It's been a while since I last shared an article with you all—4 months to be exact. I have to admit, It didn’t feel right to give advice based solely on reading about startups.

I'm relaunching the newsletter with a fresh approach. Each article, I'll reach out to three successful entrepreneurs and ask them for their advice.

So, without further ado, let's dive into today's post.

#1 Courtney Guertin- Scaled a B2B SaaS to 75k Clients, Raised $68M, and Recently Sold It!

In 2015, Courtney co-founded Ease, an online benefits enrollment system used by 75k insurance brokers to manage 3.5M employees.

Starting small in Minnesota, they have since raised $68M, became a top player, and were recently acquired by Employee Navigator.

A commonly repeated yet crucial piece of advice is: put your product in front of potential customers early and gather their feedback. Holding back until you've achieved a flawless product, only to discover it doesn't meet your customers' needs, is a waste of time.

After identifying the initial use case, the next crucial step is to focus on distribution. More often than not, distribution plays a larger role in a startup's success than product perfection.

At Ease, we launched a straightforward yet effective solution for brokers in MN, focusing only on medical enrollment underwriting. Despite its limited scope, we received positive feedback and users wanted more. This early validation allowed us to draft a future product roadmap and turn our focus towards expanding our reach.

We identified channels - primarily partnerships with related businesses - that could improve our product visibility without the need for traditional advertising. Our goal was to collaborate with other firms who could also benefit from promoting our product.

In our sector, we partnered with firms that had existing relationships with brokers. We integrated our platform into their services, incentivizing them to recommend our system.

Building and nurturing these partnerships requires time and consistency. However, once established, they serve a dual purpose - protecting your business by providing a competitive edge and driving your sales.

Achieving product-market fit is just the start of the journey. A successful company/product also requires focus on distribution and likely the nurturing of strategic partnerships. Embrace the learning process and remember - success often takes time.

#2 Andrew Gazdecki- Sold 2 Startups and Current Founder of Acquire.com

Andrew is the founder of Acquire.com, a marketplace for selling startups valued at over $100 M, he previously founded a mobile app developer while still at college and grew revenue from zero to $10m+/ARR before selling it to ESW Capital.

It Takes a Long Time to Build a Business. A lot of people give up too early. Sometimes it can take two years just to get your first customer.

Case in point, it took me eight years to grow Bizness Apps to an eight-figure business and then be able to sell it. And my business before that, Phone Freelancer, was the precursor to Bizness Apps.

So, overall, I spent a decade focused on making it in the mobile app industry. As a rule of thumb, if you don’t feel like you can commit five years to your business, I don’t recommend starting it.

#3 Taylor Hersom- Launched Cybersecurity Startup and Grew Revenue to $6 M in 2 Years

Taylor quit his job as a Chief Information Security Officer at a local firm in Austin in February 2020 to search for a new job, but then, COVID hit and all the interviews dried up.

After consulting on Upwork, he decided to open his own Cybersecurity startup which he grew to $6m in revenue in 2 years.

I think it's important to note that we inherently want to 'follow the crowd' as it's in our nature, but finding success in general requires you to identify when you should be copying the crowd versus when you should be zigging when everyone else is zagging!

We fall into this trap of wanting to copy our competitors or operate just like the businesses/entrepreneurs we look up to, and I was no different with Eden Data. We are a consulting firm and initially, I tried to be like the consulting firm I came from (Deloitte) and the other companies that I followed.

We charged by the hour, did the project rates, offered to come onsite, blah blah blah. It wasn't until we pivoted and changed our service into a subscription very similar to the startups we sold to that we were able to stand out and define our own destiny!

And that's a wrap, folks! I really hope you found this week's post packed with valuable insights. I'm eager to hear your thoughts on this new format, so please reply to this email and let me know what you think.

Till next time!

Mahmoud

This got him wondering... why aren’t there more healthy products that still have funny, cool, irreverent branding?

Fast forward to 2019, Mike launched Liquid Death with the mission to make H2O cool. And now, it's worth $700 million!

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Implement The Dumbest Idea 😛

Mark set out to create the coolest water brand ever.

His strategy was counterintuitive. He started by asking: What’s the dumbest possible idea?

But why not aim for a smart idea instead? Well, the traditional brands must’ve exhausted all those.

• The name—> Liquid Death

• The packaging—> beer can

• the slogan—> murder your thirst

• the logo—> a skull

“If someone I knew saw that in a store, I’m pretty sure they’re going to have to pick that up and be like, ‘What is this?’” he said. “And once someone picks something up, you’ve basically won.”

Sanity Check

When Mark planned to launch Liquid Death, everyone was telling him that the idea was dumb, and investors weren’t willing to fund him.

He needed a way to show them the potential of the product. So he spent $1.5k shooting a commercial and $3k in Facebook ads and within a couple of months, the ad had more than 3 million views and the page attracted 100,000 followers—more than Aqua Fina had at the time!

Thanks to the success of this marketing campaign, Mark finally secured $1.6 million in funding and launched the brand officially.

Sell to Everyone

At first, Liquid Death’s customers were partygoers. It was available at bars and tattoo parlors.

“We wanted to give people permission to participate in this cool rock-and-roll brand without needing to consume something gross.”

But in order to expand, Mark had to turn the brand into a status symbol. He did this through several viral campaigns:

• Collaborating with Tony Hawk to sell skateboards printed with paint infused with his blood.

• Creating a heavy metal album using the hateful comments they received.

• Betting $50k on the underdog of Super Bowl LVI and threatening to send a witch to jinx their opponent.

And soon, everyone wanted to buy Liquid Death and didn’t find it stupid to drink water from a beer can with a skull on it.

It is currently the second best-selling mineral water on Amazon and the fastest-selling at Whole Foods.

With 60K locations in the US, they're projecting $260 million in 2023 sales.

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So how did it grow to 1.5 million reservations in less than 3 years?

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Cereal Entrepreneurs

We can’t talk about Airbnb and not mention how they got their initial $40k funding.

It is 2008, and the presidential elections were on their way, Joe and Brian were drowning in credit card debt and needed a way out.

The solution: selling Barack Obama and John McCain-themed cereal boxes at $40 each. Why would anyone pay $40 for a cereal box? Those were limited edition boxes. They made 500 of each. And just like that, they made $40 k!

Seeding The Platform

How did Airbnb convince people to stay in strangers' houses?

They launched in cities with big events, where hotel rooms were either fully booked or too pricey, leaving travelers with no option but to try Airbnb.

They had a brilliant PR strategy to introduce their service to travelers.

At first, big media outlets didn’t pay attention to Airbnb, so they went to local blogs when launching in new cities. Then, they reached out to local newspapers and soon got covered by CNN and TechCrunch.

Creating The Perfect Experience

Airbnb managed to bring in customers but struggled to retain them. To grow, they had to step up their game for both hosts and guests.

The Hosts

In Spring 2009, Airbnb joined Y Combinator. Paul Graham (Y Combinator’s cofounder) advised them to meet their hosts in New York where they had the most users.

They offered the hosts free professional photos to get them to talk.

This visit helped them identify the hosts' pain points. They started fixing them one by one, which helped them create a roadmap for the platform.

The Guests

To improve the guest experience, Brian started by asking "What can we do, not to make this better, but to make you tell everyone about it?"

He created different levels of experiences with star ratings:

• 1-star: you arrive at your Airbnb and no one is there.

• 5-star: someone welcomes you and lets you in, nothing special.

• 11-star: Elon Musk picks you up and tells you "you're going to space".

The goal was not to create the 11-star experience but to push the limits and scale back to the best possible one.

Airbnb even hired a Pixar illustrator to improve the experience.

Anyway, within 2 years, the founders went from selling cereal boxes to keep the company alive to making over 1.5 million reservations and raising funding at a $1 billion valuation!

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In 2017, she decided to start selling Hydrocolloid patches in the US under the name Mighty Patch, fast forward five years and she sold her company for $630 million.

So, what can we learn from her story?

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Localizing A Successful Product

Mighty Patch's success is partly thanks to taking a product that was already a hit in South Korea and selling it to the US market.

Before, hydrocolloid patches were being sold in the band-aid section in pharmacies in the US. Ju positioned it as an acne care product instead and brought it to cosmetics stores.

And she couldn't have picked a better time. In 2017, K-pop was popping and people were all about trying Korean beauty (K-beauty) products. It was the perfect storm for Mighty Patch's success.

Launching on Amazon

Many consumer goods startups prefer selling on their website, Ju decided to launch on Amazon instead.

Amazon is a great place to validate your idea without breaking the bank on development or design costs, and you don't have to worry about working with a logistics company.

Plus, it already has hundreds of millions of users.

Within 3 months of launching, Ju had sold out of the first order that she had made(10,000 units)!

Another amazing thing about Amazon is that the more customers love your product, the more visibility it gets. Just search for "acne patches" and you'll see Mighty Patch at the top.

Going Brick and Mortar

Many new brands ignore that 80% of retail sales happen at brick and mortar stores, Not Ju. She used the success of Mighty Patch on Amazon to convince retailers to carry her product.

First, she started with specialty ones like Anthropologie and worked her way up to mass retailers.

By mid-2019, Ju secured a deal with Target, and even though they only sold there for half the year, Target accounted for 15% of that year's sales!

Just two years later, Ju sold the company for $630 Million!

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Let’s end with a tweet by Ju:

Extras:

Read of the week: The Billion Dollar Creator, you have to read this one, it’s awesome.

Youtube Channel To Follow: Starter Story, you know that I’m all about bite sized content on entrepreneurship and this is exactly what Pat shares on this channel.

Noteworthy News: Morning Brew acquires OurFuture.

In 2015, two cofounders decided to start a direct-to-consumer(D2C) luggage brand. They set their eyes on launching in the December holiday season.

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But as Christmas approached, they realized their luggage wasn't coming from the supplier in time.

Despite this, they managed to sell 1200 bags before having any products.

Here’s how they pulled it off 👇:

Let’s start with some background, Away was founded by Steph Korey and Jen Rubio who both worked at Warby Parker.

Steph ran supply chain and Jen handled marketing, so it’s safe to say they knew the D2C industry inside out.

Almost a fifth of all annual sales happen during the holiday season, so, it's no surprise that Jen and Steph were keen on making sure they were in on the action.

In order not to miss it, they decided to sell a travel book and include a gift card for a free carry-on bag with each one.

To make the book, they interviewed 40 influencers with loyal followings (writers, artists, photographers, etc.) and offered them free suitcases as a thank-you for participating and spreading the word.

They then flooded social media with ads.

And it paid off, The book went viral on Instagram, and by the end of December 1200 copies were sold!

Beyond The Presale Campaign

The camping was definitely a very smart move, but how did Away manage to survive while the other suitcase startups failed?

Here are two factors that I think helped:

Profitability:

A suitcase isn’t an item that is replaced often, especially when you give a lifetime warranty with it.

So, from the start, Away focused on making every purchase profitable. They also branched out to more replaceable accessories.

Product Market Fit:

Before launching, Steph and Jen asked 50 friends to fill out a survey to assist them in designing the bags.

They asked each respondent to pass the survey along to 5 people.

They received 800 responses, which revealed key customer needs like extra packing space, a spot for dirty clothes, and a power bank.

Away has definitely had its ups and downs. They had to furlough employees due to COVID but it looks like they've returned to their pre-COVID employment levels (around 500 employees) according to LinkedIn so I think they’re doing well.

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Interesting Read: Why All Pixar Movies 'Suck' (At First)

In 2006, the Seider brother decided to sell durable coolers at 10x the price of commercial ones. 17 years later, YETI is a $3.5 Billion dollar brand.

What's the secret to this company's success? Let's dig in.

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Conquer a Market That You Already Know

Roy and Ryan Seider have been avid fishermen from a young age. After college, Ryan started a fishing rod company and Roy sold fishing boats.

While neither of these ventures took off, they did help the brothers understand the fishing equipment market and build valuable relationships with retailers.

While selling boats, Roy searched for sturdy coolers because in fishing, they are not only used to store the catch but also as a casting platform and so they have to bear heavy loads.

He realized that there are several improvements that could be made to commercial coolers and decided to sell his own improved product with stronger lids, handles, and latches, and YETI was born.

Instead of selling at big-box retailers, the brothers decided to focus on fishing equipment stores. Here’s why:

• Roy and Ryan already had connections with the stores and were familiar with the fishing expos and conventions.

• Fishing equipment stores didn’t have agreements with cooler brands. Most coolers were selling at ~$40 and don’t meet the desired profit margins for specialized stores.

Target Your Believers

Initially, the product YETI sold— $400 coolers— was extremely niche, only targeting fishermen and hunters.

Instead of trying to appeal to everyone with general ads, they partnered with influential people in those communities. Commercial cooler brands weren't interested in such a niche market, so it was easy for YETI to get brand ambassadors— today, the company has over 100 of them.

When running commercials, they would do so in specialized publications targeting ~100,000 hardcore fishermen and hunters who were willing to pay extra for the best gear.

Expand Your Brand Beyond the Product

So YETI started out selling coolers to hunters and fishermen, but then they expanded to other activities like ranching and rodeo.

As the brand became known for all sorts of outdoor activities, they started selling more than just coolers - think drinkware, bags, and stuff like that.

Basically, they made the most of their brand recognition by expanding beyond just one product.

That's all for today, folks. See you in the next one!

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Interesting read: How on earth I became an entrepreneur

Gymshark bootstrapped a gym wear brand to £1 billion by turning their customers into sort of a cult.

Ben Francis started the brand in 2012 as a drop shipping website selling supplements and gym clothing but realized the gear he was selling wasn't what he and his friends liked to wear.

He used the drop shipping business profits to buy a sewing machine and screen printer and started making stretchier and more fitted gym shirts.

Here are 4 lessons from his journey.

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Find The Right Ambassadors

When Ben launched his clothing line, he knew his target customers followed the same YouTubers as him, so he reached out and sent them products.

While now this is known as influencer marketing, very few brands were doing it at the time.

“Lex [Allen] was the first person to ever get Gymshark product … I remember when he got it and he gave us his feedback and he uploaded a video in it, it was just the coolest thing ever.” — Ben

Turn Your Brand into a Movement:

To build a sense of community, Gym Shark identified their target customers - young gym-goers - and did the following:

• Live Events: at the center of the community-building strategy are the meetups that the company hosted and documented through vlogs.

• Challenges: like the "Change Your Life" campaign. Followers were challenged to set a personal goal, submit an initial photo, and an update 66 days later for the chance to win a year's worth of products.

• The CEO: Ben shares vlogs, milestones, and more on his Youtube channel which helps him connect with customers on a personal level.

Strategize About Sales:

Here’s how GymShark does this:

• Facebook ads: They target lookalike audiences and customers that had started but didn’t complete a purchase.

• Discounts: The company only runs discounts twice a year, on its birthday and Black Friday in order to build hype leading to those events.

• Being agile: When COVID hit, they anticipated a rise in demand for loungewear and focused on that line, they even changed their Twitter handle to Homeshark.

• Tiktok: When Gymshark joined TikTok, they partnered with microinfluencers with high engagement and consistently posted content that fit the platform, growing their account to 4 million followers.

Treat Customers As People, Not Numbers

In 2013, Gymshark's website crashed on Black Friday, but Ben made up for it by sending out 2500 handwritten apology letters with discounts to affected customers. Talk about going above and beyond!

The first time Gymshark accepted outside investment was in 2020 at a £1 Billion valuation proving that building a loyal customer base pays off!

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DoorDash is pretty much the big dog in the food delivery market, with ~60% of the market share. But when it started in 2013, it was just a small project entering a crowded market dominated by the likes of Grubhub.

So, how did they manage to penetrate the market?

Here are 3 lessons that you can learn from their success 👇

Survey Your Potential Customers:

The founders of Doordash were on a mission to solve a problem for small businesses so they went to business owners and asked them: “If there is a magic wand and we can take away any problem for you this week, what would it be?”.

Many mentioned the difficulty of providing delivery to customers.

Delivery services at the time were focusing on larger cities and not serving smaller ones. This forced disadvantaged business owners to grapple with the choice of hiring a delivery driver and paying them even during lulls in orders, or foregoing delivery altogether.

The team came out of their initial research with several questions:

• Why is delivery not a thing outside NY?

• Do people want delivery and how much are they willing to pay for it?

• Are restaurants interested in working with a delivery service?

Which takes us to the second lesson…

The Pilot Program:

To answer the questions, the cofounders quickly put together a simple website with 8 pdf menus for customers to place orders via phone. Instead of developing a full app, they focused on gathering customer feedback and validating their idea.

For the next 5 months, the team spread the word around the Stanford University campus through flyers and personally delivered the orders every day from 12-1:30 pm and 5:30- 8 pm.

Even though the order volume wasn’t high at first(~10/day), it was enough to get useful insights and have productive conversations with restaurants.

Identify Underserved Customers:

As I mentioned, most delivery companies at the time focused on larger metropoli. Doordash took a contrarian approach and doubled down on the suburbs instead.

Here’s why:

• Suburban customers tend to place larger orders which increases the company's revenue.

• It's much easier to deliver to addresses in suburban areas which usually have driveways and are mostly single-family homes reducing the margin for error.

• While some restaurants in larger cities offer delivery services inhouse, those in suburbs are less likely to do so.

As Doordash’s pilot program progressed, the team automated the ordering process, hired drivers, and streamlined operations. The program’s success helped them get accepted to Y Combinator and as they say, the rest is history.

I’ll leave you with their application video to Y Combinator.

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It's hard to believe that Crumbl Cookies grew from one store in Logan, Utah to over 600 branches in less than six years, but they did it!

Let’s rewind back to 2017, cousins Jason McGowan and Sawyer Hemsley decided to open a cookie shop as a side hustle, even though they had no experience in the baking industry. So, how did they go from that to over $1 Billion in sales? Grab a cup of coffee and let's dive in!

Nailing the Recipe

Jason and Sawyer started with no experience but set out to create the world's best chocolate chip cookie. To achieve this:

• They asked a local baker to teach them the principles of baking.

• They spent thousands of dollars A/B testing recipes. They would go to gas stations and grocery stores and ask random people to taste two cookies and tell them which one they prefer.

A Social Media First Strategy

Crumbl has 1.7 M followers on Facebook, 1.1 M on Youtube, 3.3 M on Instagram, and a whopping 6.2 M on TikTok. Their social media strategy is built on three principles:

• Creating an Instargammable Product: This includes making picturesque cookies and packaging.

• Joining TikTok early on: Sawyer saw its potential and hopped on it when it was still small. Since many customers were posting review videos, they decided to follow the trend - #crumbl currently has +1.6 billion views.

• Native content for each platform: Crumbl produces long-form videos for Youtube, Amazing looking photos for Instagram, and short videos for TikTok that follow the current trend.

The Tech

Only one year after opening the first store, Crumbl released its own App. Instead of being at the mercy of delivery apps, Crumbl owns the interaction with the customers. Having their own app has several advantages:

• Allows for different types of orders: delivery, pickup, catering, and digital gift cards.

• The App has a points system to incentivize users to follow Crumbl on social media feeding into the brand’s growth

• It is connected to the POS system and allows franchisees to monitor their KPIs.

Lasty, FOMO

After perfecting their first recipe, the team started coming up with new flavors. They now rotate five flavors each week. This encourages customers to buy when their favorite flavors are available, plus, it keeps people engaged and checking social media for updates on what flavors are coming up next.

Now, if all this isn’t impressive enough, just consider that they did it all while being completely bootstrapped!

Today, we’ll discuss the story of how Under Armour, one of the world's leading sportswear brands, got its start.

In 1996, 24-year-old Kevin Plank founded the company in his grandmother's basement and over time, it grew to become the fourth-largest sportswear brand in the world.

Let's dive into what led to the company’s early success.

1/ The Idea

While in college, Kevin played football for the University of Maryland and grew frustrated with how cotton T-shirts soak up sweat.

He realized that synthetic fabric, which was used for biker shorts, could be the solution.

He started making samples for his teammates to try, and then made the shirts in his grandmother's basement. He drove his car to college campuses and tried to sell them to football teams.

2/ Go After The Big Fish:

Early on, Kevin focused on selling to teams instead of individual athletes because he already had connections with former teammates and coaches, plus, it's more lucrative to sell to teams that need to outfit all their players.

This strategy amplified the effect of word of mouth. In 1996, the equipment manager at Georgia Tech bought 10 Under Armour shirts. A few months later Arizona State, NC State, and other football teams followed suit.

In 1997, 12 college teams and 10 NFL teams purchased Under Armour shirts.

A key element in Kevin’s success was his Yes Mindset, when one customer asked if he makes long-sleeved shirts, he answered: "Of course we make it in long sleeves." and then figured out how to do it. When another asked him if he makes anything for cold weather, he replied: “Of course.”

3/ Build The Sales Funnel:

By 1999, Under Armour had sold over 25,000 garments to MLB, NFL, and NHL teams and started selling at retailers. The company also made product placement deals with 2 movies to build awareness. However, they needed a way to link their logo to the brand in people's minds. At the time, one way to do this was magazine advertisements.

The only problem was that the company didn't have enough money in the bank as it had been invested in inventory. So, Kevin asked his team to skip their paychecks for a few weeks in order to afford a half-page ad in ESPN. This ad generated $750,000 in sales over the next two weeks and kicked off the company's revenue in 2000 which reached $ 5 Million.

Today, Under Armour does over $5 billion in sales, but if it weren't for Kevin's hustler mentality and grind early on, it definitely wouldn't have come this far.

I’m seeing many articles about how the current economic situation is impacting startups, so today’s post is about how Pandora pulled through the recession that followed the dot-com bubble.

In March of 2000, when Tim Westergren founded Pandora, it was so easy to raise $1.5 million, however, only a couple of weeks later, the stock market crashed, VCs shut their doors and many startups had to shut down.

What set Pandora apart and allowed it to survive the crash is a combination of an ambitious vision, validation, and persistence.

1/ The Vision:

One year after Pandora launched, the company ran out of money and couldn’t even cover salaries, but 50 employees stayed for the next 2 years without pay!

The team agreed to stay because they had a clear vision that they were focused on. Pandora was on a mission to democratize music discovery.

The idea was to map music based on 450 attributes and then build a recommendation algorithm to suggest songs regardless of the popularity of the singer.

Here’s what Tim said about the situation:

“I think there are a couple of reasons Pandora stuck around, one, as I said is this real sense of belief and a common purpose and a mission that was really important, and this product that we all thought was pretty magical and that if we could hang around long enough, it would find its home.” - Tim Westergren, Pandora Cofounder

2/ Validation:

While having a vision is important, the product has to be validated in order to prove that it has potential.

In the case of Pandora, validation came in the form of agreements with companies including Barnes and Noble and AOL to license its technology. While those deals weren’t sufficient to cover the expenses, they showed that there was interest.

3/ Persistence:

Tim was rejected by investors 348 times before Walden Venture Capital agreed to lead Pandora’s second round of funding. By then, he had already maxed out 11 credit cards!

The round was for $8 million, $2 million went to pay back owed salaries and the rest was used to build the streaming platform.

By the time Pandora went public in 2011, it had 80 Million users. The platform was so good that it mainly grew through word of mouth while spending next to nothing on marketing.

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Can I ask you for a small favor?

I started What They Did Right to share stories of successful companies that I read about and frankly, I didn’t expect 1,050 people to subscribe to it. I’m grateful to every one of you and want to learn how I can further improve it.

I would like to hear your feedback. Can you leave me a comment with any tips or notes that you think would make this newsletter better? You can also let me know if there are any companies that you think I should cover.

Leave a comment

Till next time,

Mahmoud

Before we get to the referral program, you might be wondering, how did they even get to the first 100k?

Before online file sharing was a thing, files were transferred from one device to another using thumb drives. While this wasn’t an issue for most people, it definitely was annoying for programmers who had to share files with each other all the time. This drove Drew Houston to start DropBox.

Since he knew that file sharing was a pain point for developers, he focused on attracting users through tech forums like Hacker News and Digg. The private beta launch video got over 12,000 diggs(upvotes) bringing in over 75,000 users!

Ok, now back to why Dropbox’s referral campaign worked:

1. Clear messaging and 2-sided rewards: many referral programs don’t pan out because they only incentivize the referrer, others have complicated reward schemes. Dropbox had a straightforward message: refer a friend and you both get an extra 500 MB of storage(up to 16 GB).

2. The invitation process was as easy as they come: Whether you believe the three-click rule or not, you have to agree that the fewer the clicks the better. Dropbox made the invitation process part of the onboarding and assigned each user a unique link to share. To make it even more convenient, they allowed users to sync their email contacts and invite them all at once.

3. Users could track their referral status: Dropbox included a dashboard that allowed users to check how many friends successfully registered and the total space they earned.

   

4. The team built an impeccable product: to quote Drew: “Fortunately, we spent all our effort on making an elegant, simple product that “just works” and making users happy.“

   Hey👋! Every Monday I share bite-sized startup case studies. Subscribe to receive the next one in your inbox

Here is how he did it:

Be Frugal At First

Instead of spending months working on branding and perfecting the formula, Moiz started the company in 12 days with a $1,000 initial investment. At first, he launched it on Product Hunt and only made the first order from his supplier once he saw that there was demand. This helped him avoid wasting money early on before knowing if the product had traction.

Instead of working with a large manufacturer, Moiz decided to white label the deodorant from an Etsy seller, here’s why:

• Low Minimum Order Quantity: manufacturers were asking him for a minimum order of 5k-10k sticks. The Etsy seller agreed to start with a 100.

• Speed: Conventional suppliers needed 4-6 months to make the products since they had to follow a schedule, on Etsy, it only took a week.

• Credibility: Back in 2015, most manufacturers wouldn’t even talk to Moiz since Native was still very small.

Sell, Get Feedback, Improve, Rinse and Repeat

When the business first launched, the product was mediocre and while people were willing to give it a try, only 20-22% reordered it.

Moiz spent the first year improving the formula. Once a customer bought a deodorant, he would send them a message saying:

You got a stick of Native deodorant. Love to know what you think about it. If you love the product, please leave a review on our site. If you don’t, reply to this email and tell us what you don’t like, and we’ll try to fix it.

After going through many variations, he finally launched the new formula in the summer of 2016, and the reorder rate started increasing till it reached 50%.

The month before Native was acquired, it was doing $1 Million in net profit!

That's all, thanks

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Around that time, Evan was experimenting with WebGL, a new technology for rendering high-performance graphics within a web browser. After realizing the power of WebGL, the duo decided to build a collaborative web-based graphic design platform that utilizes it.

Why a web-based design platform? In 2010, Google acquired DocVerse and turned it into Google Docs. Dylan and Evan saw that there was a shift toward web apps that are inherently more accessible than desktop alternatives. Meanwhile, even though the design process is collaborative, the popular tools were all single-player desktop programs.

Dylan and Evan weren’t designers and didn’t know the pain points their potential users faced. They quickly turned this weakness into a strength by focusing on building ties with the community early on.

• Even in the earliest phases of development, the team would reach out to designers to get their feedback. They also hired an influential designer as an evangelist in order to spread the word.

• As the company grew, it scaled the community engagement initiative by hiring designer/community advocates -- more than 70 advocates currently work there.

• While companies such as Adobe focused on signing large corporate clients, Figma zeroed in on onboarding individual users who would then invite their colleagues to collaborate on the platform, and when a user moved to a new company they would bring Figma with them leading to its viral growth.

Soon, Figma became the preferred platform for designers and even employees of Microsoft which is a strategic partner to Adobe opted to use it instead.

Fast forward to September of this year, Adobe announced a deal to acquire Figma for $20 Billion, its largest acquisition to date!

A few months after launching, Cameo only had three celebrities, Devon Townsend, one of the cofounders and a Vine influencer, Cody Ko, another Vince star, and Cassius Marsh, an NFL player. While Devon and Cody were getting overwhelmingly positive feedback after selling cameos, fans of Cassius were calling him a sell-out.

It became clear to the team that influencers were a better fit for the platform than a-list celebrities for several reasons:

• They are already used to selling merchandise to their audience.

• They have loyal fans that relate to them more intimately after watching many of their videos.

• They don’t charge crazy prices: $5-10 compared to ~$2,500 that celebrities like Dwayne Wade and Lebron James were charging on other platforms.

"The contrarian bet we made was that it would be way better for us to have people with small, loyal followings, often unknown to the general population, but who were willing to charge $5 to $10." — Steven Galanis, Cameo CEO

Once the team found their niche, they hired 15 college interns who spent all day DMing influencers.

The Flywheel:

Cameo’s strategy worked beautifully because first, the creators promoted their Cameos on social media attracting new customers, and then the customers shared the videos and their reactions luring more celebrities and users into the app.

By 2020, Cameo had 20,000 creators. They haven’t released more recent numbers but all we know is that the company is valued at above $1 Billion!

Personally, my favorite category of Cameos is job-quitting ones so I’ll leave you with one below. Until next time 👋

Here’s the strategy behind his success.

Let’s go back to 2011, Gillette controlled ~70% of the market for razors, but Michael identified several weaknesses in the company’s products:

• They were overpriced: Gilette has large marketing, R&D, and retail expenses including paying massive fees to celebrities that endorsed them which forces them to increase prices.

• Overcomplicated: Gilette kept on introducing new blades with technologies and gadgets that customers didn’t need.

• Inconvenient to buy: In many stores, the blades were kept inside locked cabinets and you had to ask someone to unlock them in order to buy one.

Michael spent a year testing different sales strategies and the model he came up with at the end is simple yet brilliant: a monthly subscription for razor blades priced at $1.

And to double down on the idea of selling $1 blades, he named the company DollarShaveClub.

This brings us to 2012, the website and products were ready and only needed marketing to get the customers coming. The only issue is: the company didn’t have a large marketing budget.

Michael’s sense of comedy and Improv training came in handy. With the help of a friend from an Improv class he attended, and at a cost of $4500, he shot a video to promote the company’s razor subscription.

The video was a direct attack on Gilette, making fun of their overpriced and technologically advanced razors!

I was just really trying to find a fun, resonant way to tell the story of what our business did and why it existed.

In order to ensure that startup media outlets covered the launch, he released the video just before South by Southwest, to avoid competing with other startups for reporting after the infamous tech conference.

Customers loved the promotion and within 1.5 hours of uploading it, the website crashed from the traffic!

By 2016, Dollarshaveclub had gained a 5% market share. That year, Unilever bought the startup for $1 Billion!

1/ Recognize the Signals

Fashion Nova started as a Brick and Mortar store. The founder, Richard Saghian was familiar with the fashion industry through his father’s business.

Richard noticed that styles similar to the ones FashionNova offered were going for double the price online. It was clear that he had to open an e-commerce store for the brand.

At that time, many of his customers were posting photos of the brand’s clothes on Instagram. He decided to create an Instagram page to capture the traffic from those posts and direct people to his web store.

To encourage them to post more, Richard offered customers free products in exchange for tagging Fashion Nova in their photos.

Before launching the website, Fashion Nova’s Instagram page already had 60,000 followers!

Once Fashionnova.com went live, it sold out within one weekend!

2/ Build a Community

Many fashion brands treat their Instagram pages as bulletin boards to display their new releases. They don’t give much care to interacting with their followers.

Fashion Nova took its Instagram game to another level.

They created the #NovaBabes hashtag for customers to tag their pictures wearing the brand’s styles. Fashion Nova likes and comments on the post and features some of them on its account.

Richard bet on partnering with influencers that genuinely liked the brand and weren’t only promoting it for the sake of money.

When Fashion Nova first partnered with Cardi B, she wasn’t yet a signed artist. This helped the brand build a bond with the rapper who to this day promotes Fashion Nova’s styles.

Today, the company collaborates with a network of more than 3,000 influencers!

The agreement they have with the influencers is simple: Choose free items each month and post about them.

3/ Follow the Trend

Riding social media trends is Fashion Nova’s bread and butter.

The company goes from ideation to having an item on its website in a matter of weeks!

Here’s how they do this:

• They go from concept to sample in <24 hours by partnering with local LA manufacturers.

• Models are present at the office Monday through Friday to pose in the new clothes.

And to make it easier for the new styles to spread through word of mouth, they give them catchy names such as the Care For The Flare Sandals.

4/ Give the Customers too sweet a deal to say no to

Most of the collection is priced at less than $50 and there are always sales to sweeten the pot. I mean who can say no to that!

Richard built a fashion powerhouse by creating his own rules instead of following the conventional path. His key success factors: He catered to the taste of his customers and engaged with them on the platform they are active the most on.

In this post, I want to discuss lessons for Casper’s success and decline.

The Success:

#1/ Choose your market wisely

Let’s list the problems with the mattress market before Casper was launched:

• Sleeping market: The market hadn’t seen innovation in years. Stores were Brick and Mortar and many hadn’t done renovations in years.

• Confused customers: Every store had plenty of options that were very to compare. Many of the options were basically the same mattress with a different label.

“In an industry where everything was just terrible, the bar could not be lower to do anything cool, unique, or fun,” - Philip Krim, Casper Cofounder

#2/ Obsess over the customer experience

The team made sure to give the customers the best experience possible:

• Limit options: instead of having infinite models, Casper started by creating “one perfect mattress”.

• Guarantee satisfaction: The startup started with a 100-day free return policy allowing customers to try the mattress before fully committing.

• Cut the middleman: By going direct to consumers (D2C), Casper was able to offer lower prices by eliminating the need for retailers.

• “Mattress in a box”: People loved filming the unboxing experience and watching the mattress inflate which helped kick off the brand’s growth!

Within 2 months of launching, Casper hit its 2-year revenue target of $1.8 million!

In 2020, the company filed for IPO.

The Decline:

When Casper filed to go public, the ugly truth was revealed… The company was hemorrhaging money. While the hype helped the company reach millions of customers, it failed to build a sustainable business model.

#3/ Differentiate yourself

Successful brands differentiate themselves through unique aspects.

Nespresso has its patented capsules. Redbull has many sports teams and sponsorships to set it apart. Casper has … nothing. Even the mattress in a box concept was invented by another company.

Only a couple of years after it launched, competitors started popping up.

There are currently over 170 players fighting for a piece of the pie.

And of course, more competitors means more marketing is needed.

#4/ Nail your unit economics

It all boils down to unit economics.

By the time Casper filed to go public, the company was losing over $300 for each mattress sold!

You might think that the entire D2C model doesn’t work, but that’s not true. One of the 170 competitors that launched is called Purple. Unlike Casper which raised over $300 M from investors, Purple only raised $2 M so the team there had no choice but to be profitable from the get-go.

By the time Casper was acquired in 2021, it had lost over 75% of its valuation at its last funding round as a private company!

Here’s 5 lessons:

1/ Improve an existing product

Before launching Canva, Melanie was a part-time graphic design teacher.

Graphic design at the time was a hassle:

• The tools were difficult to use.

• They were desktop-based and didn’t allow for collaboration.

Melanie wanted to make a web-based design program that is easy to use and collaborative.

2/ Embrace a niche

Initially, Melanie decided to narrow down. Specifically, to yearbook design.

Why yearbooks? Melanie witnessed her mother’s struggle as the yearbook coordinator.

The coordinator is usually a teacher, and many lack the experience needed to design the yearbook.

With a $50k loan from family and friends, she hired an agency to build the software.

3/ Focus on What Works

Melanie’s boyfriend Cliff joined the new business which they named Fusion Books.

While attempting to acquire customers, they tried everything from direct mail campaigns to education expos.

They found that their best sales channel was cold calling.

They would call a school and send them a sample yearbook.

In the first year,16 schools signed up. By the third year, over 100 schools were using Fusion Books!

Soon the company reached $2 million in revenue.

After the success of Fusion Books, Melanie decided to expand beyond yearbooks. But in order to do that she had to raise funding which takes us to the next lesson.

4/ Be Persistent and Constantly Improving

Melanie first met a VC, Bill Tai, at a conference in 2009. But it took her over 3 years to raise her first funding round!

She spent countless hours hiring engineers and convincing investors to fund her.

She even prepared a pitch deck to lure in a top Google engineer!

Before securing the funding round, Melanie had pitched her idea to over 100 VCs without success.

Every time someone asked a difficult question, she would edit the pitch deck and address the question at the front.

Soon she had solid proof of concept, a great tech team, and a pitch deck that won the top investors over.

5/ There’s Nothing Wrong With Being Naive

Today Canva is valued at over $40 billion. But it might not have existed had Melanie known what lay ahead of her when she first started. To quote her:

“One of the wonderful things about this whole experience is that I didn’t know a lot going into it and I think that learning every single day as you go has actually been one of the most critical parts because I think if I knew all the lessons that I’ve had to learn over the last 12 year I would have been incredibly intimidated and potentially not even wanted to start.”

Thanks for reading, Mahmoud.

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Let’s dive right in.

How To Make Million Dollars?

The answer is simple. Sell a million items for $1. You know that this is almost impossible, right?

But Alex did it.

This was in August 2005. He built a website with 1 million pixels and sold each for $1.

After convincing his friends to buy 4700 pixels, he hired a PR agency to write a press release.

It caught the attention of BBC and The Guardian and it went viral. By Christmas, all the pixels had been sold!

“In 4 months, I went from living at home with my parents to being a millionaire.”

How To Go Viral

In the next few years, Alex built several projects that went viral using the following strategy:

• Keep an open mind: you need an outlandish idea(eg: how to make a million dollars in 2 weeks?)

• Keep it simple: People should be able to get the idea instantly.

• Give it a great name: “Puns and descriptive names work best.”

• Make it Shareable: Users should be able to share their experience in a tweet.

And finally, experiment. Going viral is like catching lightning in a bottle, you probably will not succeed on the first attempt.

This Brings us to….

Calm

Alex wanted to build a meditation app.

The problem with meditation? It is a niche topic.

In order to spread the word, he had to build a simple tool that could catch the eyes of millions.

Enter donothingfor2minutes.com. A 2-minute timer that restarts if you move the cursor or press a keyboard key.

Here is the thought process behind it:

“What would the simplest website in the world be. It would be a website that does nothing. Let's build a website that invites people to do nothing. Okay let's invite people to do nothing for two minutes.”

Getting 320 upvotes on Hacker News helped seed the viral loop.

And to keep it going, he added a share to Twitter button.

People loved the website. It got 2 million visits in 10 days.

In order to convert visitors to users of his future app, he added a prompt at the end of the timer asking visitors to submit their emails for future tools. Over 100,000 people signed up!

Thanks for reading — Mahmoud