and sign up and, and hire from them. I’m suggesting you include them in your mix if you’re looking for a developer right now or if you’ve got a project that needs a developer and it felt like it’s just too expensive to do it. Give ’em a shot. In fact, if you use my url, you’ll not only get their phenomenal developers, which they screen, they pre-vet, they do everything, but you’ll also get ’em at a lower price than others.

It’s always low, but it’s gonna be even lower if you use my url. All you have to do is go to, g g.

So the thing that you did before, I’m wondering if it could still work. Let’s come back just even to to dates. Do you think that that date boxes sent to people would still work today? Can somebody still do it

Shane: Date boxes. I don’t, I don’t believe in that business really, really in too many ways. I, I think there’s a couple, uh, the economics just don’t make sense. At scale, you need a, you need a sufficient amount of, you know, diversity in what you’re gonna go and do. Every single time you do one of these date boxes, you need a lot of variety.

And like what you find with boxes is like probably if any one box matches to. 30% of people. So if you want to acquire, you know, broad sweeping date night at home category, you need at least four different types of box to start. You need to refresh those box on a monthly basis, and you’re talking about a skew in logistics, nightmare in the background A, and it’s just a really, really hard thing to work.

There’s a couple examples that really, really work for this category. Um, the best business in this category is probably a company called To Hunt a killer. It’s actually like a date night detective box. So you, you get like a, you have to solve a, you know, a murder mystery effectively every month. And it works because it’s content and it’s something that that team can just reproduce and create new content for.

It’s. At the end of the day, it’s paper that they’re sending you. It’s, you know, a couple pictures. It’s, there’s not a lot of physical good inventory that’s involved, and that’s a really, really compelling and interesting business. That business is crazy. They, they’re way bigger than they might, than meets the eye.

Um, but I think the at-home date, night box category, subscription boxes in general, just a really, it’s a hard one business to go after and it’s just a, it’s a tough.

Andrew: What about the in-person events that we’re doing so well before Covid? Do you think that that’s one that could be copied?

Shane: Yeah, I, I absolutely think it could be, uh, I think there’s, you know, local marketplaces take, you know, not the faint of heart to go out and build for sure. Uh, but certainly, you know, especially with some of the, the newer improvements that are happening across AI and plugins and all this stuff that’s happening.

Just the ability to automate a lot of that tactical event planning. Um, certainly a real business opportunity there. Uh, certainly, you know, much easier than it was when we first did it. Uh, in, in, in the early days

Andrew: It doesn’t seem like there’s much margin though. I mean, and it’s expensive. You’re talking about doing salsa classes. What do those run? Minimum 40 bucks, if not like closer

Shane: you’d

Andrew: I guess.

Shane: Yeah. I mean, so you’d be surpris the, the backend economics of hospitality and experiences are, are pretty wild. So yeah, like most experiences are pretty expensive. But the question is why, uh, if you run a sailing experience, the average price of a sailing experience is $80. Well, why is it $80?

It’s $80. Because if two people book versus 10, That host wants to make at least, you know, like 30 bucks an hour or 40 bucks an hour so that you have to charge $80. But if 10 people booked, well, they don’t need to charge $80. They only, like, they only really need to make a hundred, 200 bucks. The yield deficiency of all these experiences and, and restaurants are the same case.

You know, most people think the restaurants make or break. You know, filling happy hour spots at 7:00 PM or at 9:00 PM uh, or 4:00 PM or 9:00 PM uh, that’s not the, not the case at all. Restaurants make or break on Friday night at seven o’clock when they have three no-shows. Uh, restaurants are about turning tables three times in a night and figuring out how to optimize that.

If you can solve some of these yield inefficiencies, uh, which experiences run 90% yield deficient. Restaurants run close to 40% yield. You can really upend a lot of the economics that work. As an example, right at February of 2020, right when we were really scaling and, and things were working, um, we had a subscription product that was, it was like 30 bucks a month.

And for anything you did, meal activity, anything like that, we could get you 10% off all of those things. So you’d make, you’d recoup the money in, you know, one day. And we still had positive economics of close to 40% on a unit basis. It’s a real business. It’s a real opportunity. It’s a hard earned one. Uh, and, and one that many people have tried and many people have failed.

Um, but I, I think it’s still maybe, maybe this stuff with AI simplifying the contribution costs that you need from an operation side. There’s a real business there for sure.

Andrew: so I, I’m hearing you say there are two different opportunities. The first one is this mystery date. And the way that it works is, it’s not that you book people individually at restaurants individually for salsa class, it’s that you book up a significant portion, if not all of the salsa class or all of the sailing class, and then you kind of break it up and you’re selling it to people, uh, as part of your package.

And the same thing happens with restaurants. It seems like you’re, you’re locking in a restaurant. For multiple people, maybe on a night, that’s not a big popular night for them. And that’s the, that’s why you keep calling it a marketplace. In my mind, it seemed like a concierge service or

Shane: Yeah.

Andrew: You’re calling it a marketplace because you’re aggregating a collection of experiences and then you’re breaking them up and selling them, uh, to people. Okay. So that’s, that’s a business. And then the other business, they, they, you still think possibly is there is, is, um, what was the second one?

Shane: I think they’re one and the same. So what, what I just said, fr packaging those things up, you can at the same time, package up to the supply side and sell personalized experiences on the other side because of what I mentioned before, you like a lot more than you think you do, and experiences at a certain level of quality are a commodity.

Andrew: Okay. And I, I also hear what you’re saying about Hunter Killer. You’re, they’re actually pretty pricey. I thought it would be a, a pretty inexpensive box, kind of like these other subscription boxes, but essentially what they’re sending you is like a board game every month. And but you’re saying, look, a board game is still all paper that they personally are making up.

They’re not paying more than, I don’t know what, five bucks or so, but the intellectual property and there

Shane: I mean, they’re looking at an 80% margin business that I wouldn’t be surprised if they’re well over a hundred million in, in, uh, recurring revenue.

Andrew: It’s a pretty interesting business. The more I look at it, the more I, I get why you’re excited about it. What did you see when you looked out at these other events? You mentioned, look, all these other team building experiences just kind of suck. What did you see that sucked about the wine tastings and about the home cooking and all that?

Shane: Yeah. Um, well, you know, we joined ones early on. Number one, it was a new category, a new venue, and I think when you think about experience quality, And hosts ability to provide a product quality experience. It comes down to like practice and doing it for a long time. A lot of these hosts that were doing these wine tasting class have been sommelier at restaurants and they’re great in a restaurant.

They’ll come up to you and be like, oh my God, Andrew, like, I heard you like red wine. I’ve got one in the back that I think you should have a sip of. You’d really, really love it. They, they know how that interaction works. Meanwhile, you get, you know, these paint and sip classes on virtual that are virtual and they all started with something.

You know, in normal times we’d be in my studio, but these are challenging times and I just wanna take a minute and say to everybody that like, we’re grateful that we’re all spending this time together. It’s like nobody wants to join that shit. Uh, and, and you know, it was as basic as, you know, peeling away.

All these layers that we had learned from the State Night out product, like what were the things that really made it amazing And hospitality integration. It’s something we called, uh, it’s actually a Danny Meyer who’s like one of the best rest restaurateurs in the world, came up with this idea. It’s the idea that like when you come in, there’s some level of personal touch.

Think about the best re your favorite restaurants that you love because you’re local. What do you love about it? What you love that you get to walk in. They’re like, Andrew, what’s going on, man? Like, hey, same. That feeling is something you can actually replicate in many ways. So for like a, you know, maybe one of our classes had to make coffee at home with a, with a professional barista.

That class doesn’t all open with like, all right, everybody, let’s make some coffee. It starts with like, we won’t even offer that event to a team unless we know who the coffee snob on the team is. There’s always one person who’s the coffee snob on a team, and our event will start with like, All right, so everyone seems to think, Dale Dale’s the coffee guy.

All right, Dale, open your box in front of me. How do you make a French press? What do you do? And you know, there’s, there’s that level of just bringing, polling people in, understanding how you can integrate the right level of personalization from a hospitality perspective. Um, we looked at it and said like, yeah, most of these events are very, very bad and there hasn’t been a lot of thoughtfulness around experience design on how to make these things really impactful.

Andrew: I wanna go back and, and understand how you got here. I mentioned that when I looked at your LinkedIn profile, you talked about the shitty websites you built for law firms, bakeries. That was the first business you started. Seattle. Seattle Web Pros.

Shane: Yeah, yeah, yeah. Website, uh, website design agency. Uh, I did all sorts of stuff in college to try and pay for, pay for school, everything

Andrew: What are some of the businesses?

Shane: Uh, one was a, uh, flare copter, so these little plastic toys that go up in the air and spin down real slow with light. Have you ever seen those? Um,

Andrew: Usually when you go out to touristy cities, there’s a guy standing in the square throwing those up, like or spinning those up, and then if you’re a kid, you can’t stop looking at it and you’re a free parent. It’s a pretty inexpensive thing to

Shane: That paid for most of my college. Um, so

Andrew: Where did you stand and do that?

Shane: Uh, I would do it in Seattle on the at parks. I would go down to Vegas and do it on the Vegas strip. I would do it in, uh, you know, anywhere on the coast, any of these events. You can just go and, you know, you buy these things for a center two on Alibaba, uh,

Andrew: Literally a penny for those things.

Shane: two pennies for the, for the right quality one, two pennies. And you’d sell em for five bucks. Uh, you’d, I’d be able to make as like a 17, 18 year old. I was making two, three grand a night just selling these flare crops on the side of the street. I will say street selling toys is a good, humbling experience for anybody.

Um, you know, it did, it just takes quite a bit to get out there, be street selling toys, and then run into one of your friends and. What are you doing right now? I’m like, ah, one for ten three, one for five, three for 10. You know, you’d have to really get like animated to do well. Uh, it was a good lesson in sales for the start, but everything from that, uh, you know, doing these web like shitty websites, I, you know, quickly learned that, you know, building a website with a WordPress template and, you know, applying the very poor coding knowledge that I had at the time.

I could build websites pretty quickly,

Andrew: Well, let me pause on, let me come back to those, to those things that would spin up in the air. What are some of the sales techniques that worked for you back then? I love little sales

Shane: Ooh, I think I first learned personalization in the right way. So like being able to, uh, being able to manage a message to the person you’re talking to. So if you, you know, you have some grandparents walking by, you know, you can make them all about like, Hey, I’m sure you got grandkids, like your grandkid is gonna love this, or something like cheesy like that versus if, if I had parents with young kids, you know, I’d, I’d say help pay for a college education.

Something along those lines, right? Like you could start making it a little bit entrepreneurial, make it more about the personal side of things. Um, and you know, you can do all sorts of stuff. Getting everyone in the park to all send it up all at once and all of a sudden a bunch of people run over. Uh, I mean, I can go through countless and countless spend too many hours of my life street selling these toys.

Um, which is funny cuz these toys are just like the worst quality. The amount of people that would come up and be like, mine broke after like a minute would be like, oh, well here’s a new one. Like, they’re like, I don’t have to pay for it. It’s like, no, this costs two, 2 cents. Like, I’m fine.

Andrew: Were you the type of kid who used to read sales books and business books in school and get excited about being able to do things like that on a higher level?

Shane: Uh, you know, not, not really over too much back then into kind of the, the, you know, academic side of business that, that that’s come later in life. Back then, it was just, you know, I, I always knew I wanted to. Start something. And, uh, I was never any good at any of the academic things, so it was like, well, let’s go and try anything else that’s not in that category.

Uh, and just found, you know, small success with, with small stuff early on. Everything from that to landscaping businesses, to power washing to websites, to street selling toys, to selling blenders on eBay. I can go through all these ridiculous stories all the way through. I just always found ways, you know, in early college, I, I kind of broke myself working too many, you know, really terrible paying jobs.

I was working like three jobs, like as a track and field manager, as a waiter, as like all this stuff. And I’d finished the week exhausted and be like, I barely made any money at all. I was like, this isn’t gonna keep working. I’m gonna have to do something else if I need to find a way to get out of this debt.

And so that, that’s kind of what led me on the track of starting all these other things.

Andrew: The websites, I’m, I’m guessing you weren’t making that much money with them, right? There aren’t

a lot of law firms, uh, were you.

Shane: You’d be surprised. Yeah. You can build a website in, you know, five, 10 hours if you really get good at the templatized stuff and you can sell these websites for back then. I don’t know what you could do today, but back then I was literally just cold calling. I was walking into stores, I was looking at websites, and I was in Spokane, Washington, and I would literally just look up these websites for all these, you know, local businesses and I would just come in and offer the owner to make them a new website. Sometimes in the beginning I would just make it and bring it to them and be like, Hey, this costs you $2,500.

And then I worked my way up and you can make 10 grand for five hours of work, which is really, really, really good for a, you know, a college kid back then. Um, you know, a lot of the salesmanship being able to go and actually bring the deals in. But, um, yeah, all sorts of wild.

Andrew: The cold calling part is surprising. I would’ve thought you’d buy some ads you’d seo, but no, just walking into a law firm and you’d know who to talk to, they would get you to the right person.

Shane: yeah. You know, you just gotta be friendly and be willing to do it. I, I, I can’t believe the apprehension of people to pick up the phone and call these days. Uh, you know, I had. That was actually my first real job, uh, you know, outside of these random things, was working at a place, was working at a tech startup called Convoy in Seattle, um, which is a, a freight marketplace.

And my job every day was just a cold call. All I did was pick up the phone and call truck drivers and ask them to download an app for the very first time in their life. I, I have probably helped people download the first app of their life more than anybody on Earth. At this point. I’m like fully convinced of it.

Um, but. The reality for any business, anyone just getting started, anything at all. Like you can just pick up the phone and call, you can just walk into a business and talk to somebody you know, or you can, you know, spend a hundred hours optimizing your digital marketing ad for your, you know, product that you don’t understand or know what’s gonna, what it’s gonna do.

The best way is just go talk to people and like I, yeah, it’s funny how, how many, how many hours people will waste and spend on the perfect website, the perfect all this stuff. Just go talk to people.

Andrew: I find that there are certain industries where people do pick up the phone. Like I think in tech, if I were trying to find your phone number, it would be really hard, and you may not even pick up the phone if you don’t recognize the number. But law firms, they pick up the phone and they expect it. I just talked to my law firm earlier today.

I was shocked that I could just get to a person and uh, and do things on the phone. Um, so I, I hear what you’re saying and then I think that there’s something about sales that way where you have to like gut get your guts up, have a conversation, be cheerful regardless of what happened in the last call, care about this person, even though they may completely reject you.

It’s like a whole personal growth experience wrapped up in each one of these phone calls.

Shane: Yeah, I mean, just getting yourself to laugh before you hop on the phone call is the easiest hack in the world. You know,

everyone wants to talk to. That’s what I used to do. Yeah. Now, now I, you know, rejection is just another hour of every minute of every day, so it’s totally fine. But back then I’d, I’d laugh a little bit before the call.

I’d go through all those, all those little small tricks that you try and learn to get comfortable with. Something at the end of the day. You just have to get comfortable with it. You gotta, you gotta do it enough times that it, it feels fine. And it’s like the best superpower in the world is you can literally just call someone and like, that’s a competitive advantage in today’s market.

Not a very hard competitive advantage to go and build. Everybody can do that. Um, and no one does.

Andrew: All right. Um, I want to talk about my second sponsor. It’s, uh, origami. Origami helps businesses, well, actually it’s businesses, communities, anyone form a decentralized, autonomous organization. I was just talking with someone from Cougar DAO Get this, Shane, a group of people. They decided they were gonna get together and buy an island, Cougar Island.

They looked at it and it turns out that the price was just too expensive for what they wanted to pay. In fact, they just thought it was just too expensive in general. So they said, let’s start smaller. They pull their money together in a da. And they looked around and they found a fricking farm and they decided, you know what?

You got a tenant on the farm. You see where the person’s making money. It makes sense as a long term business. Let’s do it. They bought a fricking farm, and it’s like a group of people all egging each other on, and then they put the title up. Obviously they blanked out things that were private. And now they’ve got a, a farm with a tenant who’s happy to, to pay them.

And it’s, it’s a nice business that they all got together to form. Uh, and then of course they, they improved it. They started adding an Airbnb. They celebrated when they became an Airbnb super host. Anyway, I’ve got tons of these stories. I’m gonna see if I can interview them. Um, And all of these stories are available at a podcast I do about how these groups of people are getting together and doing business together and organizing and supporting each other, and so on.

And if you’re interested in this, go to join Join To catch up on that, you mentioned that you got Amazon. How did you get Amazon? How did you get these businesses to sign up and work with you?

Shane: Yeah. You know, in the early days I, I think. I think it was mostly just cuz we had, we had had tens of thousands of people that had been on those date nights out. We had an email listserv, all these people happened to work at Amazon, happened to work at Microsoft. So when we sent the email and said, Hey, we’re doing virtual events now.

People knew that we were good at experiences. They were like, Hey, they’re, this company’s at least really good at IL stuff. Like, we should try ’em out virtually. I think that’s how we sparked it in the beginning. You know, I think that one of the, the, you know, going through a startup journey, you start learning the, you know, the.

In all these old adages, um, you know, there’s knowledge, there’s, you know, I, I, I know that cause it makes sense and one of those is like, it’s not timing the market, it’s time in market is something that you’ve heard likely before. And like I can read that and know it and be like, yeah, that makes sense. Or I can live it and feel like, wow, every time we’ve pivoted the business, it’s been a little bit easier.

Well, it’s because like people know about us and we already have a brand, a small brand reputation. We have people that like us. Well, that’s one factor of, you know, being time in market is just, we launched and we already had a bunch of people that loved what we did. Uh, and so when we launched, like people wanted to try it out at the very minimum.

Um, and so that now I have wisdom of what that means and that I could go into a long spiel about the difference of knowledge and wisdom and. All good advice has to be learned by doing. No matter how much you wanna learn it in a book, it’s not you. The only help of learning in the book is that so you can recognize it when it happens.

That’s about it. Uh, you have to learn these things the hard way.

Andrew: I know I admire people who, who learn and teach, uh, coding because programming is all about use immediately what you’ve learned. And I wish that business books could have a way to do that, to learn the thing and then go and use it. And don’t gimme a question at the end of the chapter that I have to fill out.

It’s not the same as. Learn do, come back and, and think about it and frankly, do it again and again. Um, the problem that I’ve had when I’ve had time in market and come up with products that are different is that people think of you in one way, and when you add something different, they get confused. They don’t know why you’re doing this, what does this mean?

And the fact that you’ve had some impression on them kind of works against you. Did you find that?

Shane: Yeah, I, I think definitely to a certain degree. I mean, we still get people that are coming almost every week that say, Hey, when are you gonna bring that date night product back? It’s like, dude, that was three years ago. Like, it’s, it’s been a minute. Uh, so certainly, you know, making the change is hard.

Making that transition is difficult. I think the one thing that we’ve done all the way through, Uh, has been, you know, while yes, they are different, the root is always the same. The thing that we’re really good at, you know, is what we’re doing today. How different is it than what we were doing back then?

Certainly at its face value, it’s very different, right? It’s HR technology versus a, you know, a, a night out platform. It’s very, very different. But at its root, we’re matching people to experiences that we know how to facilitate, that we think will bring them together and make them. The same. That sentence works for both, for every business along the way, uh, from the very, very early days, all the way through to what we’re doing today, even as a platform business.

And so I think as long as you have that, that root and people understand like the base of the value creation that you’re bringing to the table, I think it’s a little bit easier for them to make that jump and, and obviously, Extension products. There’s thou, there’s a more written on this topic than I can give, but I, I think that’s what’s worked for us is we’ve stayed true to what we started with, with what we’re good at.

We’ve stayed true with knowing how to surf, right? We, we’ve, we’re surfing that we’ve surfing the same style all the way across all these business lines. We’re just finding the best way to do it.

Andrew: How are you finding customers now?

Shane: Uh, I, a lot of word of mouth, a lot of inbound. Uh, and then we have a pretty, pretty traditional marketing team, sales team, uh, outbound sales team.

Andrew: Outbound meaning what’s, what does your outbound sales team look like? How does it work?

Shane: We have one sdr, we have, uh, a marketing team that goes out and, you know, build, build some leads. And then we have, you know, uh, three reps that are, you know, mid-level senior reps that are able to both do some of that prospect for themselves and take the inbound needs that we bring to them.

Andrew: What about changing the name to glue? Has that made it more confusing?

Shane: Uh, that one, you know, to the early date night customers, I’m sure that’s more confusing to, to our current customers and, and folks. You know, have come along with us in the journey. It makes a lot more sense. Uh, we picked glue because it’s how companies were describing what we did for them. Uh, they would say things like, you guys are the glue that keeps our team together.

Uh, mystery didn’t make a whole lot of sense. Uh, when you’re trying to. When you have a product that helps you understand your people problems and do something about it, the question is like, well, why is it called mystery now? Um, and, and so glue just fit for what customers were already saying, what we did.

Uh, and for the broader market now that we’re trying to go after, it makes a a hell of a lot more sense. People see it and they, they can kind of get it, they get the idea behind it pretty quickly. When, when presented with the positioning that we.

Andrew: No, it makes a ton of sense. And I love the domain What’d you pay for that?

Shane: Uh, that, what did we pay for that? I’d say in the, uh, in the five figures, uh, I won’t say exactly how much, but not nothing too ridiculous.

Andrew: Worth it. All right, for everyone who’s listening, the site is Shane, it’s so good to have you on here.

Shane: Yeah. Thanks so much Andrew. Really appreciate it.

Andrew: Cool. And as a follow up to this, remember if you as a follow up to this, uh, sorry, lost you as a follow up to this interview, go check out my other podcast where I interview creators and people who are building dows. Go to join Join Shane. Thanks, bye.

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