Andrew: Hey there, freedom fighters. My name is Andrew Warner on the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. Get this fricking idea out. Maybe this is not the best way to introduce your idea to fricken idea Sarah, but I love it.
Sara: Makes it sound really important and serious.
Andrew: It’s such a great idea. Here’s what Sarah Dell did she, uh, problem where she wanted to give out meaningful gifts to people. And she encountered the same roadblock that many of us have, which is you could send one really nice gift to somebody that you really know well. But if you want to scale that to multiple people, you’re basically sending out coffee mugs and then the person who gets the coffee mug is kind of stuck with your stupid coffee.
Pretending that they care about it, but in reality, just another thing in their house. So she said, how can we make this problem go away? How do we make the gift giving experience? You know? Cause the gift giver wants to actually, you know, show that they care, they’re spending money. They’re spending time on it.
The worst is to do all that and then make the recipient feel like, oh, what a drag? And I got to deal with this. So says, how do I make this happen? And you know what? She started a company, right. And it didn’t work. It did not work right. But, um, enough to look at it and say, what can I do to make this right?
How do I do this better next time? And to still be married to the, to the solution that you wanted, not to the business and the approach that she first took. And she, she did it. She did it with a company called loop and tie. I invited Sarah Del on to talk about how she. Senders people who care about recipients to send out gifts that the recipients will care about and to do it at scale and to find out how she built a business, a business based on that.
And we can do it. Thanks to two phenomenal sponsors. You’re going to find out that she built her business on WordPress version one. Guess what if you want WordPress hosted? I love using host skater for a hosting company, and I’ll tell you later why you should go to hostgator.com/mixergy. And second, if you want to hire a sales person, there’s a marketplace you should know about and software that will help you manage your sales.
Andrew: Talk to you later about why you really need to go and check out overpass.com/mixergy. First, Sarah, good to have you here.
Sara: So, so happy to be here.
Andrew: How much revenue you’re making? I don’t think you told our producer, but I got to come in with the camera and ask you,
Sara: You know, we actually don’t disclose our revenue.
Andrew: can you give me a sense of scale? I just want to get a sense of, is this a small business budding and growing, and one day will be big. Is this something that’s meat? Where are we?
Sara: Yeah, so we’re in double digit millions. Um, so, well, I’ll, I’ll, I’ll let that slide. Um, but you know, certainly have seen, um, really, really exciting growth over the past two years. Um, last year was, was tremendous for us and, um, and we’re not seeing any slow down this year, so it really looks. There’s been a significant shift in the way that companies are thinking about recognition and reward for their employees and their customers.
And we’re happy to
Andrew: Ooh. I wasn’t even thinking about that for employees. All right. So well, over $10 million fair to say, you’re smiling. Now. I know there’ve been times when you ran out of money almost where things were not so good, but here’s the thing. What I understand about loop and tie. If I want to send out a gift, I basically pick my price point.
Right. And then the recipient picks the, the gift isn’t that I see how it’s useful for the recipient to pick what they want. They know what they want, they know what they’re going to keep, but doesn’t it.
take away some of the personalization. I want to show that I care that I sent you, that I know you
I’m letting you pick again.
Sara: I’m I’m so glad we’re starting with this question because this is the top question that we get. And, uh, and it’s a really interesting space because I think when people think about gifting, um, what they’re really looking at is how do I create a moment that feels special to somebody? And the way that we often think about doing that is based off of the gift, give or taking a lot of time to figure out what that thing is for them.
Um, and, and that, you know, is an aspect of it. And it’s typically because most of that is related to what happens when we give a gift to our mom or our sister. And, you know, you kind of want to prove that you’ve paid attention to what they know. Uh, in the business world, the dynamics is really different because you’re often dealing with people that you don’t know very well or you’re dealing with large groups of people at one time.
And it’s challenging to know what to buy someone when that is the dynamic. Um, and you know, there are different tools out there that might support AI, um, being, uh, supporting new, being able to kind of figure out what it is to give somebody. But there’s kind of a creepiness aspect. I’ll say the can come in.
Like when Instagram ads get a little bit too personal, um, that, that comes into play here in the, in the business world. And so what we’ve really designed is this way to send choice, um, so that you can get someone, something that is more unique than that coffee mug example. Um, while still being respectful of, you know, different boundaries that there might be in the, in the business world.
Um, and the fact that a lot of these people aren’t people that, you know, very well. And so we really use choice as this, um, form of creating the goal, which is that special experience, um, in a way that does scale and does meet some of those businesses.
Andrew: Okay. So this is in for the gift. I’m going to get my wife or even my new business partner. This is more like, um, like what, give me an example of how someone would use using this right now at scale.
Sara: Sure. Sure. So we saw a lot actually with employee recognition this year. So I have a team that I know. Uh, dealing with a lot of personal stress and I want to do something to recognize them. I’m very busy myself. I have a team of 50 people. I don’t know what to go out and pick for everybody. I’m just going to go to and Tai I’m going to choose the a hundred dollars collection.
I’m going to upload their email addresses. Each person is going to get a personalized email and message from me, but this link to be able to choose something that’s actually relevant in their life. And what we hear, uh, you know, kind of long-term the value of choice is when you, you remember when someone gave you something that you use every day, right?
Like, um, we see, we have a lot of homeware, so you have a cutting board that you use every day and you pick it up and there is that association with how you got it. And that is really long-term, um, a big value.
Andrew: You know what, the, the thing that my wife is getting a lot, because she’s in the, in the do gooder space is T everyone is sending her loose leaf tea. She doesn’t drink tea. She doesn’t know what to do with the expertise. She tries to give it to her mom. It’s just like a bunch of these really sensitive teas. That just feel like a burden. And that’s what you’re trying to avoid. You’re saying, look, let her pick it. And, uh, what’s, what’s a good alternative instead of T if at that price range on loop and
Sara: So, um, this sound like fancy teas, so maybe those are the 50, 50, 50 ish dollar price point.
Andrew: can you
Sara: one of, one of our most popular gifts and that price point is a sock of the month club, which is really cool. Um, for men and women alike, you get a sock sock every month actually named, uh, that are all really funky designs.
And it’s a company based in Austin. We, um, we do our best you, another big reason that people like to use our platform is all of the suppliers are small businesses and we have a big focus on diversity within our marketplace. And so, um, often for a business buyer, it’s really challenging to be able to know which small business to buy from discoverability is hard.
And so a big, a big value is making, supporting those, those small businesses super easy.
Andrew: Your dad was in real estate and He, would talk to you about, about business in a way that most parents don’t seem to, what would he do?
Sara: He, um, yes, I have a lot to think. I think for my comfort in just the business space, um, with how, uh, how my dad included me, I’d say growing up. And so my dad, my dad actually still is in real estate. And, um, and he did, he spent time building custom homes, doing commercial leasing, and he, he started his own business and he would bring me along to meetings.
And so I remember at such young ages, um, walking job sites, just being there when he was talking, you know, talking shop with, with whoever he was connecting with. And so looking back, I think that it was really powerful. Just sort of feeling like I belonged. And I think that, you know, many entrepreneurs, uh, I mean, people in general, we all have some sort of imposter syndrome that we walk around with.
And I think that, um, not to say I’ve been, I was totally cured of that, but it gave me a headstart at just having a sense that, Hey, you know, I belong here. I can do that.
Andrew: You would even watch him go over his contracts. You told our producer, when you started a little business as a kid, you asked your partner to, to create a contract.
Sara: I did I did. We found it recently. It was so funny. Um, yeah. My dad used to show me contracts and blueprints for homes he was working on and I just. Seeing plans. I was like obsessed with plans and a friend of mine, and I decided to start a lemonade stand. And I think it was either last year or the year before.
I don’t know, time is funny. These days where my mom found this contract that I wrote. Where we detailed that, um, we both own the lemonade stand together, but it was on my property. And, um, and the way that we would split the profits and the plans for the tree house that we were going to make, once we raised enough money.
And, um, I looked at that and thought, yep, I guess it wasn’t too far of a stretch to, to realize I’d be starting a business one day.
Andrew: You know, what that just reminds me of is how much, what we hear, what we’re surrounded by, influences us without us making an effort, the best example that in fact, that’s a great exam. I feel like the interviews that I do are a great example of it. I remember when I was teaching Dale Carnegie and associates, the instructors started using like all like the like time.
And when he went back to say, how did I even get to use the word? Like all, all the time he realized. His wife was a teacher. The kids in her class started saying like, she then picked it up from them. He then picked it up from her and then he was bringing it into class without noticing all this. And that’s the power of just being surrounded by, by well, by anything but choosing what you’re surrounded by.
I imagine that there are people now who work for you, who are now working for you, Sarah, because they want to be surrounded by the way that you think by the way that you operate to get that into their lives.
Sara: Yeah. You know, I think what that really taps on is what is the role of a leader. And, uh, and that’s something I’ve been actually considering a lot lately where I think we have, um, an opportunity when we’re gathering people at all. And you know, this, this is one of the most common, it’s common way to gather people, to choose how we show up.
Right. And I think, you know, for me, the most powerful form of leader. Is embodied leadership. And so, um, really, you know, there’s a difference to me between a boss and a leader. A boss tells you what to do. A leader invites you into a space and you can choose to follow them or not. And I think when company building that, that space of inviting people into this world that they can choose to participate or not is much, much more in line with my values and my style than this sort of boss mentality.
And, and I I’ve been seeing that embodied in a lot more companies. And, and it’s interesting to me because. When you have that kind of mentality, you really, you treat people differently. And, um, and you know, that, that goes hand in hand with what we do and with how, how you show gratitude and how you, how you include moments of recognition in your, in your workplace, in your life.
Andrew: So you were working at USB wait, UBS, excuse me. I always do that. Uh,
Sara: the bank.
Andrew: Not the port. Yes, the, the investment bank.
And what was your need to send out here?
Sara: So I, it was, it’s just so funny how the little things that you do in life can end up having such huge ripples, but I volunteered to handle the holiday guests. We were sending for our desk. Um, it was a very simple, you know, everyone was complaining about it. I said,
Andrew: the equity traders, all the equity stocks, right? All the people who are trading equity needed to get a gift. We’re talking what hundreds of people.
Sara: Yeah. Um, so no, it was about, it was 20, 25 people or so on the desk that were, we were sending gifts out. Um, I’d say it was, it was less than a hundred gifts. It was up there, but it wasn’t a hundred. Um, and, and I just said, how hard can this be? You know, I love online shopping. Like, I’ll take care of it.
Right. And I was really astounded to notice the inefficiencies in the process where we were spending. Okay. A decent amount of money on these gift baskets, especially if they were going to hold teams. And, um, I wanted to send something a bit more creative than a gift basket, but quickly realized it’s challenging when you’re sending it people you don’t know, you go into that common denominator kind of most basic, uh, purchase.
And on top of that though, it was, I mean it’s 10 years ago and I feel like the conversation around food allergies was really heating up. Right? So you didn’t want to send, um, bred to somebody who had a gluten allergy or a peanuts to someone who had a peanut allergy and, and wine to someone who doesn’t drink.
And so there are all these ways to accidentally do something that was actually rude or not useful. And so I spent a lot of time. Figure out those nuances. And then once I figured out what I wanted to purchase, I was, uh, sort of struck by how I needed to go through the checkout one. You can only do one checkout per shipping address,
Andrew: Oh, I didn’t realize that. That’s right. And so we’re talking about like before 2010, right. That period there. Okay. All right. Still to this day, it’s true. I don’t know of a Shopify store that lot. And bulk from multiple people.
Sara: It’s really tough. And so I just thought, okay, these, these are logistics. It was just to go challenges. And then on top of that, once I made the purchase, I couldn’t track what was going on. And we had an internal CRM. We would use everything else we did from a client interaction was tracked and this sort of set outside of that.
And so I just thought, all right. Um, you know, a lot of waste that’s happening right now. I know I’m buying people, things that they’re, I don’t even know if they’re at their office to receive them. This is more of a formality than it is useful. Um, that bothered me a lot and this is it’s not built for business.
And so I felt like. You know, it took some time to get here, but at the end of the day, I wanted to connect the buying power. That’s sitting on the corporate side, which is it’s massive. It’s $125 billion industry and, uh, and United with small businesses and make sure that when people, when the companies are spending this money, it is.
It’s going to a product that is desired. It’s not ending up in a landfill and we’re using commerce as power. You know, we’re supporting small businesses, we’re supporting diversity and we’re supporting causes. So, you know, another big piece of the way that we are designed is that if you don’t want a physical product, you can donate and we’ve driven a significant amount of money, um, to a variety of non-prime.
The most support we’ve given is to, uh, charity water. And we’ve, we’ve been able to donate over a half million dollars. And that’s awesome. I mean, that’s all stuff that could have ended up in a landfill.
Andrew: All right. So the very first version you say, I’m going to start a business. I’m going to do this and the, the idea. It was called the next one’s on me. The idea was.
Sara: Yep. So the idea was I want to treat people to food and beverage items, um, and I don’t want it to be dollar denominated. So I want to say to my friend who helps me by picking up my dry cleaning. Thank you so much. You know, next coffee is on me and send a, a voucher essentially that could be redeemed at a verb.
Of different coffee places. And it was really about the coffee, not about $5 to the coffee.
Andrew: Uh, and you didn’t want to do like a Starbucks gift card because some people turn their nose up at Starbucks or maybe they just don’t like coffee.
Maybe they like tea. And so that’s, I get the idea there. All right. Um, and you also didn’t want them to see that it was a $5 card. You just, you would intentionally set from the start.
I want to be able to give you a coffee and whatever the price is at each place is what it is.
Sara: Yes. Yes.
Andrew: Sarah, that is a pain. Okay.
Sara: No idea was, there is a, there’s a nuance difference when I send you a gift card. Versus when I send you, like, if I were to take you out to treat you for a coffee, there’s a kindness to that. That’s much different than saying here’s $5.
Sara: with that social nuance was really interesting to me. And, um, and yes, it made it incredibly challenged is essentially creating my own currency.
Right. And I was taking away a lot of the value of when you’re building a tech company, there’s sort of this aspect of infinite scalability that can come into play. And I took that away by creating an in-person redemption network that was based off of training the staff to recognize this voucher. Um, so there were a lot of problems.
Was making sure that that was something that was sustainable. Um, and it actually, it, it didn’t work. It wasn’t sustainable.
Andrew: it’s still impressive that you were able to put this thing together, by the way, to this day, Starbucks doesn’t do that. Why does Starbucks only allow me to send someone a $5 gift card instead of. Just let me give, well, I guess I know why I was going to say, let them have the coffee of their choice.
A lot of people prefer not coffee. They would rather have some kind of a espresso drink. And then if you say here’s the price for espresso drink and you price it less than the highest end, then people are going to just buy that and use it for the highest end for themselves. All right. I see the problem.
Tell me how you solved it. When you were doing this in your smaller business.
Sara: So the way that we solve for it was we got the, um, the coffee shop to agree. Okay. We’re going to pay you. Flat rate every time there’s a retention, you choose what is available for redemption. And I still think this is something that Starbucks could do where here’s the, you know, the gifted menu, the pay it forward menu.
And those are the things that are eligible for that redemption. And, um, and with the coffee shop was banking on as well as this was also during the group on days where, um, there was, you know, a lot of challenge with people giving away almost too much discount. And the idea was I’m going to drive traffic into your store and they’re going to end up buying more, but that didn’t always have.
And so our premise was, you know, exactly how much you’re going to get paid. Every time you choose the kinds of products that you want to make available, given, you know, how much you’re going to, um, be. And they’ll probably also buy a pastry, they’ll come in with a friend, so it will be able to increase the average
Andrew: So you went into, into local coffee shops in what city
Sara: in Austin. We ended up Austin and Houston.
Andrew: So you went to Austin and Houston kind of close to each other. You said, I need to make a deal with you. It’s let me print out these vouchers. When somebody comes in, you pick what you give them for these vouchers or you pick what they could, what, um, what selection they could pick from God.
How many of these places did you get?
Sara: And it was an app. So it wasn’t that it wasn’t printed. So you would text or email somebody the, the, uh, claim code and they would show their app to redeem it. Um, I think we had about 80 places.
Andrew: all your footwork going door to door knocking on these places. Maybe some had multiple locations, but for the most part, we’re talking mom and pop stores, mom pop restaurant. Wow. We who built the house.
Sara: Yep. Um, so we worked with a development shop to build it and kind of came with the first idea and, and got it off the ground. And, um, and yeah, it was a lot of, it was a lot of footwork actually getting it all together.
Andrew: Is this the, the company that you hired and then they charge you $25,000 and then they took off literally. No. Okay.
Sara: that was another drama.
Andrew: All right. Well then we’ll get to that in a moment, but then how did it work out for this to get an app built is kind of a pain. If you’re not building it yourself.
Sara: Totally. Well, and it was also, I mean, again, this was 10 years ago. Um, so there it, um, the hurdles to build your first app as a non-technical person felt much more significant, um, and not having a technical co-founder was, was really hard. Um, you know, I just, I went with a friend’s referral, um, and found an agency that worked out fine, um, to just create what I had wanted.
And I learned how to wireframe and I learned how to, um, work with, with product people. And
Andrew: well enough.
Sara: yeah, it works well enough.
Andrew: well enough. How did you, I now know how you got the local stores to do this. I understand that they wouldn’t, that they wanted money upfront. They wouldn’t say okay. Every time someone comes in, we’ll charge you sour. Right? They wanted did they.
Sara: Yeah. So they, they would, um, we, we knew how many redemptions were happening and they were fine with us paying them after this.
Andrew: Oh, okay. After the fact, how did you get the clients who are going to buy this.
Sara: So that was the hardest part, um, was getting, getting the demand. And so we did all of, all of your standard, you know, demand generation channels. We did press, we did, um, in-person pop up events. Uh, we did social media ads and nothing really worked very well, honestly. Uh, so we were, we had, um, about 10,000 gifts that were given through the platform, uh, over the course of our lifetime.
Um, which it was fine, you know, um, it wasn’t enough to, to make the company, um, sustainable and, uh, and the, you know, the way towards the end, the way that we were really looking at scaling was partnering with, um, companies that had more nationals. Which is with whether that’s through a POS system or a larger restaurant chains and, um, in food supply chains, that was the avenue that we were looking at or, or going, um, partnering on a payment systems, um, with the payment systems manager, whether that be Amex or visa, you’re looking at those, those options.
Um, nothing really worked. And, and so, you know, a year, I think it was probably a year and a half, maybe close to two years. Just had a period of a lot of self-reflection where I said, Hey, it’s been a while this doesn’t feel like it’s really working. Um, and there’s a lot of reasons that I can, uh, think to double down on this.
But if I was starting from scratch today, would I start this company knowing everything I know. And the answer was a very clear now. Um, and so.
Andrew: Let me take a pause and that’s why you decided you’re going to launch something new. We’ll take a pause here. I want to do a little bit more of a post-mortem on the first business before we go into the second one. But first I want to tell you about a company called overpass. Imagine if you could have done this hour, imagine if you could have said, you know what, I have this hunch that it.
By talking to customers instead of putting up a website and buying ads and so.
on, but actually having a human being may cause imagine if you said maybe that could work, where would you even go for that? You know, Sarah, if you want a landing page, there are tons of companies that could great create great landing pages for you.
Right? If you want email marketing, tons of companies that could. What about salespeople? Where do you go? If you want to hire a sales person and basically be able to get them up and running the way you would landing page? Well, there’s never been a place to do that, right? Until overpass.com. Sarah. Here’s what you do with overpass.com.
It’s a marketplace. So you say here’s what I’m looking for. Maybe what you want is. They told me that there are a lot of people who work remotely on their platform like moms, maybe who, who want to, or chatty, who are good conversationalists, who she sells people who want to have work from home while they’re waiting for their kids to come home from school, you could go on the platform, see how some of these, some of these people do.
Maybe it’s a mom, maybe it’s somebody who’s new in their career. Who’s trying to learn about technology. I don’t know what it is. But maybe it’s the person who’s the right fit for you. You get to see how they’ve done before. What are they good at? Are they good at making phone calls? How are they made? Are they good at sending out email?
How good, how well can they write? Are they good at communicating via chat? Whatever it is, you can find them on the platform and then you can hire them and manage them on the plane for him to see how many calls they’re making for you, what their followup processes and so on. And if you don’t like them, you can say, sorry, and just move on.
If you do like them, you could continue to work with them. And continue to higher and higher and higher from overpass. I’m turning you onto this platform. So I’m turning on my audience to it. I’ve never seen this before. I I’m just glad that they’re here. I interviewed the founder company’s boss.
Overpass.com/i love that they got the.com. If you use my URL, you’re going to get 10% off. That’s why I’m being very deliberate about giving the full URL, overpass.com/mixergy. Really go check them out, spread the word. This is the place to go and hire salespeople. We don’t have to rely on just webpages.
When you make a big purchase decision decision, you want to talk to a human being. Your customers deserve that same, uh, situation, that same possibility over past. We’ll give it to them. overpass.com. Slash Mixergy. Alright. I have a, I have a question about the post-mortem. First of all, I see that one of the problems is you would have had to have all these different locations across the country.
The other one you’ve told our producer is that you’re basically creating a new currency, right? Your voucher is not it’s becomes equal to roughly five us dollars or whatever. I wonder if the other one is something that you’ve done now, which is, I wonder if it. Sales calls like with loop and tie. You found these, these companies that you’ll reach out to directly that opened up and we’ll see it.
As the story unfolds later, you open up a bunch of customers, a bunch of orders all at once. What do you think.
Sara: Yeah. You know, I’d say one of the things that was really interesting was not only, um, was it hard to, and not a great ROI just because we didn’t, we didn’t have a good acquisition channel for this. It’s hard to reach out to individuals. Um, and the, the folks that were wanting to spend the most money, we did have some HR directors.
Hey, can I buy a batch of these for my whole team? You know, and we were seeing, Hey, this is where the money is. And I kind of went back to my initial problem, where I saw how much money I had been spending on client gifts. And it just felt like this is a market that really needs to be served.
Andrew: Okay, so it’s that. And then it’s also, well, actually, what is the problem with your currency? Isn’t it nice that businesses are paying for this gift voucher. You get two, you get to work with the float. You’re not keeping track of inventory yourself. Why is that problem?
Sara: That wasn’t a problem. Um, the redemption network was a problem. So that, and that, so then the dynamic you just described is still present and loop and tie. Um, but we’ve taken out this need to have a in-person redemption experience that by the way, has a ton of time. So there’s so many different people that are coming in to work at these cafes, restaurants and bars, and to keep those people trained.
And you know, when they have someone show them their phone and say, give me something for free. If they’re not familiar with that, they’re like, ah, I don’t know.
Andrew: I see. Yeah, yeah, Yeah.
I see what you’re talking about. Right. And until you have acid option, it could become awkward in the moment that it’s an awkward experience for the recipient is the moment that they’re not thinking about it for themselves and that you’ve broken the whole thing. Got it.
And by the way, I keep referring to it as a voucher because I’m looking for some kind of visual representation of this. I understand that it was an app. I get it. All right. So you said I would not do it this way. Did you raise money for the bills?
Sara: Yep. We had raised from friends and family and, um, and that was, oh my gosh. I remember, I remember going through the process of that kind of self audit that I described and coming to the conclusion of, I don’t, I don’t think this is going to work and just the pit in my stomach feeling of, oh my gosh, I’ve let down these people.
That I care about and who have believed in me and just having like such. Such sadness, such remorse. Um, just regret. I would say for, um, when I was in that low point of knowing it wasn’t working and not really knowing what I was going to do next. And, um, I won’t, yeah, I won’t ever forget that feeling. It was, it wasn’t a great one, but it ended up actually being a really empowering experience because.
I did. I realized how much fear I had of letting people down, um, and how that was really governing me more so than this opportunity to create. And, uh, they gave me the greatest gift when I decided that I was no longer going to do next one’s on me, but I had another idea that I wanted to try on just enough money in the bank to make it happen.
I went back to each investor and I said, What I had originally told you, wasn’t working or isn’t working. Here’s why I want to try something else. Um, but I want to get your support first. And it was really remarkable to hear the way that they responded, which was look, we knew that it wasn’t, you know, it wasn’t the idea we were investing in.
We we’re investing in you and your ability to figure out the next step. So if you believe this. You have our support. And I think I just didn’t appreciate that before. I didn’t know. They never S you know, hearing that verbatim was a really big deal. And, um, and especially as somebody who this is the first time I’d done any of this stuff, uh, that kind of encouragement really, really went a long way.
Andrew: Did their ownership get rolled over into this?
Andrew: so it wasn’t a brand new business. It was just you saying, oh, oh. And then that’s not a hard thing to let go of, but I could understand in your position saying I’m about to tell them I’m a failure. Will they want their money back or, or even just feel let down?
Um, or will they allow me to take on this next risk and Okay. I understood. Now that I’m, I’m not you, I’m not you in that situation as a person, just looking at it from the outside, it makes a hundred percent sense for them to say yes, move on from that idea. So you said I’m going to start brand new from scratch.
What are some of the things that you decided you were going to do with the new business with Lupe?
Sara: Well, first and foremost, I wanted to make sure I did not have a physical world component to it, of building out this, this, you know, physical redemption place, uh, or physical redemption spaces and, and secondarily, the thing that was most. Important to me from, um, a product design standpoint to carry forward was this idea of things not being dollar denominated.
And so we really, a lot of the aspects of next one’s on me carried over into loop and tie in the sense that you were sending choice, um, you were sending a collection, um, you know, in, in next one’s on me, we call these collections categories. So you would send food. Coffee. Um, and in, in loop in Thai, we call them collections where they’re $25, $50.
And, um, but the same, the experience is the same where I’m sending you choice. You pick what you want. It’s not about the money. Um, it’s about getting you something that is actually meaningful to you in your life. And, um, and the other part that was really important when we launched loop and Taya was I wanted it to be a national solution.
Um, and that was a big reason. We wanted to take it out that, that physical redemption place, uh, and we were able to launch with, with just a very few. Supply relationships and we could, we could ship, right. So we can serve the whole us and, and it made a really big difference.
Andrew: Okay, that makes a lot of sense. The thing that I wonder then is if you’re not going to work with local restaurants, you’re going to have to, I guess, make a deal for the products that you want. At that point, you have to ship it yourself, right? For each individual. What are the three, what are they called?
Three PLS where they’re these third-party logistics companies that could do it for you? Or did you have to buy this and take it in.
Sara: Oh, there, there were, but we were way too small to even consider that we were dealing with target shelves and, you know, inventory lineups of four, uh, four products per skew. So, um, you know, at the very beginning, we, you know, we’ve moved more into a drop ship model now. Um, but when you’re that small. You’re not necessarily getting trade terms.
Right? And so we, in order to launch needed to buy really small amounts of inventory and truly set up target shelves in our office and would go to the post office every day. And when redemptions would occur, you would take the items from the shelf and put them in the mail.
Andrew: What products did You have?
Sara: You know, there’s one product that we’ve actually had the whole time. Uh, I remember, uh, sir, Toto copper, it’s actually another Austin company and their Moscow mule mugs were always really popular. They’ve really, you know, really beautiful stuff. And it’s all, um, handmade from recycled copper and, and it’s, it’s been cool to have them the whole time.
And another one was the baking steel. And I remember each of these. You know, you meet the founders of these companies. And, um, and I remember Andras from the baking steel and this product is, is really cool. It’s like a pizza stone, but it’s steel and you can, uh, you can cook all sorts of breads and, um, and vegetables on it in the, in the oven.
So that, that was an early one. And, um, and the whiskey stone. Yeah, actually where, uh, another really, really popular, um, product, but, but, you know, broadly, those are examples broadly. I’d say items that. Part of your home life, um, things that are just, uh, enhance kind of the day to day and things that you wouldn’t necessarily buy it here by yourself.
Do you feel like treats.
Andrew: And things that are pretty expensive. The Moscow mule cups that you’re talking about, those, those costs a lot, the steel, what is it called? Steel stone. That is that’s expensive too. How much money did you have to lay out in order to get all this products at home?
Sara: So, um, you know, I don’t remember the exact amount that we spent on our first inventory by I’d say it was probably around $10,000. Um, we didn’t buy a ton of inventory, you know, maybe had two or three of each of these, and we launched with work collections. So we had 25, 50, 75 and a hundred dollars collections.
And, um, we also didn’t have all the products in house. So something was redeemed. We can go and purchase it quickly and get that.
Andrew: just run out to the store, run out to the maker, get it, and then ship it out. All right. The software then, is this where you had an issue with software?
Sara: Um, yes. So the, the first, so the, the, the, the first, um, the app was run off of a backend solution called , um, which is the most eighties looking software interface you’ve ever seen. Um, and it was way more robust than anything you took you like 17 steps to do one thing to just kind of. Reconfigure it, it was, it was not the days of Shopify that’s for sure.
And we had a funny checkout process because you weren’t buying a specific unit. You were buying an open-ended link that then could turn into a unit of something. Uh, so it was really, um, it was creative. I’d say the way that we execute it. And then we had a WordPress, um, front end, right? At that point as well.
And it, it was enough for us to launch, um, but certainly not scalable. And actually, so this is where we had the issue with. Um, when I was retooling the app from next one’s on me, I was essentially needing to. Shift the backend to reflect this idea of collections versus sending categories. And I was needing to redo the whole front end webpage and, you know, marketing sites, which was run on word.
And I found a group to do it. And, uh, this was, this was, and I had literally had $25,000 to do it. And that was it. It was, there was $0 in the bank. And I found this group paid that and was able to get the price down to $25,000. If we paid up front, paid them and they went radio silent and I mean, Q panic attack, right?
Like, it’s like the worst thing you can imagine. And I remember. Finally getting in touch with them. And they said, oh, we’re so sorry. We went, and we ended up needing to go to Barcelona because we had a client that was there and we were building something locally. It was, I mean, I still, to this day, I don’t understand the excuse.
And I said, okay, I’m going to come into the office every day to make sure that we’re on track and make sure you’re unblocked. And if you need me to give, you know, uh, feedback on there. And I remember it was right before July 4th and, um, the gentleman I was working with. Uh, I would, I I’d love to, um, to do that, but it’s, you know, we’re starting this, let’s start that next week.
It’s July 4th and it’s illegal for me to have anybody in the office. And I, I just remember being. Well, wait, what is probably illegal for you to take this much money from somebody and not, but I think it’s illegal. Um, and so, yeah, that wasn’t, that wasn’t a positive engagement, I would say. Um, but I was able to get what I needed and, um, and launch.
And so that was July. We didn’t launch until December. So it took a really long,
Andrew: Wow. Wow. But you would go into their office and sit there be available and I’m guessing also make your own sales calls and do your work.
Andrew: That’s a, that’s such a good move. That makes total sense. All right. Plus you get the whole spirit of the environment. They get to see you as a real person who they need to help instead of some random client who they’re taking money from.
Andrew: All right. Let me talk about my second sponsor. Speaking of WordPress, you built the first front end, the first customer experience on WordPress, a lot of businesses. Have you mentioned Groupon, the founder of Groupon revealed here that he built the first version of Groupon on WordPress. Um, I always used to think that everyone understands what WordPress is or that they get WordPress and they’re into it with this whole no code thing, Sarah, that people just want to build using air table or notion or whatever, and build a quick website based off of a database.
I’m finding that. A lot of creators are thinking the word presses is dated and not as useful anymore. And I think that they’re because they’re closed minded to it. They’re missing an opportunity. Here’s, here’s an example of the problem. A lot of these new products now that people are creating as MVPs are basically air, table tables.
You want to find a what’s one that I saw a teacher for your, uh, learning pod for your kids and the people created, it might use an air table to keep a database of all the local learning pods or in another database of all the local teachers. Then you can cross reference and you can have a database basically as, as the experience.
The problem is that for most people, when they see air table, for example, as. That user experience, it looks ugly. It looks confusing. It looks like just a bunch of data in, in rows and cells, because that’s what it is. If they, if these people could in the no-code community, just take it a step further and say, let me try WordPress.
This publishing platform that’s been around for years. It’s open source. If, if they would, I’m looking right now, there’s a plugin right now called air press. It basically takes your WordPress data. It puts it in a, excuse me, it takes your, um, air table data. It puts it in a WordPress design that you pick the theme of, and it automatically updates the pages using your theme just will look so good.
Andrew: I think that might be, what do you think of that?
Sara: Yeah. You know, for us, it’s been a really, um, a really helpful way to empower our marketer marketing team because we, so we launched with WordPress plus OFS, we shifted, we rebuilt our technology. We just did a whole, a full custom build. So we didn’t use WordPress for a period of time. And then we started using WordPress again.
Um, and it has made our marketing team so happy because they’re empowered to make site changes without asking developers. And it helps our developers because that’s not what they want to be working. You don’t want to be doing copy changes. Right. Um, and so it’s really freeing up that time and it’s at the end of the day and making sure that everybody is doing the highest and best use of their time and what they can contribute to the company.
Andrew: And an ecosystem is phenomenal. You want landing page plugins? You’ve got it. You want plugins that take data out of a database and put it in it. You’ve got it. You want forums? You got it. All right. And it all looks good because somewhere press anyway, I’m not doing an ad for WordPress. I’m just saying, look, if you’re out there and you want to launch on WordPress HostGator makes it super simple.
I literally was able to do it in under five minutes. We’re talking about an easy way to get started an easy way, frankly, also to close up. If you’re not happy, just shut it down an easy way to take your site and move it to another hosting company. If you prefer or do what I did. I just scaled up with w with a WordPress on HostGator.
If you want to get started and just play around with this thing, I urge you to go to hostgator.com/mixergy. HostGator will host you. They’ll do an inexpensively. And if you use my URL, you’ll also get a bigger discount than others do. Go get started right now by using my URL, hostgator.com/mixergy. All right.
Now we’ve got a business, right? How did you get your first customers before we get into what really brought in customers?
Sara: Well, so we, so we launched in December and we had $30,000 in sales, which I just remember being over the moon about, um, way, way more magnitude, more than we ever had with next one’s on me. And then in January we had $700 in sales.
Andrew: Wait before we get to that January, which is, wow. That’s so painful. How did you, how did you get so many sales? I understand, obviously you’re looking at the holiday season where people are buying. How did they discover you? Who discovered you? What
Sara: it was just, it was direct. I was reaching out to every human who I ever met or wanted to meet and saying, you know, this is my company, as you’re considering doing, um, your, your holiday gifting this year, um, please use us. And I mean, I was on LinkedIn. I was on the phone. I was emailing, I was asking all of our investors to share with their networks.
It was as boots on the ground as you could possibly get. And, um, and it worked, you know, we had, because everybody, everybody was already looking at. And so it was a really, it was a really supportive time to come to market.
Andrew: By the way, why was the company called
Sara: Sure. We get that question all the time. Um, so Lupin tie to me is kind of a nod to what there’s a difference between when I hand you something. And when I present you something and, and loop and tie is kind of a nod to the symbol of it being a gift, versus it being just anything else that, um, you know, just is not memorable.
Andrew: Meaning the loop and tie of like the bow on a box that I would give you. Right. That, that extra touch, that of a gift that you’re trying to communicate. Okay.
So then January, all sales go down because the people you’re reaching out to have already done their gifts. Um, what did you do next then to try to get this business back?
Sara: Um, well, after I had, um, probably my 17,000 freak out, um, count back down, um, and I actually, you know, had another conversation with my dad that ended up being really, really powerful where he, um, again, background in real estate said, do you know how many gifts we give in the apartment space? We are always doing move in renewal gifts.
Apologies. And I had been living in New York and landlords are not, um, we’ll say gift givers in, in that, um, community. And that was just not even on my radar. And so I started cold calling apartment complexes to see if they would consider using us for their resonant gifting programs. And I, gosh, I don’t know how many hundreds of communities I call it.
So I got to this one gentleman who I still remember his name, he’s been so formative in, in, in getting us to where we are. Uh, his name was Marlin and he was at a, um, a building called the Argenta in San Francisco. And he and I called a few times and he said, you know, I applied, I remember him saying, I appreciate your pleasant persistence.
Um, because it takes a lot of calls to get to the property manager and for them to actually take your, your, your, the time to listen. And he said, I actually do have a pretty significant, um, move in gift problem. I like the Polish of your site. I liked the kinds of gifts you’re offering. I’d like to not only work with you on, at our building, but I’d love to help you get all 50 of the buildings that are in our portfolio.
And, and that was a, that was a tipping point.
Andrew: Wow. What was he giving before?
Sara: So different food items, most properties will go out to a local bakery and when they have move-ins, they’ll buy something, it takes a lot of time. And these property managers have so many things that they’re doing otherwise. It’s really a pain to go and coordinate that.
Andrew: These are really nice buildings, by the way. I’m email@example.com.
Sara: Yeah. Yeah. It’s
Andrew: What was your, your gentle and, uh, effective follow-up process?
Sara: You know, I think that we all have a radar for authenticity. And I think when you have somebody on the other end of the phone that is trying to get something that they’re, they dream about off the ground. I just think that comes through, you know, and I think it’s something you can’t fake. And, and I really believe in the product, I believe.
This was a way to support small business. I believe this was a way to reduce waste. And I think a lot of people, you know, not only cared about that then, but are increasingly caring about that. And it just, it makes you listen.
Andrew: I noticed that there are people who listen.
who will then start writing down some of the software and resources that you use. What did you use to keep track of this? How did you know that you were following up with everyone and not letting anything slide
Sara: Um, so we’ve always been users of Salesforce. Um, that’s been a part
Andrew: really from the beginning when it was just you essentially too.
Sara: Yeah. We use the free version. Um, so when you’re, yeah, the, um, you could, I forget what it’s called, maybe it’s Salesforce essentials. Um, and, and a big part of that was always, um, for me, related to the fact that Salesforce, I wanted to learn the ecosystem with Salesforce.
Uh, it’s always been kind of a dream partner for me. And I felt like if I was using them, From the beginning. And if I understood the way people use them, I could figure out, uh, how to associate with the product, how to build in there. And it was really, it was a way for me to educate myself, um,
Andrew: the software that your customers, your ideal customers are using and the one that you would use as you continue to grow. Okay. All right. So now you finally found your spot and then you told our producer that’s when the fi the flywheel kicked in. What’s the flywheel that kicked in.
Sara: So we were able to prove, so the biggest piece of pushback when I had been trying to raise money was this is a seasonal business. And, um, people just weren’t interested in that. And I was trying to prove that it didn’t have to be seasonal if it worked for your business. And if we really started thinking about gifting as a marketing and engagement tool year round, and the most important thing about working with property managers and the apartment space.
Was, it was consistent monthly cashflow. And so I started to not only prove that seasonality, we would always have a seasonal aspect to the business, but you could be making money throughout the year. Uh, and it also helped cashflow the business. And so I went back out to market because I needed to build a whole team.
So at this point still I’m running on. Um, you know, not ideal, uh, combination of, uh, OFS and, and WordPress. And I knew I needed to create something much more scalable. And so I was able to raise more money and, uh, an a, an, a formative part of that actually was a pitch competition that Google hosted Google for entrepreneurs.
And Steve case was one of the judges and we didn’t win the competition, but we won. We won in, in general because he decided to make a personal investment. And it was really incredible how just having that, the support of someone with that name recognition helped open a lot of other doors. And I was able to close the amount of money I needed to, to build out more of a team.
Andrew: How much did He invest in? How much did you raise after that?
Sara: He invested a hundred thousand. And I think after that, we, we, um, I don’t remember the exact amounts. I think we, we raised something around 600,000.
Andrew: why did he like it? It seems like he’s talking about this new wave, the third wave of entrepreneurship and startups that going to work with governments instead of opposing them, they’re going to be bigger. And now he’s investing in a hundred thousand dollars in a gift company. What was it that he saw that made him think this is worth his time?
Sara: Well, it was right at the beginning actually. Um, it was before they even launched their rise of the rest portfolio, which is about empowering companies outside of, uh, tech centers and tech hubs, um, as a economic growth engine. And I think that he saw the, the way that Lupin Thai is structured is it is a massive support engine for small business.
So not only were we located outside of, I mean, Austin, I guess, as a tech center now and. Okay. Flavor to it, but it wasn’t, you know, it wasn’t San Francisco. And, um, so we had that geographic aspect to us and it was also an empowerment engine for other small businesses. So, um, when you’re buying some loop and tie, you’re important, you’re supporting a whole network of, of, um, folks that, you know, he identifies with.
Andrew: Know what I’m looking at the earlier versions of your site. I can see that we’re really good about using all these free versions of software that you were then going to get to use later. I think you were using mixed panel’s free version and a couple of others that kept. Um,
Sara: That’s child for that free trial.
Andrew: that’s, that’s exactly. You’re exactly who it’s built for.
Right. They want you in so that you can then build on top and, um, and then become a lifelong customer of theirs. All right. So now the business is starting to grow. Um, I don’t, I don’t see you. I don’t see you pimping Steve Case’s name on the site as it evolved where you were, you, you weren’t using him.
Sara: No, you know, we always grew the business based off of the values of what we could offer, not necessarily who was associated with it. I think that, um, having his association really helped in investor conversations, um, and, and that piece of just capitalizing the business. But the way that we’ve grown has really been about just explaining the value and explaining the impact of what happens when you, when you purchased it.
Andrew: Tell me about, um, the Salesforce pitch competition. So you didn’t win The one, but you ended up with Steve case. What happened with Salesforce?
Sara: The emotional roller coaster. Well, I’m also a poster child for pitch competitions. Um, it’s been a
Andrew: Are they worth? Are they worth the effort?
Sara: Oh, my gosh. Yeah. I mean, for, I’ve been involved with Google’s pitch competition with visa, um, their visa, everywhere initiative and Salesforce, and each one of those. I mean, every time you get the support of those larger companies, you get visibility.
And I think one of the hardest things for companies is at the very beginning, especially companies outside of tech centers is getting credentialed, um, getting access into the new. That are in those tech centers and, um, and, and really just, you know, that visibility for customers too. So, you know,
Andrew: you’re saying when you’re pitching customers often will find you because they listened to a pitch. Didn’t visa become a customer of yours.
Andrew: Misa is one of the businesses. Okay. All right. And so what happened with the Salesforce pitch competition? I know we’re running out of time here, so.
Sara: What an emotional roller coaster? Well, um, you know, I forget the year, I think it was 2016. Um, we were in a bit of a dip. We were, um, sales were okay. We didn’t have enough money to keep the whole team we were about to run out of the team. Doesn’t know this. Of course, it’s just me. I’m freaking out. And I had applied to one of Salesforce’s pitch competitions for a trailblazer.
And it was $150,000 prize money. And I was so excited. It’s $150,000. I knew I was gonna win. I knew, you know, this was my opportunity, my last shot. And a few days before the competition, I got a call that said, um, you know, we’re so sorry. We have to make a change. We’ve you’ve actually raised too much money to be eligible for this.
And I was just like, no, no, no, no, no, you can’t. This can’t, this can’t be. And I, you know, it just the irony of being. About to run out of money, but kicked out of this competition for having raised too much money historically was really challenging. Um, but it was a really ended up longer-term being a really wonderful reminder of how things can be working out for you in a way kind of grander than, than you might realize.
Because, you know, I, we were able to kind of get through that period, um, by the skin of our teeth. And there was another competition for a dream pitch, which was for Dreamforce and even larger venue, which meant a larger prize. And I reapplied to that one and was able to get in the prize money was $250,000 and it wasn’t prize.
It was. From Salesforce ventures. And so it’s completely different dynamic and it was, uh, an audience of 5,000 people in person. It was the biggest venue. At DreamForest. Um, it was incredible. I won that and it was the first, you know, got to really align ourselves with Salesforce. It was the first of a few investments that they’ve made in us and it, it was an absolute game changer.
And in hindsight, I realized that was the competition for me to win, not the $150,000 one, but goodness, that roller coaster, that was horrible.
Andrew: want to close with this. How are you getting customers? Now? It was calls in the beginning pitch competitions. I went to SEMrush. I said, maybe she’s writing a bunch of articles about gift giving ideas and then getting traffic according to SEMrush. You’re not. Um, and, and they’re a sponsor, um, but you’re not getting a lot of traffic according to SEMrush from, uh, from content it’s it’s ads on DoubleClick, it’s direct traffic to your site.
What are you doing?
Sara: Um, so we do a really great job with direct traffic and with expanding within our existing customers. So our customers love us and they refer us internally and we’re able to. Grow significantly within these larger organizations that can be pretty challenging to tap into. Um, I think a big opportunity for us is to grow in the ways that you, that you’ve mentioned.
Um, but you know, we’ve got, we’re really fortunate to have a very organic aspect to the way our business grows. And we have an inherent virality too, because we have a very high proportion of people that receive gifts who liked the experience and sign up either personally or professionally
Andrew: Uh, that they have to come back to loop and tie to redeem the thing, to pick what they want. And now they say, well, what is this? I like this experience. Let me share this with other people. All right. If anyone wants to go check it out, the website is loop and tie. Dot com congratulations on doing so well.
And I want to thank the two sponsors who made this interview happen the first, if you want your website hosted. Do what Sarah did do what I did hosted on WordPress. Get to know WordPress, even if you never want to use it, just get to know it. And you’ll see where you go with it because it, I didn’t expect to do podcasting on it.
It will take you far. And if you go to hostgator.com/mixergy, they will give you a tremendous discount and great service. And finally, if you need to hire a sales person or a team of salespeople, there’s no other marketplace like overpass. I urge you to go to overpass.com/mixergy. Sarah. Thanks so much for being on.
Sara: Thanks for having me. This was fun.