Andrew: Hey there, freedom fighters. My name is Andrew Warner. I was doing this so the camera can pick up on my skin tone. That’s why the hand was up in the air a little bit longer than usual. My name is Andrew Warner. I’m the founder of Mixergy.com. It is home of the ambitious upstart.
You know, when I first went online, I remember talking to someone and saying, “I see your website. How are you making any money with this thing?” And he pointed me over to an ad for One-and-Only and he said, “That thing right there. They have an affiliate program. Anyone can sign up for their affiliate program and if they send a new member over to One-and-Only, the site gets a commission.” I thought, “That is amazing.”
And then I started looking around the Internet and I would see One-and-Only it felt like everywhere. It was an online dating site that was eventually sold. Today I get to talk to the founder. His name is Will Bunker. Now, after having sold the business and moved on, he is running an angel fund called Silicon Valley Growth Syndicate.
I’m so proud to have you on here, Will. Thanks for being here.
Will: Great to be here.
Andrew: Were you a gold miner before you started One-and-Only?
Will: I worked for a gentleman that had bought a gold mine down in Nicaragua. Every two weeks, I would have to get on a commercial airliner with $250,000 worth of semi-refined gold, fly to Miami, hand it off the Brinks guys, come back, get out $50,000 of cash in Nicaraguan money, which would be this huge box of money, sleep with it under my bed and take it out to the airport in the morning to send it to my boss.
Andrew: Was this legal?
Will: Yes. We declared it up front. That was the part that worried me the most. I would show up the airport and they’d go, “Senor Bunker, where’s the gold?” They knew I was going, how much I was bringing, the whole thing.
Andrew: So, the idea was it was a mine in Nicaragua, but you would bring gold to Nicaragua?
Will: So, I worked in the capital and ran the logistics and the money side of it. So, the goal would come in and then we would have to fly to Miami so that we could get it refined in the US and sold. So, I would do that and then make sure all the money and supplies got back out to the mine. So, I was so nervous and I was having panic attacks because the average salary was $100 a month. So, I’m carrying like 10,000 years’ worth of salary around. It was pretty terrifying.
Andrew: Yeah. I get it.
Will: So, starting my own internet company seemed very low risk compared to that.
Andrew: How did you even hear about the internet?
Will: When I was in Russia, I lived there for two years and a Usenet came out and I remember thinking, “Anything that lets you communicate in Russia must be damn good technology.”
Andrew: And you just said, “I want to build a business there?” Or did you say, “I want to see how I can communicate with others around the world?”
Will: No. I just said a technology change this fundamental, there’s got to be a great way to start a business. Dave Kennedy, who’s my co-founder, the way we came up with it was AOL was the largest “internet company” at the time.
Andrew: And you put quotes because they weren’t getting people online, they just had this own little internet of their own.
Will: They were experimenting with it a little bit. They would sort of let you go online.
Andrew: I think ’93 they opened up Usenet. I just happened to be reading a book about it and the date sticks in my head.
Will: So, they generated revenue by charging by the hour. If you got out their FCC docs, 50% of their revenue came from chat. If you got on chat, everyone was trying to get laid. So, we said, “All right, if half the revenue from the largest company comes from this motivation, then that ought to be a good business on the internet.”
Andrew: And how did you guys meet, how did you and Dan Kennedy? Did I say Dan?
Will: So, prior to that, I had tried to put together an internet service provider. I had reached out to people running bulletin boards all across Texas to look for content, to put on my “access service.” He happened to be running a really cool bulletin board doing online stock trading simulation. So, we just hit it off. We stayed in touch. I came back from the gold mine and I said, “Well, let’s just figure out what we want to do on the internet.” And that was what we came up with.
Andrew: I called him Dan by accident. I should save Dave Kennedy. What were some of the ideas you were kicking around before you hit on One-and-Only.com?
Will: Well, my mom wanted me to start what would have been eBay, but I couldn’t figure out how to make money with a bunch of antique dealers. I figured that the sex drive was easier to tap into. Plus, the newspaper industry made a tremendous amount of money off personals. So, we just went down that path. Once we hit that, we stuck with that for the next five years.
Andrew: How did you know that the newspaper industry was making so much money off personals? They didn’t break it down.
Will: Oh, yes they did. They had a trade pub magazine. Because newspapers are monopolies, they would talk out in the open. Basically the articles say if you own a newspaper and you don’t have personals, you’re an idiot. It broke down the business model line by line and we just went, “Well, holy shit, this ought to work.”
Andrew: Was this just fun reading for you or was this your research?
Will: We were actively trying to rationalize starting a business on the internet.
Andrew: Got it. So, this was your way of understanding, “How does the offline world work and what can we do to bring some of that online?”
Will: Right. We said, “Okay, AOL is driving revenue from this sort of motivation. Newspapers are monetizing this at a higher rate. If you put it on the internet and you connected it to a database, that ought to be a better model.”
Andrew: Okay. So, you weren’t a developer. Dave was a little bit technical. Who put up the site? Was it either of you?
Will: We drew straws, but I lost. Initially, we just put up HTML. The form, it was an HTML email form. So, it would pull up your email client and just mail it to us. And then we would hand paste it and then upload it back on the internet. About two weeks into it, we went, “This is too much work. This is never going to work. We’re going to have to program this.”
It was pretty awful. Was it NaviSoft who got bought by AOL? They had the first web server that would connect to a database. But it ran using TCL, which is a god awful language to try to program a web server in. So, I had to learn that and then rewrite it in Microsoft ASP when it came out.
Andrew: How did you learn how to code?
Will: We only raised $90,000. It was the total capital we had. So, literally, I could hire someone. At that time, people charged enormous sums of money to do this kind of work. It was like, “Well, we could hire a consultant for $20,000 or I could read this $40 book,” and only one of which I could afford to do. So, I read about 100 books that first year.
Andrew: I’m looking at earlier versions of the site and I see something called Web Media Ventures. That’s the name of the company.
Will: That was our LLC.
Andrew: And I see on the bottom of one of the pages a Cupid’s Network Affiliate. What is that?
Will: So, that was probably one of our earlier attempts to see if we could monetize by using someone else’s network. And then we got into doing the affiliate thing ourselves. That was 80 percent of our revenue by the time we sold it.
Andrew: You told our producer that the first version of the site was awful. I’m looking at it. It’s pretty typical of what sites looked like at the time, wasn’t it? Or do you feel like it was extra awful?
Will: It was pretty bad. An accountant designed it and an engineer did the layout. So, it was pretty rough. We figured if that could actually generate–if people use something that bad, then we were on to something. I’m still a big believer of you’re almost better off not having a perfect product because if you don’t get demand, then you’re solving a problem that’s probably not a good startup problem.
Andrew: I see. If you’re solving a really good problem, then people must need it so badly that they’ll go through an ugly website.
Andrew: And if you have a pretty website then maybe what they like is the pretty site and you’re not showing that they’re willing to go through–how would you say it?
Will: If you have to be perfect in order to get someone’s business, then it’s large company idea.
Andrew: You also said, “What moron would put a pic on a site to get a date?” So, you felt like it was all going to be text like the personals?
Will: No. I’m from a very small town. I was shocked people would write about themselves and say they needed a date. That blew my mind. So, the first hurdle was actually believing that people would do this activity because it seemed insane to me to say, “My name is Will Bunker and I really need a date.” The people who took that leap of faith in the beginning were true early adopters in my opinion.
Andrew: You charged for the site. That was unusual back then.
Will: Yes. From day one we charged the first day we were in business. It took us a week to make our first dollar.
Andrew: A week. How did people pay you? How did that come in? By check? By fax?
Will: It was worse than you can imagine. Because we had looked at the 900-number industry, the only way you could respond to an add was to call a 900-number and get charged, leave a message and hope they would come and check their message and pick it up. So, it was atrocious.
Andrew: I see it here. Here is a personal ad. Headline, “Wipe that smile off your face little man. You’ve never seen…” and then it says, “You’ve never seen a woman like this before. Get a finger out of your nose. Go get me a mushy card, some flowers and candy. Get me a card with a rainbow or unicorn on it. That will get things started off,” etc. And if I want to contact this person, she is in Baltimore, Maryland, United States. The mailbox that I would punch into the phone is 73626.
Will: Yes. So, we were doing 900-numbers. You could call at 12:30 at night to find out how much money you made. So, I sat up every night waiting to call in to see if anyone had actually used it. I remember a week in, we got our first dollar. I was just like, “It’s going to work! It’s going to work!”
Andrew: Where did you raise the money to do it?
Will: Well, initially, we put up the first $2,000. That got us enough profiles that we knew that it would cost $5 in advertising to get each profile. Match had 20,000 profiles. So we raised $100k from the guy I worked for. He kept going, “Gosh, I wish I had an internet business to invest in. Man, I wish I had an internet business.” So, at some point I said, “Well, let me show you what we’re doing.”
Andrew: I see. You knew your cost of acquisition at that point?
Andrew: What was your cost of acquisition before you discovered affiliate programs?
Will: $5 a profile.
Andrew: But that’s the revenue. What was the cost to get that?
Will: No, no. But that was how much advertising we had to spend to get enough traffic for someone to be crazy enough to put their profile up.
Andrew: Ah, I see. And it was $5 to be a part of it?
Will: We went out and took out banner ads.
Andrew: Got it.
Will: And we paid per click and it added up to about $5 for every person that would show up and put their profile on.
Andrew: I see. So, I got that wrong. It wasn’t that you charged $5 for the site. It was it cost you $5 to acquire a new user. Once you acquired them, what did it cost to call the 900-number?
Will: So, the initial monetization was so–it was aces to get a visitor to the site. They monetized at 0.001 penny. So, one-tenth of a penny was the revenue we made off of them. So, our hypothesis was that this would increase with density of profiles. So, the pitch to the investor was, “Give us enough money. We will track the revenue as we get more profiles. If it starts going up linearly, keep putting money in until you reach $100,000.”
Andrew: You mentioned Match.com. Gary Kremen founded that site in ’95. You founded yours a year later. How much of his model did you copy? It doesn’t seem like any.
Will: I think they got to the subscription model sooner than we did. They did not do affiliate stuff at all. Probably the biggest mistake–now, he was going for a branding play. He raised $2 million, which when they went to raise–it takes more than $10 million to build a national brand–when they went to raise it, the VC kept pulling the plug on them and sold it off. So, he was very brand-conscious. But I feel like the biggest mistake he made from a monetary point of view was the free two weeks. So, we had a very elaborate A/B testing system that we built almost from the beginning. I can tell you for a fact free two weeks costs you 50 percent of your revenue.
Andrew: Wow. What did it do, the elaborate A/B testing back in the days where there wasn’t an Optimizely?
Will: We basically built our own framework, tracked it all. We had it down that every nickel we spent, we knew what the yield was. Every feature we knew–chat, if you had in-system chat, that increased revenue by 15 percent. If you added photos, that increased revenue by 30. So, we would just A/B test every feature to see what should we be spending our time on.
Andrew: You know, it seems like this comes up a lot that there’s new technology always coming up and people who want to capitalize on it need to find a way of thinking about it, right? So, when the iPhone comes out, you want to figure out how do you create apps for the iPhone? Do you bring back what was on the desktop to the iPhone? When the watch comes out, do you bring back the understanding you have from phone notifications to the watch? That challenge is really tough. How do you think about it today now having gone through building a site which basically used almost exactly what was in the offline world?
Will: Well, it was very different in that you could have unlimited inventory. So, you didn’t have to be picky about who was on the site. You could allow people to search and sort it in a way that a newspaper couldn’t. But the way I think about it is every time there’s a new distribution channel or new medium, all the old business models are going to get moved over to that new medium because there will always be new things discovered that you couldn’t have done before, therefore this is a new behavior.
But if you take an existing business model like, let’s say, people want to meet each other and they’re lonely and they want dates. Guess what? That’s been around probably 200,000 years. I don’t think it’s going to go away when the iWatch comes out.
Andrew: I see. That goes from the newspapers to the web to the iPhone with Tinder and if the watch is a hit, then it goes to the watch. If Google Glass is a hit, then it goes to Google Glass and that model just goes everywhere.
Will: Because you’re talking underlying it all, this basic monkey behavior. So, if monkeys like to do it, it migrates to every technology that monkeys use.
Andrew: But you still need to figure out how the monkeys use the new technology. Tinder and Match aren’t the same and One-and-Only was in the beginning. How do you figure out what the new interaction mechanism will be?
Will: The funny thing is is Tinder is Match.
Andrew: Right, you mean owned by the company behind match, Sam Yagan in charge.
Will: Yeah. The guy pretended he did a startup. But the point is valid in that you have to figure out what’s unique about that interface. Well, the screen is really small. So, you probably only need a picture. They’re not going to read a lot of text. It has a very intuitive way of interacting with it. Now, the funny thing is is interesting. I know this because of a bunch of a dating startups. In the old days, you needed about 400 profiles per location to get your critical mass. That’s because it takes you longer to consume the content on the web browser. But if you’re on Tinder flicking girls back and forth, you need about 4,000 ads.
Andrew: I see. How did you know that it was going to be 400?
Andrew: How did you know that it was going to be 400?
Will: We didn’t. We just found out by plotting out the monetization as we got more and more density. That’s where it leveled out.
Andrew: You bought ads on chat rooms. Why did you buy ads at first on chat rooms?
Will: Because no one else would.
Andrew: Why didn’t people buy ads there?
Will: Well, because someone might type in really bad words. So, brands were terrified of being next to a chat room. They probably still are. People are pretty raunchy when it comes to user-generated content.
Andrew: You know, I never understand that, though. I guess brands are looking for the prestige of the page that they’re on to transfer over to the brands. But direct marketers, people who want someone to come to the site–
Will: They don’t care.
Andrew: I see. They don’t care. So, that worked out for you. Then the widget–
Will: You didn’t see a Procter & Gamble advertising on Chatroulette, did you?
Will: And you’re never going to. So, yeah, we went to kind of the bottom feeder area and just bought up all that inventory.
Andrew: So, I do remember there was some kind of widget, but I don’t remember exactly what it is and I can’t Google and even find it. What was the One-and-Only widget?
Will: So, we made it to where you could co-brand and slice these personals up any way you wanted, have it on your site. So, if you had a site that was geared toward African American people in Chicago, then you put the widget on your page and you would only get African American people from Chicago and it would be branded just like your homepage but come out of the complete pool of database of ads.
Andrew: I see. And the payment for running that was the affiliate commission?
Will: It was still a rev share. So, we white-labeled it with a rev share, which really, we had a much deeper integration than most affiliate models, which are just click on the link and get paid. We even ran Yahoo Personals for a while.
Andrew: They were powered by One-and-Only?
Will: They were powered by our database.
Andrew: How did you hit on this splitting of commissions with other sites? That was a novel idea at the time.
Will: Amazon, most people forget Amazon was the fastest growing company back then and they were doing it through affiliate marketing back then. Plus porn sites were pioneering the whole thing. So, you just kind of went, “Amazon is building a massive business on this and so are these other guys. It ought to work in our business as well.”
Andrew: And how did you figure out that doing a long-term commission was a better deal for you?
Will: Just a way of motivating people. So, we gave you a percentage of the lifetime value of the customer. We had one guy that quit his job, moved to Trinidad and Tobago and had like 40 people working in an office complex like doing personals.
Andrew: What did he do for personals?
Will: He had come up with all these wacky marketing schemes to get traffic to his affiliate.
Andrew: I see. And you didn’t have to inspect his system too much because as long as people were paying, he got paid. If they weren’t paying customers, that’s how you knew whether it was quality or not.
Andrew: When you hit on the affiliate program, you said the business just took off.
Will: So, yes, because we were always limited by the number of people who would take the direct ad buy. What had happened is people had raised a tremendous amount of money saying that they were going to get a $20 CPM. Am I still there?
Andrew: Yeah. Did I lose you?
Will: Yeah. Am I freezing up when you freeze up?
Andrew: No. You’re coming in very clearly.
Will: Okay. So, we were limited because at the time, everyone had raised money saying they were going to sell advertising at this amount. So, they were petrified of taking our offer because then it would be apparent what the space was actually worth. But if you did an affiliate model, they would put it up there and it was just… So, then it wasn’t advertising. So, then we were able to just really rapidly expand and get massive distribution.
Andrew: Alright. Will, last time we had a bad connection, so, we had to end the interview early and we’re going to pick it up here again today. That’s why I’m wearing a different outfit. You’re in a different location. And things are a bit different. But the two people are here, still the same. One story you started to tell before that I’m hoping you can tell again is the one about how you were able to finally pay yourself for the first time and your new wife did something with that check that I thought was inspiring. What did you do?
Will: So, when we got the first really big check, which was like $45,000, which was more than I made in a full year out of college, we would put it on top of the television and just look at it and then when people would come over, we would hide it so no one would see it. Then when they would leave, we would bring it back out and just smile. It took us about six weeks before we cashed it.
Andrew: And this was the first salary you were able to take in how many years?
Will: So, we had paid ourselves a little bit of salary. All of a sudden we’re making so much money that we were able to start paying yourself–we went from $4,000 a month to $45,000 a month. It was crazy.
Andrew: What happened that suddenly changed so much, changed the finances so much?
Will: When we finally got to scale and we were able to hire enough people, basically the site had enough levers in it that if we just had enough people pulling all the levers at the same time to increase productivity, that money just starting shooting out of it. I think toward the end we were doing $45,000 a day.
Andrew: Oh, wow, in sales?
Andrew: Not profits.
Will: Well, we were 50% net profit. So, it was insanely profitable. We would basically sit there. We had a page that we called the money page. You could push out any change on the site and within like ten minutes, you’d see the curve bend up or bend down based on how you affected revenue.
Andrew: Do you remember one change that dramatically increased things?
Will: Well, I mean the obvious one was when we came up with the little thumbnails next to the photos, which was incredibly difficult to do in 1997.
Andrew: What’s a thumbnail next to a photo?
Will: So, like when you’re doing the search results, we put small photos next to the search results versus a full photo that someone had uploaded. Now that’s very trivial to do. Back then, we had to actually take that photo and run it through a Mac offline to do the photo processing, then we could upload that thumbnail. It was a total pain in the ass.
Andrew: Oh, I see. So, you manually had to create a thumbnail for each of the images that was put in and it couldn’t have been done on the main server.
Will: No. Mac was the only thing that had software good enough to do that kind of image change. Shrinking an image from a large image to a little thumbnail, that’s not the most trivial thing in the world. Mac makes it look easy now. But back then, we’d have to get the photos, move it to a Mac, batch run it through Photoshop and then batch upload. It’s crazy.
Andrew: And it was you manually doing it or by then did you have enough of a staff that they could do it?
Will: Well, we wrote a batch process. So, we would load the photos onto this little computer. It would make thumbnails using Mac software and then we’d put it back up in the cloud.
Andrew: Unbelievable that you were doing this. We talked a little bit about what your competition was doing. They were a little bit more flush because they had taken on so much outside funding. Things were going still very well for you. But I don’t think last time we talked about the problem that you had where equipment was dropped and data was just poof, gone.
Will: That was the day we almost lost the company. So, we had our first I want to say $15,000 or $20,000 month. Dave Kennedy, my partner, put in his notice at the accounting firm. Three days after he put in his notice, AOL was moving servers and they dropped our machine and destroyed the data.
Will: We had paid them extra to be making backups. It turned out they weren’t doing that. So, Dave, for some reason, had a printed out version of all our paying customers. So, we hand-typed in all those customers. That was the only thing that kept us solvent. And then we slowly built up the profiles again. We had lost all the profiles as well. But at least we didn’t lose the paying customers. The column was only like 14 spaces wide. So, I had to basically hack the code that some people we only had the 14 digits of their email address. That was it.
Andrew: And so that means that you would have lost those people.
Will: Well, if we hadn’t printed it out, we would have lost them. But yeah, we typed in the first 14 of their email and then that was good enough for them to log on.
Andrew: Oh, I see. Okay. So, you build it up. Why did you decide to finally sell it?
Will: Well, the value of the company–because we had raised so little money, we got to the point to where selling it was a life-changing event, never work again the rest of your life. My partners wanted to sell. I really didn’t because I felt like we had a lot of room to grow. But thinking about it I said, “Well, if I’m wrong, how would I feel having to go back in and say, ‘Yes, we could have hit all our goals, but instead I screwed up and I ran it into the ground.'” I just thought it’s not fair to do that to the other five people involved.
Andrew: You know, I have a letter in my drawer right here from a company that offered to buy my company back in the late ’90s or early 2000s for something like $80 million and I didn’t take the deal. I still keep it with me. I don’t know what for. But it is still painful. It’s painful and I don’t really have a lesson from it. But I feel like that will be important at some point in my future for me to remember.
Will: Well, one of my mentors was this crusty old oil field guy in Dallas. He told me this story when I was in the middle of building it. He was like, “Will, let me just share something with you. I used to always feel inferior because all my peer group would always have the bigger oil field or they would have a higher interest. I spent my whole life,” Now, this guy was worth about $20 million. So, he’s not a chump. But this guy would be worth $300,000 million or this guy.
It’s very similar to tech, right? It’s not what you have. Everyone tends to compare themselves to everyone around them, right? So, “That guy, he did really well so I feel bad.” And he goes, “You know, the problem is none of those guys ever took money off the table.” He goes, “You would be shocked at how many of them are living in their kids’ basement now.”
Sooner or later, things change and if you haven’t taken money off the table, it can be super painful. So, as we were going into it, I was just like, “There will be more ideas. There will be more deals. Let me get out now while we’ve got it figured out and go down the road.”
Andrew: I guess I used to think that if I was the kind of person who could build a company to that level that it was worth $80 million to somebody else, then the only way to get to that is to have been willing to give up $2 million a few years before and before that to have been willing to give up a job that only if you’re the kind of person who keeps letting it ride, I should say, can you get it to $80 million. If you are that kind of person, then you want to keep letting it ride beyond it. But you’re showing me that it doesn’t have to be that way.
Will: Well, my thought process around it is that I had plenty of other ideas. I knew plenty of other people with ideas. Therefore, it’s not like this is it. Look at how many waves of this stuff. One of my favorite things that happened to me is that I was getting my teeth cleaned in Palo Alto and I’m sitting there and I hear this, “Miss Packard, it’s time to get your teeth cleaned.” And this 80-something year old lady stands up and it’s Miss Packard.
I thought, “Holy shit. This stuff has been going on that long.” Here she is. She’s 80-something years old. Innovation has been happening her whole life, like there’s just not that big of a hurry. Like I’ve got another 40 or 50 years of this, I hope.
Andrew: I see. I guess the spouse or the wife of one of the founders of Hewlett Packard.
Will: Hewlett Packard. There she was. She’s still alive.
Will: It’s been going on that long in the Valley. There have been innovations for 50 years now.
Andrew: How much revenue did you get it to at the end?
Will: We were at a $14 million gross run rate with about a $7 million net profit.
Andrew: Wow. That’s unreal.
Will: We were growing 30% a month.
Andrew: I had no idea you guys got it that big. I remember being on the outside being a little bit jealous that you guys could actually charge your customers and trying to find ways to get myself off of advertising, off of lead gen to a place where customers can pay me because if you have thousands of customers and one of them leaves, you’re fine. But if you have a handful of smaller customers, you’re dead if one of them leaves.
Will: People would write me these long, pissed off emails. It would usually start with, “Dear Sir, it’s very unfair that you wish to charge me money. Yahoo Personals is free.” It would be like a whole page of crap. I would just hit reply and I would go, “You and I both know the girl you want to go out with is on my site and not on Yahoo Personals or we wouldn’t be having this conversation.” 100% to the time, they would buy within a day.
Andrew: Why is it that the girl who they would want to go out with was on your site on not any number of the free sites that were out there?
Will: Well, because the inventory is very unique and also the way you present yourself probably isn’t the same on every site and the ability to find it. So, if you take any given dating site, let’s say there are two million ads on there. She might be on there and you might just never notice her there, but you found her easy here. So, you noticed here and that’s where you’ll pay.
Andrew: I see. Was it something also about the fact that you charged that brought in a higher quality of person, more engagement, that kind of thing?
Will: Well, it gave us the marketing power to build the largest database and that in and of itself gave us a huge advantage.
Andrew: That’s a good point. Right. If you’re making money from each new customer, then you have enough money to go market to bring in more customers. What did you sell for?
Will: We sold for $47.5 million.
Andrew: $47.5 million. How much of that was yours?
Will: One third.
Andrew: A third of the business. That is incredibly life-changing.
Will: Yeah. It was like, “Okay. I’ve won. Now it’s time to get off the merry-go-round.” I have this talk with a lot of entrepreneurs. It’s funny because you get trained to not say your number. Everyone is like, “Oh, you only won $10 million. Well, you’re a chump.” Like I’ll try to have an honest conversation with an entrepreneur and I’ll go, “Well, what’s your number?” And either they’ve never thought about it or they don’t want to say it because they’re worried that they won’t get an investment if they’re honest about it.
For me, it’s like work backwards. “What do you want out of it? Okay. Well, how much do you own of it? What does that mean you’re going to have to sell it for?” And you can kind of back yourself into, “Well, how much do we have to generate in revenue traction for it to be worth that?”
Andrew: I see. I thought you meant that they weren’t willing to share their number after they sold the company. You’re saying they don’t even know what number they’d be willing to sell their business for.
Will: Right. So, the three of us had agreed that if it ever got above like $5 million apiece, none of us would hold the others hostage.
Andrew: I see.
Will: So, we kind of had a mutual understanding that this was what we were building towards but we overshot it and that’s great, but we knew when to quit because we kind of pre-agreed to it.
Andrew: How did you make the sale come about?
Will: We hired an investment banking firm. We were very lucky. Normally, they only take companies that are hundreds of millions of dollars. But at that time, they were all trying to build a reputation around internet. So, we were able to get someone to take us on in order to build their perceived reputation for doing internet companies.
Andrew: So, they had a client who was interested. You guys sold to the same company that bought Match.com.
Will: Yes. It was Ticketmaster-CitySearch.
Andrew: Ticketmaster-CitySearch. They merged you and the One-and-Only went away because I’m guessing Match was a simpler name.
Will: It’s a better name. It’s a better name that had a great brand. Our last job there was to port all the data over and put the brand up. It was totally the right decision.
Andrew: How was their software once you got to see it inside?
Will: Well, their software was crap. They actually had, one of the only companies that I know of that had a real Y2K bug. So, they were going to cease operations at midnight on the year 1999. So, we had to bust our ass to basically recreate–they were on a Sun workstation. They had maxed out the hardware. The next size up was a $1 million machine. So, no one wanted to put the budget into it. So, they had backed themselves into a corner and were kind of screwed.
Andrew: I can’t believe an internet company would have that issue. I thought that problem only existed for companies that had been around for 30 years before Y2K.
Will: Well, if you remember, in the ’90s it wasn’t obvious that you should do these cheap server farms. Google really hadn’t standardized that. Yahoo really hadn’t standardized it. So, you could go and buy these really kickass Sun workstations. But the problem was every upgrade was almost 10x more expensive than the previous machine. So, when you reached a certain number of users, you were in a hole.
We maxed out our $40,000 machine and I was just like, “Wow, what are we going to do here? I can’t afford that Sun equipment.” So I re-wrote all the software to be parallel early into the business so that we could buy $4,000 machines simply because we just didn’t have the money. But it turned out to be the right answer.
Andrew: Do you remember the day that you saw the money hit your account.
Will: Oh, yeah, man. That was a kick ass day. It was over three tranches. But yeah, you’re sitting there. It doesn’t even feel real because it’s just a number on a screen and you’re like, “Well, what if the screen said nothing? Would anybody believe me? Is this real?” Money is a weird thing when you think about it.
Andrew: Yeah. How did it change your life afterwards?
Will: Well, I can buy any book I want. That’s kind of cool.
Andrew: Any book?
Will: Yeah. I love books. So, my wife used to always ride my ass about buying books. So now I can buy books and no one will say anything. So, that’s great.
Andrew: How many books do you go through a year?
Will: I probably read two or three a week.
Andrew: Wow. Okay. That doesn’t seem like ti would have busted your budget before, but I can see how.
Will: Well, the technical books are like $50. So, I would go in and I want to learn something new and I found the best way to do it was just to get every book on the subject because the authors would have different things they were good at writing about. So, if you just got one book, you’d be going, “I don’t totally understand that.” So, I would just buy every book and then just read through them looking for what the guy was good at and put it together. So, that would be like $300 or $400 and she’d get a little pissed.
Andrew: What else were you able to do that was especially exciting?
Will: I hired someone to clean my house.
Andrew: Really? So, up until then, you still were cleaning your own house, you or your wife.
Will: Oh, yeah. That was awesome. And then being able to eat out nice is always great. It’s funny. I don’t have big things because what I’ve found is I tried a few things. I bought a plane and learned to fly. The problem with all that stuff is it takes a lot of time. So, you end up with your stuff basically taking up all your time trying to take care of it. So, I’ve just gotten to where I don’t really want to do all that. I’d rather be engaged with startups or I’d rather learn new things. So, I try to go really wide on stuff and just rent it when I want it.
Andrew: I wrote a note here to come back and ask you about your other ideas. One of the reasons you felt comfortable selling was you said you had other ideas. What’s the first one you acted on?
Will: Well, it’s not high tech. My father and I went in to a catfish business. We grew about four percent of the US catfish supply.
Will: Oh, yeah. I will say, I have this vivid memory of 3:00 in the morning. I’m on top of this metal truck. We’re trying to get fish out of the pond, like 1,000 pounds at a time. This basket is swinging up. It’s sleeting. I’m sitting there going, “You know, if I slip and bust my head on the side of this metal truck, I will have spent a lot of money and time so that I can stand on this truck freezing my ass off trying not to kill myself. I’ve got to think through this shit better. This is not what I wanted to be spending my time on.” So, that taught me like only work on things that if you get stuck doing it, you’re not upset or it’s not a big drag.
Andrew: I’ve seen people buy houses that way, saying that they’ve seen the ups and downs of the market and they’ve decided to only buy a house that they can live in for the next decade if they had to with however many kids they plan because you’re committed. You’re in there.
Will: Yeah. I will no longer buy houses. My wife and I love to move around. A house only works if you stay in it like ten years or something. The longest we’ve ever stayed in anything was like six. We just like moving.
Andrew: I’m looking over your shoulder to try to get a sense of where you are today.
Will: I’m in the Band of Angels office in Menlo park.
Andrew: I see.
Will: We had the investment committee meeting this morning. So, I was like hearing pitches.
Andrew: How long have you been a part of that?
Will: Almost two years now. They’re a great group of people. All the people that I’ve met in there have done really interesting things and are very professional.
Andrew: Yeah. They were essentially the Y Combinator, I feel, before Y Combinator, right?
Andrew: They were the ones that were giving them a start and advice and helping them out. If catfish was the next thing you did, what’s the best thing you did afterwards?
Will: I helped co-found an enterprise scanning company with my brother and sister. So, they were very integral with helping me with the dating site. So, while they were still at Match, I wrote all the original software for them to launch their business. Then we just sold that in December of last year.
Andrew: Wow. Can you tell me a little bit more about what it did? I didn’t see that in my research.
Will: It was an enterprise scanning company. So, it would search through all your network space looking for machines that aren’t configured well. There are several competitors in that space.
Andrew: I see.
Will: My brother is a security software expert. So, he wanted to do something in that space. Again, we only put $100,000 into it. It took them 14 years. So, it took a long time. They actually ended up inadvertently VC funding themselves. So, they licensed their software to a company and they got one percent warrants and then that company sold for $600 million. So, that was their A-round.
Andrew: The money they got from that funded the rest of the business.
Will: Yeah. That gave them enough capital to build it up and sell it.
Andrew: And then you started your own investment vehicle, Silicon Valley Growth Syndicate.
Will: Which has nothing to do with AngelList Syndicates. We named it before them. The next one will not have the word “syndicate” in it. I basically looked at the math on how angel investments work. There’s some pretty good data out there about it. I just said, “Oh, wow, if I’m really going to make this work, then I’ve got to be in 50 deals. My wife will bash my head in if I tell her I’m going to invest in 50 startups.” So, I just said I’ve got to get a pool of money together so that this is more rational.
Andrew: So, it’s not just you putting your money into it.
Will: Because the minimums are–yes, if they know you, you can get in for a small amount of money, but generally it’s $25-$50k a deal. So, if you say 50 deals, that adds up to a lot of cash.
Andrew: Yeah. I’m looking now at the SEC filing to see if I can figure out a little something here. But it’s hard to do on the fly, from 2013.
Andrew: So, what’s your thesis? What’s your vision?
Will: My basic thesis is that if I can predict the future, we’d be having this conversation on my private jet. So, therefore I don’t try to overthink it. I feel like you can screen for a very basic few things that will tell you, “This is going to be really difficult for this idea to work.” Beyond that, it’s anybody’s guess. If you would have went back in time and said, “Oh, I’m going to build a big company off strangers sleeping in your house overnight,” I’d have just went, “What the fuck are you talking about? No way, man.”
So, if you look at all these really big deals, dozens of very intelligent successful investors pass on them. It’s not because they’re stupid. I just don’t think it’s predictable. So, my thesis is how can I take a rational amount of risk with people that I want to work with and do enough of that that I get the one in a hundred that just really rocks the whole world.
Andrew: I see, just enough deals with people who you get excited about working with and then you figure that some of them will do well. I don’t know enough about, frankly–and this may be actually outside of the scope of this conversation–but it feels like is the idea to put in $25,000 or so into a startup and hope that one of those actually take off? Does $25,000 turn into something significant?
Will: So, just guess how much $100,000 in Uber’s angel round is worth now?
Andrew: In their original angel round, $100,000? I’m just going to throw a number out. I don’t know $1.2 million.
Will: $400 million.
Andrew: $400 million?
Will: $400 million.
Andrew: I see.
Will: So, what you see–and it’s not intuitive–is there’s a power law, meaning that if you take Y Combinator’s 600 companies, they have a confirmed $40 billion upside. Three companies account for $30 billion of the $40 billion.
Andrew: So then why even look for people who you like enough to keep working with? Why not just say, “I’m going to keep putting my money in. Travis wouldn’t have needed my help anyway. The next Travis is not going to need my help. I’ll just spread it around?”
Will: For me it’s just like, “Is this person going to add stress to my life?” I don’t have to work–I’m in Sprig, Gagan Biyani, great guy. He doesn’t need my help. He’s freaking amazing at what he does. That’s awesome. I don’t have to spend any time on that. He rocks. But if I do end up having to spend time, am I going to go, “God, why am I dealing with this person?” So, it’s just kind of a basic screening on that level of not to introduce any more drama into my life than I necessarily have to.
Andrew: That makes sense. And no, Gagan will not introduce more drama in your life at all.
Will: No. He’s too busy running his company. He’s doing great.
Andrew: Yeah. I love that guy. I haven’t seen him much since he started Sprig because he’s spending so much time running his company, but I see his people all the time. I think the other day I recorded an interview and my receptionist interrupted to say, “Hey, here’s your Sprig food,” because it came so fast.
Will: Every day I’m in San Francisco, I get Sprig. It’s not because I have stock in the company. It’s because it rocks.
Andrew: Yeah. For people who don’t know, it comes within ten minutes.
Will: Yeah. And it’s good food.
Andrew: It’s good food. They have vegetarian options, which is important to me. They have gluten free options which is important to some people who I have over here for lunch or meetings. It’s just so fast and so good.
Will: So, yeah, if I can find 100 Sprigs to give money to, that would be great. But you just don’t know. It’s so hard to tell up front. With Sprig, you had 24 hours to make up your decision to be or not be in that round.
Andrew: How did you get connected with him?
Will: He and I were on some panels together at Founder Institute. I think Udemy was the largest company that’s come out of Founder Institute. So, I met him there. I was like, “Super smart guy. Obviously very successful. If he’s going to do something, I don’t even care what it is, as long as it’s not like drug running or something, I’ll do it.”
Andrew: I see.
Will: I think we’re in the people business. So, knowing people–and it could fail. Maybe Sprig wouldn’t have worked. But I feel like it’s a decent thing to take a risk on.
Andrew: So, is that enough to just say, “I’m going to look for people who I can deal with, who I like to deal with even in a bad situation and I’ll just keep investing in as many of them as I can get to?”
Will: Yes, because some of them will succeed, statistically. One or two of them will just wildly succeed. Look at the guy who gave us $100,000. He gave us $100,000 and he got back $15 million. Holy shit.
Andrew: All you need is one of those.
Will: It wasn’t quite Uber, but it was damn near Uber.
Andrew: Did you raise $600,000?
Will: I raised $90,000.
Andrew: No, for Silicon Valley Growth Syndicate.
Will: We’ve raised a little over $4 million.
Andrew: $4 million. Okay. I was looking at Bison.co to try to quickly get some data on it. Wow. Alright. What’s a good way for people to connect with you?
Will: My email, TheWillBunker@Gmail.com. I’m starting to use Twitter a little more aggressively.
Andrew: You said it’s TheWillBunker@Gmail.com?
Will: Yes. It’s a very humble address. Actually, there’s a very funny story behind that. When Gmail first came out, someone sent me an invite. It was hard to get a name on it even then. I just thought, “This isn’t going to last that long. So, screw it. I got BunkyBalls, BunkyBalls@gmail.com,” which was okay until they started making you use it to sign in to everything. I just went, “I cannot be signing into stuff as BunkyBalls.” The only name I could find was “TheWillBunker,” without like a bunch of digits in it.
Andrew: Yeah. I can’t imagine BunkyBalls getting into my spreadsheet and taking his edit seriously.
Will: Exactly, man. I was just like, “This might be cool if I was 16, but I’m like 40-something.”
Andrew: I’ve got to tell you. You are one of the most easygoing guests that I’ve seen. It’s so much nicer today that we have a solid connection. My computer isn’t going down. The internet isn’t going down. So, I get to really get a sense of you. I’m so shocked by how easygoing you are. You could have said, “Andrew, I’m not telling you what I sold the company for. Andrew, I don’t remember or I don’t want to tell you what the revenues were at the time.” I don’t know why. What is it about you? It feels like you found some kind of inner peace that only Zen masters get.
Will: Well, so, I think one of the secrets to this whole thing is that you cannot compare yourself to other people in this industry because there’s always–I watched, and I don’t know him personally, but I watched Larry Ellison like tear himself up inside trying to be Bill Gates. Larry Ellison is more successful than maybe 100 people are more successful than him.
Andrew: Maybe, in the world.
Will: In the world. And he made himself nuts chasing after this other guy who just happened to be in the right place with the right skillset. I just don’t worry. I’m in the Valley. There are always going to be people that are tons more successful than me. It doesn’t matter. I’ve had a good life. I’ve succeeded wildly beyond my wildest dreams. I like what I do. I like who I work with. That’s good enough. If I never go beyond here–I think I will. I’m trying to. I’m working really hard at it. But if I never go beyond here, I’m okay. It’s okay.
Andrew: How do you get to that point, especially in an environment where everyone seems to have so much money, so much going for them? You can’t even just say, “All right, he’s a jerk with money. They’re bright, really good people.”
Will: They’re talented.
Andrew: They’re talented. They’re funny. They’re interesting. They have insights that just come out of nowhere. But they’re really deep and meaningful.
Will: Like the Dos Equis guy, right?
Andrew: Like who?
Will: The Most Interesting Man in the World. So, I used to drive around Dallas looking at all the oil guys mansions. I just made up my mind. I said, “Look, I will attempt to be the very best person I can. I will work as hard as I can. I will be as successful as I can. But that’s it. I’m not going to get tied up in a knot inside because this guy sold his company for $700 million.” Like, who gives a shit?
Beyond a certain point, you can’t consume the money except in a way that just tries to increase your social status. You can only sleep on one bed. You can only eat three meals. You can only drive from one place to the other. If you look at like physically meeting all those needs, beyond a certain amount of money, other than like trying to show off and be more important than everyone else, that’s it. There’s nothing else you can do with the money.
Will: So, I feel like I’ve exceeded that limit. Therefore, I’m not going to worry about it from this point forward.
Andrew: Alright. Well, that’s an inspiring place to leave it and I’m going to end it there. I’ll try to keep remember it for myself. Thank you so much for doing this interview.
Will: Well, I had a good time. Now, is there anything relevant for your users that we should have covered before we sign off?
Andrew: I don’t think so. I’m going through my notes here, just going up and down. I don’t think so. But even if there was, you gave people tons of ways to contact you. You told them how to connect with you via email, which a few guests have done and it’s unusual. And of course, Twitter. I think we hit it.
Will: I don’t give out my cellphone number.
Andrew: That’s a smart move, actually. I’ve done that and I’m regretting it a little bit.
Will: That’s what caller ID is for. That was the one reason I got a new phone back in 1999. Actually, it was one of my sisters was constantly calling me and I was like…
Andrew: That’s fine for phones. Text messages just keep coming int. Text messaging is the new way to connect. It’s the new way to get through to people beyond email.
Will: I’m starting to get comfortable with it but it’s taken a while for me to shift my brain over to text messages.
Andrew: The problem is that everyone else has shifted over and they’re all shifting into my text app. So, that’s the problem with handing out my phone number all the time. I’m going to start to hold back.
Will: Cool. Well, have a good rest of your week, man. Let me know if there’s anything I can do for you.
Andrew: You bet. Thank you for doing it and thank you all for being a part of it. Bye, everyone.