Andrew: Hey, everyone. My name is Andrew. I learned in a past interview show my hands actually show people I can be trusted, so I’m going to show my hands on camera a bit more. I’m the founder of Mixergy, where I’ve done over a thousand interviews, learned so much from all these entrepreneurs. And my goal for these interviews is to have people learn from them, build great companies based on what they learned and ideally come back here and do an interview yourself where you can tell me what you’ve built.
Well, today I’ve got a guest who–well, he tried to get rich fast and instead, he lost a bunch of money. He’s smiling when I talk about this. It’s one of those things that’s easier to smile about in retrospect, but at the time was painful. And he didn’t get rich fast. Instead, he got to lose his money fast. Now he’s running a company where he’s trying to get rich, I assume, a lot slower and I know that the speed is not as important anymore for him. The company is growing and I want to find out how it’s growing. I want to know more about it.
His name is Nikolay P. . . Why do I–how do you pronounce your name? I even have it phonetically on my screen. Go ahead.
Nikolay: I was going to say I’m going to give you a few more times.
Andrew: I’ll do it again. Wait, Piriankov? Piriankov.
Nikolay: That’s right.
Andrew: There. I’m leaving that in there. Let people see that I’ve screwed up that name. Nikolay is the founder of Taylor & Hart. They sell custom diamond rings online. This interview, complete with my mistakes is sponsored by the company that just did such beautiful design work for me. It’s called DesignCrowd. I can’t wait to tell you about it. And the second one is a company that actually redid the way we think about our site. They’ll help you hire a great developer. It’s called Toptal. I’ll tell you more about them later.
Nikolay, welcome, man.
Nikolay: Thank you. It’s a pleasure to be on.
Andrew: What’s your revenue right now? How much money are you bringing in selling these rings?
Nikolay: We’re doing about $2.5 million.
Andrew: A year?
Nikolay: A year, yeah.
Andrew: How many rings does that equal?
Nikolay: So since we’ve started, we’ve done close to 2,000 engagement rings.
Andrew: How about annually?
Nikolay: Annually about 800 to 900 rings for last year, but hopefully triple that this year.
Andrew: Okay. And the company’s been around for how long?
Nikolay: Three years.
Andrew: Three years? Impressive. I went on the site, the way you do it is it’s like a checkbox, a collection of checkboxes to pick the ring that I want and the design that I want. Am I right?
Nikolay: Kind of. Some people go down the checkbox approach. But actually our main differentiation is for those that want to start from zero and have something completely unique designed for them that involved sketching, that involved 3D CAD work. So that’s what we call custom on the UK bespoke. What you’re referring to is customized. There have been a few companies doing that for a few years. But essentially, they’re editing premade templates as opposed to giving you a dragon ring, a lobster ring, something really interesting and creative like that.
Andrew: I see. Okay. So you do both of those options, but really what sets you apart is the fact that you’ll create something from scratch for me and you’ll have somebody there to help me do it.
Nikolay: Yeah. If you think of most jewelers, they’ll go from off-the-shelf to a little bit customized. We start from customized then go into anything you want.
Andrew: Okay. All right. We’ll get into why that’s such a big thing, but I’ve definitely noticed that it’s a huge thing now for guys to customize the rings for their women. There’s a fear of that. You customize and you get it wrong, what happens? We’re going to talk about all that because you’ve got solutions for it and that’s why the business has grown.
But I’m curious about this thing that you thought was going to get you rich. It wasn’t just you, but you and your friend David. What are some of the things that you and David were experimenting with back in the early days? I think every entrepreneur can identify at least a little bit with this.
Nikolay: Sure. Well, I think a little bit of context is useful there. I grew up in South Africa. South Africa at the time was post-apartheid. It felt like it was ripe for opportunities. It was this culture and you would hear it with their parents and the way they talk and you’d hear it with their friends. There was a lot of, “Where can we do something like a little hack here, a little hack there, an import, export of this to make a bit of money?” So we were exposed to a lot of that kind of thinking because there was so much of it going on.
So, when we started researching these things online, we start finding somewhat dodgy options of doing this kind of import/export thing but with digital things. We got exposed to affiliate marketing. We got exposed to Amway or Scamway, as some people–
Andrew: Did you do Amway?
Nikolay: Yeah, we did it. We were Ameroids, as we now say.
Andrew: And then what–sorry, give me one more and then I want to dive into one of them.
Nikolay: Yeah. We did–if you’ve ever heard of the million-dollar homepage where the guy sold a million pixels. We did the same thing, but for travel sites that was to promote the FIFA World Cup, the soccer World Cup. We went around door to door selling pixels to travel destinations.
Andrew: Did that work?
Nikolay: No, of course not.
Andrew: Do you know how many sites tried to copy that Million-Dollar Homepage?
Nikolay: So many. There were so many. We tried after they all tried. So that was. . .
Andrew: Did you make any sales when you were an Amway salesman?
Nikolay: We made sales in everything that we did. So there were a lot of lessons coming out of that perseverance. None of those were like, “We’re going to try. You’re not getting rich quickly. Let’s move on.” Every one of those worked. They just didn’t have the unit economics or the scalability for us to commit.
Andrew: What’s one thing you learned with Amway? I’m so fascinated by them.
Nikolay: So it’s a bit like the McDonald’s thing where the business model is not what it seems. Everyone knows the story that McDonald’s business is real estate, not food. So, for Amway, it wasn’t about selling products. It was about educating people on how to become self-employed. That was the business.
Andrew: Right. They pretend–not pretend, but ostensibly the business is you sell people toothpaste and other household items and that’s how you make money, but in addition, you also sell them on the opportunity to sell to their friends all this stuff and you make a commission whenever they pay to get into the Amway business and you make a commission whenever they sell toothpaste, etc. You’re saying look, that second part where you make a commission is obviously the bigger part. I get that. Did you learn anything about sales from doing it?
Andrew: What did you learn?
Nikolay: A few things. Just on that point you just said, I think it’s interesting to point out that the business model is about signing up to conferences where they get you all excited and not at all linked to Amway. It’s all about this join the community of people who are going to create passive incomes and so on. They’d sell books and they’d sell conference tickets.
The thing about sales we learned is your friends–Taylor & Hart started like this as well. Obviously people who were getting engaged around us were coming to us and asking us for engagement rings. Similarly with Amway, the first people we went to sell to was our friends because it was easy.
What I remembered is distinctly feeling very uncomfortable about it. That made me feel that there’s a values thing and an excitement thing about what you’re selling so that when you do go to your friends, you’re giving them something that you know is really going to help them in their lives.
Everybody starts selling first to their friends and family. I never want to be in a position again where I’m in a line of business where I feel uncomfortable even going to my closest people and signing them up. That was like a very strong values check. What I want to be doing in the future needs to be closely linked to my values and my own passions and not just randomly something that I believe is going to get me rich, as you would say.
Andrew: I want to touch a little bit on this options thing. I remember as a kid getting excited about options. For a few bucks, you get to control a lot more money worth of stocks. If the stock goes up and you bought a call option then boom, you make more money. If the stock goes down and you bought a put option, boom, you make more money and it’s fast money. You got excited about it. What happened when you got into options?
Nikolay: So, basically my savings after the age of six, I put half into Amway and half into the options and they all went within a couple weeks and then it was back to working.
Andrew: Didn’t you also ask your mom, your dad to give you money for this too?
Nikolay: I had savings from the age of six. It was basically my parents putting money aside for me.
Andrew: And all that money you lost in both of these projects.
Nikolay: Then I went to them and said, “Guys, can I have my savings now?” They were like, “Yeah, are you sure you know what you’re going to do?” I think my dad knew that money was gone, but it would teach me some good lessons. I think he was right. He let me do what I wanted to do with it. It wasn’t that much that it was like my university fund or something.
So, yeah, the options was really interesting. I’d been playing around with learning how to trade and invest for a few years. Obviously everything that you learn is really linked to investing into shares. In the minute you get exposed to that you can get a 10x return for the same movement in the stock, you believe you have the fundamentals right on the equity, so why not get a 10x return? So, it wasn’t actually an option. It was a warrant, which is a very similar structure.
Andrew: Except the warrant, I think, is issued by the company itself, right? I think that’s the difference.
Nikolay: I think so. It’s so many years behind me now. But yeah.
Andrew: I get it. All these things didn’t work out. Somehow, you’re in South Africa. You’re probably the only person in South Africa not getting excited about diamonds and you finally say, “Hey, let’s just pay attention to this thing we’re so good at in South Africa.” Was it David who said, “We should start this?”
Nikolay: No, actually–I’m not going to get into the whole long story of this, but I was actually the first person to get into diamonds because of a family connection who gave me a part-time job. The job was very simple. It was work in a Chinese-run showroom for the Chinese tourists that were coming from China to visit South Africa. What would they see? They’ll see all the famous spots. One of the things they wanted to do is buy a diamonds as a souvenir, of course a very expensive souvenir.
My role was to give credibility to the institution by not being Chinese. In essence, as clearly and as funny as that is, the owner perceived that having a young person that was not local would be something that would be very helpful to the credibility of the establishment. So I worked part-time there and I learned about diamonds, and then I introduced David when I left for England, where I went to the University of Manchester.
From that little introduction, he went and learned a lot about the industry and grew a business to $5 million turnover a year, was running it out of Hong Kong. I say a business, but he considered it being self-employed. I think that was the part where he hadn’t built something that he could step aside from and say, “That’s my business. It’s running. It’s got systems. It’s got process. It’s got people.” It was very much like his own integrity was what people were buying into when they were buying from him.
He said to me, “Nik, I really want to start a company.” I’d been at the University of Manchester. I’d been continuing to mettle with a lot of commerce and affiliate things. He thought I would be a good partner to start this company with.
Andrew: So you guys partnered up and you heard about the Lean Startup methodology. You started reading the book. You said, “You know what? Ah, anything that goes online should start with a minimum viable product.” You’re smiling. What was your minimal viable product for the online diamond business?
Nikolay: I think the minimum viable product difference between what we’ve done and what the Lean Startup was encouraging was you’d go and test what the minimum viable product is, not come up with it in your head, which is what we did. We decided the minimum viable product was people would buy the diamonds online because we had access to that. We made a website that sold diamonds.
Andrew: Just loose diamonds?
Nikolay: Loose diamonds.
Andrew: What would I do if I bought one of these loose diamonds?
Nikolay: We thought you’d then go on to find a jeweler and have it set in your ring. It sounds so silly now when I say it because I know how complicated that is for a customer to do. But yeah, we didn’t plan on having a loose diamond site for a long time, but we thought we’d launch with that at least, not realizing that when you launch with something, it could be a year before you develop further elements to make the minimum viable product actually function in the way that you imagine.
Andrew: Did you actually get a customer for this loose diamond business?
Nikolay: Yeah. We had three.
Nikolay: Three, three real customers.
Andrew: So these people just wanted to buy one diamond, take it to their local store and have some jeweler put it in a ring. Is that it?
Nikolay: No. They went on to say, “Hey, by the way, do you offer anything else?” And we were like, “Yeah, sure,” just because we didn’t have the rings on the website, didn’t mean we didn’t know how to manufacture rings. We just hadn’t created the ecommerce elements around it.
Andrew: I see. So they ended up buying full rings.
Andrew: Interesting. So even the people who bought. But there was one guy–let me finish that previous thought–even the people that bought a diamond actually wanted a ring, not a diamond. That actually is–frankly, it’s the purpose of a minimum viable product to see, “Will people even buy diamonds? Who knows?” Maybe there is a market for loose diamonds that you guys would have tapped into or now you’ve learned that people actually want to buy rings and that’s helpful. There was one guy though who wanted to buy $100 million in diamonds from you, though.
Nikolay: It wasn’t just one guy. So we found very quickly–you know when you create a brand and you create a website, you attract a certain type of persona. You never know who you’re going to attract until you see from the evidence. What we realized, at a loose diamond, it was going to attract a lot of people who wanted loose diamonds who were not necessarily–they are the typical kind of person that you see in the movies walking in the shadows, opens up his jacket and he’s got diamonds in his pocket.
What we found is one of the sad parts of the industry in addition to the conflict diamonds part that we work really hard to avoid is that diamonds are also a commodity, in a way. They are a good store of value. So, for the less ethical industries in the world, diamonds are a really good way of people transferring their cash into value and then basically smuggling it across borders. I want to talk about that because it’s a real thing.
We started having people inquiring about this and sending us–this guy that you’re mentioning, he sent us photos of his cash, like literally mountains of it. It was obviously like a very scary thing to happen, to be involved in that kind of business. That’s when I realized this wasn’t the place for us. We didn’t want to attract these kinds of customers.
Andrew: So he wasn’t scamming you. He was trying to get money across the border and save his cash in a way that’s a little bit more smaller than that pile of cash.
Nikolay: That’s my assumption. We never ended up serving any of those customers. But being in the industry, you obviously hear about things, the darker parts of the industry that come up. Yeah. I thought it was really funny that he thought he could convince us by sending us a photo of money. I don’t know what world these people live in.
Andrew: Was that man named Tim Sykes, by any chance?
Andrew: No? Okay. So, all right, you’re getting some direction from your customers, you know what you want to do. You need to buy a bunch of diamonds and you need to start creating rings, right? You told our producer, “I’ll be honest with you guys. The Jews and the Indians are really who have all the diamonds.” You guys, neither one of you is Jewish or Indian, right?
Andrew: You’re from Belarus?
Andrew: Bulgaria, sorry.
Nikolay: And Dave’s from Australia. We’re not mixed for this industry.
Andrew: So was that an issue for getting diamonds?
Nikolay: It was an issue for being trusted to get anything on credit or any kind of–so, what we had to do–we’ve got to a situation where we don’t know anyone. They don’t know us. Obviously we also don’t trust them. But we’re requested to start purchasing our stock in cash across border transactions from India without knowing those companies. So, initially it was a very stressful experience. We basically put everything on–it’s a bit like going to the casino and putting everything on black.
We hoped that the odds were better than 50/50, but it was putting all the capital into some stock, getting that stock, delivering to the customers. But then when we’d come back the second time, it wasn’t that supplier who had what we needed. We had to do that whole process again with another supplier. Now we’ve purchased and had relationships with over 250 companies. What I mentioned previously was I thought was a very good positive side of the fact that we’re not Jewish or Indian was that people know us much better because we’re not.
Andrew: You stand out more.
Nikolay: We stand out. Right. Which has helped now in being able to pick up the phone and say, “Hey, it’s Nik. Can we get some better terms?” They’re like, “Hey, Nik and Dave from London. Sure. We’re happy to help you out.”
That also actually helped us to negotiate better. We found that between the same like–so, when Indian people would negotiate with Indian people, they’d get lower discounts than when we would. I’m not sure exactly that I’m behind that, but we have noticed it because we had some partners who would try and negotiate on our behalf. When we’d picked up the phone, we’d always get a better price.
Andrew: You’d get a better price?
Andrew: I thought you were saying if you were the same nationality as the seller that you’d get a better price. Why are you getting a better price?
Nikolay: So, without going into too much detail about the diamond industry–the Jewish people were involved in the diamond industry for a long time. But the reason why the Indians are involved is because several decades ago the Indian government invested into creating the equivalent of a Silicon Valley for diamonds by creating the right economic conditions for the Indian people to basically import diamonds, polish them and export them. So they all get subsidies, and they get better interest when they borrow money to start diamond businesses. There are all these economic conditions.
Andrew: I see.
Nikolay: So, for that reason, when an Indian person tries to buy from another Indian person, they’re basically saying, “You shouldn’t get a better discount anymore because you already have these subsidies and this and that.” But when we’d phone up and we’d say, “This is the only way we can buy. Our business can’t survive if we don’t get a better price,” they extend an arm and they’ve given us a discount.
It’s also how hard you push. You’ve got to always pretend like you don’t need it, which sometimes you do, but you’ve got to still be able to hustle in that way. I guess that’s a bit of old school hustling even though we’re very much a technology ecommerce business. I never realized that before.
Andrew: The first time that you bought a big amount of diamonds, you weren’t even sure if you were going to get it. You were a little bit nervous about it. What did you do to deal with the nerves?
Nikolay: I don’t know if I said this earlier. But it was a really funny night. We basically drank. We drank a lot to the point where we didn’t expect to have to do anything that night. We went home and fell asleep. One of the guys called us at like 2:00 in the morning. We were in South Africa. He was in India. The day had started for them already.
That was the first time we had to basically, a little bit half-drunk, had to convince these guys that were a legitimate company–we were teenagers at the time, actually–a bunch of teenagers trying to buy diamonds from them without knowing what we’re doing. Of course, money talks. So the fact that they’d received the payment did help as well. They sent them through to us and we held our breath for a few days. Yeah, a few days later, we fulfilled our first orders.
Andrew: All right. We’re going to get into what you did with this business and the huge mistake that you made that I think a lot of people listening are going to make it. Even if they have made this mistake before, they’re going to make it. We’re going to get to that in a moment.
But first, I’ve got to tell people about DesignCrowd. Dude, I am so freaking lit up about it that I’m not even supposed to talk about them yet. They scheduled ads for a few weeks in the future. But here’s why I’m so excited about them. I’ve hated the way that Mixergy’s cover art looks in iTunes for a long time. It’s like black and white. You can barely make out that it’s Mixergy and who the hell cares that it’s Mixergy? If you don’t know Mixergy, you’re not going to be tempted to click on and subscribe to my podcast.
The thing that kept me from redesigning it is I’m so intimidated by design. Anything related to design just doesn’t compute for me. I can see the finished product and know that it’s great. But I felt like I can’t even tell you how to make it great. I don’t know what to do to explain what I’m even looking for.
So, any time design comes up, I say, “Screw it. I’m not going to pay attention to it. I’m going to pay attention to what I know. I know things like research. I know things like math. I’m going to focus on stuff like that that matter, that I’m good at and deal with crappy design because that’s just the way I am.” You can’t do everything, so I pick the stuff I’m good at and focus on that and let the rest just fall apart or fall to the side, I should say, not fall apart.
But we resigned DesignCrowd as a sponsor. My wife was out of town this past weekend. I said, “There’s nothing else I’m going to do on a Friday night. I’ve got to just stay at home with the kid who’s sleeping. I’m not going to get a babysitter just so I can go out on my own. I’ll just hang out.” As I was watching “Shark Tank” on my laptop, I said, “Let’s try DesignCrowd.”
I went to DesignCrowd.com/Mixergy because they’re giving a $100 discount and I said, “I’ll take the $100 discount they’re giving my listeners and I just filled out this one little form. They basically said, “What do you like and what don’t you like?” I had like four sentences. I said, “Who cares? I’ll just fill out four sentences.”
As I started writing those four sentences, I realized, “I have strong opinions.” I took a couple of screenshots and I included it and said, “I really like how this NPR cover looks on iTunes. Copy this part of it. I really like how Gimlet does their logo in iTunes. Use that. Mimic that size logo,” and so on.
And I actually had a brief. I hit submit. I thought, “Who cares? $250 is what I would pay if I paid for a babysitter and went out for a drink with my friend. If I lose it, I lose it. Let’s just see what comes back.” I forgot about it over the weekend. I went and played with my kid and I enjoyed myself.
Then on Monday I’m going through my email with my assistant and I see DesignCrowd sent me a bunch of designs. I click it with my assistant looking on screen share because I like her to look at my screen as I do email in case there are issues, she can jump on them.
I’ve got to tell you, Nikolay, the stuff I saw took my freaking breath away. I’m telling you–I know good design when I see it. I don’t know how to get to it. These freaking people designed something so good, I was in awe. I was like giddy like a kid. I felt like, “For me? You did this? This is beautiful.” They made all these freaking designs, all these beautiful works of art that actually have my marketing desire in them. I’m talking too long here for this ad. They didn’t pay for me to talk this much. I’m that excited about it.
I immediately took a screenshot and posted it on Facebook to go, “Look at what I’ve got. Look at what I’ve got.” The feedback on it was tremendous. People loved it. They liked the one that I liked with me punching the screen and the name of the podcast really clear, my logo clear but smaller so it doesn’t distract. But they also liked a few designs that I didn’t consider, like a yellow one that really stands out, which I didn’t realize was even worth investigating.
Now I’m so freaking lit up about these guys, I don’t know which one I’m going to pick. I’m so excited that I actually will get to look good in iTunes and the world of design possibility has been open up to me just because of these guys, DesignCrowd. So I was supposed to talk about another sponsor. I quickly moved them on our spreadsheet up into some other date. Even though I don’t know what I’m supposed to say about DesignCrowd, I’m just telling you my experience with DesignCrowd. It is that good.
If you’re out there and you’re listening to me and you need anything designed, really, these guys will give you a bunch of designs, like whatever you need. You just list what you’re looking for, include some screenshots you want. Link to stuff you like online and let them figure out how to do it. I don’t know how to make this stuff look good. I don’t even know how to express it. I do know what I need. They did it.
Try them. They’re giving every Mixergy listener–they’re already super freaking cheap. They shouldn’t even have to do this. But they’re giving us $100 off. I did it. I took the $100. It was super easy. It’s so worth it. Whatever you’re looking for–website design, logo design, business card design. Do I have anyone in my audience with business cards? Do you have business cards?
Nikolay: Yeah, of course.
Andrew: You do? I have business cards sitting in the freaking drawer. I never have an opportunity to use them. Usually if someone wants my address I just email it to them. But if someone out there needs business cards, these guys will send you a bunch of different business card designs. Frankly, just any design that you want, go to them. They will create more options than you thought could be out there.
They’re going to take your design to a whole new level because you’ve got, on DesignCrowd, lots of different–I got dozens of different designers, each one of them coming up with multiple options, at least what I could see here, coming up with ideas that no single designer ever could because they’re coming at it from different perspectives, from different parts of the world, from different experience levels.
All right. DesignCrowd, thank you so much for doing this. Everyone out there who needs a design should go check out DesignCrowd.com/Mixergy. It is such a good experience, 100% of your money back if you’re not happy with it. You set the budget. You get all these designs from them. I’m obviously like shot out of a cannon about them. I really think you guys should all check them out–DesignCrowd.com/Mixergy.
All right. Now, we’ve got an understanding, coming back to your story, Nik–I’ve got to take it down a notch from the DesignCrowd ad.
Nikolay: We’re luxury, right? You’ve got to kind of pace it.
Andrew: Right. I’ve got to go softer. But sometimes I get really lit up about stuff and it’s fun to talk about it. It’s fun that I’m in an industry where I still get excited about things. My dad was in the clothing business and I could never get excited about it. Even when I used to work for him on the weekends and after school, I would sell stuff and I was like, “Who cares?” People would come in and get all excited about a shirt. I couldn’t even work up enthusiasm to sell to them. All I could do is be like an order taker on the floor.
I always said to myself, “I don’t want to be in a business where I’m not excited about what I’m doing. That’s not the life for me.” Everything about this industry I like, like figuring out how to post stuff online I like. I like figuring out like the new technology that has nothing or not directly to do with the interviews like these wireless earphones, the ear pods, I’ve been excited about that. I’m excited about DesignCrowd and sponsors.
Anyway, I’m also excited about your business because I never would have thought that you could sell rings online. I bought a diamond ring for my wife when we got engaged. I thought you have to touch it. I thought you have to feel it. You came up with a few solutions for that need. Let’s continue with the story.
You decided, “I’m going to put it up on a website.” You start building the website and you go with your intuition. What did your intuition, what did your gut tell you about this business?
Nikolay: Well, initially we were just replicating what other people had done. My gut told me that that was going to make us like always catching up because these guys were a hit. So, trying to play their game with less resources or less people, being in the UK as opposed to the US, which is the biggest market, we were never going to win. We didn’t actually come up with the idea that changed our business on our own. Like anything, we took it out to the market and that idea came back through one of our customers.
So what happened to us is one of our customers came by and said, “Nik, can I have an engagement ring?” I said, “Sure, choose a diamond. Choose a ring. Let’s do it.” He said, “I don’t want anything you’ve already got. I’ve got an idea in my head and he brought out these papers and these sheets and he started us crazy ideas. His ring never ended up looking the way that he imagined. He wanted the Eiffel Tower sticking out. He wanted a DJ booth because they met at a club. He was an inventor and he read a lot about like 3D printing.
So we started working on this design for him just as a creative project. Very quickly we couldn’t make any money off it because we’d invested so much time. It took us a year.
Andrew: To make his one ring?
Nikolay: Every single stage was like right, we just learned where to find CAD designers. At the time it was on Elance. Cool. But the first 15 CAD designers don’t want to work with us or can’t understand the brief. So, it was about finding a good CAD designer. Right. We’ve got the CAD. Where do you 3D print these days? Oh, there are a bunch of 3D printers but none of them 3D print jewelry. We go through 25 places until you find the right 3D printer.
And then each stage was basically like that until it got to the point where initially he had told us he’s not in a rush and then it was one month to go and he’s like, “Nik, it’s been a year, man. I need my ring.”
Andrew: And you guys were able to get it to him in time.
Nikolay: We got it in time. It was our first custom design. His name was Piers. His lady, Jenny, she was a botanist or she was studying a PhD in botany or something of that sort. He was going to propose in the Amazon jungle. He wanted the ring to connect all three of those, kind of the mood.
So it was organic vines running down the side with diamonds in place of the flowers and the leaves. Yeah, he proposed in the Amazon jungle in a canoe on one foot. He came back and that’s when we first realized we were on to something because we started hearing other people tell his story and how exciting and how awesome it was that he designed her ring.
You always used to say he’d get brownie points from the girlfriend’s friends and a lot of hate from the guys because he’d set the standard and they’d all go, “I want a custom ring when I get engaged,” which I thought was really funny.
Andrew: What is the thing with custom rings? It’s becoming a thing. It wasn’t in the past.
Nikolay: Yeah. Well, you said something earlier and I didn’t want to interrupt you, but the main thing is because it’s no longer just guys designing the ring. That’s one of the biggest things that we didn’t know that we learned. We learned when we did Techstars in Boston, as with any accelerator, one of the things they do is challenge your assumptions. One of those assumptions is guys are proposing to girls as a surprise, the classical proposal that we all know from the movies.
The reality is that’s not happening and we’ve learned since then why that’s not happening. The first thing is that millennials are getting engaged–millennials are different, first of all. They’re much more collaborative. They’re much more emotionally intelligent about each other’s feelings, but they’re also getting married later. Initially when we saw this trend of marriage rates declining, we thought that’s because millennials aren’t getting married. That’s not true. What we’ve actually seen is they just delay it a little bit later.
By the time they’re making this purchase, they’re spending more and they’re collaborating because they’ve been together for eight years. They also know each other better, which helps with the custom design. You know, “I’m confident she’s going to like this because I know her style so well.”
So we sent out a survey and we asked our customers and we found that only 25% are guys like you, the complete surprise, she has no idea. Most of our customers either collaborate by doing the engagement ring together. Some, a large number have subtle hints, sometimes not so subtle. Then there’s a small part, about 15% to 20% where it’s a woman designing her own ring completely and saying to her boyfriend, “When you decide for us to get engaged, this is the ring I want.”
Andrew: Wow. Okay. I get that. Frankly, I would have loved that. I didn’t even know that was an option, that you can say to your wife, “You tell me what you’d like. So, before you did that, before you surveyed your audience, what did you think you were going to create?
Nikolay: We thought we were going to create another off-the-shelf company that sells engagement rings that are pre-made. It was a difficult time because it was not inspiring. It was not inspiring us. All we knew for sure is that this company, there was a demand for this because only 10% of the market is buying online and that’s growing really quick. The reason why that’s happened is because as you can imagine, people first started buying lower priced items online before they trusted the internet to buy a $7,000 ring.
So, while a lot of investors and people we spoke to would say, “Everything in ecommerce is taken care of,” we’ve seen the ecommerce of diamond jewelry and other luxury lag behind. So the trend to get into it, that was the time. That was the time to come in and differentiate yourself.
Andrew: I see. So, if I’m understanding you right, you said look, you didn’t notice this whole customization thing, but you did realize more and more ecommerce is going online and the part that’s the slowest to make it online is luxury, we have an opportunity here with luxury. I actually saw your site used to be called Rare Pink?
Andrew: I saw you did more than engagement rings at the time. You did earrings for a while on the website too, right? It was a more a luxury diamond site.
Nikolay: Yeah, absolutely. Another lesson that it took us a long time to learn is the fact that there are a lot of jewelers that are for everything. But as a startup, I think the goal is it’s hard enough to become good at one thing, never mind trying to become good at 100 things.
We just saw at this specific opportunity of focusing on the engagement ring–the thing about the engagement ring is that even though it’s metal and diamonds and design and an earring or pendant or wedding band is the same thing from components, the purchasing experience of an engagement ring is different from buying because it’s more emotionally charged.
It’s a higher price point. There’s more uncertainty because the diamond is often large, whereas a pair of earrings for your loved one for Christmas, far less investment in time and learning and also it’s transferrable. You can buy earrings or you can take her on a trip. But the engagement ring isn’t quite like that. For some people it is. Some people prefer to not get engaged, but for the most part, that’s like a rite of passage that men go through.
So, because this experience was so well-defined, the engagement ring one, we knew we could learn a lot about it, test and iterate and we want to become the best place to buy your engagement ring.
Andrew: I see. I understand why you’d want to focus there instead of going broad. I also understand what you’re saying is, “Look, we had an intuition that people just want to buy engagement rings online. We didn’t learn until we started talking to our customers that what they want is customization. Once we understood customization, then the business really started to take off.”
That’s a mistake I mentioned earlier. We think we understand. We think we can intuit and from experience we can decide things like what you said. You don’t sell earrings and diamond rings. Let’s focus on diamond rings and maybe later on expand to earrings. What you can’t get to without talking to your customers is the depth of the uniqueness of them, which is like there’s a strong segment of them that wants to create their own jewelry.
What I thought was interesting about where you took it from there is dude, this company Zapier is coming up more and more in conversations. You use them, like so many other people who I’ve talked to, to basically be your dev shop.
Talk about what–Zapier, for anyone who doesn’t understand it and I imagine most people in my audience do–Zapier takes data from one piece of software and moves it to another and back and forth. Now actually you can move it from one to another to another. It just connects all the software that we have online. What did you do with Zapier to help yourself get organized and to sell in the beginning?
Nikolay: It’s so funny with Zapier. I was using Zapier even before we started the company. I was one of the very early users. I had like the best account free of charge.
Andrew: Me too. I still do.
Nikolay: I gave mine up and then I came back a year later and I was like, “I can’t believe I did that.” Yeah. It’s not just about connecting services. It’s connecting them with certain rules. You always want to go, “Wouldn’t it be nice if. . .?” I’ll give a few examples instead of explaining it further. So the most popular one that we use now, the most popular two that we use now is basically–like one of the best ways to grow is obviously through PR and getting featured in blogs and so on, both from a referral traffic and from a link building point of view.
So how do we find inbound opportunities? Inbound is always the best. You don’t want to go looking for people trying to sell them your business. You want to find people who are interested in what you’re doing already. Obviously one of the most popular ways to do that now is #JournoRequest. Journalists and bloggers tweeting what they’re looking for and saying #JournoRequest and then it comes up. The problem is every single journalist is using it now. It’s thousands of requests like this a day.
So I made a little list that I followed a bunch of different journalists that were in our space. I made a little zap that said every time one of these people specifically uses the hashtag #JournoRequest, I want you to send it to my personal Slack channel with a little exploding fireworks and everything because I need a response to that straightaway.” And from that, we’ve been featured in Forbes, Financial Times, Telegraph, about to be featured in Virgin, hopefully, I sent my response earlier today.
Andrew: Wait, so it’s #JournalRequest? I’m doing a search for that. I don’t see anything especially useful here.
Nikolay: On Twitter?
Andrew: Is it journal or journalist request.
Nikolay: Journo, as if it’s a journalist, but journo.
Andrew: Oh, journo, got it. #JournalRequest got people asking for journals.
Nikolay: No, journo.
Andrew: Okay. “Looking for guest bloggers to write about tips, tricks of the blogging world or reviews. DM me for more information.” I see. “Looking for work with great brands this year, #JournoRequest.” Okay. Some of it is useful and some of it is completely not.
Nikolay: Most of it is not. But the only way to get the useful stuff is to follow the people you know are the ones that are writing for publications that you like. I don’t even know if that’s a big thing in the US. Maybe it hasn’t gone over the pond yet. But following the ones that you know aren’t going to talk about some nonsense and then making a zap that tells you as soon as they–it’s funny we use the word making a zap. It’s like a verb now, you know?
Nikolay: Just zap it. That was one that we did. Another one that we did that we’re really proud of is connecting a bunch of our different tools including our CRM, our emailing campaign, Google Sheets and our Geckoboard to create a Net Promoter Score automation. So, there are companies that sell you the service of gathering your Net Promoter Score. We were like, “I’m sure we can just build this ourselves.”
So we use Zapier to basically connect our CRM. It sends a little zap to our email marketing software which sends the, “On a scale of zero to ten how likely are Taylor & Hart to your customers?” The minute someone clicks on one of those numbers, it sends it into Google Sheets the results. Then we create a little formula that projects it onto the Geckoboard. That’s created a culture in the company of people really caring about the customer experience because that number is live on the screen.
So every time a customer gives like not a nine or a ten, that number goes down a little bit and everyone goes, “Why? What happened? Who was that? Who said they’re not happy?” which never existed in the company until we introduced this kind of full automation tool. People feel accountable to numbers on a wall. Nothing can make you feel accountable than your metric being shown like that.
Andrew: And you use Geckoboard for that?
Nikolay: Yeah, really cool company.
Andrew: So now we know how you started building the early version of your software and still to this day, you’re using Zapier. We know where you got your diamonds. We know how you understood what to create for your customers. How did you get customers though?
Nikolay: Sure. So, when I was saying in those days as a student what I was doing was a lot of affiliate marketing and kind of the million-dollar homepage type of stuff that we talked about briefly. What I learned from that, there was a guy called Ed Dale. I’m not sure how many people know him, but he was a veteran in the early days of online marketing.
He created something called the 30-Day Challenge. It was really cool. It ran for a few years. The idea was in 30 days, you’d watch his videos every single day. There would be a community and we’d watch it and be together on this adventure in the forums.
In 30 days, the goal was to make your first $5 online. He taught us all the kind of old school SEO, PPC, content writing, stuff that right now has been really well-documented. But back then, it wasn’t as easy. There were a lot of people selling you stuff online about how to do digital marketing. But he was the first that I remembered, like it was really high quality and it was free.
I learned a lot about SEO. When we first started the business, I started creating content with my team. We started reaching out with that content to various publications in our industry and slowly we saw traffic start going up, organic traffic because no one’s got money to invest into Google AdWords. We use Google AdWords now but it’s the most expensive sales we’re ever going to make and they’re getting more and more expensive every single day. So, it was mostly SEO.
Andrew: SEO? Do you remember some of–what was the name of the guy, by the way?
Nikolay: Ed Dale.
Andrew: Ed Dale. Okay. I think he’s still–EdDale.co, I think, is his URL.
Nikolay: Yeah, that’s him.
Andrew: So do you remember some of the early pieces of content that did well for you, that brought in traffic from Google?
Nikolay: Yeah. Again, everything is surprising. It’s not surprising looking back, but always looking ahead. So, one of the ones that was really surprising was we started not as a getting traffic idea, we started creating celebrity engagement rings. Because we’re doing custom, this was a really cool thing about what you mentioned earlier, this idea of still being excited about what you do. The thing about doing custom is every single day we’re having these new interesting inquiries. Just when you think, “How weird can it get? How interesting can it get?” Someone is going to surprise you.
So we said, “Let’s showcase what we can do.” Some of the things we can do is recreate celebrities’ engagement rings. So Blake Lively got engaged a year ago, two years ago, I don’t remember. But it was early on in the business and we created like this very, very long form piece of content which analyzed her ring, showed the poor man’s version, the average Joe’s version and her ring and how they compared. It was really like we were committed to this content. It was what we now call in the company and a lot of people call it 10x content. It was the best piece on Blake Lively on the internet.
In a couple of months, that was generating like 30% of our traffic. It wasn’t all converting, but that wasn’t the goal. The goal was to create some brand awareness and to get some links back to the site. So we started creating other celebrity engagement rings, and they’ve all worked just as well. So that was a little kind of interesting point.
It comes back to what Google always tells everyone. Create content for people that they really like and don’t worry about over-optimizing. We live by that now. It’s all about 10x content. It’s not about thousands of links. It’s not about having tens of thousands of pages with different keywords. It’s just about creating great content.
Andrew: Did you guys even create a video around this? You did?
Nikolay: Yeah. We did.
Andrew: Where you basically took a photo of the ring from her finger. You recreated it and you put it in a video where the ring is spinning so people can see it all the way around?
Andrew: I see.
Nikolay: Because you can’t see that on her finger. There are only limited photos. Since then, we’ve sold two dozen Blake Lively-inspired engagement rings?
Andrew: Really? So then people actually wanted to buy the same one?
Nikolay: Absolutely. It’s a beautiful ring.
Andrew: You know what? It really is. I didn’t know what to expect. I thought it was going to be one of these really gaudy rings with a lot of different things going on on it. It’s pretty simple. At the time your company was called Rare Pink. Why is that?
Nikolay: So, when we first started, we wanted to have a name that resonated with just something unique. Even then we were doing custom engagement rings. One of our colleagues actually pitched this to us. She came in. We hired her in New York. She came in when she came to the London office and said, “Guys, you’ve got to use the pink diamond as your symbol. And we used to put the pink diamond into every custom engagement ring on the inside of the band. We used to say it’s a little secret only the couple shared.
Andrew: Oh, really? So you would get a ring and only you and your spouse would know there’s another diamond inside. I got it.
Nikolay: Exactly. That still lives on with Taylor & Hart. We do it with a ruby now resembling the heart. There’s still a lot of symbolism around it. But yeah, that’s kind of the story about where Rare Pink came from. It was the brand mascot. The problem is with the name that very soon we started having people thinking that all we did was pink diamonds. So it wasn’t quite telling the story.
Nikolay: Or there was Blue Nile and then there was Rare Pink. We started thinking–we got advice when we are Techstars that the name didn’t quite have the kind of scalable luxury. We were like, “What are we all about?”
We’re hand-finished in Britain. We wanted something that would resonate with that. I mentioned briefly about the fact that much more of our customers collaborate. So, one of our mentors said, “You’ve got to use the ampersand. The ampersand is the symbol of these couples working together.” And you connected. The engagement is a connection of two people.
So we started having these random concepts of different ideas for the brand and finally, we wanted two words that resembled what we are all about and the Taylor sounds like tailoring, playing tribute to the sable robe, bespoke suit tailors but we’re doing that in jewelry and Hart, obviously it sounds like heart. It’s inspiration where all the custom comes from.
Andrew: But it’s two different names and there is no Taylor at the company. There is no Hart at the company. And it gives people a sense that maybe these two people created this company years ago so it feels dignified, traditional, long-lasting.
Andrew: I’ve got to come back to the rest of the story in a moment. First, I have to tell people about a company called Toptal. Toptal is the company that basically gives you the best developers, the best designers, the best MBA people that you can work with one on one or have as part of your team. That’s what they do. And the reason they do this is because–where do you live, Nikolay? What part of the country are you in?
Nikolay: In London.
Andrew: Oh, you’re in London, right. Okay. You mentioned it. I’m in San Francisco. I’ve got a friend name Rich. He wanted to work for one of the big guys. He actually wanted opportunities to work with all of the big companies–Apple, Facebook, Google. The guy every day after his job went and studied the languages that he would need to, to work with them but also more importantly what is it like to get a job.
He brought people in who went through the Google hiring process and had them tutor him and ask him the questions. He went through the Facebook process. He went through all of this stuff to be prepared because that’s the kind of person he is. Then he went and applied for jobs at all these companies we all know of. The screening process was intense. He went through it because he just had to win, even though he didn’t want a job necessarily at every one of them, he knew the one he wanted to work for. He wanted to work for Google, I think.
He’s just so competitive. He had to like master all of their recruiting processes and get recruited by each one of them because that’s who he is. And he did. He got job offers from all of them after all that work and then he picked Google and now every day he has to get on the freaking Google bus and take a drive down for about an a hour to an hour and a half each way.
And lucky him, he got what he was looking for. The thing is that there are a lot of smart developers like him who really are obsessive about getting things right. Nobody will even know the hard work they put in to the code that they do, but they have to because they’re that obsessive about getting things right.
And they don’t, though, want to work in Mountain View the way that my friend Rich does. They don’t want to go work in Cupertino or in Palo Alto and all these Silicon Valley addresses and spend an hour on the bus each way. They want a life that is meaningful and they want a job that challenges them.
And the people at Toptal recognized this. They said, “Let’s give these Googlers and Facebookers and all these other people–and Apple. . .” I don’t think there’s a name for Apple engineers, is there? What are they called, like Apples? Let’s give all these kinds of brilliant people a home.
We’re going to put them in our database of smart developers and if somebody needs to hire a smart developer, they can come to Toptal, ask for the kind of work they’re looking for, tell them what their company culture is like, tell them if it’s a short project, long-term project, if they need a team of people or just an individual and Toptal will boom, match them up.
That’s what it’s like at Toptal. I’ve worked with them. I love them. They’ve done wonders for my site. I urge anyone out there who’s looking for this level of developer. You will see the good developers everyone says are ten times better than the bad ones. It’s more than that. They can out-think the bad ones to a level that they’re not even on the same chart. You know what I’m talking about, right?
Andrew: That’s the idea behind Toptal. If you want to check them out, I urge you to not just go to their homepage but go check out Toptal.com/Mixergy. Top as in top of the mountain, tal as in talent, when you go to Toptal.com/Mixergy, they’re going to give you 80 hours of Toptal developer credit when you pay for your first 80 hours and that’s in addition to a no risk trial period of up to two weeks.
People in my audience love them. I’ve gotten great results from them and I urge you to go check out Toptal. In fact, if you want an intro, just email me and I will make an introduction to Toptal. It’s Andrew@Mixergy.com. I’m telling you, you’re going to get good results. If you’re not, you let me know and we’ll work it out. But people have praised them so much that I’m so happy that we get to talk about them a lot more in 2017.
All right. Toptal.com/Mixergy. Frankly, Nikolay, you might want to write them down, they’re going to blow your mind with what they can do when you’re ready for them.
Andrew: All right. You’re starting to get all these customers in. Do you ever raise any money or are you still bootstrapping the whole thing?
Nikolay: So we raised a bit of money. I know in the US it’s been quite popular recently and quite topical, crowd funding. But actually in the UK because the regulation was relaxed far sooner than it was in the US, it’s been quite a popular way of raising investment for a few years. I’m not talking about Kickstarter which is basically selling products, I’m talking about like pure equity investment.
So we used a platform called Seedrs, which is like one of our amazing partners that we work with. Basically we raised investment from about 200 different investors and our first $250,000 came through that. So I’d say that was a bit of friends and family with a little bit of seed money. But the platform allowed our friends and family to invest in a structured way without us going around and collecting bits and bops from everyone.
So that was where we just kind of started. It was just getting some of the people that knew us and the network and a few new investors too to back the idea. We already had a bit of revenue at the time, but not a lot, but more than what a large number of other companies have at that stage. Then following that, not last year anymore, but at the end of 2015, we raised our seed round. We raised $500,000 from a couple angel investors, one VC out here in Europe.
That’s when we really started to kind of take some [inaudible 00:51:18], increase our marketing budget. That’s when the business started changing and that’s when we realized as well that it might be time to rebrand if we’re going to scale this up.
Andrew: Let’s talk about Seedrs for a bit and then go into how you got the other angel investors and then what you did with the money. Seedrs is S-E-E-D-R-S, right?
Nikolay: That’s right. Yeah.
Andrew: Seedrs. What did you learn about getting people to invest through Seedrs, about recruiting them?
Nikolay: So I talk on this regularly, actually, because it’s such an interesting experience. For us, crowdfunding is a little bit like something that I think we can do it for many different companies over and over again. You know when people become like so good at something–I’m not saying that we’re experts. We’re not to 10,000 hours. But there are a lot of things that once you learn the first time, you can replicate them and then you can have repeated success.
Those things, for example, are–Tim Ferriss talks about this in a blog post really well. I learned a lot of things from him. Some of those things are preparing in advance. So, for example, the quality of your video, no money should be spared on that. That’s a really big part. The most important thing really was having about 30% of the investment committed before launching is critical.
In fact, there was a metric that Seedrs had. I believe they no longer have this metric. But at the time, they had it and it was like the big metric they taught everyone. They said, “If you come to our platform with 30% already committed, we have a zero percent failure, or in the positive form, 100% success rate.”
So they almost said to you we guarantee you’ll raise money if you come with 30%. I think it wasn’t even 30. I think it was like 28 or 27. It sounded quite low. It sounded–we wanted to raise $250,000 for our first round. All we needed to come in was with like 65 or something. I think that was really encouraging.
So that was an important lesson. The other thing that I learned was it’s hard enough raising money from a few angels and a few VCs, but having 200 people talking to you and asking questions, there was a period of time where it was a full-time job. So, for any small company founders trying to raise money and thinking they can continue with the same momentum, it’s not quite the case. In most cases, the CEO needs to acknowledge that for a period of time, his or her role in the company will change.
Andrew: Why? What did you have to do when you were on Seedrs?
Nikolay: So it’s quite simple to get on there. You’ve got your pitch. You’ve got your value proposition, your financial metrics and video. But then what happens is that you have to start outreaching to people that having invested in similar consumer retail brands, outreaching to bloggers who talk about investment opportunity, so there’s a large number of bloggers. There’s this whole kind of marketing campaign that’s not even marketing for your core business.
The good thing is that you don’t expect is how much comes back from all of that. So, your investors become customers. Your investors become brand ambassadors. Who was it that said that if you get to a thousand true brand ambassadors, that’s the first goal you need to have. So, if you’re crowdfunding and you have 500 investors, these people are passionate about it. It wasn’t until we had an investor event and asked someone why they invested 10 pounds. I said, “What was your motivation?” She said to me, “It’s really cool to tell people that I’m an investor in a diamond business.”
So the motivation behind that spectrum of investing from $10 or £10 all the way up to $50,000 is quite different. You have to understand that some people are investing not expecting a return but have different motivations. People at a higher level have obviously very much investment motivations.
Andrew: Were they sending you customers too?
Nikolay: Absolutely. We created a little special discount just for investors and incentivized them in that way just to say thank you. Yeah. They continued to come back.
Andrew: How’d you find your more traditional angel investors?
Nikolay: The best way is through your network. It took me a while to figure out some of the hacks, as you can maybe say for investment. So, for example, I didn’t realize that my lawyer could introduce me to VCs because that’s an obvious one, but again, not obvious at first.
Andrew: Why could your lawyer introduce you to VCs?
Nikolay: Well, he’s our lawyer that helped us to close our round. So he’s doing a lot of rounds with fund and investors.
Andrew: Got it.
Nikolay: That’s why obviously it made sense. AngelList was a godsend. We used it a lot to find similar investors. Then I’d use Conspire to see if someone I knew knew that person, which is also a great tool.
Andrew: How does Conspire work?
Nikolay: So, as far as I know, Conspire connects your LinkedIn, your AngelList and your Gmail accounts if you obviously use Gmail. Through those three systems, it understands the strength of the connections between different people.
Nikolay: It knows, for example, if I want to speak with you and there’s someone in the middle that you’re really good friends with them and I’m really good friends with them, so it would tell me that’s the best person to reach out to if I want to chat with you.
Andrew: I see that–were you also in Techstars?
Andrew: When did you get into Techstars?
Nikolay: We did that last year. We were the 2016 cohort in Boston.
Andrew: So, you came into Boston. This was after you started getting customers, though, right, after you figured out your market, wasn’t it?
Nikolay: Absolutely. So Techstars Boston is an interesting accelerator because at the time, they had a track record of attracting slightly more mature companies. So all the companies in our cohort had traction. In fact, a couple of them were even far ahead of us in terms of traction. So the structure of the accelerator wasn’t so much about validating poor ideas. It was about validating some assumptions that were holding you back from being able to scale.
Andrew: Like what? What are some for you?
Nikolay: So I mentioned earlier that one of them was about understanding the customer better and it was about this idea of who is the customer, the persona and we were saying it was a guy who was going to propose as a surprise. The minute we realized that women were that involved, our entire thinking about our marketing strategy stopped being so guy-focused and it became two different angles. So we have these woman personas and we have these guy personas. We need to treat them differently.
Yes, okay, some of these ladies didn’t go on to put their credit card in the checkout page, but can we create systems that tell us how they connected? So, in our CRM, we started having not just a single customer. We’d have the customer and their partner and we’d connect them as best we can. It’s not always easy.
Andrew: What’s your CRM? You guys are using Insightly?
Nikolay: No. We use Salesforce.
Andrew: Salesforce. Okay.
Nikolay: Salesforce is a bit, I think, for larger companies. But we’re not going back. We’re really happy with the reporting that it provides, but we don’t use any of the advanced Salesforce features, to be honest, because they’re too expensive. What we’ve done is we’ve Zapiered everything into Salesforce. So, we use Salesforce with its core reporting and CRM but then everything is startups that do things better than I think they do.
Andrew: Wow. I love that you’re doing that. And you know what? I can see why it’s important to talk to your customers because your data would have completely misled you. You would have thought that women are browsing and wasting your time, when in reality what they’re doing is teeing up a customer for you and they need to be treated that way.
Andrew: How do you know if it’s a woman who’s coming to your site versus me?
Nikolay: So here’s the interesting thing about our business that happened also during Techstars. There were a few things that happened. So one of the things we learned as well is we gained the confidence–that’s the main thing about the accelerator is that once you’re in a place where you’ve tested some assumptions but you’re moving slower than you’d like, it gives you the confidence to make some of those decisions quickly. One of those decisions was dropping the ecommerce business model. That was like a major one.
What I mean by that–on the old platform just before we rebranded, you could go and you could choose a ring, add a diamond and check out and you could buy it. That’s the way we thought we’d scale, touchless, beautiful. Customers do all the work. The reality was when we dug into the data in Boston, we found that only five percent of customers actually did this.
Andrew: Meaning they came to the site, clicked and bought.
Nikolay: Without us knowing who they were.
Andrew: And then what did the other 95% do?
Nikolay: The other 95% would come on to the site, have several visits and at some point make an inquiry. At that point, they become a lead in our CRM and then they go through a sales process of education. The problem is because some of them came so late, they’d already received so much guidance and education. It wouldn’t necessarily be what we’d recommend and we thought some of it was ill-advised as well.
The jewelry industry is a bit notorious about these things. You have jewelers hating on other jewelers, things that we would never do. But it has that kind of side to it, where not everybody is giving the same advice, whether it’s on certification of the diamond or the sourcing of the gemstones or whatever.
For us, it became really important to capture the customer early so we could take them through a process, educate them. We decided to do that, we’re going to drop the ecommerce part and we’re going to become lead gen and we’re going to develop a killer sales process. We’re going to use the best systems for managing that process and suddenly, we are a tech-enabled consumer brand, but really all that technology is helping us have an efficient and effective sales process but we’re not touchless anymore.
And what we found–and this was the thing that we needed to find because otherwise this whole assumption would fall flat–is that in the unit economics of our business, adding the cost of service, we still increase the conversion rate so much that the gross profit we get at the end would still be better than we got when we didn’t have service, if that makes sense.
Andrew: Yeah. And that explains why when I click on your site on design a custom ring, there’s a button that says start now and when I click it, I don’t get to start now. They say, “We’re going to have a personal consultant contact you.” That explains why some people might have even heard every time I go to your website, there’s like a little chicklet sound. That’s Intercom that you guys use that tries to encourage me or does encourage me to get in a conversation with someone from Taylor & Hart.
That kind of thing, I get it now. So that’s your process. It’s not come on the site and start buying, it’s come on the site and start talking to someone, which frankly, again, going back to my own experience with this, I wanted to talk so much. I kept going back into the store. I wanted to understand.
Nikolay: Right. And that’s where it came from lessons like that as well. We had these people who would have 100 emails backwards and forwards. We try and automate a lot of it, right? So one automation we have now is that we have this kind of guidance and inspiration automation, which has got no sales linked to it at all, but it’s the seven things that we’ve realized customers most care about.
We need your email to be able to educate you on that, otherwise we expect you have to find it on our site. We can try and show you and give you a lot of cues to where it is, but really, that’s one thing that’s been really useful to us because by the time customers come, they already have a good idea of what’s going on in the process and so on.
Andrew: The thing that I mentioned earlier that I really love about your process is that you also will say, “Look, if there’s a guy like Andrew who wants to propose but is not sure which one he wants and how to design it,” what you’ll do is you’ll send me a proposal ring that I get to use to propose and then I get the actual ring. Am I right?
Nikolay: I’m not sure if someone else has already coined this term. It doesn’t feel like the kind of thing we came up with, but we hadn’t heard of it when we did. It came from this hesitancy of this other 25% that is designing on their own as a complete surprise. It’s this kind of trade off. You don’t want to trade off the surprise for the confidence that the ring is the right ring. In the best case scenario, you’d have both.
Then we did a session, a UX session with a couple of people from the Techstars cohort that were in the market. We discovered that the surprise was an important part. They wanted to have that kind of photo beautiful surprise where she has no idea, the family and friends are there. By the way, Americans do proposals very differently from in the UK and in Europe. You guys are like fireworks, everybody needs to know. It’s a little bit more conservative. So it was really good to be there to learn the different cultural aspects.
So they want that surprise, but at the same time, they want to have the right ring because we heard these horror stories of people like hating their ring for years and not wearing it or not being confident to say anything because the guy spent so much money and so on. So the idea to create what we call the proposal ring is like the best case scenario, in my opinion. I try and sell this to every customer. Some guys will be like, “No, that’s not me,” and some guys are like, “Thank god you told me about this.”
So the idea is you design the ring. You do what you think she’d like. You go get those brownie points for doing the work of designing the ring. What we’re going to do after that is if it’s a complicated design, we’re just going to print it off on a really nice card with the designer signing it off for you. But if it’s not too complicated, we’re actually going to make it for you and we’re going to make it in silver. We’re going to set it with the real diamond, the diamond that you’ve bought.
Now, the thing that I tell the guys here that hopefully gets them over the hurdle is the good thing here is you’ve also locked in the price because most of the cost is the diamond and you’ve already bought that. So, later on, when you come in for your consultation, it’s not going to be a question of, “I bought an $8,000 diamond and now you’re looking at a $16,000 one,” because you’re going to say, “We’re going to design a beautiful ring for you and it’s going to be around this diamond you’ve already bought.”
So the idea is you propose with the proposal ring and then you tell your loved one that this is the design, this is what you’ve done, do you love it? If you do, let’s go in for a consultation. We’re going to also check her ring size, another big benefit to this because most guys have no idea and they try and do cheeky things like checking it with a string while she sleeps, which we always say don’t do. She’s going to catch you.
Andrew: Or taking another ring and bringing it in, which actually doesn’t work because they don’t all fit right.
Nikolay: They don’t right. If she’s not wearing it on that hand on that finger–even if she wears it on the other hand, most people don’t know that we’re not symmetrical. So our right hand is about half to one size bigger that our left hand per finger.
Andrew: Yeah. I had a problem where actually I got it from Tiffany because I knew that they were a–I just knew the brand. But in reality, if I knew this existed, I would have done this. The nice thing about them was if there was a problem, I could just take it in and they could fix it. So they resized the ring after I bought it because I definitely got the size wrong. They did stuff like that. I just had no idea this thing existed. I’m thinking, “Maybe I need to divorce my wife and go marry someone else so I can try this.”
Nikolay: Or you can just do a consultation.
Andrew: I once made a joke about that in an interview. You know how much she really was hurt by that? I should not say that. All right. But I dig what you guys are doing. I really admire how much you’ve grown and the process behind it. I like hearing your methodology. Why don’t we close out with one last thing since I promised it to the audience? I said that we’d talk about what you did with marketing after you raised money. Can you give me one thing that you did that helped grow the business after you raised money?
Nikolay: Yeah, sure. So probably the most interesting thing that we’ve done and it was really important is–it’s definitely the hardest thing I’ve ever done in marketing because if you are a digital product, a service or a SaaS business or something like that, then your gross profit analysis per person is very easy to calculate. But we are a manufacturing part of the business. We’re not even a drop shipping business with the same SKUs.
So we’ve got this situation where we’re spending a lot of money on customer acquisition, on Google AdWords and affiliates and other channels. Then we’re making a sale and then we’re not knowing what’s working and what’s not. We know in aggregate it’s working. But how do you scale up a marketing channel from $5,000 a month to $100,000 without having the confidence that that’s working.
So return on ad spend is a metric that has been very aspirational for us. We’ve wanted it but we’ve never been able to have it because it required two things. The first thing is on the marketing side–I don’t want to get too technical, so interrupt me if I do, but on the marketing side, attribution is a pain in the ass for us.
Why? Most companies that sell something ecommerce, you’ve got a guy coming, maybe he comes back two or three times within a 30-day period and then you buy and it’s easy. You know that the first click was Mixergy because you mentioned the product, boom. A sale was done. For us, we’ve got people who are designing a ring for a year sometimes.
Nikolay: They come into the website 40 different channels, on their phone–by the way, 65% of our users are on their phone, but they’re not buying on their phone. They’re buying on the desktop. Attribution is a challenge.
So fixing the attribution of figuring out where inquiries are coming from was a pain in the ass and what fixed it was finally getting some good systems in like HubSpot. HubSpot is a really good system for attribution. So, if anyone is having their problem, I highly recommend it. And also making the inquiry happen very early because then what happens is on the second or the third visit, we’ve got that email, it connects, now we have a user as opposed to a random visitor.
Then on the supply side, figuring out how to connect the individual gross profit per product to that so that we can, at the end say, “From this channel, we made this amount of profit as opposed to sales,” this was like a complicated business problem we had to solve and we were just too small to figure it out. We’re finally there and it’s really helped with our business because we’ve just gone, “Wow, look at that affiliate partner.” We did that last year in December. We’re like, “What is going on? That’s like 10% of our revenue. Who knew?”
Get on the phone with them and say, “What would it take for us to rank number one when you search jewelry this, this and this.” Then they told us. They were like, “Yeah, increase your discount.” And we’re like, “Increase it. What do you want?” Yeah. It’s become like a really–and we would never have known. We just see affiliate. That’s great. We’ve got 15 affiliates. Who’s doing that? We don’t know. But affiliate’s working. Keep going.
So I think being able to identify individual wins and linking them to profitability and then scaling them up as much as possible is probably one of the hardest things for growth. Being able to figure that out was a massive benefit for us.
Andrew: I can understand that. Yeah. You know what? Even as you said it, I can see how tough it is to maintain it, but there are aspects of it we can all learn from. The easiest thing is get that email address fast so at least you know where that person came from and then if they’re messing around on your site for the next year, it doesn’t matter if you haven’t recorded it, as long as you know at the end who that person is, you can tie it back to the source.
All right. For anyone who wants to check out the website, it’s TaylorAndHart.com. You guys also own the .co, from what I saw, right?
Nikolay: I don’t think so, but we have all the misspellings of Taylor & Hart. So, you should be able to find it no matter what you do. But it’s -ay and Hart is without the E. It’s the British names.
Andrew: The reason I thought .co, I was looking to see where your referrals were and it looked like that was sending you traffic, but no. That’s not up. All right. TaylorAndHart.com. It’s a really interesting site from a marketing point of view to take a look at and I’m really grateful to you for coming here and talking about how you built the business.
The two sponsors you guys heard me talk about, the first is the one that’s designing a really great cover art for me for iTunes and other platforms. It’s called DesignCrowd. Get a huge discount from them. Go to DesignCrowd.com/Mixergy. I liked how they used my photo there. The second is a company that will help you hire a great developer. Really, see what a great developer can do for your business. Try them out at Toptal.com/Mixergy. I’m grateful to them for sponsoring.
Thank you so much for being here.
Nikolay: Andrew. Thank you.
Andrew: Cool. Bye, everyone.