Andrew: Hey there, freedom fighters, my name is Andrew Warner. I am the founder of the Mixergy.com home of the ambitious upstart and home of over 900 hundred interviews with successful entrepreneurs. But you don’t care about that because you want to judge me by my latest work but I got to take today for you. And if you watch any of those interviews you might have wondered to yourself, interesting idea, did that guy survive, or did that guy survive, what happened to that guy.
Well today we will have a returning guest, and we will both get to ask that question and get an answer. Three years ago, when I think I was still living in Argentina, I interviewed Jon Crawford about how he sold over a million dollars of t-shirt printing and used that money, part of it, to fund his idea for a online shopping platform. He called that platform Storenvy.
Today I invited him back to find out with Storenvy and what happened to Jon. All of this is thanks to Scott Edward Walker of Walker Corporate Law. He is paying so we can chat, so Jon, we better get him his moneys’ worth and start chatting. How you doing?
Jon: Hi.
Andrew: The t-shirt printing service started with a couple of other guys right? Jon: Yep.
Andrew: They went on to do t-shirt printing and you went on to do Storenvy.
Jon: Yeah, the legend goes, just kidding. That we had this idea that we wanted to set up free online stores for everyone and let everyone in the world be able to become an online business without any money or experience and I believed and still do that it needed to be 100% free and so the kind of wacky idea that we had says three guys outside of the technology space, we just came up with a bunch of pretty crafty ideas on how we were going to sustain our business
And the first thing that popped up was, we had a whole bunch of t-shirt companies and banners setting up to sell on our platform and so were like well, they have t-shirts that need to print more t-shirts, what if we started a t-shirt printing service and long story short that went really well. So well in fact that when we got excited about the web platform, it made sense to spin that off to be its own thing. So it’s still going, I changed the name from Serenity Printing to Thread Bird Printing and I think it’s doing really well.
Andrew: Are they kicking themselves for not being a part of Storenvy?
Jon: I don’t know, I don’t know, we haven’t stayed in that great of touch. They still have some shares in the company, so they are still part of Storenvy.
Andrew: So what percent of the business did they have?
Jon: Right about what an employee would have, so pretty small.
Andrew: Alright, you backed the right horse. They are still doing well; I just looked at their website. Looks like their doing well, right?
Jon: I think they are doing good cash flow.
Andrew: Okay.
Jon: So.
Andrew: At the time you and I talked you said my angel investor is my wife, she has a good salary and she has insurance. You were basically early on living off of that. At what point where you able to start taking a salary? I think I might have just lost you, but I think I will give the Internet connection a chance to catch up.
Jon: Check one two.
Andrew: There you go. So at what point did you start to take a salary?
Jon: I was taking a salary from the minute we launched the t-shirt printing company, it was enough to be pretty, it was enough to sustain us. We were in the Midwest, I was in Kansas City and you know, it was fifteen bucks a month to pay my house payment, so it was cheap, but it was, I took a gap, another gap after that when we decided to spin a t-shirt printing company off before we raised. When I was first on your show I hadn’t raised any capital, but I was in the process. And, if I were recall, you actually set up, either 1,000 or 2,000s store.
Andrew: Yep right there live.
Jon: Live on the show and now were at about 10,000s, so that’s about how far we have come but, there was awhile before I got funding to where I had no salary and had to live off of sea maidens so when we closed the series, the series seed, the seed ground, that’s when I was able to start paying myself.
Andrew: Okay.
Jon: Yeah.
Andrew: I am looking her at our transcript from the first conversation; if I type in the word free in the search box in Chrome I get forty three mentions. You said at the time, I read Chris Anderson’s book, “Free” in 2008 I think you said, and you just gobbled it up. The whole…that’s your phrase right there, and that’s what you decided to do for the business. It’s still free. Where’s the revenue coming from?
Jon: Well, we have two revenue models. One of them is actually coming online in the next couple of months, so one of them is not even online yet.
Andrew: Okay.
Jon: The other one is that we have…it’s premium, so we have, you know, sort of recurring revenue elements that you can turn on optionally. If you want to use your own domain name, if you want to give out coupon codes, these are upgrades that you have to spend a monthly fee on, and people are happy to do it, because they realize that they get so much value for free, and they actually want to support the platform, so it’s sort of this gift economy thing. We’ve given them something that they really appreciate.
We also have an upgrade known as, “The Storenvy Love Fest” that is $10 a month, and the only feature that it creates is that after three months, we send you a surprise.
Andrew: That’s it?
Jon: In the mail, yeah.
Andrew: What kind of surprise?
Jon: You have to do it and find out.
Andrew: I see. I talk…
Jon: The other revenue…well, the other revenue model is…so for anyone who doesn’t know, we have, you know, two products, really, that are glued together, and that’s what Storenvy is, so we let you set up your own online store, it lives at your own URL, it’s, you know, competitive to any of the store builders out there. It’s significantly easier to set up. You can do it in five minutes. You don’t have to punch in a credit card number. You can add in all of the code, you can make it look however you want, and so, you know…but there’s several sites out there like that.
But what makes us unique is that anything that you put into your store is also for sale on our site, so if you go to Storenvy.com, it’s a marketplace made up of 70,000 brands. They’re all using our store builder, and the benefit of the merchants is they actually make more sales by virtually being a part of this network.
If the revenue model that’s coming online within the next quarter is…if you make a sale through your storefront, whatever, Storenvy.com, or you know, you used your own custom domain…like we have Edward Sharpe and the Magnetic Zeros, which is a cool little indie band. You know, so if you go to store.edwardsharpemagzeros.com, that’s his store and [SP] restore. It’s his custom store, but then if you make a sale through our marketplace, then we’ll take a commission on those sales.
Andrew: I see.
Jon: It’s just incremental sales that you wouldn’t have gotten, so if we drive the customer acquisition, then we take a commission on those sales, but you still get it 100% for free to have your own store, and do your own sales.
Andrew: Basically it’s free to get people in the door, and then you start to look for ways to make money without hurting their businesses?
Jon: Yeah. Create even more value for them than just getting a store online. I think that that should be free. That should be like the…that’s like the road. The road shouldn’t be taxed. It should be the other stuff.
Andrew: Okay. I talk to a lot of SaaS founders who say that they just need to hide or get rid of their free option, because people who are really going to pay aren’t afraid to putting in their credit card, and then cancelling later on. People who are never going to pay are just never going to pull out their credit card. For them, it doesn’t pay off. For you, it does, because if someone sets up a store they’re also promoting Storenvy. They’re also promoting your marketplace, right?
Jon: That’s right.
Andrew: There’s…
Jon: Yeah.
Andrew: Mm-hmm.
Jon: Our community does all of our customer acquisition for us. You know, we have millions of shoppers, processing millions of dollars a month. We have, you know, 70,000 active brands, and we don’t spend any money on advertising, and we never have. We experimented with some consumer facing advertising during this holiday shopping season just because we were curious, but all of our customer acquisition on both, the merchant, and consumer side happens through the merchant’s pushing their own store, and it’s not a trick.
I mean, it obviously helps them to push their own store, but then when someone checks out their store they’re like “Hey, what’s this,” and when they checkout we invite them to make an account, and then they’re a Storenvy customer, and they can set up their own store, and do their own promotion, et cetera, et cetera.
Andrew: What else do you do to keep someone who’s just checking out a store from leaving, and forgetting all about Storenvy?
Jon: Well, it kind of depends on whether or not they’ve come in through the marketplace, or a custom store. We want to be pretty sensitive to someone coming into an individual’s branded storefront, because we want it to be their real estate. We want them to feel like it’s their territory, so we’re not going to introduce ourselves in a big way there.
But if they’re coming in our Market Place from a Google search or something, then there’s all kinds of stuff we try to sell them on: the value of making an account, supporting businesses with a story to tell, buying from brands you believe in instead of just buying stuff. That’s a big part of our sort of manifesto. We try to introduce them to the community stuff. There’s people here curating all this content because the way it works it’s kind of like Reddit for cool stuff.
So all the content is socially curated and we don’t sort the categories. If you go into Men’s, whatever’s there is what’s hot right now based on what the community is devouring. So we try to push that and make people feel like they’re going to be a part of something and helping people discover cool brands and all kinds of stuff like that. So…
Andrew: How are you doing today? Kind of when we got on, I sensed that something was up. How’s your day going? What happened?
Jon: Nothing happened. I’m in full on… strategic planning mode this week.
Andrew: I see.
Jon: It’s just serious right now.
Andrew: And in between this whole planning I interrupt your day to do this conversation.
Jon: Yeah I think it’s pretty rude and…
Andrew: [laughs]
Jon: What’s wrong with you?
Andrew: What kind of planning do you do for next year? You know what? Instead of looking at next year, what did you do last year?
Jon: Well I didn’t do much…
Andrew: [laughs]
Jon: So I mean that this year is a fundamentally different year than last year because… I didn’t have a leadership team at this stage last year. So at this stage last year, I had seven people. Now I have twenty. Last year everyone was reporting to me, and now only five people report to me and everyone else reports to them.
Andrew: Okay.
Jon: And so I have to be much more strategic. I have to be much more about helping every team set their own goals that somehow align to a bigger goal. It’s administrating an organization as opposed to running a team. It’s very different and specifically before it was like a seven person engineering and design team.
And now it’s like marketing and PR and product and merchandising and all this other stuff. So it’s just much more strategic and very much more like a business than just building cool shit all day long.
Andrew: When it was time to go from building cool shit all day long to building a process where people reported to people, how did you sketch it out? Who helped you design it?
Jon: I don’t think anyone helped me design it. I used Google…
Andrew: That charting program.
Jon: [??] Or whatever that drawing program is, that mind mapping sort of thing on Google. And I just drew an organization chart. And I kind of had to balance because we had raised $5 million Series A, so I had $5 million. But as a budget for hitting certain mile stones over an eighteen to twenty- four month period.
And so I put pen to paper on like, “Okay, I think I’m going to need these areas. I think I’m going to need these kinds of departments… And then you know okay, this person’s going to cost this much, this person’s going to cost this much.” And then I just spent my budget and kind of moved things around to see if it could make sense. But yeah, nobody really… there really wasn’t anybody who learned the hard way.
Andrew: What was an area that needed somebody that was easy, it was just easy to structure?
Jon: Engineers. I don’t know. It was an interesting learning experience because I just had to start. I had to say like, “Okay. I guess we’re going to need a Creative Director. Or I guess we’re going to need an Engineering Manager.”
Andrew: Okay.
Jon: ‘We’re probably going to need somebody to run merchandising because I don’t really know what girls want and what teenage boys want and all this stuff. So I’m going to need somebody to do that.”
Andrew: How did you even know you needed somebody to do that? And that, it couldn’t just get done with software or that… How did you know you needed someone to do it?
Jon: A Marketplace and a SaaS business are very different. And a SaaS business doesn’t really take any [??] because the product is the same for everyone. And it’s whatever you put out. Whatever I as the platform put out, that’s what the product experience is. So [??] they just put this software out and everyone has the same experience. And it’s exactly what they designed.
Well, with a marketplace or anything shopping oriented or furthermore anything that’s user generated content, the content is the experience. Product almost doesn’t really matter if the content isn’t fantastic.
Andrew: Okay. Okay.
Jon: And I didn’t have any experience in content. I didn’t have any experience in [??] content or having a content strategy. But the home page needed to be constantly beautiful stuff. And I didn’t necessarily know how to do that.
Andrew: I see.
Jon: And what we had done was a software approach. And it was, let’s just make the most popular stuff. And it wasn’t good. It’s at rates to the bottom. It’s at rates to the cheapest product in a lot of cases when you do that kind of stuff. And so, you have to lead by example. [??] leads by example by putting the most beautiful homes front and center. And then that sort of creates this tone for the rest of the network. And so I just needed somebody that could do that.
Andrew: And the way you knew you needed it is because you saw on your home page all the products were just looking like they were going down to the cheapest rates and most popular as opposed to coolest and best representative.
Jon: Yeah, and most on brand. So, I knew, and I don’t know how I knew this, but I knew that a from a consumer standpoint, brand was going to be very important, more important than from a merchant standpoint. Okay? And so, I knew that we needed to have a tight control over the content so that we could control the brand.
Andrew: Okay.
Jon: And I knew software wouldn’t allow us to do that.
Andrew: Okay. And now I’m on your page, and I do get a sense of what Storenvy is about by the images of the people who are on there, the clothes they’re wearing, the typography, the works. And that’s what the person who you just talked about does.
Jon: Yes.
Andrew: I see.
Jon: Yeah, we’re a three person merchandising team. At the top you can see featured collections, featured brands, and they’re touching on this stuff and making all these collections making the imagery and rotating this content out every day.
Andrew: So, one of the challenges for entrepreneurs is we over work ourselves. And then we hire someone and we say, “Now this is your problem. I’m over worked. I can’t even guide you.” I imagine when you’re hiring so many people, that giving that guidance that’s necessary becomes way harder. How did you bring on board your three people properly so that your vision was carried out and that they weren’t just taking on your burden and were destined to fail?
Jon: Right. I’ve been fortunate enough to have built a product when I was so low that continues to grow itself without any of our own effort. And so that’s just the foundation for the real answer to your question. The foundation is, that we could all go on vacation for a month and come back. And there would be a thousand new stores that launched. And millions of dollars would have transacted. So that’s really nice.
But what that allowed us is spend a good chunk of last year in kind of like soul search mode because we really wanted to nail down what the brand is, nail down our own mission of what we are trying to create in the world. And so when people came in, it wasn’t like, okay go start executing. It was like, join this director’s meeting where we are going to do an offsite two or three full days and figure out who we really are and answer the big tough questions.
And so, we were able to spend enough time internalizing the brand mission to where we all sort of felt the same way about we were trying achieve. And so when it came time build this new home page experience, it wasn’t necessarily even my vision. It was Brock’s who does the merchandising.
Andrew: So, Jon, was there a period there where your growth was fairly flat because you weren’t going to do anything to grow the business while you were focused on integrating the new people and giving them time to figure and giving yourself time to figure out what the product was?
Jon: The only time that that’s ever happened was during fund raising.
Andrew: Okay.
Jon: Because I’m like completely checked out from the day to day when I’m pitching.But otherwise like not really because my team is so responsible that they just don’t let things drop. And if we’re doing the touchy feely stuff during the day then the real work is going to get made for at night.
Andrew: I see but you were clear enough about what you were doing and you were on enough of a path that stores were still getting added and it gave you the breathing room to think that out…
Jon: Yeah.
Andrew: …who you were.
Jon: And if truth be told, we’ve never pivoted, like I’m still working on the same exact vision that I was working on when I talked to you the first time in 2010.
Andrew: Yeah.
Jon: And so that has helped because we’re still going down the same path. It’s not like we found things didn’t work, and we had to stop and think about it again. But…
Andrew: What about this, Jon?
Jon: Yeah.
Andrew: I look at you and I remember paying attention to the way you dressed last time, the way that I am today. It’s a different look. The look that you had last time was artistic. It still is artistic but it matches the couch that no one knows. You just happen to go to because we needed better sound than the place you were before.
Jon: It’s the pants.
Andrew: The pants, it’s a different feel.
Jon: Yep.
Andrew: I mean, it looks like something that belongs on your website, same thing with the couch, the tree behind you, same thing with the logo, same thing with the dice on the bottom right corner. This all came from this year of self-exploration, of figuring out who are we as a company. What is our design?
Jon: Believe it or not, absolutely.
Andrew: Okay.
Jon: Absolutely. Because what I found when I brought… we’re about to get into the meat here. This is the meat. What I found is that I built Storenvy out of here. I built the feeling. I found the problem that I couldn’t help but solve and the engineering was done in such a way that I was really expressing myself. The design was done in such a way that I was really expressing myself.
And then when I started hiring a team out of necessity because I couldn’t keep up with everything there was a lot of tension at first. And it was tension around me. They were extremely talented people, but the work they were doing was…
Andrew: The work they were doing, what? Sorry. The work they were doing was what?
Jon: The work they were doing was great by generic standards. By everyone’s standards they would look at that and be like, “That’s a good design” or something like that, but it wasn’t necessarily on point for the vision that I had. And so there was all kinds of tension where we were arguing about all kinds of stuff all the time.
And then I finally realized that I hadn’t stepped back and learned how to take my unconscious competence and turned it into conscious competence. I hadn’t taken the feelings and my approach and the way I look at the world and turned it into English so that I could teach it to other people. So ultimately what I needed to do that I hadn’t done was teach my team how to Storenvy. But I didn’t even know how to do that. So I…
Andrew: So how did you get the language, the self-awareness first to recognize what is Storenvy and then the language to communicate it to other people?
Jon: So that took a long time and that’s what a lot of these off sites were. And it wasn’t easy and it felt like we kept throwing darts at a wall and it was like we’re getting pretty close but not there. There were things like oh, we really want to be everything that’s cool and cutting edge. You’ve got to peel away things that are more of an ego [??]
Andrew: Mm-hmm. We’ll give the connection a chance to catch up again. You were saying, you got to peel away everything that’s ego in order to get to…
Jon: You have to peel away the ego stuff in order to get to the stuff that’s really who you are. I mean, everyone wants a sexy website, right? But is that really like you? Is that really like you are? And we really couldn’t figure this out for a long time and what finally happened, I remember I wore some leopard shoes to work one day. They were like leopard pink spots and I think my creative director was like, “Those are so you! Oh my gosh, that’s the brand! What is that? Describe that.” She was like, “Why are you wearing those?”
And I was like, “I think I just really want to be unique. I really want to be authentically me without being filtered. I want to be an original.” And we’re like, “Whoa, that’s the brand!” The brand is unique, original, and authentic. Helping people be themselves without being filtered in any way. We want to help you set up your own store without there being any blocks or roadblocks. We want to help you feel confident in expressing yourself that way.
It’s not just features, it’s actually about making you feel like you could be a bad ass in this way and then on the consumer side, we want to introduce you to things that are going to help you express yourself better, we want to introduce you to brands that are going to add depth and originality to what you do. One of our internal mantras is “Weird is rad.” We really want… They finally found him.
Andrew: What part of town are you in that you’ve got so many sirens going off?
Jon: This is the TL, bro. This is the tenderloin, Sixth and Market. But, you know, we want to help people sort of believe that weird is rad.
Andrew: You know, I get that in the sense that when you talk about the uniqueness of it, I do feel when I click through Storenvy that a lot of what I find on there is one of a kind. I almost feel like it’s handmade, although I know that it’s not. So, that’s what that got to. What about, though, the choice of colors then based on that? Now, I understand a lot of the vision, I see a lot more, and I understand more of what I see on the site. How does that come out in expression of colors and in expression of styles? Who’s image do you have?
Jon: This statement we’ve tried to do, that we’re doing is very nuance. It’s a million, many, many, many decisions because it’s brand driven but it’s a platform. Those two things are in complete and utter…
Andrew: Why? How? Help me, I don’t understand it.
Jon: Well, if you are a platform, you want anything to happen. You want people to Tweet whatever they want if you’re Twitter, you want people to sell whatever they want if you’re eBay, you want people to post whatever they want on Craigslist.
Andrew: Because it’s their platform.
Jon: It’s a platform for things to happen. It’s like a telephone system or a cell phone network or something.
Andrew: Or Tumblr.
Jon: Or Tumblr. Well, I actually think Tumblr’s got a bit of a brand but we’re even more brand focused because we have a point of view, we have a world view, and we have an agenda we’re trying achieve in the world and certain kinds of businesses we feel are better suited to be a part of that world with us. That ends up being a conflict, so we’ve had to do things like make color decisions in a very careful way, where if, let’s say our background had been blue, that would not feel like a platform. It has to be gray scale in order to feel like it can support any kind of product.
Andrew: Oh, I see.
Jon: But, there’s still some style, there’s still some attitude, there’s still some voice. Enough to where you can feel it but you don’t notice it.
Andrew: Alright, here’s something else that I’ve noticed that’s different, back when we talked, I think you described the site as social and I described it as social. In fact, I’m looking at a snapshot of the site from 2010, around the time we talked and it says, “Social Shopping and Free Online Stores”. The social part was a big emphasis, it’s still a big part of the site, but it’s not emphasized anymore. Why not?
Jon: Well, I think for a few reasons. One, I think social is a table-stake. I think every product is social anymore. I mean, I think Zappos is social. It’s not really a banner you wave any more, it’s just sort of taken for granted. Two, I think that there is a lot of value to just having a destination of a place to find these great products from amazing brands that we believe in, social, or not. So you don’t actually have to make an account to search, discover. You don’t have to even have an account to check out.
The social, what it does for us, I think the social is really exciting for the people who want that kind of experience, and it’s not necessary for the people who don’t. What the benefit we get out of it is that we. . . They curate all of our content for us, so there’s like thousands and thousands of products added every day. There’s over two million products.
Andrew: To the collections?
Jon: Just to the site.
Andrew: Okay.
Jon: There’s over two million products on the site, and the users curate this by envying things. Envy is our like button. And then, making collections and buying. So the popularity algorithm changes the content all day long.
Andrew: Okay.
Jon: So the community actually curates all the content, so that’s how it’s pretty social.
Andrew: Okay, and I do see that on the site, and you’re just saying the reason you’re not emphasizing it anymore is because social is just what everything is.
Jon: Yeah.
Andrew: Google search results, now, are social.
Jon: And people aren’t looking for social. You know, I just wish there wee more ways to social shop.
Andrew: I see.
Jon: That’s not a word that you hear.
Andrew: Was that a hard thing to give up? It seemed like it was a big part of your mission. Was it a hard thing, a hard phrase to give up?
Jon: No. The phrase doesn’t matter. The mission is still the same.
Andrew: Here, look at this stuff.
Jon: Again. . .
Andrew: Typing. . .
Jon: Excuse me.
Andrew: Typing it into our old transcript, 36 instances of the word social in that one hour conversation, it was that big a part.
Jon: Interesting. No, it’s still social. There’s still all kinds of that stuff going on on the site, it’s just not something that we feel like we have to drive home, it’s just obvious.
Andrew: What about this? As going back to people, culture is a big part of it. If you’re so unique, and you personally value uniqueness and self- expressions, does it become harder to tell other people what your vision is and force them into your design, or at least into one cohesive design? Because you would never want to be boxed in by someone else’s design.
Jon: Yeah. I mean, I’ve had a lot of growth in that area, just as a person, in the last year, even thinking about, like, social justice issues. You know, the. . .
Andrew: What do you mean?
Jon: You know, there’s everything from, you know, we have immigration. California’s just a hot place to be for all kinds of stuff. We’ve got immigration issues. We have gay rights. We have all these things where it’s like, people who are different, how are we going to treat them? So, like, thinking about these ideas of needing so badly to be unique, original and authentic, it’s really helped frame even my political views in a lot of ways. And so. . .
Andrew: How do you tell other people this is our vision? No, we are not the neon colors, we are the more staid colors.
Jon: We share, we all share the same vision. You know, it’s still a business, and we have to recruit people that share the vision. So, in the early days, I recruited people who were talented, but they didn’t share the vision. Now I only recruit people that share the vision.
Andrew: How can you tell if they share the vision?
Jon: I don’t know. I just can.
Andrew: You get in a room, and you can have a conversation and pick up on it?
Jon: Yeah.
Andrew: I remember when I first hired people, it would be a whole lot of, “This is what we stand for. This is how we do things. Is that something you can buy into? Do you believe that, too?” And of course, they say yes.
Jon: Right. Well, you know, for the most part, my recruiting has been around recruiting leaders.
Andrew: Mm-hmm.
Jon: And in this city, in this culture, these people can get a job anywhere. These people could get 10 other jobs in the same day, and so, they go where they want to go. They go where they believe that they can be effective, and where they align with the vision. And so, it’s pretty easy to be able to tell when it comes to hiring a leader because they’re not going to be passionate about throwing their [??] and talent at an idea they’re not passionate about.
You know, and I think that, also the flip is that these people are coming to us, instead of us going to them. You know? So, if I’m like selling really hard on, “Dude, this is going to be a great job, it’s going to be. . . “which is all I had to do with my first two or three hires, “This is going to be great. We’re going to build this thing,” and they’re like, “Oh, okay, yeah, yeah.” Well, that was why it didn’t work out that well. But now, these people are coming to us because they’re so passionate about what we’re doing.
Andrew: Did money help with recruiting, where you can say to someone, “Don’t worry, there’s money in the bank. You will not have to worry about your paycheck.”
Jon: No.
Andrew: No? That wasn’t an issue.
Jon: No. It wasn’t an issue.
Andrew: Okay. Was there a time when you looked at the bank account and said, “Oh, man, this is so big. I think I’m done. I think I’ve done it.
Jon: There’s been points where I looked at the bank account and had an “oh shit” moment.
Andrew: Why?
Jon: Because like raising Series A is very elusive for many, many companies and we got down to fumes. And it was pretty tight. So I think that we got our financing done the day before payroll, and we had like single digit thousands in the bank.
Andrew: Wow.
Jon: So it was like a swoosh kind of financing.
Andrew: How do you communicate confidence to your people, “Don’t worry, you’re going to get paid” when you’re not so sure they’re going to get paid.
Jon: Because I am sure they’re going to get paid. As an entrepreneur you have to be like radically unrealistic because that’s the only way amazing things happen.
Andrew: But…
Jon: And so I just knew it was going to work out. I knew I was going to make it happen.
Andrew: You just said somehow I’ll figure it out.
Jon: Yeah.
Andrew: What about when the inner doubt would creep in and say, “Hey, you know, Jon, you could just be misleading these people. You could be misleading yourself. Maybe this isn’t working out.
Jon: I just hadn’t expended all of my resources yet and until I expended all my resources I know that there’s still a chance.
Andrew: You just knew that something would happen.
Jon: I knew that something would happen.
Andrew: I know that feeling. I get that feeling and sometimes when I read a story about an entrepreneur who runs out of money and the story is about he cheated his people, I think we’ve all done that. He probably believed it, and he continued to need to believe it until he continued to find it. It didn’t work out for him.
Jon: Absolutely. You do what you have to do to survive, to make the business survive. And sometimes that’s lying to yourself, like if you were realistic you would have given up a long time ago. I mean, I actually really had a hard time with the Series A fund raising which many people do. And if you were realistic you’d just fall into a hole and never come out. But to sit across the table from that thirtieth investor I’d give him the same pitch, only better, about how you’re going to rule the world and everything is going amazingly, like you have to be a little bit crazy. You have to be like a little bit of a sociopath.
Andrew: [laughs] What was that part that was so good that you thought I’m either a sociopath or I’m damn good at this?
Jon: Well, I don’t think that those are mutually exclusive.
Andrew: What the part that was the height of that feeling in a meeting with an investor?
Jon: Yeah. I mean, kind of what I was saying, like when you just bomb five or six pitches, and by the way you don’t bomb. I never bombed. I would feel really good about it and get bad news which is worse because you can’t fix that, like I did everything right. But and then just feel that punch in the face ten times of “Your best isn’t good enough.”
And then be able to walk in to a partner meeting and there’s six investors sitting there and you just like crush it again, like, dude, nobody can stop you. That’s unbelievable resilience, and you just gain a lot of respect for yourself.
Andrew: Do you ever feel a little envious of some of the competitors, some of the other marketplaces because they have more money, because they get press like they’ve already made it?
Jon: No.
Andrew: No?
Jon: No. I am sort of genetically wired to buck systems, like be an under dog, to be an outside that comes in, like stir things up. And if I were like them, I wouldn’t be able to do that. I wouldn’t be able to come from behind. I love coming from behind!
Andrew: [laughs] You told me when we started out before we started, what’s a win for you and you said, “I want to take about the mistakes I made. So speaking of come from behind, what’s a big mistake that you made that you had to come from behind to recover from?
Jon: There’s a lot, culture building. I already went over the one where I wasn’t teaching people and that created a negative culture…
Andrew: Okay.
Jon: I realized that that was on me. A year before that, I hired my first three people, and I hired them for completely wrong reasons. I just hired people with talent, but we didn’t share the same vision. They are amazingly talented and are working on cool stuff now, but ultimately, I spent $500,000 of our $1,500,000 seed round on salaries and server costs, and we didn’t ship anything.
We ultimately had to part ways with the whole team. So I let the whole team go all on the same day, and I started over on my recruiting.
Andrew: Wow. You didn’t ship anything with that other team, so you had to start from scratch essentially?
Jon: We already had the site online. This was after we set up the 2000 store. Then I started building a team, and in that window of time, we didn’t ship anything. So I let them all go and started over on recruiting. It was brutal because I had spent so long putting that team together, and I was initially so proud of that team. Then I had to call up the investors and tell them that I had fired my whole team. They said, “Well, some investments are bad investments.”
But a few days later, I hired my first new employee, and he’s still here two years later. Now we have a fantastic team, but I made totally wrong decisions about how to build a culture and design a recruiting process that yielded the right kind of people because I wasn’t doing values-driven recruiting. I was trying to hire rock stars.
Andrew: When you talked to me, you felt like you had it figured out. Did you feel, at the time, that you did? It seemed to me that you were doing well.
Jon: Well, Andrew, part of that is that I was in the middle of investor pitches, and you were part of my master plan.
Andrew: How did that fit in?
Jon: I was getting out there. People saw my name in lights for a minute. If they were interested in getting to know who I was, they could watch this interview. They could hear me talk and get a meeting with me.
Andrew: Did that work?
Jon: Yeah, I think so. I don’t know. I was doing a lot. We made a huge splash on AngelList, which was very new at the time. I was blogging like crazy. I was on Hacker News. It wasn’t any one thing.
Andrew: But it got you out there to talk to them. I didn’t notice it with you necessarily, but I’ve noticed that entrepreneurs do this.
Jon: Yeah.
Andrew: But at the time, how were you feeling behind the scenes?
Jon: I was feeling pretty good. I had never raised capital before. I had never worked at a start-up. I had never seen a $1,000,000 budget for anything ever. The most I ever made was $50,000 or $60,000 running my own web design shop in Kansas City, which was a pretty good living. So when it looked like I was going to get $1,500,000 that felt like, for lack of a better phrase, “A million bucks!”
Andrew: Yeah.
Jon: It’s funny though because it feels like so much power. I felt like I was going to be able to build this team, and throw money in the air, and people would just come running to work for me. I thought I was going to have a huge budget for promotion, but that money goes pretty fast, and everyone else has more money than you. So it does not help you recruit that much. It does not help many things. Now you have a Board, and you have people to answer to.
Andrew: Who’s the biggest jerk on your Board?
Jon: That’s probably me.
Andrew: Good answer. We are almost at the end of the hour, and I want to give you time to go back and work on the stuff I interrupted, but how can you work in the Tenderloin with all of those sirens? That would drive me nuts!
Jon: I think this is the number one developing section of the city right now. It’s under unbelievable economic development from every direction. It’s going to be the next hot area of town. In our building, the two floors below us are Spotify. One floor below them is a company called Quip, which I understand is founded by the ex-CTO of Facebook. Two floors up is Benchmark Capital. Across the street is Zendesk. It’s ‘Zombieland’ down there with the clientele on the streets, but there’s a crackdown.
The cops sometimes come into our space with binoculars to look down at the street. It’s about to change, so we are just waiting for it to improve because it’s beginning to improve already.
Andrew: I can see it.
Jon: Yeah.
Andrew: What good is it to you to have all these other companies around you? How does having Quip and Spotify in your building help you?
Jon: I don’t know that it really helps us that they are in the building, but I think of Silicon Valley as Florence, Italy, once was in a different era. That’s where all the artists were because it’s where the money was. The Medici family was commissioning artwork by Michelangelo, and all of this great work is being done. People were inspired by being in such close quarters with other top-tier, amazing creators, and that happens here. It’s all about the creation, all the time, 24-hours a day. You may be someplace in line for coffee and you here talk about this stuff. I imagine it was like that in Florence.
Can you create amazing things in Kansas City? Absolutely. Picasso didn’t have to be in Paris to do amazing stuff, but it helps. It gives you resources, inspiration, drive, and money that you may not be able to get otherwise. I am asked that question a lot because I moved out here from Kansas City. People ask, “Couldn’t you have done that in Kansas City?” Yeah, probably, but would I have? I don’t know.
Andrew: It’s so hard to point to anything that’s a direct result of being here, but I feel that there is. I’m fairly new here, but we were talking about how we both know Shane Mack. If Shane comes over for brunch, just the conversations we have give me insight into his thought processes as he builds his business. I think it makes my interviews better. It’s very hard to trace it, but I think that’s the way it helps.
Jon: I bumped into a mutual friend of mine and Shane’s at a coffee house on Sunday, and I came in, probably a little hung over with sunglasses on and a little disheveled. He’s got a full-time job and has built a product that has a lot of recurring monthly revenue, and it made me feel like I was slacking off.
This guy is getting it done, and I wondered if I need to have my own side projects. Probably not me personally because I have enough going on, but it does push you. It pushes you that much further when you have close contact with people who are in the same industry, and in other cities it is hard to find that.
Andrew: Yeah, you’re right. When every time you talk to someone, they’re doing something, it makes you feel like you should be doing something too.
Jon: Yeah.
Andrew: Well that’s one of the benefits of these interviews. Hopefully you are making someone out there feel like, “Well, if Jon is doing something right now, and he keeps building up Storenvy, I have to do something.” I forgot to ask, but what is the revenue now for Storenvy?
Jon: We actually still considered ourselves pre-revenue because our main revenue channel is starting in a few months.
Andrew: I guess the number I have here is monthly sales. Can you say what that is?
Jon: In December, we did about $5,000,000 monthly sales.
Andrew: Wow. That’s even bigger than what I have, but I think we did this interview in November or October.
Jon: Yeah, that was before the holidays.
Andrew: Well, congratulations.
Jon: Thank you.
Andrew: Way to kick ass! The site is Storenvy. To Scott Edward Walker of Walker Corporate Law, I didn’t do the spot in the middle of the interview because I felt there was a different vibe in this conversation. I didn’t use my notes or list of questions, and I didn’t include the ad. I just wanted to go with the vibe and see what happened. Hopefully good things happened, but we’ll let the audience decide. Thank you all. Bye guys.
