Minted: Mariam Naficy (2018)

Hey everyone, just want to let you know that the How I Built This elves are hard at work, and over the next few weeks, we're going to be sharing some of my live conversations from our recent summit in San Francisco. You'll see them every Thursday in your podcast feed. In fact, we posted our first one last week. It's with Sarah Blakely of Spanks, and you should definitely check it out. And we've got a Bunch more on the way, Kevin Sistrum and Mike Krieger of Instagram, Terry Kharid of Edible Arrangements, and many, many others, so keep checking for updates. All right. Today's episode is my conversation with Mariam Nefisi. She founded a beauty company called Eve, and then the stationer company, Minted, which Almost died.

before Miriam figured out how to grow it into a multi million dollar brand. It first ran in June of last year. There you go. Oh. So April two thousand eight you launch minted

And and you're like the door's open, the shingles out, you're excited, you pop the champagne corks, and Nothing. Nothing. Absolute dead silence. No orders. There was not a sale to be had. It was terrifying horrible. Horrible. And we almost I really contemplated that moment. This is a failure.

We need to shut this business down. We need to give whatever remains of the money back to investors. Because it's a it's a total failure. From MPR, it's how I built this. show about innovators, entrepreneurs, idealists, and the stories behind the movements they don't. Guy Roz, and on today's show, how Mariam Nefiisi turned her online stationer store into one of the

Biggest platforms for emerging artists on the internet? And in the process transform the business Personalized stationary. Back at the end of the nineteen eighties, at age thirteen. I was getting ready to officially become a man.

This is the age at which, according to Jewish tradition Boys enter manhood and they have a bar mitzvah. There's a big party. You get hoisted up on a chair and paraded around a dance floor, you serve salmon or chicken, you get the idea. Anyway, about eight or nine months before the big day, I remember going with my mom to a stationer store to look at tons of invitation samples. We checked out fonts. Paper stock colors, we ended up going with Burgundy Black and Gold, she put down a deposit. It was a long process. Now compare that to when my son was born 25 years later. I went online, I uploaded a photo of his

Pink little face, I picked a layout, uploaded my address book, put in my credit card details, and bam within like Three days? Everyone on my list received a beautiful birth announcement in the mail! So thank you, internet. Now this is the revolution Miriam Nefisi tapped into in 2007 when she launched Minted, but what differentiates Minted is a major pivot Miriam would make early on.

Because instead of just selling personalized holiday cards or wedding invitations, Miriam actually built a platform for artists to showcase their work. And she did this by tapping into another revolution that was happening in the early two thousands. Crowdsourcing. But before Minted was even a thought in Miriam's mind, she had ridden the dot com wave of the late 90s with a company called Eve. Eve was a website that sold cosmetics.

And at a very young age, Mary Am and her partner manage to sell it. before the dot com bust. And the thing about Mariam is that despite launching two successful companies, She never intended to become an entrepreneur.

Mariam grew up in Tehran. Her mom was an artist originally from China. Her dad was an economist from Iran. And toward the end of the nineteen seventies, as the situation in Iran became more volatile, The family decided to pack up and flee. You know, the environment

was unstable and we did not you know, it it was very unclear what was gonna happen. I I I think that we were we were really worried about what would happen to us. Um in the new regime. So Yeah, I guess my Dad thinks of us as refugees. which is when you leave unwillingly. Uh when we got here it was the you know, soon after we arrived the hostage crisis started. Yeah. And that was not a great time.

to be Iranian in the US um And being a kid in school that was really difficult. I basically really honestly tried to Americaniz and fit in as fast as I possibly could. Um I really wanted to integrate. And I when I came here I actually had a pretty I had a strong accent I was two years younger than everybody in my class all the way through basically school. I was two years younger, so I was small and small, young and foreign. And uh I just I really wanted to be American. And and honestly I sort of feel like the whole time, even when I was in Iran, I felt like a little bit of a

you know, an outsider there as well. So you're always If you're like me and you're you move around a lot and you're of mixed cultures, you're you're never really gonna feel like you belong to one place or one culture, right? You're always gonna feel a little bit like the outsider who's traveling through time and space as as an observer. W were you a pretty good student as a kid?

I was. I was I was that Nerdy girl who sat at the front of the class with glasses on who everybody wanted to get help from with their homework. Quiet. I would say quiet and and pretty competitive. Very competitive. Yeah. And w did I mean, as a kid did you have any real interest in like business or entrepreneurial stuff.

No, my my parents I come from a completely non business family and Honestly, you know, with the Iranian upper class, uh, you know, you didn't you didn't you they didn't set up business as sort of the vaunted thing that one goes into. things that were in in in my family very uh admired were things like being a doctor, going into foreign service in the government, for example.

So when I was growing up in Chevy Chase, not once did business cross my mind. I was thinking Law and uh I I I do remember my mom On the first day of first grade. sort of bending down.

And she said, I want you to go to school and I want you to beat all of the boys. So you uh you eventually went on to uh to call to Williams College, um in in Massachusetts. What did you w what did you uh do after you you graduated? So That's where I did do the the the expected

Classmates who were in economics and poli sci were interviewing for jobs. On Wall Street. And in management consulting firms. And those firms had these huge processes on campus recruiting processes. So I just so I went to Goldman Sachs as a financial analyst in their investment banking division. And you loved it. I can't say that I love being a financial analyst. That it is sort of like loving bootcamp.

I don't know if you're familiar with it, but you you end up working very, very long hours. Um but I will say it's a great training ground as to what work ethic really means. Because you you can't imagine working harder than than what you actually physically pull off as a financial analyst. And all you were doing was working.

All I was doing was working. So I was twenty and I was w I was eating breakfast, lunch and dinner at the office. And I I was actually selling I had a desk on the bond trading floor and I was selling bonds as well as doing working with clients. So before I could actually drink, I was selling bonds. So before I could drink, we go. So you I I guess y you were doing this for uh a couple of years and then at a certain point you decide to go to to business school. Were you Were you thinking in your mind like okay, I'm I'm gonna go to business school and then I'm gonna start a business? Um, so what happened was I

At first was just thinking about going to business school because I'd actually done fin investment banking. And management consulting and

I thought perhaps I would want to go into consumer products or retail. But I didn't get into Stanford the first time I applied for for business school. And so I decided to take a year off and try to boost my And went to work for an entrepreneur. Maurice Wardegar in the restaurant business, actually. Who was a Stanford grad and he became a key mentor to me.

And he s he was starting our chain of restaurants in Palo Alto and all over California. But I was so inspired and bitten with the entrepreneurial bug during that experience, and Maurice importantly said to me, You really You really could do this, you could start a company, I think you should really consider it. Because we would spend hours talking about entrepreneurial ideas, venture capital, and just get becoming completely obsessed to the point where I thought, Why go to business school? A real entrepreneur doesn't go to business school. I'm not even interested anymore. And at that point I thought, all right, I'll apply one more time because my boyfriend who became my husband was applying I thought, all right, let's I'll throw my hat in the ring one more time. And and then Stanford accepted me. Yeah.

So you go to business school. By the way, I I read that you while at business school you published You published a book called I'm gonna read the title of this book called The Fast Track, The Insider's Guide to Winning Jobs and Management Consulting, Investment Banking. And security trading a book That has sold like 50,000 copies. That's very precocious. I mean that's like super like that is it's like overdrive. Precocious. Yeah, so the reason I did that was I thought, well one, it's a market need. Yeah. I know how to fill this need. I I have done so much recruiting at the at the two firms I was working at that I knew that there was a need for the book. And I wanted to experiment to see what would happen if you create a consumer product that you know that there's a need for. Can you can I actually put a product together and sell it?

And I also thought it would be um a good project to demonstrate that I had some I guess Hutzpah to be able to get into Stanford. So I I sold the book, right? And then I I knew I'd sold the book to a publisher Broadway before I w as I was applying and I think that helped differentiate me as well. And then I used the the advance to pay for business school, which I needed to pay for. Yeah. So it was a way to pay for school. So at Stanford did you did you actually have a a business plan or idea that you wanted to put together? Well, I started in the second half of the year uh f so first of all

second half of the year at Stanford I was taking every entrepreneurial class I could and trying desperately to get into the best classes. I was auditing some sitting on the floor of others. Um And then working on plans. And one thing I knew that that I wanted to do was find a partner that I really liked. So I called a friend of mine in New York. and tried to convince her to come to San Francisco and start something with me. And we had two ideas. And she said well I'll start a company if we if we pursue my idea.

Which is selling cosmetics online. And I and mine was to do market research online, sort of like a survey monkey. What was her name? Uh Varsha Rao. Mm-hmm. And so we decided to pursue

cosmetics,'cause I thought, sure, why not? I I wanna work with you and I need to get to convince you to come out, so let's work on cosmetics. I I've used cosmetics before. We can figure this out. Um And so I convinced her to move out. To come to San Francisco to help s you start a An online c cosmetics company. Mm-hmm. Yeah. And she slept on the couch in our studio apartment or our one bedroom apartment.

And in the morning we'd get up in our pajamas so we wouldn't wake up My my now husband, and we'd sit on the couch and call all the New York Cosmetics companies from our couch in our pajamas. And convinced people to sign on with us to distribute on this thing called the internet, which

We were extremely suspicious of. So that was a adventure. U so the business was going to be just an an online store selling all kinds of cosmetics to every different brand, that was the idea? That's right. So the idea was to create a replenishment brand for cosmetics. We thought skin care. Skin care, hair care, you know your favorite and you just want to replenish it because at that point everybody was telling us nobody was going to buy cosmetics online that they'd never tried. Yeah. And moreover, women don't shop online. Right. That's a fact. Yes.

Women don't shop online and nobody will ever buy makeup online. And and I I'll just say in my career That has happened repeatedly, right? Where people will say, No one's gonna buy paper online. Yeah, who's gonna buy that? No one's gonna buy shoes online. No one is gonna do this. No one is gonna do that. Yeah. So I mean if you hear that as an entrepreneur, you've gotta discount that massively because trust me, it's been everything, all of those things have been said. So when you approach these small brands, Did any of them I mean why didn't any of'em just say, uh well, we'll just sell'em online ourselves. Why were they attracted to what you guys were offering them. Well, in those days

There was no you know solu that would easily allow a small brand to actually sell online. I know it sounds crazy, but there was no solution. And so First of all, nobody wanted to sell online. We would have to go in there and convince them that the internet was not bad. We we also actually hired a a woman from Macy's who was formerly from Ma at Macy's is a big manager of the cosmetics business and she ended up being our river guide in ch making introductions for us, helping advise us.

Yeah, if you go to Chanel, wear the Chanel nail polish, for example. That was that one stood out. Um they'll recognize their colours on you. So you and Varsha and by the way, what's your husband's name? Michael. Michael, okay, so you, Varsha, and Michael are living in this uh apartment. Uh you and Varsha decide you are gonna start an online

Cosmetic store, which today doesn't sound like that r big a big of a deal, but I I guess in nineteen ninety eight that was kinda revolutionary. Right. Nobody was selling cosmetics online. Nobody. Uh can you believe literally no one so yeah.

I wish I had some machine. I could go back and start a cosmetics company. Yeah. And then you know, to to start a company, you know, I basically took a white sheet of paper out and started drawing a website. on a white sheet of paper in my kitchen, along with another sheet of paper where I was trying to come up with metrics As to what I would call Different. things like people coming to your site and

what would you call the metric where someone converts into a customer and everything had to be invented literally for the first time. Then we went through really insane. year. So we I graduated in nineteen ninety eight. We um immediately started fundraising.

But w was there was it easy to raise money in nineteen ninety eight? Nineteen ninety eight it was getting pretty easy nineteen ninety nine was crazy. Just cause it was the dot com boom. It was boom. It was starting to boom. Yeah, it wasn't the height, but it was getting there. And I sense that there was an opportunity for m for me to get capital even though I was twenty seven. And uh had no work experience really. And people liked your pitch. They loved our pitch, they loved us, and they loved our pitch, and we had a lot of interest.

We ended up in a interesting situation where um We we did experience some collusion actually. This was a really difficult part of that journey where In the old days. You could have VC firms gang up if they could find out who else you were talking to. they could collude and basically work with each other and partner together to to drive your price down, your valuation down. And I had heard about it at business school in a lecture and it's sure enough it happen it happened to me. So we had a couple term sheets come in for our

First round. Of financing. And it was Idealab plus a couple of others. But Two of the firms decided to

They first they found out about who we were talking to and they decided to collude. So we signed a term sheet with one player. And they were valuing us straight out of the blocks just as people and with this PowerPoint presentation at six million dollars. Right. Pretty good, right? Yes, it was fantasti we were very happy. We it was a uh prestigious firm. Maybe they had a office on Sandhill Sand Hill Road.

But they turned around and actually Decided to partner with another firm. And they called us and said We're sorry. This is now their deal.

The terms are changing. The terms now became We need you to move. cities to where this other firm is. We're gonna bring the valuation down to four million.

And i it was a collusion. Straight like a textbook collusion. Hold on. This is like Darth Vader territory. Like the terms have changed. Just explain to me. how that worked. How that was like allowed to happen. Yeah. So it's a term sheet is Unfortunately not binding. It's a indication of interest that's really a build up of good faith. And so you you could do it and get away with it. Absolutely. And it happened a lot in

you know, in n the night late nineties when You didn't have online transparency and and reputation. where other entrepreneurs could learn. about what people were doing to you. And so there was no consequence. And so you could become as an investor much more abusive. So what did you what did you tell them when when they said that? They said it's four million bucks and here you go.

So what's fascinating is we had not yet called Bill Gross to tell him that we were turning him down. Bill Gross was the guy who at Idea Lab. in Pasadena. So we we had had this third term sheet. And we were planning to call him, but we just didn't have the time. We hadn't had the time to call him. So instead of calling him to turn him down, we put the phone down with the other group, we picked the phone up We called Belgoros and we said, We're signing your term sheet, we'll be in Pasadena tomorrow morning.

And we Exited the side door. Wow. Okay, so you ha you raise some money, it's ninety eight. How long be be between the time that

You went to investors for seed money and you actually launched the website. Um We took the money in in nineteen ninety eight and we launched in July nineteen ninety nine. And what describe and so by the way, we should mention the what the name of the website was I'm sorry, the name was Eve.com and Like Adam but Eve. And Eve, yes. So when you launched Eve.com, um

D did people find out about it right away? H how did people even know where to go and how to look for it? Yep, so we we ended up with a massive amount of press coverage. And We actually had a lot of money for marketing and we were encouraged to spend it. 'Cause at that time it was land grab time. Everybody was trying to grab market share as fast as they could. We launched in and there were four competitors who launched right behind us and

One of the big things I learned to do was just completely block out. any fear or notion of the competitors, keep your head down. And so the minute we opened the doors, the th literally the product started selling ridiculously quickly. Wow. I mean we did ten million dollars in sales in our first year. Amazing. Yeah. It's a very it was a runaway year given that it was our first year business. That must have been amazing. You were so young and you were like huge. But we were uh d lest anyone be confused here, we were working till ten o'clock at night every night in the office. You know, this is where the investment banking background came in handy because we were trained to operate like that.

And you know, my husband would come meet me at the office at ten and we'd have dinner at ten thirty every night. So you uh In two thousand, like a year and a half uh s after you launch You guys get an offer.

And You sell this company Eve.com is sold for a hundred and ten million dollars. Uh, which I mean, I I I don't even want to ask the question why. I mean it seems obvious. It was a lot of money and A no brainer, I guess, right? Right. So

w you know, this was a time when we were trying to raise a series D and honestly the market was starting to get a little skeptical. You know, when are you gonna make a profit? What's going on? And so I start for the first time and that for the fourteen to sixteen month period, I started realizing that getting the next round was going to be difficult. And we could take have safe harbor for the company inside an other company. I thought it would probably a be a wise move and

We closed it in April two thousand. Two weeks later the market started crashing. Just like by the skin of your teeth. Yeah, we we yes. We had the foot in the door as the door was closing. Do were there other people in your position in the industry who maybe didn't have as good timing

as you guys did who were, I don't know, maybe resentful of of your luck or your your foresight. I think there were a lot of cases where people were convinced by investors or convinced themselves to keep going and wait for the public exit. because clearly at that point everybody was in everybody was enamored of the IPO. And I do think people were resentful of us for this and and they considered it

Lucky versus any type of hard work or intuition or anything else. And tha that was unfortunate'cause we worked our butts off to build this business. I mean, we were working I I basically lived at the office during this time. I never left. Um so um We built a pretty good business in a year. It was Ten million dollars in our first year. Yet yes, people w I think were very resentful that we had sold at the right time.

So Did you just like Go to Hawaii and like Kick it and drink pina coladas? Uh, I did take a year off and my husband and I traveled around, it's true, but

About two months into it, I got I was absolutely miserable. I felt like I was missing out on what was happening and and and and and and fundamentally There was a perception that we got lucky. With Eve.com. And I had this feeling that

You know you that saying once You're lucky, twice you're good. I wanted to See if I was actually good or not, you know? And so I think I needed to prove to myself that I could do it again.

In just a moment. how Mary Am got into the stationary business and almost abandoned it. Right before stumbling on an idea. That would transform the entire industry. Stay with us, you're listening to how I built this from NPR.

Welcome back to how I built this from NPR. I'm Guy Raz. So it's 2002, and after a break from work, Miriam Nefisi decides to get back in the game. And it turns out the Body Shop wants to create an e-commerce division, and so they ask Miriam to run it. But after a few years working for a big company? Miriam starts getting that entrepreneurial itch.

Once again. When you have entrepreneurial tendencies, sometimes you'll see something that you can't resist. And I I I saw I saw a change in what consumers were willing and excited about consuming. And so, for example, bloggers were starting to emerge that were disrupting uh journalists at at really established institutions and consumers were willing to read them over those established institutions and there was great talent coming to the fore. And so

I was thinking to myself that perhaps in product design There would be A similar opportunity. That you could find talented designers that uh people would rather buy than than not talented designers. So I was started getting really interested in the idea of having design competitions and this idea of crowd sourcing.

And so I decided to take stationary, which was an interesting model for me. And mash it up with this kind of experimental idea. Which was crowdsourcing. And at that time, like if you met a a friend at a coffee shop and and they said, uh, hey, you know, what are you working on? You would say I'm working on this this business that's going to do What? Like w what would you say?

At that point I would have said, We're going to sell stationary online. Which sounds sounds pretty clear. Yep. And it was one foot back in the old world of just take the brands, consolidate them online and sell them. Yep. There was this s slightly embarrassing idea I had, which was to run a design competition around the side and crowdsource designs that weren't available through

the established stationary brands and I was gonna do that on the side. In other words, you ha you said I'm gonna have a site that sells stationary and then on the side we're gonna run like design competitions and uh and maybe we can d d develop stationary based on the winner of that design competition. That's right. Exactly. The idea was focused around stationary retail and it had fantastic economics associated with it. Good margins, it was an inherently viral product because your name is on the back of the card, your your company name. But the shopping experience offline was pretty archaic. You'd go to a store, there'd be a piece of paper you'd fill out. To order some custom cards, they'd have to fax it in to the supplier. It was an archaic, slow, and really inconvenient process.

And I thought, in my opinion, the design could be improved greatly. And that gave me an opening for crowdsourcing. On the one hand. On the other hand I was a little bit, honestly, a little bit risk averse, and I thought that

I did not want to raise venture capital again because I had had some bumpy experiences. In the first in the first go round. So I thought I need to find a business model to apply this idea to. That is very, very cash flow positive.

And doesn't require a lot of cash. And I'm going to run it as a cash flow business. In other words, a business that could f just self fund, right? Because of the revenue. So You didn't want to have to raise a lot of money, but you still had to raise some money, right? To get this off the ground. Right. So at this point I was going to friends.

And because I had successfully sold Eve, they were willing to listen, and so I was actually able to raise a pretty big angel around of two and a half million dollars, which is big for an angel round. So you decided you weren't even gonna go to VCs initially. That's right. At this point I wanted much more control. I decided not to have a co founder from the outset.

And so I put the plan together and what I found was many of My friends were a little bit they were very, very supportive, incredibly supportive. But they were all a little bit wary of crowdsourcing because it was

not a tried and true model at this point. What was tried and true was E commerce one point oh which is take all the brand names, put them online And provide convenient access online. So that's what I did. I signed up all these stationary brands and I put them online and then the in the in the background I hired a coder who was in college in Portland. And I would work at night on the competition structure, which was my real passion, which was to try to crowdsource the content. So you raise about two and a half million dollars and Angel

funding and you Um are ready to launch this site. Uh, which is gonna sell stationary. And by the way, how many people did you hire, did you bring aboard to help you launch it? To launted I had virtually no one. Um, there were maybe five of us, something like that, and I That's when I raised um I finished the Angel Round.

We sublet a little bit of space in Jackson Square. And we started. With just a few people. First year. And who built the website? How did you do that? So we spent almost all the two and a half million on an in house team

Who came on board an engineer. And the key challenge was how to render the customization of your stationary online. That was and that was so that wasn't something we could buy off the shelf from anyone, so we had to build it ourselves. In other words, just to be clear, i a way to be able to see what your stationery would look like. That's right. So our engineers built A way to see your customized text appear on the screen in inside your stationary design and that you couldn't buy from any other technology company.

So I spent most of the two and a half million dollars I raised Going around signing up all these exclusives with stationary brands that you would see at a papyrus store, for example, you you see them They've already gotten distribution, they're well known wedding brands, stationary brands.

I spent most of the time and the money doing that and then I just couldn't let go of this other thing that was really risky and unproven, which was to have a design competition. And I really, really wanted to let myself do that, but I just couldn't let myself do it. It was this this torn this tear, so At night I worked with a college student who I found on rent a coder, which is embarrassing to admit

And we we worked on this at night. After everyone admitted went home, I would build the competition structure with this guy. And Um I really wanted to do that full time, but I just c I just didn't let myself. So April two thousand eight, you launch minted

And and you're like the door's open, the shingles out, you're excited, you pop the champagne corks and Nothing. Nothing. Absolutely dead silence. No orders. There was not a sale to be had. It was Terrifying and horrible. Horrible.

with Eve we we opened the doors and the makeup was just flying out from day one. I mean it was it was this massive amount of sales. Here there was not one thing sold in the first thirty days, not one sale. And we almost I really contemplated that moment. This is a failure. We need to shut this business down. We need to give whatever remains of the money back to investors. Because it's a it's a total failure. D did you at least have like positive buzz around it or or anything like that? We had a really negative article from TechCrunch.

What did it say? Terrible idea. This person's failed before. I think that they didn't really even understand that we had, you know, it s successfully sold the company for as much money as we did. You mean Eve.com. Yes. So they just made some assumptions and had just a terrible

Uh like that was our our freshman our debut. And so see the so what happened was, and this is what was really fascinating when you look back on it, is we just didn't have enough data. And so what happened was we didn't have enough traffic to really assess whether we were successful or not because nobody nobody knew about us and nobody was coming. And then when they did come, what they were buying were the t it was a tiny little crowd source selection that I mentioned to you that I was my little personal secret hobby, passion. Explain explain how that worked for for a moment. Yeah, so So when we opened our doors in April, we had our very first design competition for what people call save the date cards that people send out when you're about to get married. And and we had very few entries

And I think what would happen is we pick something like Sixty six. Cards. out of that competition based on voting. So the way that minted works is everything is submitted to us via a design competition.

We picked about sixty six designs. And we launched those, but we had hundreds, if not actually really thousands of SKUs that we were carrying from established stationary brands that we launched at the same time. That already said save the date. That already said the save the date or wedding. It was all all sorts of things, wedding invitations, other things that people provide. And we launched all of that stationary wedding stationary product online, and then just our little tiny collection of sixty-six crowdsourced save the day cards. What was really different is that immediately the submissions that were coming in were breaking

A lot of barriers and a lot of molds that have been assumed about that category of product. For example, people started putting photos on them. And I remember our printer who we signed up to do this tiny little bit of business said to us, You know what? In our industry, people don't put photos on save the day cards, Marion? They don't they don't do that. I said I I understand, but that's what's actually being submitted and that's what's winning. So we're gonna sell them. Yeah.

So what happened was within a couple of months we started getting Let's say. One order a day. Seriously one order a day, maybe by June. And then, you know, a month after that it went to two orders a day.

Maybe three orders a day. Still nothing to write home about and you were probably not You're running out of cash. I can't I can't. Absolutely. Our runway at this point is running out, our conversion rate, which is a critical metric that e commerce companies use to determine success was something like point one percent, meaning out of all the people who come,

point one percent buy. And that is really, really low. So ha you're in trouble. Like I'm getting nervous. Yes, and we have you know a couple hundred thousand dollars left in the bank. Um, but then we started seeing that tiny sign of life and I thought, Well maybe what I can do is Take some capital and at least save this business just to recoup the initial investment and that's it.

So um my good friend an angel, one of my really good friends, um, Alex Sluske, called me and said, You know, I'm just getting he's like I just getting nervous about this market. I think you should take some capital, some institutional capital. And I thought, you know, I I feel the same way. I I I should get on it.

So I um went out and I decided to break my own rule and actually raise venture capital. And we raised in We basically closed our first institutional round of capital, so that's where we raised a couple of million dollars. H how were you able to do that if you l if you if what you had to show for was a company that was getting no orders You were losing money. Like why would a venture capital

firm give you cash at that point. That's a great question, guy. Yeah. That's a great question. So The reason why they invested in us was uh Personal reputation. That was it. You know, I'd I delivered one thing successfully before and

This one brave investor. uh from IDG now Ridge Ventures Uh, Alex Rose and decided to take a chance on me. And that's it. That's the only reason. And nobody else was interested. Do you think I don't wanna I don't wanna put you in an uncomfortable position, Marianne, but do you think that anyway Um it's the question it's like that the way I framed that question. Do you think if you would have been a man

There'd been no doubt. Oh yeah, stationary sounds great. Here's the money. I think that if I were a man I would Probably have gotten a little bit more credit for what I'd previously delivered. I think the personal reputation effect of what had happened with Eve would have magnified.

Mm-hmm. But I don't think stationary was very and designed was very interesting to a lot of male venture capitalists and I I don't think that um When I say Silicon Valley doesn't have design confidence I mean the investors in Silicon Valley.

don't really understand design and why it's important. So when you so explain the the business model. I mean, obviously you were selling uh all all of the stationery from from other brands and so you would get a cut of that and that would uh fund your business. That would that would that would bring in revenue. But also you had this crowd sourced um these competitions from designers and then how would that work? Like they would Their their d designs would be

printed by you guys and then they would get a cut of that. Well, the the way it worked back then was that we had the stationary brands who we were basically in a wholesale relationship with we would take the product and resell it and and ear a cut. And we had the crowd sourced side where Designers would submit And they would receive a couple of things. So they first of all they would receive

peer critique and feedback from their peers. We are we built in a critique phase into the process, which was a a benefit. And second, if they won, they would receive an upfront cash prize that was completely at our risk, meaning if the product never sold, they could still keep the cash. And then on top of that, if the product sold. they would receive a percentage of every sale. And so That's how the business model launched, but because

The only thing that sold was the crowdsource product and not What we spent the entire year launching, which was all the stationary brands. We actually made a hard cut over and by Christmas of that year.

We went. One hundred percent crowdsourcing. And so we turned it around. We actually decided to move into the holiday cards business at against the advice of all of our Investors who probably rightly said you should focus on what you started which was wedding. We decided to ignore the advice, launch into holiday cards, and we were

We had an exceptional first Christmas. I mean we were s So Oversold. So the that's when the the company went

through a huge increase in sales. So at what point did you Filling. Um other stationary brands.

Yeah, so that was really rough because I had gone and sold minted as a partner to all of these stationary brands and I felt very Ethically bound. Like you know, I I've made a commitment, I've I've explained why we brought them on.

And now instead this crowd sourced design coming from unknown designers from all over the country is just taking off. And I felt very Uncomfortable. And I and I was lingering in that discomfort for many months. It took me at least nine months to say We've got it cut and run. We're gonna lose all the money we put into those building out those brands on our site. We gotta just cut that.

and shed all of that work, all that money, and all those relationships, and we need to completely pivot towards A crowdsourced model, one hundred percent. I did. But I think also they they understood why why tie themselves up selling online at Minted if if that's just not what's working and the sales aren't happening.

In the meantime. We couldn't print fast enough. the work of the Emerging designers who the customers themselves were picking. So as you start to gain traction those first few years

Did any I mean, w did any competitors try to go after you? Yes. Mm. So

It's twenty thirteen. We have two printers who handle all of our holiday card orders. One does fifty percent, the other one does another fifty percent. The first week of October my cell phone rings at about five o'clock. It's the CEO of a much, much larger comp uh competitor. Mm. And um they basically say we want you to hear the news from us.

We have bought this printing company of yours that that you use, you know, this this this fifty percent player. And we'd love to talk to you about how we could continue supplying you with printing services through the holiday season. Now this is, mind you, two weeks from the start of the holiday season when all of the you know what hits the fan, meaning you have to be prepared. You're s you're spending, you know, ten months of the year preparing for this moment because the seasonality is so high for holiday cards. And um Basically he said, You know, can you come in next week to talk to me and invited me in, I think, for like a six o'clock meeting. ne the you know, the following week. So I went in for the meeting and after a little bit of chatter, um

He said we'd like to buy you. We liked we like to buy your business. And I realized in that moment that that whole thing had been constructed to basically force us to sell our business. They basically bought that printing. facility knowing that you guys would be

in like in a corner. Back to the corner. That's right. So what did you do when when he said we wanna buy you? I mean I mean Well, you know, I was in his office kind of stuck there, so I had to say something. So what I basically said was, Well, let's talk about it. Let's have you know How would this work? And I thought, in the meantime, God, I cannot I gotta get out of this meeting right now and call my my head of supply chain so he can and the engineering team so they can work start working on this immediately. Like, you know, I left the meeting and I called everybody. The team is waiting and we we had a conversation and they were racing around the country trying to find uh printers who would work with us. D did a part of you think that you might actually have to sell?

No, I never feared that we would have to sell. Not once. I knew we would find a way around it. I just I just There's just no way I would let that happen. So what did you do? I mean, uh where did you go? So we found um we found another two printers who were gracious en enough to uh to take us on and we

We call still inside the company it's called Printer Get Inted. Uh because the amount of work and hell our people went through to to do that integration at top speed. Was Dreadful. Yeah. And to this day. That that has left a taste in those people's mouths, you know a

around this potential competitor that still I think is still there. You know? And at at that time, I mean w when when they were going after you, I mean there were There were there were comp companies doing custom stationer that you could buy online.

That's right. So the first generation of companies had been around that captivated people just by the sheer fact that they could make custom stationery for you at a decent price, right? That was just They're almost like an outgrowth of the printing and manufacturing industry, frankly. We came along with real design uh vision and really

tried to change that con entirely into a branded high-end European stationary product with lots of bells and whistles and really change the t the industry. So that yes, there were choices, but we felt the design could be better. And more exciting. And then as this community, creative community blossomed and developed, we realized that we were a creative community of all kinds of different people. Some people Who were former lawyers.

You know, there's an oil rig worker from Alaska. There's a um plumber, a master plumber in New York City who's winning stationary challenges. There are all kinds of people who want to be creative and who want to earn money creatively, and minted is A platform for these people to be seen and discovered. Із Minted a profitable company today. Yes, so we are in the low hundreds of millions of dollars in sales and we are e but da we're cash flow positive. Are you able to kind of just relax now and know and know that

Your business is fine, you will be fine like Can you go on vacation and um disentangle disassociate yourself from from work for a week and not take calls. Like is that Or do you still are you still always thinking about the survival of your company? That's a great question because I think for the first

I Believe it or not. five or even six years, even longer, of the company, there was constant survivability risk, actually. Um Now I feel differently. I feel like the the company, given that it's profitable, given that it's growing so well,

It's a great feeling and yes I can breathe. This this the uh parano paranoid immigrant mentality that I've I think grown up with. Um And then of course I've you know a couple of crashes in the the market. Uh you know

it it it make tends to make you a paranoid person, you tend not to forget any of this. It just it just stays with you. Um but yes, I can I can now say that a yes I can guy go on a on a vacation for a week and not worry, maybe even two weeks and not worry at all. How much of uh of your success is because of of luck? Versus uh skill and intelligence and hard work. I think so much of it is luck. I mean

Think about What would have happened if I had not been able to Leave Iran, right? Uh. Um, how many people are in areas around the world where

They can't. Escape. Uh what the situation that their governments are creating for them. Think about all those talented people who won't ever have a chance.

And and and and I guess I would say the other thing is just sheer wanting it very badly, right? I mean, there are there are a lot of people who are smarter than I am. And I think it's just I I really focused in on something I'm happily extremely passionate about and love to think about all the time. And I would say that's luck and passion probably outweigh the The raw skills.

Mary I'm a Fisi, founder of Minted. Minted's also become one of the biggest crowdsourcing platforms for emerging artists. Tens of thousands of artists submit their work to the site each year. and only a tiny handful are chosen to have their artwork and designs sold on minted. And please do stick around because in just a moment

We're gonna hear from you about the things you're building. Hey, thanks for sticking around because it's time now for how you built that. And today we're updating a story that we first ran about a year ago. And this story does not start in the typical way. A lot of people think of starting a company, they think, oh, I gotta wait for that lightning bolt moment just hit me, like that amazing insight that I'm just like, oh my gosh, I gotta build a company around this. But that is not what happened to Chris Ranaforce. He did not have that lightning bolt moment. What he did have was more of a restless itch. He and his friend Harrison were feeling bored at their 9-5 jobs in Louisville, Kentucky, and they knew they wanted to launch a business. They just had no idea what to sell.

Um, so we would actually walk up and down the halls of Walmart and say, Okay, what if we took that toy and smashed it with that uh home object? What would we get? And what if we took that thing and tweaked that thing, and what if we smashed this with that and that with this? And on one of those brainstorming trips to Walmart, they wound up in the garden section. And they had a pretty big selection of birdhouses. And Chris looked at those birdhouses, but He didn't think about birds. Instead, he thought back to how he and his dad used to build little houses. For bats, literally a place for bats to hang out and sleep in the backyard, which I know sounds kind of creepy. Fifty percent of people out there will think, oh bats, horrible, scary.

The other 50% will think, huh, bats. But whichever camp you're in, Chris wants you to know that bats, they get kind of a bum rap. The vast majority of them do not want to bite you and do not carry rabies. In fact, in many places, bats are in trouble. They're actually running out of habitat, so a nice little wooden house in the suburbs could be the perfect refuge. And as a bonus, they will also eat your mosquitoes. A common bat will eat up to a thousand mosquito-sized insects in an hour. And that makes them one of nature's greatest forms of natural pest control.

So that was it. Chris and Harrison had their idea. They were going to sell wooden bat houses. So now that we've found this concept, we started uh digging further into the bad house market, this this very niche in particular space. Who knew that the bat house market was even a space at all? But clearly it was. And we started noticing that most bathouses on the market, they lack proper ventilation, they're too small, they don't have proper gripping for the animal to hang on. Um or they just don't look good. So Kristen Harrison designed a prototype of a wooden bat house with grooves inside that the bats could grip onto. And then they launched an Indiegogo campaign and were kind of amazed when about five hundred people signed up to buy bat houses. We asked them why did you buy this thing? And I think about two thirds of them said like I hate mosquitoes.

But I don't wanna buy pesticides. I hate pesticides even more than I hate mosquitoes. So the two partners found a manufacturer in Missouri and they shipped out their first bat houses in January. And you should check out a picture of these things. They're made of red cedar, they attach right under the roof of your house, they hold up to a hundred bats. And they look, well, sort of like Scandinavian furniture. If you get a bad house that's beautiful, you're gonna want to put it up on the side of your house, right in the middle of your yard. And then when you have your friends over for a barbecue and they come over and they say, Hey, what the heck is that thing? You gotta say, Oh yeah, it's my bad house. And they're like, Bad house? What? And you say, No no no like Let me tell you about bats. Chris and Harrison's company is called Bat B, and earlier this year they appeared on Shark Tank, where they got an investment of$100,000 from Shark Kevin O'Leary.

And they were both just named to Forbes thirty under thirty list for social entrepreneurship. To hear more about Bat B<unk>B or hear previous episodes, head to our podcast page, howibuilthis.npr.org. And of course, if you want to tell us your story, go to build.npr. dot org. And thanks so much for listening to the show this week. You can subscribe at Apple Podcasts or wherever you get your podcasts. And while you're there, please do give us a review. You can also write to us at hibtnpr.org, and if you want to send a tweet, it's at how I built this or at guy's. Our show is produced this week by Rem Teen Arablui who also composed the music. Thanks also to Candice Lim, Julia Carney, Sanas Meshkinpur, Neva Grant, and Jeff Rogers. Our intern is Sequoia Carillo.

And before you go, I just want to remind you to please consider donating to your local public radio station by December 31st, because your gift helps bring public radio to listeners like you. Donate to your public radio station at donate.npr.org slash built. I'm Guy Raz and you've been listening to How I Built This.

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