SPEAKER_00: Today on This Week in Startups, Andy Dunn, the founder of Bonobos, is on the program. Pants, pants, pants. And Kathy Choi.

SPEAKER_02: Really? Yeah. And Kathy Choi will do the news. All that and more on This Week in Startups.

SPEAKER_05: That's what it's all about, man. They said money is the root of all evil.

SPEAKER_07: What? Funny how it feeds my people. We ain't gonna live like equals until we get the money, spend the money, and defeat you. Money is the root of all evil. What? Funny how it feeds my people. Yeah. We ain't gonna live like equals until we get the money, spend the money, and defeat you.

SPEAKER_13: Wow. Hello. Gosh. What to say? What to say?

SPEAKER_14: What a long week we've had. Winning. Just pound winning. Pound winning, pound tiger blood. We're bringing it all to the show.

SPEAKER_16: I was just like, I just happened to put pound tiger blood at the end of my tweet. And the, I mean, I know this is just stupid for me to be bringing up on this show, but the Charlie Sheen madness continues.

SPEAKER_14: Here's his latest quote. I think the guy's genius.

SPEAKER_20: Well, I mean, genius in one sense. This is his tweet. Oh, this is brilliant.

SPEAKER_21: Yeah. Don't judge me until you've walked a mile in my shoes, snorted a mile of my coke, drank a vial of my tiger blood.

SPEAKER_22: He's genius. He knows exactly what he's doing. People think.

SPEAKER_24: But I just want to make a point that I don't think anybody has ever, just in the history of Twitter, had, I don't know.

SPEAKER_25: No. Oh, he's two of the top trending things in San Francisco, tiger blood winning. I mean, it's just like, what?

SPEAKER_27: And why is Blade Runner? Is it, oh, it must be on TV. No, they're going to do a sequel.

SPEAKER_30: What? Yeah. Oh, don't do that. I know. That's what people are trying to campaign to get into.

SPEAKER_14: Oh, don't do that. You see, this is the problem. Oh, perfect movie. Please don't do the sequel. I mean, there is a book and there is a, I know that there is a sequel. It seems like there's a, um, images. Well, you know what? I'm such a huge Blade Runner fan. It's one of my favorite films, like top three probably. But I'll go with it. Sure. Oh, you know, fine. Destroy perfection. Um, I just, if I only have one thing I hope for with the new Blade Runner movie, is that they use miniatures, not CGI, for the cities. If you look at Blade Runner, I have the 1080p, like, somebody got me for Christmas. Maybe it was you. I don't know who got it from me. You can take credit for your life, because I don't even remember. Thank you. Um, uh, this huge box set with all, like, five versions.

SPEAKER_16: And, including, like, the work print and everything. It looks spectacular, because when you blow it up, it doesn't look like it's a person on a green screen. It looks like an actual set. Yeah. For the love of God, the cost of CG is just build the sets, and then take the sets and ship them to a museum or to somewhere, and make an amusement ride out of it or something. You know? Yeah. Just make the goddamn sets. The miniatures in Blade Runner are perfect. When the cars, when the hovercrafts are landing on the police stations, or when you go to Tyrell corporations, and the elevator's going up, and you can see them inside the window, it's like, wow, it looks great. Just a small piece of advice for filmmakers out there who are wondering how to perfect their

SPEAKER_33: craft from your friends at this weekend.

SPEAKER_31: You know what amazes me? What amazes you? Back on the Tiger Blood day.

SPEAKER_33: Back to Tiger Blood.

SPEAKER_34: Why? If you own a bar, how are you not doing a special on...

SPEAKER_33: Oh, no, no, no, no, there are. And people are doing Tiger Blood hot dogs at stadiums.

SPEAKER_34: Tiger Bloody Marys.

SPEAKER_33: Oh, very nice.

SPEAKER_35: Got to. You have to.

SPEAKER_37: Insight from Tyler.

SPEAKER_35: That sort of counts as an insight. It's an insight. Why wouldn't you do that? Why wouldn't you do that? If you're a bar and you're not doing Tiger Bloody Marys, you're not winning.

SPEAKER_42: You're not pound winning. No. Clearly. By winning, I'm winning here, I'm winning here.

SPEAKER_43: That was the best line. Oh, absolutely. I'm bipolar, what does that mean? I'm supposed to go in the corner and cry, oh, my mom, get over it, move on.

SPEAKER_31: Yeah, but people, like, the journalists think, like, he's crazy for accepting, you know, their request to be on air. They're like, he's out of his mind. It's like a date rape, you know.

SPEAKER_30: He just can't say no, he's drunk, you know.

SPEAKER_49: Yeah, it's like they should stop letting him on TV.

SPEAKER_30: He knows exactly what he's doing.

SPEAKER_02: Will he ever work again? Yeah. So is this a net positive in his career or a net negative?

SPEAKER_50: He knows very much what he's doing. So it's a net positive. I think it is.

SPEAKER_02: Okay.

SPEAKER_16: There you have it. I'll tell you one net positive you need to add to your life. That's MailChimp. They are pound winning, pound, pound, pound winning with 2,000 subscribers in their free plan. That's right. Most people's email list, well under 2,000.

SPEAKER_35: It's free. Powered by Tiger Blood. How are you not using the code Tiger Blood in your campaign?

SPEAKER_54: Go use the code at MailChimp Tiger Blood. I don't know if it'll work. Give it a try. Give it a try. You never know.

SPEAKER_16: And they've redesigned the site and the app. It works flawlessly. I use it constantly. You know that because the launch newsletters on it. Also, GDGT's newsletter. Also, Inhabitats' newsletter. It's spreading like Wildfire. O'Malloc. O'Malloc just started his newsletter. Everybody is using MailChimp. Why are they using it? Because it is perfection. It is product perfection. We had Aaron, the product designer, at the launch conference as a judge. He was awesome because he is so product-centric. Very critical. Very focused. Very focused. I don't know about critical.

SPEAKER_59: It was constructive. Yeah.

SPEAKER_61: But he had very, very specific, nuanced things about product. This product doesn't have a personality.

SPEAKER_62: Interesting philosophy about, you know. Just, yeah.

SPEAKER_64: Extremely, extremely talented. As a matter of fact, in the future, we have Zendesk on the program. Very similar product.

SPEAKER_65: And I know he likes MailChimp as well.

SPEAKER_64: He does like MailChimp. Yeah, we're fans. So go ahead and try out MailChimp. And I'm running a little contest here.

SPEAKER_16: If you sign up for MailChimp and you forward your registration. You know, like, hey, you've signed up for MailChimp. Forward that to contests at this weekend. You forward that to contests at this weekend. We're going to give away 10, 10, 10, 1, 0, 8, 9, 10, 10 of the This Week in Startups bags. Let's show the bags. They're beautiful. And you can only get them through the contest. These bags are not available in stores. They're not available on the website. They're not available. I bought 200 of them. And I'm going to give away 10 of the 200. 5% of my stash, my secret stash, to the 10 people who sign up for MailChimp and send their registration to us. I just want to make sure that people are actually going and trying it. And the people who go try the sponsors and tweet the sponsors, thank you. You guys are true fans of the show. If you're a true fan of the show, you go use the products we talk about on the show. That goes from the guests and to the partners. Because the partners and the sponsors are hand-selected.

SPEAKER_33: We will only let people advertise on this program. That's our promise to you if I use the product and Tyler used the product. And that's it. It's Tyler endorsed. Jason endorsed. Yep. That's how we roll. No, I know. That's how I roll. I gotcha. We're banging seven, what did he say, seven what, gram rocks, seven pound rocks? Banging rocks.

SPEAKER_67: What does that even mean, banging rocks? Does that mean you're smoking? I don't know. Is he saying he's smoking crack? Maybe. Anyway, it's a good segue into our next guest.

SPEAKER_16: Andy Dunn is on the phone or on the Skype. He, blah, blah, blah, blah, blah, blah, blah, blah, a bunch of different graduate school business stuff we'll talk about. But anyway, Bonobos, Bonobos, Bonobos. It's the largest apparel brand in the U.S. ever launched on the web. A couple of qualifiers in there. Obviously, this is on the web. And I saw this the other week, that they raised like almost $30 million. And I said, how does an apparel company raise $30 million? And then I thought, well, Zappos, these other things are going on. And we have to get this guy on the program because they sell over 1 million pairs of pants a month. Wow. That's a lot of pants. That's a lot of pants.

SPEAKER_43: That's pound winning.

SPEAKER_00: Welcome to the program, Andy Dunn.

SPEAKER_69: Hey, thanks for having me, Jason.

SPEAKER_00: Wow. And look at you. You got your custom white shirt on.

SPEAKER_70: You got your blue blazer. You got a little, what is that? That's the ascot over here?

SPEAKER_71: Pocket Square, actually.

SPEAKER_72: So a couple of corrections right off the bat. If I was selling a million pairs of pants a month, I would be retired in the Caribbean right now. We're doing well. Not quite that well. Okay. And what you did say about us being the largest brand launched on the web is true, though. You know, I think when we got this thing going, there was a point of view that you could extend a brand from stores onto the Internet. There wasn't the potential that you could launch a brand. And it's kind of fun to see that that's what's changed.

SPEAKER_75: So tell me, how did you have the idea for Bonobos? Where did this come from?

SPEAKER_72: So Bonobos was just a twinkle in our eye back at Stanford Business School. My roommate, Brian, was designing better-fitting pants. He felt like there weren't pants available to fit American guys. And I watched him selling them out of the back of his car and thought to myself, wouldn't this be fun if we could actually go direct-to-consumer over the Internet? Guys don't really like shopping in stores. It's not a particularly fun experience. Maybe we can actually tell the brand's story online, offer, you know, free shipping both ways, lifetime returns, what we call ninja customer service. And a bunch of people said we were crazy, which was the cue to give this a shot. And, you know, here we are with what we think is the beginning of a coming revolution in retail, which is people realize they can reach customers directly over the web. They can serve them better. They can manage their inventory more intelligently. They can price the goods better without having that store network in between. And that's really our ambition.

SPEAKER_79: And, wow, look at this. There's some pants here that obviously would appeal to Tyler. You know, I've wanted a pair of orange pants, and now I've found them.

SPEAKER_81: You're the one who wears the crazy orange stuff. That's my signature color.

SPEAKER_83: Yesterday you wore a jacket that exact same color. I know, and that's the color of my Tesla. I've never seen orange pants, actually.

SPEAKER_84: I would not wear those if you paid me.

SPEAKER_00: I'm going to buy those now. Now, wait a second. With the name, I pronounce the name Bonobos, but you said Bonobos.

SPEAKER_87: No, it's Bonobos. So kind of like bananas, Bonobos. So like lowercase B-U-H, big N-O, in terms of the pronunciation, Bonobos.

SPEAKER_72: It's actually related to the chimp. It's related to your male chimp. Really? How so? Well, chimps and Bonobos were thought to be the same species until the beginning of the 20th century. And they're anatomically very comparable, but chimps and Bonobos organize very differently. Chimps are patriarchal. Bonobos are matriarchal. Chimps can be pretty aggressive and violent.

SPEAKER_91: Bonobos are known for their promiscuity and their peacefulness. So we thought we'd call them out with our brand name.

SPEAKER_75: So you picked your brand name based on promiscuity. Love it.

SPEAKER_00: Pretty brilliant. And so the customer support part and the selling out of the car. The selling out of the back of the car sounds to me like almost like a too-good-to-be-true founder story, like the Pez dispenser, eBay story.

SPEAKER_94: Is that a real story or is that just something like at business school they said over and over again you have to have like a really good founder story? And you just said, wow, let's sell pants out of the back of our car. Did you make that up? Did you orchestrate that?

SPEAKER_96: Literally, no, this is literally what happened. Brian was selling pants out of the back of his car.

SPEAKER_72: I started pitching in. And then we spent the summer, I built a website in a, actually this is going to add to it, in a tent behind my friend's house in Menlo Park because his wife wouldn't let us in the house. So I have four little kids. So we spent the summer building the website, moved to New York with 400 pairs of pants, put them up on the walls in my bedroom at 17th and Irving in New York City. And we pressed play on the website and lo and behold, over the course of the next year we sold, you know, 12,000 pairs of pants and found that we actually could build this connection directly to the customer if we focused on telling a great story with a great product and then building a web-driven distribution model that takes guys out of, takes guys out of shopping and malls.

SPEAKER_14: And the customer support obviously inspired by the Zappos gold standard, the ninja, we're going to just be ridiculous on customer support. Is that the inspiration?

SPEAKER_96: That's absolutely the inspiration. I mean, we've got guys now, we have seven ninjas here in New York City, you know, they're not halfway around the world.

SPEAKER_72: And what makes it, we think, even more powerful than the Zappos model is they can then go talk to people that are designing product and we can actually use customer feedback to influence what we make. And so this is the benefit of being what I would call a private label web retailer, which is you own the clothing, the process of designing and making the clothing as well. So you can really focus on the holistic customer experience, which, if you think about it, isn't just about the product, but it's the experience of buying it. You know, we think guys like, guys want to buy things as quickly as they can. They want to spend as little time shopping as possible. And Bonobos makes that possible.

SPEAKER_102: All right, let's talk about suits for a second. I see you guys have suits there. I get custom suits made.

SPEAKER_16: And there's, like, I don't know how many measurements this guy takes, and then he sends it to Hong Kong, you know, the whole bit. And you guys have started selling these suits for $800, 100% wool, Super 130s, which is Super 130s for people who don't know. That's a pretty good count there.

SPEAKER_02: Where are these being made, and how do you, you know, ensure that it fits the person properly? Aren't suits a little bit difficult to sell on the web?

SPEAKER_72: Yeah, well, this is the thing that we were wondering last year is if we develop a great athletically cut suit, meaning, you know, most of the guys have the same problem where it's, like, too boxy, would we be able to sell that product over the web? And lo and behold, what we found was our customer has got this athletic build, knows that our pants fit them great, and we were able to build a business in suiting that is now our second biggest business just by developing a great cut with the ability for the customer then to. To tweak certain things like the sleeve length once they've gotten it. But if you think about it, you know, the suits are made in Asia, the wool is coming from Europe. The problem with a lot of retail is you end up with, you know, let's say that a suit costs $300 or $400 for a brand to buy from a manufacturer. They're then wholesaling it, and then there's another markup on top of that, and you end up with $1,000 to $2,000. So our opener is actually at $570, and it's one of the things we like about our model is we don't have to mark it up twice. And so assuming we can figure out the fit and selling fit-driven products over the web, we can end up doing so at a retail price that beats, you know, paying double effectively if you're buying it from a brand that's selling it into a store where both of those parties are trying to make money.

SPEAKER_02: And, wow, I cannot believe that you have suits for $500 to, I guess, $800.

SPEAKER_16: How is that possible? Is it just because the markup is that great or the double markup is that great?

SPEAKER_72: Well, you know, most people don't pay attention to this, but one of the reasons why the flash sales sites like Guilt Group and Ideally are doing so well right now is you're generally paying between five and ten times the cost of goods when you shop at a department store.

SPEAKER_00: Wait, five to ten times the cost of goods? The COGS is marked up five to ten?

SPEAKER_72: Yeah, because the brand is marking it up at least at two times so they can keep a 50% margin, and then it's going to be a little bit more. It's being marked up again, you know, between two to four times by the retailer. I think the target's like 2.7, 2.8. So the average is probably 5.5, six times. You know what I mean? I'm in this industry, and I talk to people, and if people knew what it actually cost to make these goods, they would know they're paying way too much for sales and marketing. You know, for my money, I would rather pay for great service and great product. I don't need to pay for the expensive sales and marketing to create a brand image. I just want products that look and fit great. And so we thought that fundamentally going to the customer over the Internet was a chance to revolutionize this whole economic model in retail. And, you know, we're not the only ones doing it. There's other brands now that are saying our website is going to be our flagship because over time we're going to be able to deliver much better value to consumers. And, in fact, we hope that we get to be a part of that. We want to power the vertical web revolution, and we're talking to other brands now that we might power their e-commerce. This is a bigger movement than just better-fitting pants.

SPEAKER_14: And very interestingly, when you look at the branding, you talked about, hey, we're going to be, you know, amazing. The prices are going to be ridiculous.

SPEAKER_02: But it doesn't feel cheap. You know, you're still building a brand here. The domain name, the logo, the user experience on the site is absolutely gorgeous.

SPEAKER_14: It feels like you're shopping at Saks or Barney's or something to that effect. Is that what you're going for? What are the brands you sort of, the brand feeling you're trying to evoke here?

SPEAKER_72: Well, you know, one of the things that you bring up is the branding. You know, most people with an e-commerce experience are giving you a pretty plain vanilla experience. You know, it's really about the brands that are being sold through that channel and what you carry from those brands in your mind, from shopping them in stores, from seeing their ads. What we realize is if we want to actually build a brand on the web, this is our store. We have to create that experience when you're on the site. And so every product has a description that just, you know, that talks about the personality of it. We think hard about some of the photography and how to communicate the fit. You're spot on that when you're trying to be a brand and a channel, you can't just put up a plain vanilla, you know, retail background on the website. And, you know, if you think about the analogs here, you know, a great example is actually in a totally different category, which is grocery. So if you think about Trader Joe's, you know, they're a brand and a channel. And most people launch private labels as an afterthought, and the private labels actually don't carry any cachet. But if you start with that label and you invest in it from the get-go, maybe the way that L.L. Bean did with it when they were a catalog, or J.Crew did when they were a catalog, you can actually become both a brand and a channel, which we think is an exciting thing to do.

SPEAKER_02: And the crazy part about this, I can't believe it, you know, I pay about $1,200 for my custom suits, $1,200 to maybe $1,600, and this is a Xenia fabric.

SPEAKER_16: But the other brand I like of fabric is actually Laura Piana.

SPEAKER_02: Is that my pronouncement correctly, Piana?

SPEAKER_117: That's right.

SPEAKER_02: And Laura Piana is basically second only to the Xenia, I think, you know, in my mind in terms of fabrics. So you're using the highest-end fabric.

SPEAKER_98: That's like a top-five fabric maker, correct?

SPEAKER_87: That's exactly right. And so, you know, the trick is for someone like you, you're actually used to incredible fit measured by people.

SPEAKER_72: You know, we're developing the same capabilities. So we have our ninjas, which is what we call our customer service folks. We're now launching a program called the Field Agents. And the Field Agents are people who are going to come to you, measure you. We'll store that data, and then you won't have to worry about shopping again because you'll have that data stored on your dress shirt, on your blazer. But the difference between us and your custom suit guys, we actually are going to have economies of scale because we're buying fabric on a broader basis.

SPEAKER_115: And hopefully we can deliver you that suit at, you know, the best price that you can get it for.

SPEAKER_120: And my guy's got to pay for his store on Wilshire Boulevard here in Los Angeles.

SPEAKER_16: That's not cheap to have a whole store, and you guys don't need to have a store. So I love this idea of the, what did you call the guy who's going to come to my house?

SPEAKER_72: Well, the Field Agents, we just hired our first Field Agent this week in New York. So give us some time, but we'll, where are you, by the way? I'm in Brentwood in Los Angeles. Okay, okay, got it.

SPEAKER_127: I'm going to be in L.A. this week, and maybe I'll come measure you.

SPEAKER_126: Well, you know what you could do, actually? I'll buy him a ticket on JetBlue for $400 round trip.

SPEAKER_16: He'll come out for the day, and that will be the, if I buy more than one suit, I'm still going to be in the black.

SPEAKER_128: Perfect.

SPEAKER_00: I'm serious, if I'm paying $1,200, I pay for the Laura Piana, $1,400 for the Laura Piana. You know, that's the best fabric. A little bit more. You could fly him out here, take my measurements. We'll get Tyler a suit. You want a suit? Sure. I'll buy a suit. Of course. We'll fly this guy out here. We'll get Tyler a suit as well.

SPEAKER_67: Perfect. So how big can this get?

SPEAKER_02: You know, most VCs, at least in the old days, were like, we don't like these businesses. We don't like to get our hands dirty. We don't like inventory. We don't like any other stuff. And then all of a sudden, Zappos starts kicking ass. The flip camera. I'm trying to think of other hardware, inventory type things start all of a sudden doing so well that it's sort of changed.

SPEAKER_67: People seem to be okay with inventory, I guess, since also the guilt groups of the world. How big do you think this can get?

SPEAKER_72: Well, you know, I think there's a company in the U.K. called ASOS, and they're actually pioneering this category of being a brand and a channel. They're about a quarter of a billion pounds. You know, they're also focusing on women, so I think that's a bigger category. But men's apparel e-commerce is now a $10 billion market, and it was, you know, $4 billion when I launched the company four years ago. It's moving really, really fast. You know, we just had a roundtable here hosted by one of the venture capital firms, and Kevin Ryan from Guilt was there, and you had people from Groupon and Rue La La, you know, all these different companies. And, you know, there's a belief that in five years, this could be half of retail.

SPEAKER_133: Half of retail.

SPEAKER_72: Yeah. And, you know, I think that's bullish. I think that's probably too aggressive. But these are really, really big markets, and our belief is that there's a big company to be built owning customer data, understanding it, making shopping experiences much more convenient, and then, yeah, making the bets on owning brands, owning inventory. You know, people made fun of Amazon for their inventory issues, and, you know, look at them now. I think over the next 10 years, they're going to pass Walmart. You know, I don't see anything that's going to stop that company, and inventory has now become a competitive advantage for them. I mean, they've acquired Zappos and diapers because it's so hard to compete with them on a low-cost position standpoint. So we know we can't compete with Amazon on low cost, so what we'd rather compete on is owning brands and being able to deliver better economics that turn retail on its head by collapsing what is usually a double markup into a single markup, pairing it with great products and great service. That's the concept behind Bonobos.

SPEAKER_64: It's amazing. I mean, it's built with true tiger blood. If you buy retail, you are an idiot.

SPEAKER_135: This is tiger blood, actually, right here.

SPEAKER_00: Oh, you have the tiger blood, yeah. See, luckily, it's 4.30 in your office, and you can have a cold one. Right now, I'm going to have the iced tea. But didn't I say a couple episodes? We're coming close to the point at which if you buy something at retail, you are an idiot. And it used to be like when people would say things like that, like, oh, I don't buy retail. That was just like somebody in the industry said that. Right. But now people like my mom and my wife and Tyler say, wait, Tyler won't buy retail. Tyler goes to Thailand to get his suits and everything made because he wants to cut out Bonobos. Correct. Bonobos. Well, no, I like working. Bonobos. Bonobos.

SPEAKER_136: Bonobos. I have to get. Got it. Bonobos. Say it with me, Tyler. No. Bonobos.

SPEAKER_138: Not until they become a sponsor. Right, exactly.

SPEAKER_16: It's like I'm doing a commercial already. No, I'm just, I'm so excited about this because I didn't know you did suits until the show.

SPEAKER_00: I knew his pants, but I don't like buying slacks. I'm either jeans or I'm a suit. And I'll tell you why. I think slacks is the dead zone in man's fashion.

SPEAKER_121: Jason, we're coming for your denim. We'll talk more about that if you want.

SPEAKER_00: No, but I'll tell you why. Because you buy a nice pair of jeans and you buy a nice suit. You drop the slacks from the suit. You put the jeans on like I'm doing today. Here we go. Boom. Zenya, nice Zenya jacket, right? It's looking okay. And then I got a nice, you know, guess these jeans. Really nice looking pair of jeans. Guess. How much? Guess.

SPEAKER_144: One, one twenty.

SPEAKER_00: How about thirty-five dollars at the Gap?

SPEAKER_144: Oh, wow.

SPEAKER_131: Nineteen sixty-nine cut, huh?

SPEAKER_00: It's a nineteen sixty-nine cut, but you put it with, you know, a Zenya jacket and a custom white shirt. You know, hey, now you're baller.

SPEAKER_16: I mean, I hate to turn this into This Week in Fashion. I should have the This Week in Fashion guys on the show.

David Friedberg: So, Jason, is that, are you drinking Tiger Blood? I'm drinking Tiger Blood today. Okay, good.

SPEAKER_126: All right. Let's get to brass tacks. What was it like at Stanford?

SPEAKER_72: So, it was funny. You know, a lot of people come to business school and they talk about starting a business. They write a business plan. I was one of the people that was doing that. And, you know, my hat's off to my co-founder, Brian Spaley. He actually made pants and was selling them. And then, you know, what was cool was two of our professors ended up investing in the company and then twenty-five of our earliest customers became investors. So, if you want to, you know, that founding story just keeps getting better and it actually happened. We were funded, our first round, seven hundred and fifty thousand, was almost entirely classmates and professors from Stanford.

SPEAKER_126: Wow. So, it's just, it's so great to disrupt and, when you disrupt a space that has so much fat in it, you just, everybody's going to root for you.

SPEAKER_16: So, now, you got Excel. Wow.

SPEAKER_00: There's a great firm. And Lightspeed. Where's that, Jeremy Liu over there? Yep. Do you know him from school? He graduated, what, 2003?

SPEAKER_151: Yeah, well, the Stanford thing keeps rolling. I think Jeremy from Lightspeed graduated from Stanford a few years back.

SPEAKER_72: And then Samir from Excel, also a Stanford grad. So, it's just, and then the founding investor was a guy named Joel Peterson, who's the chairman of JetBlue. Wow. And you were mentioning flying him out on JetBlue. You know, Joel will be happy with that, with that decision. And what he said, I walked into his office and I said, you know, we've sold fifty thousand dollars worth of pants now out of the backs of our cars. We want to launch a website and build a web-driven distribution model. And he goes, this reminds me of my first conversation with David Nielman from JetBlue, which is let's go into an industry with an established way of doing the business and let's actually focus on the customer, change the economic model, and disrupt. And so, you know, that's one of the five or six fastest companies to a billion. I mean, we'd be lucky to have any anywhere near their success. But Stanford was a phenomenal environment to find mentors and classmates who would really be rooting for this thing. And in the first year, having twenty-five customers who are angel investors, that's some of the best word of mouth you can get. People that love the brand and are going to see in the upside.

SPEAKER_126: Tell me about how you've acquired customers, your customer acquisition strategy. Have you experimented with SEM, search engine marketing, buying ads?

SPEAKER_154: Have you done any viral stuff, flash shells? What's your marketing strategy?

SPEAKER_72: You know, selling an established brand is about search engine marketing and search engine optimization because you're capturing demand that already exists. When you're launching a brand, you're actually trying to create demand for a brand that doesn't exist in the consumer's mind. And so we find that it's about great online display advertising as personalized as possible. We love Facebook. It's about PR. It's about blog and, you know, key influencers, word of mouth, referral. These things have tended to be better for us than your traditional search engine marketing, search engine optimization approach.

SPEAKER_21: Yeah, it seems like that. So what's been the most effective?

SPEAKER_94: When you look back at the, you know, you guys obviously spend some decent money doing branding. What do you think in your mind you say that was the thing, that was a turning point?

SPEAKER_72: The number one thing was and still remains word of mouth, our existing customer base throws off more customers than any channel that we pay for. Second is PR, so editorial PR where people say, hey, this is a great company, this is a great product, this is great service. We track those types of press hits daily on Google Analytics and that is the best cost per acquisition after word of mouth, which is large, word of mouth and our referral, which is largely free. We do offer a give get, $50 store credit to $50 reward and customers love that. And then the third part, the only paid channel that has really been amazing is actually Facebook. So you obviously have the social media amplification of your message on Facebook and Twitter, but actual Facebook ads we find are a great source of paid customers.

SPEAKER_16: And how do you slice and dice those Facebook ads? I was actually doing it because, you know, Mahalo just got hit with that just massive Google stick and I was like, oh, I've got to experiment with some Facebook stuff now. And I started buying some ads. You can buy it down to like marital status and, I mean, you know, city and like what they're interested in. Did you say, I'm just interested in people in fashion in major cities?

SPEAKER_94: No.

SPEAKER_131: It's not people interested in fashion. It's the 18 to 40 year old guys in cities, you know, our core customer, we know their

SPEAKER_72: top three favorite movies, their Godfather, Shawshank and Caddyshack. You know, we know they like to play sports. We know they're active. We know that they live in, you know, 60% of the guys live in New York, California, Illinois, you know, Texas, like we sort of know all the markets, Boston, Philadelphia, Washington, D.C. And so we were really targeting a guy more so than a particular psychographic. And the cool thing is, is that you can run so much creative and so many campaigns that you can become very analytical about the tracking of, okay, which of these campaigns should I invest further in? Which one do I need to update the content on? Which do I want to retire?

SPEAKER_02: And so you have profiled to the point at which you know that the Goodfellas is their

SPEAKER_16: favorite film. That is extraordinary because that is one of my top five. And I like Shawshank Redemption. I put it in my top 20. Caddyshack, yeah, it's up there, but not that far up there. Tal, you have questions? I mean, you were on the, what

SPEAKER_166: they call it, the schmatza business? Is that the, what they call the clothes rag on 38th

SPEAKER_72: Street? It's the schmatza business. Schmatza is where you actually make clothes out of crackers. Is it really? No, no. Schmatza is, I was trying to create a hybrid of matza and schmatza. What? Oh, schmatza is the way you say it? Schmatza, yeah.

SPEAKER_171: Schmatza. You add it, so I was like. Yeah. Yeah, schmatza, right.

SPEAKER_00: Exactly. You got the schmatza ball soup? They put a little piece of fabric in it. No, when I had my office in New York on 36th and 9th, and everybody, oh, you're in the

SPEAKER_83: schmatza business. What is it over there? No, no, no. We make websites. We make a magazine. Tal, what are you doing? Yeah, Dantelope has a question.

SPEAKER_173: Dantelope has a question. Yeah, why aren't you wearing pants?

SPEAKER_00: Yeah, the audience definitely wants to know, where are your pants?

SPEAKER_131: My pants are here, so. No, no, no, don't do it. Oh. Don't do it, sorry. Oh, wait, don't you wear pants? Okay, do it, do it, do it, do it. Yeah, I'm wearing, I'm wearing a pair of the gray, of the, um, these are called the khaki stands. So khaki stand is a

SPEAKER_72: very important country. Khaki stand. Played up to Cordistan. And the khaki stands are our tan mid-weight cords made with a Spanish corduroy, a lot of stretch. Um, super comfortable alternative to what Jason's wearing. So the blazer and denim look, I think can be good, but you throw on a pair of great mid-weight stretch corduroy, and you kind of spice it up a little bit.

SPEAKER_27: I might try that. I might try the gray dogs. So you, uh, and it's like you name the stuff

SPEAKER_02: for people who are like goodfellas too. Ah, Jet Blues, there's a little inside reference. There it is. Uh, red rums. Try the red rums with the navy blazer,

SPEAKER_00: Jason. You're going to love that look. Even the naming, you guys, Kongos, it's, you guys are thinking about these things, the headaches, because they're so bright yellow. See, this, it really is, like when you're building a brand, it is the little nuances like that, huh?

SPEAKER_131: Well, you got to create the brand identity on the website because you're not creating it anywhere else. You don't have the brick and mortar distribution. So you got to make sure

SPEAKER_72: you're communicating your personality right there where the customer is procrastinating from work. You know, you were mentioning how flash sale, no one buys stuff at retail. The reason why people don't buy at retail is because you don't have to go on a Saturday shopping now to get a deal. You can do it while you're procrastinating at work at your desk. Um, you know, probably like a lot of the people watching the show right now. And so you have a chance to talk to customers right then and there. And that's, that's why we do it. That's why we try to invest in, um, in the descriptions of the products.

SPEAKER_64: Cracker Jacks. Those are your red ones. I love it. Who names them? Who comes up with the pants names?

SPEAKER_123: Uh, it's a mixture of our ninjas, uh, and our customers.

SPEAKER_16: Got it. It's sort of like, um, did you get that from that, what's that candy company? Hard candy? They had all the weird names for the shell, you know, like tarantula, uh, whatever the, all the nail polishes.

SPEAKER_185: Oh, I don't know that. Yeah, I think it's hard candy. Hard candy. It's, um, it's a nail polish. Um, yeah, here we go.

SPEAKER_186: Makeup from hard candy. They, all their, they just name all of their products, like really, nail polishes, like, it's cockroach or something, you know, like, these bizarre colors. Yeah. Anyway, uh, Tyler, another question from the audience.

SPEAKER_34: Um, you know, to get, um, 90 good ones. Uh, well, kind of a generic question. What, uh, what was the hardest part of the business thus far, and how did you overcome it? Okay, good question. Or what was the worst thing to happen to your business, and what did you do about it? Yeah.

SPEAKER_72: Uh, one of the scariest moments was last year. We, we tripled our monthly sales from June to November, but we almost ran out of cash. And it's a funny thing, is that a business can run out of money two ways. One is because it's not working. One is because it's working faster than you want it to. So, you know, the, one of the things that people, I think, um, assume about the web is, oh, you're going direct to customer over the web. You must not have any costs. The reality is, is that you have to build brand infrastructure, you know, which is, uh, merchandising design, sourcing people, and, and the investments to make an inventory also channel infrastructure, which is the e-commerce, the fulfillment, the customer service. So that's when we decided to take money from Excel and light speed. Um, but access to capital, I think is, is critical to building a vertical web retailer like we've done. And people assume that, you know, you can get it off the ground for 500,000 bucks. That is the case. You can get it off the ground. But if you actually want to get to scale, uh, you got to be prepared to find some investors who are willing to, to

SPEAKER_80: see your vision forward.

SPEAKER_21: Is that because you're floating so much inventory? You just had the, the amount of inventory you have to have, or the amount of accounts receivable? How, how did you run out of cash exactly?

SPEAKER_181: Well, it's partly because you don't have accounts receivable. So you don't have the

SPEAKER_72: wholesale relationships where you're selling to people who are buying in advance, you know, and the whole factoring, you know, there's some, there's some debt financing benefits that come from running a traditional business. And you're running it, you know, real time with customers. So you're learning what sells, what doesn't sell. So you're right. It, it is the inventory piece. The second is team wise, you know, until you get to, you know, 10 to $20 million level, you're not really covering the expense base of your team, you know, and it's for this reason that we're starting to think through, how do we become a platform for other people that want to do this, to let them get their brands off the, off the ground less expensively. And we, back to your question, can this get that, that big? Yeah. I mean, we think there's a, there's a nice business to be built with bonobos.com, but becoming a vertical web platform is, you know, a possible next step as we think about empowering other people, because we know how hard this is to do in terms of having that infrastructure from online marketing to customer service, to clothing design, to making inventory investments. Not everyone's going to have that same access to capital. We've been very fortunate. And we're hoping to extend that, that platform to others to drive this, what we call the vertical web, uh, retail revolution. So I am some great

SPEAKER_02: designer who doesn't have a home right now, whatever, Isaac Mizrahi, whatever. And I come

SPEAKER_64: to you and say, you guys basically white label, um, and I am in business. Well, I mean, if you click

SPEAKER_131: on our shoes tab, for example, right now, we're, we're curating shoes from other brands for exactly

SPEAKER_72: this reason. You know, we know that we're not going to make everything under the sun. We know that we're going to be good at better fitting basics. We don't want to extend our brand places. It doesn't belong. We think a lot of people make the mistake of jumping into, um, categories where they don't belong with their brand. What we'd rather do is power other brands. And so we're curating. And some of these folks have approached us and said, Hey, can you help us run our own website? And, you know, we're thinking that through because if we can actually help people get direct to the customer via their own website over time, we can affect some of those changes around retail pricing and customer service that we've talked about that were so powerful for

SPEAKER_64: bonobos, those become powerful for other people as well. Awesome. Uh, and so, uh, most challenging thing in the business going forward, uh, is it just talent acquisition in New York? Is it hard there?

SPEAKER_72: You know, we're pretty excited. We just hired a terrific VP of marketing who was, uh, at the guilt group. We hired a terrific VP of merchandising from, um, J crew. I'm actually flying out to California this, this weekend to meet with a CTO, uh, VP engineering candidate. New York's a hot market right now for startups. It's really fun. When I started the company in 07, I had the pants on,

SPEAKER_87: you know, the walls of my bedroom and walking over to the kitchen. I felt like I was the only person trying to do this technology enabled fashion thing. And little did I know there was guilt group, there was rent the runway. There was ideally, there was all these other companies starting at

SPEAKER_72: the same time, you know, Excel just opened an office here for that reason. So, um, the hardest thing going forward, it's always hiring great people, but I'd actually, um, I'd actually say the harder part is the customer acquisition in, in scaling that. And so that's why we've made the investment in hiring a terrific VP of marketing, because we've got to really get analytical about

SPEAKER_16: how figuring out how that scales. Awesome. Uh, we'll continue success with it. I am going to, I'm like salivating over the suits thing. I like the second I get off the show, I'm going to order

SPEAKER_203: a suit. I can't believe it's phenomenal. Now you're going to be like looking at my account. You

SPEAKER_83: didn't know my waist size. I used to be a 32. I just want everybody to know I used to be a 32.

SPEAKER_204: Nice. Yeah. Is that one of the forms you've, uh, one of the fields? Yeah, what did you used to be?

SPEAKER_202: What did you used to be? What are you now? Exactly, exactly. Because, you know, usually people don't

SPEAKER_34: tell the truth. No, that's helpful because now they'll know what you'll be in six months and they just add a little bit. They can just trend it. Yeah, they put an extra inch in. But the, the, the, I think one of the cool aspects to this site and, and things that fall under, um, you know, this umbrella are the novelty factor of when you order something through this. You walk around, you know, and you're become almost a billboard for them. If assuming they do a good job, which we know in this case they do, that there's this novel factor to doing it that way. Like it feels somewhat customized and everything so that when you talk to everybody you know, you are evangelizing this

SPEAKER_16: brand. Well, no, I've sent people to my, the, I got the custom suit guy, I got in LA, I got from my friend, actually Mark Thompson is the guy who does the news sometimes. Mark Thompson put me onto Vishnu, the guy who does his suits. Yeah. He does my suits now. And then I'm going to do this. I'll put Mark Thompson onto this if it works. I think it's true. And also when you, the thing about people who get a deal,

SPEAKER_00: if you get a deal, there's some people who cannot shut up about it. Right. They're like, oh, did you see this shirt? And I'm like, yeah, guess how much I pay for it. And I'm like, I don't know how much you, how much you pay for it. Two dollars, two dollars. Yeah, I bought it in Thailand for two dollars. But were you telling me about that shirt you got the other day? The, you had a shirt you told me you bought it in Thailand. Oh. In San Francisco. That's right. It was like a sweater shirt.

SPEAKER_210: What was it? No, all the black ones that I wear. Those are five dollars a piece. Five dollars? Yeah.

SPEAKER_16: They fall apart after two watches. No, they don't. All right. Anyway, Andy, thank you so much for coming on the program and explaining it so succinctly. Continued success.

SPEAKER_64: Thanks very much for having me. Yeah. Give my much in a year.

SPEAKER_31: By the way, my favorite pump moment in this is when he goes, people told us we were crazy, so I knew we were out into something. Yeah, absolutely. That's when you know.

SPEAKER_170: Well done. Continued success. We'll see you next time. Let's do the news. Thanks so much.

SPEAKER_83: Okay. Okay. Kathy Joy is here for the news. Hello, everybody. You know about Bonobos.

SPEAKER_221: Bonobos. Bonobos. Of course. I was in New York and got invited to one of their fancy gatherings. Oh, they had fancy gatherings? They did. Lots of beautiful people there. Really? Yeah. Hmm. I think it was in the Hamptons, actually. Really? Well, the marketing was just superb. I mean,

SPEAKER_227: I remember they just had a huge cult-like following in kind of like the Upper East Side type. Yeah.

SPEAKER_33: People feel smart getting deals. Well, especially if you're in New York and you're buying $3,000 suits and then somebody walks in with an $800 suit that looks the same. You feel pretty dumb.

SPEAKER_231: Three for one. Okay. What's in the news? CBS has acquired Clicker, a TV guide for programming online, for somewhere between $50 to $100 million. Woo-hoo!

SPEAKER_221: Clicker is a comprehensive search engine for TV content on the web. Jim Lenzone, who was previously the CEO of ask.com, that was bought by IAC in 2005, is also the CEO of Clicker and has created a product called Clicker Predict, which essentially sits on your Facebook and will immediately recommend shows for you to watch. Hmm. Now, how useful is this actually for a visitor? Because the way that I look at it is, once you have watched a few shows, how many more shows could you possibly get into?

SPEAKER_126: Yeah. It's a great product. Launched at TechCrunch 50 a couple years ago, actually. And

SPEAKER_00: good friends with Lanzone. Here's our page for This Week in Startups. How accurate is this? On air now. They actually know that we're on the air. I mean, their website looks better than our website. I wish my website for This Week in Startups looked as good as this website. I mean, how crazy is that? So they've done an incredible job. And wow, they just have the last episode up there. They have it by season. I mean, you can't even, I might as well just redirect my page on This Week in to this, because it's better. And you get the full episode guide, and you can look at all the different sources

SPEAKER_16: it's on. It's great. And I think that what's going to be interesting is CBS, which bought CNET,

SPEAKER_02: owns TV.com. And TV.com, let's face it, not so good. So what you'll see here is tech team from

SPEAKER_16: Clicker turns into TV.com, I predict. And this would be the Web TV interface. And they're going to license it out to a whole bunch of people. So congratulations to the team over there. Once again,

SPEAKER_14: a well-designed product results in a big win for the founders. Tyler?

SPEAKER_210: For Jim? Yeah. Yeah. Jim's the man. What Tyler said, Jim is the man.

SPEAKER_34: No, he is. He's one of the coolest, nicest, smart. He's like the most down-to-earth smart guy. I can't say he's up in the Bay Area because he's down here too, but remarkably cool for somebody so

SPEAKER_33: smart. He's blown out and he's cool. Just, you know, very focused on product.

SPEAKER_243: Is having a Facebook, is having that Facebook predict tool even useful? I mean, I find it kind

SPEAKER_16: of point-wise. Yeah, that's just, we have a Facebook tool. They didn't buy it for that reason. The reason is they own TV.com. TV's a huge business, discovering TV, et cetera. And what you would see happen here is Clicker goes over there and then they do a bigger deal. Actually, what it is, is they're going to compete with Hulu. So what they'll do is TV.com will then try to get to license television to go on there and CBS will put stuff on TV.com and then ask other brands to put their stuff there as well. They become an aggregator. And then on CBS and their other affiliates, they just say like, hey, go to TV.com, go to TV.com and

SPEAKER_247: watch TV at TV.com. Well, what about online? What about for online shows? Like all your This

SPEAKER_16: Weekend shows? Yeah. It'll be both. Yeah. I mean, they, right now Clicker puts both. So that's why we're on there. And if I were to search for, you know, Battlestar, Galactica, it's going to be there. And if I search, actually, if I search for Walking Dead, it should come up with both the podcasts. So I just did Walking Dead. It's actually The Walking Dead. The Walking Dead.

SPEAKER_186: And there's Walking Dead. And then there's The Walking Dead comic. And let's see in the search results if they have This Weekend Walking Dead. Oh, maybe it's because of The. Maybe they don't have such good search. It's called Walking Dead. Because we name ours slightly differently. The Walking Dead motion comic. Oh, they got too many results. Anyway, there's so many

SPEAKER_16: things in here with The Walking Dead that you can't even find it because it's picking up Deadwood and other stuff. Anyway, yes, they're side by side. And so that's the future of television. I mean, that's why we created This Weekend. Yep. Because we know that these shows will be watched on big screen TVs. As a matter of fact, some people are complaining like, oh my god, your Google TV sucks. Da da da da. The website on Google TV doesn't look good enough. And like, I should know the team's working really hard at This Weekend to actually make it look good. Um, watching internet TV, watching internet on your TV is going to be something that happens after next Christmas. Because the whole, all the TVs sold around Christmas time this year will have Apple TV. You know, people will put Apple TV on it and Apple's going to come out with their own TVs. I'm pretty sure of that from some inside information, which could be inside

SPEAKER_64: bad information, which they do spread sometimes. They do. Apple sends out bad information just to see who's leaking information. They also will have Google TV built into TVs. So you won't be

SPEAKER_16: able to buy a Samsung TV or a Sony TV. They'll all have web-enabled TV in them and websites will be optimized for them. People are just going to be just as likely to turn on and look at the episode guides as they are going to a TV.com or going to a This Weekend. Yep.

SPEAKER_33: Um, because if you, niche content versus, you know, if you're in the internet business, would you rather watch this or one order? You know, like, would you rather watch this or, you know, it's just so obvious that people are going to want to watch the thing that's about their particular vertical.

SPEAKER_253: Isn't everything going to be on demand at some point?

SPEAKER_16: Yeah, I mean, it's getting there. It's getting there. I mean, it is, currently everything can be on

SPEAKER_64: demand because you have TiVos built into everything. Um, and DVRs are moving to the cloud. So now in New York and Cablevision and some other things, like, you don't even buy a DVR. The DVR is in the cloud. So you don't need to have DVR hardware. You just say, I want to record this. And in the cloud, they record it. And it's legal. So interesting stuff. Next story.

SPEAKER_231: PeakU is a people search company that has developed a program that lets you track how your online personal rank, personality ranks relative to others on the internet. It's PeakScore's data service, now indexes people with their public web URLs, then takes into account a user's known presence and activity on the internet. So blogging, social networks, number of friends, followers, content, and prominence in the news. What is this data point useful for other than the penultimate egoist?

SPEAKER_16: Ah, good question. Uh, this reminds me of Clout. It's doing Jason Calacanis right now. Blah, blah, blah, blah, blah. Let's see. Uh, yes, that's me. 40 years old. Correct. And it's verified. They verified mine, so they knew I was going to talk about it on the show. Um, they don't actually give a score. No, they do. PeakScore, 8.67 out of 10. Um, they've got a bunch of different user names. Pretty scary. All the different places, I guess, I'm sort of mentioned. It's, you know. But, uh,

SPEAKER_14: the one that's really working is Clout. And the reason why Clout is so awesome is, um, you actually, the scores are very, uh, realistic. And they have this new extension. There's a Clout extension that was made. Um, uh, and the Clout extension puts on next to, um, next to your Twitter names, the actual Clout score

SPEAKER_16: of the person. So when I look at replies, I can see this person's an 11. Mm-hmm. So this person's not important enough for me to respond to. I can ignore them. This person's, I'm just saying a person could do this. I wouldn't do this. Yeah, of course not.

SPEAKER_00: Uh, but then I see somebody's at 75. I go, well, who's this person? And man, it is transformative.

SPEAKER_64: Uh, okay. It's now installed. Uh, blah, blah, blah, blah, blah. Let's see. Let me go to Twitter. And I probably have to refresh this. Uh, so when I look at Tiger Blood, it puts the Clout score

SPEAKER_16: right there. Hey, pull up my computer for a second. Oh. So I see this person. Charlie Sheen's got a 72. I'm slightly higher than 70 than him. 74. Uh, look at Red Cross. We may not collect Tiger Blood, but that's pretty good. Joe Steeler fan, Warlock. You know, you can start to see who are the important people on this list, um, who are commenting on that. And when you do your own

SPEAKER_64: list of people, um, talking to you in your at replies, boy, does that get really powerful. So here is at Jason and, um, it takes a second for the, for it to do it. But the Clout really

SPEAKER_16: only measures, you know, how many friends you have. No, no, no. Facebook, Twitter, LinkedIn, and how retweetable you are. Uh, how many people respond to each of your tweets. Yeah. And so when you look at your Clout score, Clout's got this on lockdown. This is, these other guys, you know, um, I think that, you know, it probably, it looks, it doesn't look as refined as Clout. It just looks like a search result. It doesn't look like they're doing that much science. But here it says, my Clout score is 77 and I've achieved all these different things. A thousand unique mentions. A thousand messages retweeted. A thousand user likes. A hundred user likes. A hundred total comments. A hundred total likes. Fifty messages retweeted. A hundred unique commenters. So these kind of achievements, um, then give you some idea of quality. Like if, I haven't been retweeted ten thousand times, but there are people who have. Like Ashton Kutcher's probably been retweeted a thousand times. But that's like a single tweet being retweeted. Um, and then it puts you on the spectrum between casual to consistent, uh, listening to participating, creating broad, whatever.

SPEAKER_64: Interesting. And TechCrunch is a celebrity. Mark Schuster's a thought leader. Jamie Foxx is a thought leader. Don Dodge is a thought leader. I am a taste maker. Um, Lons is a specialist, right? So he doesn't, he's focused and consistent and listening, but he doesn't have as big of an audience as I do. Um, but there's obviously something going on there. That's good because, um, he's very consistent. And Les Port is an explorer. Tesla Motors is an explorer. Anyway, um, I find it to be

SPEAKER_16: relatively true. And then they just invited me to a screening last night, um, of, uh, some film. And I actually didn't go. But they offered me, based on my clout score, two free tickets. So what they're doing is they're going now to advertisers and saying, hey, market to these people. So they must have paid to get that message to me somehow, uh, or dinner for free. And then additionally, um, in MailChimp, I can sort by clout score. So I pulled out everybody with over 50, and I looked down the list and it was like Leo Laporte and you know, all these like famous people, CEOs of companies, famous VCs. Uh, and so I could email just people above 50, one message and people below 50, another, I could give a, I could give people above 60, a complimentary VIP pass, people between 40 and 60, 50% off and people under 40, you know, 10% off. You start thinking about how crazy that is to give different offers to different people based on influence, knowing that they're going to, you know, and I didn't even know I had some people on my list who are influential. So I just took the most influential people, the top 200 people, and I followed them back on Twitter.

SPEAKER_267: Hmm. So it pays to be online for sure. And if you mix it with reportive,

SPEAKER_268: reportive is pulling in cloud score now. So you sort of like reportive, MailChimp,

SPEAKER_16: everything is starting to connect together. Hey, just breaking news, Bonobos is offering

SPEAKER_02: twist viewers, 50% off orders of a hundred or more using the code twist50. Wait a second. That's not possible. If you give 50 off, that's half price. Is that, is that correct? Can somebody give me a verbal that's correct? It's not a typo? That's correct. Not a typo. They're giving twist viewers 50% off orders of a hundred more. So you just order one thing

SPEAKER_270: for a hundred dollars and you use the code twist50. You're kidding.

SPEAKER_67: All right. Show's over. I'm out of here. Wait a second. Oh, no, it's not 50% off. It's $50.

SPEAKER_273: It's $50 off orders of a hundred or more. So if you order a pair of pants for a hundred bucks,

SPEAKER_16: you get them $50 off. I think they're 60 bucks for a pair of pants. You order two pairs of pants for 120, you get two pairs of pants for 70, which is $35 each. Next story. Next story. Greylock Venture

SPEAKER_231: Capital said it's expanding an early stage fund to $1 billion and it's starting a growth fund to usher in the next phase of its investment strategy. So overall venture capital fundraising last year was at a record low since 2003, but several firms are still moving forward and raising large funds such as Excel, currently raising $2 billion for four different funds in the U.S. and China, among others. Is the venture capital market back in full force? Is it full steam ahead and now

SPEAKER_16: you're going to see much more expansion in the next year or two? No. It's actually much more nuance than that. What's happening is the returns are all in a small subset of firms. Excel, Sequoia, Benchmark, you know, and those guys. And that group of people are getting incredible returns and then everybody else is getting returns that are either negative or whatever. So this whole mid-tier

SPEAKER_64: VC firm concept is going away. They are not raising new funds and maybe the endowments and the CalPERS and the people who invest in it are saying maybe we don't want to be in that. We want to be with

SPEAKER_16: these top folks because the victors go to the spoil. So, you know, and the people with the track records are getting, have it easier to go raise funds from LPs, limited partners. And an additional

SPEAKER_64: trend that's happening is people are saying we will, since people go public later, there's this huge late stage opportunity. So you see people like, we had Mo in from Spark Capital. They put money into Twitter at a $100 million valuation. Everybody thought they were stupid. Now it's at a $4 billion valuation. They look like geniuses. And the same thing with Zynga and the same thing with Facebook, multiple times in Facebook's history. People look stupid at a billion. They look stupid at $4 billion. They look stupid at $10 billion. They look stupid at $25 billion. And now it's going for $60 billion in the open market. And I heard from somebody that there's a Saudi prince who wants to buy shares

SPEAKER_16: at a $100 billion valuation. He's trying to get, you know, one or two percent of the company. And so it's, those two trends are happening at the same time. Big, big funds. So you can just go buy

SPEAKER_64: 25 percent of something before it goes public or 10 percent of something before it goes 5 percent. And those big funds are going to be in control of more capital. The little funds are going to be competing against angels from AngelList. So AngelList is able now to circulate deals without a VC. And you can raise a half million dollar round without a VC. So there's, it takes less capital in the early stages and more capital in the later stages. That's what's happening. And that's why you, people are

SPEAKER_68: confused about, is the venture business dead or is the venture business booming? It's dead for some

SPEAKER_221: people and it's booming for others. But as an overall, in terms of overall growth or number of dollars that are available today, is it much more than 2003 or would you say it's the same? The amount

SPEAKER_64: being raised is less in aggregate. However, the returns will be greater. So that's really what matters is what are the returns. If there were enough opportunities, you could actually raise more. There's plenty of money that is going into other parts of the investment spectrum, whether it's treasuries, bonds, equities, foreign equities, all kinds of other real estate funds, you know, REITs, whatever they are, you know, all these things. People, there are people who are money

SPEAKER_16: managers of, you know, 10 billion dollars, 100 billion dollars, and they have to separate that money out. And they may allocate venture capital 3% or 2% of the fund or 10% of the fund. They would allocate 20% if they could guarantee those returns. The problem is, it's just not how it works. There's not enough, not as enough Zappos, Facebooks, and Twitters to actually, you know, move so much out of the equities portion of their portfolio. So it's always a tiny percentage anyway. But after this next round, you know, 2011 and 2012 are going to be extraordinary years for the stock market. Stock markets will go up 20% this year, 20% next year, 20% the year after. It'll be like three years at 20% probably, or something in that range. But yeah, plus or minus 5%, I think.

SPEAKER_64: And I don't think that even if there's oil problems or food shortages, it's not going to affect the startup companies. I'm sorry, the public companies. They're going to become more and more efficient. They're going to hire less and less people and make, you know, bigger profits per employee. Because they're going to be building these companies on a global basis. So Groupon will

SPEAKER_16: just be a rocket ship. Facebook is a rocket ship. They're already rocket ships. So equities are just going to go crazy. Even though unemployment is not going to change fundamentally in the United States and other places. So it's going to be a very weird couple of years. We're turning into like a society of have and have nots. And we should probably raise taxes in the top 10% of the country. Top 5% should pay, you know, much more. Much more? Much, much more. Yeah. We hit the lowest tax rates. I mean, the top tax rate used to be, I'm not saying it should be 80%, but it used to be extraordinary. Now it's way down. So we could, the rich in this country say over and over again, we could pay more. I'm not saying corporate taxes. I'm saying individuals. The rich should pay more. Just a couple of percentage points. No big deal. I don't care. If I had to pay another two or three points, I'm not uber wealthy, but I wouldn't care. I don't even look at my taxes. Okay, I pay taxes. Who cares? I'm happy. I live in America. Free country. I'm not in the streets of Libya trying to fight for my freedom. Seriously. I'm stoked to pay taxes and live in this country. So it's a third. I mean, we only pay 35% tax in this country on average or something like that. You know, there's people who are in the Scandinavian countries paying 50%, 55%. You know, France, they give you 1% tax on just your wealth every year. So like, every year, you lose 1% of whatever you have in assets, whether it's cars or apartments, just boom, everything gets 1% tax just for owning it. It's

SPEAKER_282: bizarre. We have such an incredible deal here in America. Incredible deal. Let's do one more story.

SPEAKER_231: One last story. AOL has announced that there may be layoffs, obviously, coming related to the $350

SPEAKER_221: million Huffington Post acquisition. Apparently, there will be an overlap of about $20 million in cost savings. So this story really kind of boggles my mind. Isn't Huffington Post essentially going to

SPEAKER_231: be the new AOL? I mean, what properties are they going to keep and what are they going to let go of?

SPEAKER_283: I don't know enough, and I'm sort of close to the situation in a weird kind of way.

SPEAKER_16: What does that mean? Well, I mean, the whole business model is Weblogs Inc., which was my last business. So it's sort of weird. And I'm trying to figure out if they become Huffington Post Incorporated. If so, that's maybe, you know, a $500 million business or something. If they double it in size, it's a $600 million business. I don't see how it's going to be a $2 or $3 billion business. So they're just playing fill the gap. You know, they have this $2 billion valuation now. They have maybe, you know, I don't know, half of it is the content business. So maybe it's really a billion dollar company when the access business dies or gets sold off. Or maybe it's a $600 or $700 billion company. So they're going to have this like, it's almost like a little mini content company

SPEAKER_64: that's public. Same footprint size of maybe CNET or something. And so it makes them like a nice small part of a bigger company. You know, it could be a nice little thing for News Corp to own. Or it might be a nice little thing for Time Inc. to own, the magazine part of the business. If they have this little content publishing business. But a content publishing business is kind of a small

SPEAKER_16: business. It doesn't scale very big. So although I'm big into content, obviously, it seems like it's a little bit messy. Like I don't know that Huffington brand is a better, I don't know that's a better leading brand than AOL. I don't know. So it feels very weird. It feels like a Hail Mary in a way.

SPEAKER_291: Yeah, I agree. I'm still confused about how everything's going to sync together.

SPEAKER_64: What I was told by bankers who are close to the situation is that what they're trying to do, Huffington Post was a chip that, you know, only had $30 million in revenue. It's tremendous success, don't get me wrong. But it's not like it's going to move the needle for Yahoo or News Corp or any of those companies. But anyway, you add Huffington Post to AOL. Now you've got like a little content base. And you've got, you know, maybe some good executives, good sales force. Then you take that over to Yahoo, which is in distress. Yahoo is going to sell off the Japanese business. And when they sell out of Japan and Alibaba, they're going to get a ton of cash. They'll probably give a dividend to the people who own shares in Yahoo. Or they'll give them a tracking stock like Yahoo Asia or whatever. And they'll be like two separate stocks. And then it'll be up to individuals if they want to keep the Yahoo Asia asset, which will then be the piece of Yahoo Japan and the Alibaba stake into like some one tracking company. That means you'll have Yahoo as a half-sized company. So they're worth, you know, whatever it is, $12 billion. You have AOL worth $1 or $2 billion. You put them together, you get the Tim Armstrong, like, you know, big, tall, handsome CEO. And you've got Carol Bartz will move up to the executive suite, be executive chairperson. And Aaron Huffington leads content. And you've got this incredible thing. And Tim gets to be leverage the AOL position to become the CEO of that. But what I've heard is that Yahoo has, wants nothing to do with this. And Yahoo's like, this is all just like, you know, AOL insiders and helpful bankers trying to create a transaction. Why Yahoo would do that makes no sense. Yahoo could have bought Huffington Post and they could have outbid Armstrong because they have more cash and they have just a huger business. It's a multi-billion dollar business, you know, in terms of revenue. So I think AOL will crash or merge with Yahoo and the asset will be Tim Armstrong.

SPEAKER_16: Because he's a great leader. People seem to think he's a great leader and the stock market likes him, I guess. But it's quarter after quarter of bad news for AOL. And, you know, in a growing market for them to be trailing, it's not a good sign. And it's because there's so much cleanup. It's not really their fault. I mean, if I give you, if you move into an old house, like, things are going to break every couple of months. And that's when he moved into a really old house with a lot of bad plumbing, bad electricals, like buying a 10-year-old car, you know, you're going to constantly be in the shop.

SPEAKER_231: Exactly. I mean, having worked there myself, I just remember how many times management changed. But there are still so many people in that company who have been there for 15 years. Yeah.

SPEAKER_273: So the culture really doesn't change all that much. Like, the people at the top have, you know,

SPEAKER_16: switched in and out. Yeah. This seems to be the biggest culture change they've achieved to date. Yeah. Because he brought a lot of people in. So I give him points for, you know, doing that.

SPEAKER_64: I don't know that they're going to get this deal done, sort of amorphous, like, you know, we're going to flip this kind of thing. But hey, I think he made a couple hundred million

SPEAKER_16: dollars in stock just from being CEO of a dying company. Yeah. You know, and so if he makes a couple hundred million dollars being CEO of a dying company, that's the biggest payday he's ever had, probably. Jeez. And you should all be so lucky. And then he can, if he has a chance to flip it and become part of some other company and then get another CEO job, that would be like this epic, you know, awesome executive move. It would be like, you know, like a Barry Diller level executive move. Like, you know, so I give him credit. But, you know, when you put together multiple troubled businesses, that's like taking multiple troubled people who need to go to therapy and need to, like solve their problems and then you have them get married. You know, like if I move, you know, like if your dad didn't love you enough and this other person's got a substance abuse problem and he, you know, had something tragic happen in his life or whatever. You put them both in the same house and they get married and then you give them a kid. It's not like all of a sudden now it's a family unit. All those problems go away. What actually happens is they get worse. They get magnified because now there's more at stake. So that's the problem is, you know, they have to jettison that access business, get it out of there, fire everybody who's not core to the content business and just start from scratch. But while they're doing that, the email, you know, the instant messenger, I mean, all of these things are crashing and burning. And at Yahoo, it's the same sort of thing. I mean, they can't get product out the door. Yeah. None of these companies can get product out the door. Both of them have great leaders. One has a great sales guy as a leader and the other one has a great operations person as a leader.

SPEAKER_268: Neither is run by a product person. Product people win big. Managers win, you know, they go sideways, they go, you know, four percent up. So unless it's like some big scale business where you're just trying to, you know, increase three or four percent. But in our business technology,

SPEAKER_16: you need visionary founder at the helm or you lose, period. You will lose because another company will have a visionary leader who has a vision for where they should go and is willing to take risk and is irresponsible and, you know, insane and wants to, like, we have to achieve something, we have to create something new and they're going to just outpace you. You know, like, Tim Armstrong versus Zuckerberg, you know, or Carol Bartz versus Larry Page. I mean, who would you put your money on? It's a pretty obvious choice. I mean, if you were to rank those four executives in charge of the four big internet companies,

SPEAKER_268: who would you bet on? And you put Steve Ballmer in there as well. You know, you're going to bet, the bet's going to be, in order, Steve Jobs, Zuckerberg, Larry Page, Ballmer, Armstrong,

SPEAKER_16: Bartz, Todd. That would be the order you do it in. And only, and maybe it's Ballmer, Armstrong, and Bartz, Todd. I would, you know, it's hard to know which one, because it,

SPEAKER_64: Armstrong doesn't have too long of a track record, so it's kind of hard to gauge them versus people

SPEAKER_268: with a very long track record. But the point is, Jobs, Zuckerberg, Page, those three have achieved

SPEAKER_307: a ton. Well, doesn't it matter what phase the company's at in terms of the leadership that's

SPEAKER_64: necessary there? I'm talking about the top seat. I'm talking about the steering wheel. Who's at the steering wheel matters. Larry Page is at the steering wheel, and what happens a month or two after Larry

SPEAKER_16: Page takes the steering wheel? Google's updating its index and fixing search. It's not a coincidence. They announce Larry Page, and then they're like, we're going to fix the search results, and we're going to do drastic stuff. Like, there's nothing drastic happening for 10 years. He's in charge. All of a sudden, you know what? Because he doesn't want to be embarrassed. He's like, I want my search results back. This whole thing that happened last week was Larry Page. Larry Page driven. He just told them, I want to change. I want to shake it up now. Go. Guaranteed. Guaranteed. If Eric Schmidt was still running things, I mean, technically he might be still running things, but he's not. If Eric Schmidt was still running things, he'd be like, oh, well, let's not shake the boat. Let's think about this. Let's be, you know, we have partners to consider. We have the marketplace. We have a dominant position. We have to think about, you know, antitrust issues, all these different things. It would be like a big discussion. You put a founder in charge? You're just like, no, it's my company. I own this personal company. I started this. It's my search results. I want them better. Just knock all this stuff out and move all this

SPEAKER_109: stuff up. Who cares? Oh, well, it's going to be riots in the streets. People are going to be really upset. It's going to be a ton of stories, blah, blah, blah. I don't care. Deal with it afterwards. Go. What does it do? You can get it done by Friday. I want it on Wednesday. You're really good at that, Jason. That's what they think. That's why those companies, the people who are hard to get along with are the people who succeed. If you're easy to get along

SPEAKER_16: with, it's not a successful company. Period. Steve Jobs, not an easy guy to get along with. Bill Gates, the stories about him are insane. You know, like he would just tell people like, wow, that's really stupid. My God, you're an idiot. You really came up with that idea? Who gave you your PhD? You should burn it. You know, like that's like Bill Gates was like considered the most aggressive in the 80s and 90s. Like he would sit there with his brain trust and just destroy people. And from what I've heard, people like Larry Page, people like Steve Jobs, they're not going to compromise and they're going to engage you on a very strong level. I don't get that sense from Tim Armstrong or from Carol Bartz or from Steve Ballmer. Steve Ballmer may be a little more aggressive, but I get the sense from those people, they're building consensus, they're building a strategy plan, there's going

SPEAKER_00: to be a business. Those aren't necessarily bad things. Anderson's coming in, they're going to do a report. You know, if you need to bring Anderson in or somebody to do a report for you as a CEO,

SPEAKER_16: that's it. I mean, if AOL does a strategic plan by a bunch of knuckleheads with MBAs, I don't, you know, from Boston Consulting Group or whoever they hire to do these things, like once you do that, that's basically like saying, I'm out of ideas. You know, I'm not like, oh, I'm out of ideas for Mahalo. I'm going to bring in a bunch of, you know, snot-nosed, MBA kids to write like a report this thick that nobody reads that tells me this is

SPEAKER_109: the direction to take the company. Who needs that? Put it in the shredder.

SPEAKER_231: Well, sometimes you need to go back and make sure that you're hitting the right points or you're putting things into consideration. It's not always to go lead by being maniacal and just

SPEAKER_232: forcing your way through something. Steve Jobs is not maniacal? It's as maniacal as it gets.

SPEAKER_16: You know, they bring him the tablet. He's like, not ready. And then like three years later, it comes out. That's maniacal. I mean, they brought him the tablet three years earlier. It's like, that's not ready. Make it a phone. They're like, what? We've been spending all this time on a tablet. He's like, I don't care. Make it a phone. Then we'll make the tablet three years from now. That's maniacal leadership. That makes sense. You know, like, we're not going to release this until it's ready. Like, you know, and it's going to be ready. So you have to release it.

SPEAKER_268: Like, you have a plan. There's a difference between having a plan and then being in planning all the time. You know? Like, you can plan if there's a vision, but you can't plan on having a vision.

SPEAKER_322: Yes. I see. I hear what you're saying.

SPEAKER_16: And I think some of these companies are planning on having a vision someday. AOL's going to have a vision someday. Microsoft's going to have a vision someday. Yahoo's going to have a vision someday. They're planning to make a vision. There's going to be some offsite where we're going to make this

SPEAKER_00: vision. Either you've got vision or you don't. That's it. And if you don't have it, then don't be the CEO. Be the president or be the chairperson. There's a million other places for you to have that, but you need to have somebody in charge. This is just in terms of stock, appreciation, and, you know, shareholders. Shareholders get paid off by maniacal CEOs surrounded by competent

SPEAKER_16: people. At least that's what I like to believe. Well, thank God for the kind of competent people.

SPEAKER_00: I like to believe that. Works for me. Bonobos is offering $50 off to all of the viewers of This Week in Startups. I am going to do that. I didn't ask them to do that, but that's a ridiculous

SPEAKER_16: deal. Use the code TWIST50. MailChimp, MailChimp. We love you, MailChimp. Thank you, MailChimp. I love a little applause. Thank you.

SPEAKER_325: Where's Moe with his MailChimp outfit?

SPEAKER_16: Moe gets the third insertion order. The MailChimp outfit goes on.

SPEAKER_325: Ah, okay.

SPEAKER_16: I told him he's going to come in here and he's going to do a monkey dance for MailChimp

SPEAKER_203: because he's going to be so excited. If I can go ee, ee, ee, ee, ee. If I'm that excited about it, he should be that excited about it. Wow. Thanks, MailChimp, for all the support. You make a beautiful product

SPEAKER_16: and I love it. Everybody thank MailChimp right now on Twitter. Thank you, at MailChimp. Thank you, at MailChimp, for sponsoring Pound, This Week in Startups. If you want to be on the startup, Shark Tank, or you want to do Ask Jason, Ask Jason at thisweekin.com, be sure to follow us on Twitter, twitter.com slash TWISTARTUPS, TWISTARTUPS, and you'll get tweeted who's going to be the next guest and all that kind of good stuff. Hey, when you're on Facebook, go to that search box and type in This Week in Startups, and then save, like it, and everybody go try Squeal.

SPEAKER_00: Dub, dub, dub. S-K. How do you spell that, Squeal? How do we spell Squeal? S-K. Are you trying to break my thing? W-E-A-L? Yeah, I think he's force-breaking.

SPEAKER_287: It's in our magazine. Yeah. It's in all things D. Yes. Everybody go check out Squeal. Directly, privately. You're just amazing.

SPEAKER_81: Can I talk about this so we have context? I'll do the commercial, don't worry. He's taking over. Leave it to the professionals. He wants to be the face, yeah, exactly.

SPEAKER_00: Leave it to the professionals. Keep negative feedback offline with Squeal. Very simple. Step one, your customers see the sign, squeal.com. The sign looks great. Step two, find location at Squeal. Go to squeal.com. Step three, say what the problem was, and give that feedback privately, privately to the proprietor of the business, somebody who could solve your problem, not the manager. While that manager is at a game or at a poker table, they will get a text and it'll say what's going wrong. That manager will then be able to give feedback and reply directly to those customers and give them a free sandwich. If you want a free sandwich, step six, customer gets response. Step seven, you can see trends of how many people hate the certain waiter who is working during that shift. Step one, look at the sign. Everybody understand that Squeal is free, free, free, free to businesses to get started and you're in direct contact with, direct contact with your own customers. Right. If you're a business and

SPEAKER_34: you're not using Squeal, you are an idiot. Well, the idea is there's a lot of tools out there for customers to complain online and rate online. Absolutely. And there's tools that weren't even intended to be used that way. Twitter was not intended. Ev has told me this himself. It's not a customer support platform. It wasn't meant to be. Right. The founders of Twitter and employees of Twitter don't use Twitter to complain about companies online, but a lot of other people. And who

SPEAKER_102: can never find it? Some people are just like, I hate this. But Twitter is so convenient that people

SPEAKER_34: are using it for that purpose. Or Yelp review for that matter. Or Yelp. Yelp was never intended to be used as a platform for complaining about customer service issues. But people get their... But it's so

SPEAKER_344: convenient. ...pound of flesh back. But it's so convenient that people do. Right. And when they get

SPEAKER_346: revenge. And Yelp... Well, not really, because you never know if the manager actually hears it. You

SPEAKER_67: don't know who's actually listening. I know, but people use it to vent. Yes. Sure. Like, if I have a bad experience... I definitely have. I definitely have. Yeah. And people say, I am going to... They just... You know, this was so bad, I'm just going to go home and I'm going to write a Yelp review. Yes. It's like revenge. Yes. You've done it. I've done it. Totally. I'm going to get my pound of flesh. I'm sure you've done it. Right. I would much rather just eat... Just simply go to Squeal. S-K-W-E-A-L. Go to squeal.com. And get a free dinner out

SPEAKER_00: of it. Or get the problem resolved. Well, here's what happens. By the owner. Yes. Get the problem

SPEAKER_34: resolved. Here's what happens. Is the owner is usually not on the premises. Right. They want to know, though. They're always wondering what's going on. Yeah. And the managers aren't giving that information. The managers are... And then you ask the guy, I want to talk to the manager. He's like, I am the manager.

SPEAKER_31: Yeah. I am the manager. You're like, no, let me talk to the other manager. And his cousin comes out and he's like, I told him I was the manager. Yeah. Yeah. He's a manager, too. Now we're both

SPEAKER_30: the manager. Yeah. You know. The bus boy's the manager.

SPEAKER_355: Yeah. The valet guy's the manager. So it'll go to, like, the president.

SPEAKER_50: It goes to whoever is the owner of the business. Goes direct to the owner.

SPEAKER_338: You get your complaint in the owner's hands. The owner can resolve it.

SPEAKER_34: As a text message. And he responds right back and he says, thanks for being private about this and not going on Yelp and screwing my business online. So in a way... In a way... How is the owner... Is the owner going to be more thankful if you go on Yelp and do it publicly or if you do it privately? Yeah. I mean, listen, I'm saying this is an app. Is there even a question? There's no question. The people who have been using Squeal, and I can show you tweets to attest to this,

SPEAKER_50: they're getting their entire meals comped. Right. Before they even leave. They're getting gift baskets of champagne sent to their room.

SPEAKER_00: I'm using Squeal. That makes me want to use Squeal. I know. Okay, everybody, I will see you on Squeal.com after the show and Bonobos.

SPEAKER_338: And thank you, Kathy Choi, for bringing us the news. Everybody go check out MailChimp. They are the greatest thing since sliced bread. Everybody go check out Squeal.

SPEAKER_367: They're the second best thing since sliced bread. See you next time on This Week in Startups.

SPEAKER_05: It's what it's all about, man. Hey, Sid. Money is the root of all evil.

SPEAKER_07: What? Funny how it feeds my people. Yeah. We ain't gonna live like equals until we get the money, spend the money and defeat you. Yeah. Money is the root of all evil. What? Funny how it feeds my people.

SPEAKER_09: Yeah. We ain't gonna live like equals until we get the money, spend the money and defeat you.