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- [00:00]
Nicole Lapin
Since 1981, Justin has been producing world class Bordeaux style wines from Paso Robles on California's Central Coast. With a rich history of accolades, Justin produces exceptional wines and is proud to be America's number one luxury Cabernet. Whether you're a first time wine drinker or a wine aficionado, Justin has a wine for every celebration and occasion. Visit justinwine.com and enter Help20 for 20% off your order. Get celebration ready with Justin Wine.
- [00:26]
Jason Pfeiffer
Enjoy exceptional wine all season long with Justin. Whether it's for seasonal celebrations, festive dinner parties or gift exchanges, Justin Wine is sure to make your holidays memorable. Justin offers curated gift sets, library wines, magnums and even custom etched bottles. Personalize the gifts with a custom message icon OR logo. Visit justinwine.com and enter HELP20 for 20% off your order. Justin offers the perfect holiday gifts for clients, colleagues, friends or family. Be sure to check them out@justinwine.com to receive 20% off your for a limited.
- [01:05]
Nicole Lapin
Time have you ever made a vision board? Have you ever made one for your money? Chime lets you make a vision board for your savings goals, which makes it easy. Having a visual nudge when you're making plans is so motivating. I was saving up to move one time and I kept a picture of my dream place on my lock screen so that every single time I picked up my phone and we know how much we do that, I saw the picture and that motivated me. It still took hard work and planning, but that visual representation really helped me stay on target. Chime makes it even easier. In your savings account you can create a goal. Give it a name and a fun little emoji. Then as you add money, you can watch the little circle fill up as you get closer and closer to achieving your goal of that vacation, new bag, even a new home. Anything your heart desires. And that savings account and the Chime checking account come with one big green flag. They have no monthly fees or maintenance fees to delay your savings streams. Work on your financial goals through Chime Today. Open your account in just two minutes at chime.com helpwanted that is chime.com helpwanted Chime feels like progress.
- [02:09]
Chime Representative
Chime is a financial technology company, not a bank. Banking services and debit card provided by the Bancorp Bank NA or Stride Bank NA members, FDIC spot and eligibility requirements and overdraft limits apply. Timing depends on submission of payment file. Fees apply at out of network ATMs. Bank ranking and number of ATMs, according to U.S. news and World Report 2023 Chime checking account required.
- [02:29]
Jason Pfeiffer
This is Help Wanted, the show that tackles all the big work questions you cannot ask anyone else. I'm Jason Pfeiffer, Editor chief of Entrepreneur.
- [02:37]
Nicole Lapin
Magazine and I'm New York Times bestselling author and money expert Nicole Lapin.
- [02:41]
Jason Pfeiffer
The helpline is open.
- [02:45]
Morgan Lavoy
Today on Help Wanted.
- [02:47]
Nicole Lapin
I wanted to lift the M and N veil even more than usual.
- [02:50]
Morgan Lavoy
So I co host this show and.
- [02:53]
Nicole Lapin
Also a solo daily show, Money Rehab. And those shows and other awesome business and finance shows are part of a network that I used my life savings to build. Money News Network is more than my baby. It is me. When something bad happens with it, I feel bad.
- [03:11]
Morgan Lavoy
But like really, really bad.
- [03:13]
Nicole Lapin
It affects me more than I ever thought.
- [03:16]
Morgan Lavoy
Now don't get me wrong, I am.
- [03:18]
Nicole Lapin
So proud to have not taken on investors. I am so, so proud to have bootstrapped through a crappy time for advertising.
- [03:26]
Morgan Lavoy
That I had to navigate right out of the gate.
- [03:29]
Nicole Lapin
And I am excited, extremely proud to be able to pay our lean, mean, badass team really well. But it hits differently when all that money comes essentially out of one banking portal.
- [03:42]
Morgan Lavoy
I choose every day between spending on.
- [03:45]
Nicole Lapin
Personal stuff and spending on stuff for the business and I think you know which wins. Make no mistake, we are doing really well as a company and I have personally been able to build a rich full life that younger Lapin would be.
- [03:58]
Morgan Lavoy
So, so proud of.
- [04:00]
Nicole Lapin
But self funding this company has not only affected my net worth, but my self worth in big ways. I know though I am not alone here in a world that funding is hard to come by generally and most especially for female founders. There's a growing crew of us who not only sacrifice sleep and friends as is often expected in startup land, but who feel the ups and downs of the business extra hard because when you're self funding you and your business have no safety net but you. So I wanted to talk more about this with one of my favorite self funded founders, Christina Stempel. She started Farm Girl Flowers and she.
- [04:41]
Morgan Lavoy
Gets these feelings better than anyone. Christina Stempel, welcome to Help Wanted.
- [04:48]
Christina Stempel
Thanks for having me. Nicole and Jason. I'm excited to be here, excited you're here.
- [04:51]
Morgan Lavoy
I'm excited to see you again. We did a panel I think it was like five years ago at Blog her with other entrepreneurs. I think Maggie Q was one of the panelists and I just loved hearing your story. And then I stumbled across a Marie Claire article talking about self funding your startup and how it affects your self worth. I am currently self funding a network and so so much of what you said resonated with me. Can you tell our listeners how you started the company and how much you started with?
- [05:23]
Christina Stempel
Yeah, yeah, I started. This is gonna age me the five years is. Is much better than what I'm about to say from my dining room table. I didn't start it from. I think this is really important to State, especially as a female entrepreneur. I didn't start it as, like, a passion project. I didn't love flowers. I didn't grow up frolicking in my grandmother's garden. I think a lot of times a female starts a creative business, you know, the story just becomes like, oh, she's so lucky. She turned her hobby into a business. And it was nothing like that. I carried an idea notebook around with me. I probably had 4,000 business ideas before I came up with this one. I annoyed all of my friends and family with, like, you know, every girl's night would become, like, a focus group of, like, hey, what do you guys think about iron pockets for your suits? And, hey, you want to try these out? And stuff like that. I was like, basically, if you're old enough to remember the guy that would be on TV with the, like, question.
- [06:12]
Jason Pfeiffer
Marks on his blazer, I do remember that guy.
- [06:14]
Christina Stempel
Yeah, that was me, you know, So I came up with the idea. I was working at a university, and I oversaw a department that did events for the school, and I saw how much we were spending on flowers and decorations. So that led me down a rabbit hole of research on the weekends, because I was at Dork. Pretty much. I saw it as an untapped, like, you know, the last undisrupted product category that I'd found from all those 4,000 sessions of research. And I was like, why has nobody disrupted this space yet? You know, I'm in Silicon Valley. That was the word that was used every day. So I just tried to, you know, figure out a better way for this problem. I saw, like, you know, when I'd send my mom flowers in Indiana, I didn't like the options that were out there. Found out that younger consumers didn't like the options as well, and I thought, well, I could do that better. So I came up with a new business model. And I had, you know, very naively, you know, I thought, I have so much money saved for this. I had $49,000, to answer your question, what I started it with. And I thought, you know, $50,000 more money than I've ever saved in my life. So that's enough to start a business and live off of. I Should state that wasn't just like a separate account. You know, that was like. Everybody was like, that's my rent in San Francisco. And, you know, living expenses as well.
- [07:22]
Jason Pfeiffer
Seems like a lot of money until you start spending it.
- [07:24]
Christina Stempel
Exactly. And then it goes so quick, right? And you're like, okay, I'm, you know, living on ramen and lifting tea bags for a very long time. But I just thought, you know, this is my opportunity. Early 30s. I wanted to take it, and so I jumped.
- [07:38]
Morgan Lavoy
I actually want to talk about those ramen days and the tea bags that you talked about switching from coffee to Lipton tea, because the unit economics stretched that pot a little further to 6 cents a cup. Like, it really got down to that.
- [07:55]
Christina Stempel
Yes, yes. I got down to $411 in my bank account at one point, and rent was coming up in a week and a half. You know, my rent in San Francisco was a lot more than $411. So I've almost run out of money so many times. And not just in the early days. Like, everyone's like, oh, aren't you you now you've made it. And I'm like, when you're bootstrapped, you never say that you've made it. That that's a difference. Like, you've never made it because tomorrow could is another day. There's still that we are now. There's, you know, like, whoa, I didn't plan for that expense time after time after time. And, you know, there's no nest egg.
- [08:28]
Jason Pfeiffer
Christina. I think a lot of people have heard, and I have heard founders say, I nearly ran out of money and often give a very exact amount because it's burned into your brain. But can you just spend a moment telling us, like, pick one of those moments where you literally almost ran out of money and what happened? Like, how did you not run out of money? Or what did you do with those final dollars? Because that's a thing that often gets packed into people's stories. But when you're about to face that exact experience, I bet it's pretty helpful to hear from someone like you who is like, okay, here is what I did when I only had $411.
- [09:08]
Christina Stempel
Yeah. I'm going to give two short examples of that, because both are kind of different and I think relevant. You know, the first, when I got down to $411, I was fortunate that I had an outstanding invoice that hadn't been paid for a corporate order that saved me. So I got on the phone and I nagged them, and I probably called them 14 times until they paid that invoice for that order. And that was. I still remember, like you said, exact numbers was $3,000. It's just dollars over $3,000. And that saved me then, you know, if they had not paid that invoice on time, I would have been in trouble.
- [09:36]
Jason Pfeiffer
Right. It saved you for the month. It didn't. It's like, then you just have the same problem next month.
- [09:41]
Christina Stempel
Exactly, exactly. A more relevant one, I think, would be 2021. So it's. It's, you know, 11 years after I started the company and during COVID like, everyone, none of the patterns have been the same. Right. So projections haven't been the same, spending hasn't been the same. From everybody's heard it before, the supply chain issues, the, you know, costs going up and container prices and everything. But, you know, we were shut down in San Francisco. We had to come up with other ideas for how to stay in business. I had to, you know, figure out how to save the company. Then did it. But how we did that was opening facilities in locations we norm. We wouldn't have had. We had the ability to analyze the data more fully into, you know, inbound transportation, outbound transportation, things like that. It wouldn't have been places that we would have opened. We only opened because opportunistically, those counties allowed us to with agriculture exemptions and things like that. So 2021 came, and I remember 2020. We had a boon year. Like a lot of people in gifts, this was nothing. We did well. When people come on and, you know, say, you know, we killed it in 2020, like, we didn't kill it. Like, we were in a position where we were lucky, and I don't use that word very often, where people were sending gifts when they couldn't be with them themselves. And so we did 100 growth year over year, and we had marketing turned off for ten and a half months fully. The only thing we did was send emails out we couldn't even keep up with. We couldn't get the supply for the demand. We could have had 2 or 300% growth easily had we had the supply and had marketing turned on. Um, so we did nothing but try to. We just sprinted to try to keep up in 2020 and open facilities. We opened five facilities in five weeks. It was crazy. I drove to Miami from San Francisco twice.
- [11:20]
Jason Pfeiffer
Oh, my God. That's a long drive.
- [11:21]
Christina Stempel
Yeah, it's a long drive. But 2021 came, and 2020, I. I had said over and over again, I Even said it on, on Marketplace, I said, you know, that we're gonna, we may be in trouble next year. I don't know what's gonna happen next year.
- [11:31]
Morgan Lavoy
At the end of 2020, just to be clear, like you reported that you made more than $60 million of revenue.
- [11:38]
Christina Stempel
Yes, we did.
- [11:39]
Morgan Lavoy
Okay, so just to like going from the 650 square foot apartment and 6 cent cups of tea to 60 million dollars is a huge shift and congratulations.
- [11:50]
Christina Stempel
Thank you. 32 million in 2019 to over 61 million in 2020 was giant during a pandemic of, you know, trying to open warehouses and have them shut down and all these things. Right? It was, it was hard. It was really hard. And that's why I think this is really relevant because, you know, people would think at 60 million you're fine, right? Like you're absolutely fine. People think I'm like rolling in it and I'm living in a mansion.
- [12:17]
Jason Pfeiffer
Sounds like made it. It sounds like you just said a minute ago, like you don't like that her made it. But 60 million sounds like made it.
- [12:23]
Christina Stempel
Sounds like made it all bootstrap. What they don't realize you might have spent 62 to make 61. You know what I mean? Like it's, it's not, that is not like profit in the door, you know. And so 2021 came and you know, I said like when the vaccines become available, we may be in trouble. I don't know what's going to happen then when people can go spend time with people in person. And that's exactly what happened. April 2021, our sales plummeted for the first time ever in 11 years. We'd never had a week. That week over week, year was down ever. We never had less than I think 11% growth ever in a week. You know, we'd never had less than 20% growth year over year. And usually it was more like 200%, you know, early years. So it was an un. Unchartered territory for us. And I was like, oh crap, what are we gonna do? We just opened all these, these facilities, hired all these people. We have hundreds of people working and I don't know what to do. And at that point, I should say I was the, the finance department too. Very flat organization where I was every C level, you know, and I didn't have the training to know quick enough, like, okay, we're in trouble now. I didn't, you know, we went from one P&L that I should have split into many PNLs with different locations. But I didn't had done that because I was just running in 2020 to keep up. So I didn't know which facilities were bleeding, I didn't know where we were in trouble. And it very quickly caught up. And in June, May, June 2021, I literally had three weeks of cash. Three weeks as $60 million company. And I'm like, I'm. I'm going to fold at 11 years in and over.
- [13:51]
Morgan Lavoy
You know, that's not how this story ends.
- [13:53]
Christina Stempel
No. So I spent 3 days whiteboarding any idea I could come up with to save the company. Came up with an idea that I thought might work. Had no idea it changed our distribution model completely. Would require that I lay off two thirds of the company. And the only way for me to test it was to do a simulation on our website. Basically where I pretended we, you know, had to wait this long for this type of product. Create a new product category that we called Burlap Lights, you know, all the things. So we did that. Within two days we had created this new product category. We were launching it at certain facility partners and had, you know, kind of hacked the back end of the website with the inventory levels to like pretend that this was the way that we were operating. And I modeled it out that if we did 14% reduction in sales, it would be worth doing. And ran the simulation for a day and a half. That's all the time I had. And we were 13.6 reduction in revenues. Like, I'm like, this is as close as it comes. That was on a Thursday night. We closed one facility Monday the next week, and we closed the second facility on Tuesday the next week.
- [14:57]
Jason Pfeiffer
Wow.
- [14:57]
Christina Stempel
Yeah. And it worked, thankfully. And that's why I'm still here talking to you. But it could have not very easily.
- [15:02]
Jason Pfeiffer
This was an all in bet, right? Which is to say if that didn't work, that was the end.
- [15:06]
Christina Stempel
That was the end. Yeah, it was, it was folding. And what that means when you're solo S Corp CEO, founder is you declare bankruptcy as well. So the company would go under and I would file bankruptcy and I would just, you know, lick my wounds kind of thing.
- [15:22]
Morgan Lavoy
So still, after that many years, you didn't separate yourself from the business. You put all of your personal money in from the beginning, Right. You put your $49,000 in. And it's not like you didn't want to raise money. Right. You had 104 rejections from investors. So you put all of your money in. You kept reinvesting all of your money in. And that never Stopped?
- [15:46]
Christina Stempel
No, I mean I never. $49,000 was all the money that I've ever into the company. And then I just reinvest the profits. But I didn't pay myself for many years and then I paid myself $60,000 a year until 2020. So 2020 I raised it to, I think I paid myself maybe 150 that year. And then I wasn't sitting. I hadn't taken $10 million out of the company as a disbursement or anything like that. I just reinvested. Let's say I like kind of ran it like Amazon, that I would like run it at a zero profit margin, reinvest it. And for example, a year that we did 32 million, so that was 2019, our profit was $36,000. So I ran it as close to zero as you possibly can, meaning I worry about payroll still, you know, but I was reinvesting into the growth of the company. That's what you have to do if you want to scale a company large while bootstrapping. You have to spend less than you make, but as close as you can to reinvest the profits back in.
- [16:44]
Morgan Lavoy
But if you are looking death in its eye, really like with three weeks of cash left, even after all of that time, would you have still taken whatever you had kept in your bank account? If you paid yourself even 60 grand, if you had some personal amount in your bank account, would you put that money in to save the company?
- [17:01]
Christina Stempel
No. Here's my hindsight. What I would say for people listening is a mistake I've made is not taking care of myself along the way. One thing that I would highly recommend, and what I'm working on for myself right now, is to never be in a position again where you're like, I'm going to have to declare bankruptcy and walk away from this. Potentially. I've taken 100% of the risk on myself and I haven't even paid myself a living wage. You know, I would never do that again. And so what I would tell people now is don't do what I did, reinvest a portion back in, but take care of yourself. You know, pay yourself a living wage. You know, if the average CEO salary is like $450,000 in this country or something, the Bay Area is probably way higher than that. You know, maybe don't do that, but pay yourself a living wage of 250 or something like that so you can some savings. And then, you know, maybe I would put some in back into the company if needed, because I'd have that nest egg that I built myself and the, the growth would be slower. You know, I might not have hit 60. Maybe we would have been at 50 million. That's fine. You know, even right now we're lower than that. We're much lower than that. What I did in 2021 after that is I, I decided that I'm going for profit, not growth. I knew what was coming ahead with the economy. We are half the size of a company, a little bit more than half the size that we were then intentionally. But we've added 12 points of profit margin and I can pay myself with that. I can, you know, pay my team members what their, their worth with that as well. And you know, I'm setting us up more successfully. I think that we don't need to be as large of a company. Also, when you own 100% of the company, something to remember is that that number for an exit becomes much smaller of what you need. You don't need a hundred million dollar exit. I find as 10% of that, that's great. You know, and I can definitely get that now with the profit margin we've added, you know, to the bottom line and the EBITDA that we've added that most companies don't have because they aren't able to make the decisions the same way that I can for the company because they are reporting to a bunch of investors that need that valuation to be what the last round was based off of.
- [18:59]
Morgan Lavoy
Yeah, I think what I was getting at is if you were able after that decade plus to separate yourself psychologically from the company. Like you've said that Farm girl Flowers was you and vice versa. And you never felt like you could separate things. You've said that you've sacrificed friends, sleep and time. You live, you breathe your business and when you're bootstrapping, there's zero safety net. So I was just curious if that ever really changed. It sounds like you still remember the hungry years. The literal hungry years, no matter what is in the company bank account.
- [19:32]
Christina Stempel
Yeah, that's a great question. If I'm really honest, I don't think I have. I don't know if there's a way to fully separate yourself emotionally from the company. I think you can separate yourself more financially from the company. But as a founder and I definitely see that difference between founder CEOs and hired gun CEOs, I care so much, you know, nobody's going to work as hard as you like. When people say, well bring in a president and all that and it's like, cool, yeah, you can do that. Do I think I'm going to find a president that's going to care as much as me about the company? No, you know, that's just natural, I think, and to be expected. But yeah, your failures as a company definitely impact how you feel about yourself emotionally. You know, your, your mental health is definitely contingent on the company more than it probably should.
- [20:18]
Jason Pfeiffer
So then let me ask you how you manage that, because I'm thinking back to this moment where you came up with what maybe was a solution to save the company. And now after hearing the way that you feel so tied personally, emotionally to the company, that's not just, okay, this is the last ditch effort to save the company. This is like the last ditch effort to save you in some way or some version of yourself, how you understand yourself right now. So, I mean, look at that particular moment. I don't know that there's any amount of, like, mental health practices that can be done to make you feel good. You probably just didn't sleep and were having an anxiety attack the whole time. Confirm if that is true.
- [20:59]
Christina Stempel
Yes, absolutely.
- [21:00]
Jason Pfeiffer
Outside of those incredibly high stress moments, how do you emotionally manage it?
- [21:07]
Christina Stempel
There's no, I mean, there's absolutely no way that if the company fails, I'm not going to feel like I failed. Right. There's no way that I'm going to feel like great about myself. But I am very realistic in thinking, you know, even if it does fail right now, I will have succeeded along the way. I mean, I bootstrapped a $60 million company or a $36 million company, you know, with profit or 60 million with no profit. You know, like I've, you know, that's something that most people have not done, especially in personal product. I don't really know anybody who's done that in perishable product. So I take the little wins and I try to remind myself of those, but there's just no way around. This is my heart and soul. And along the way I have gotten, and I think it'd be impossible not to. I've gotten more realistic about, you know, with thicker skin. Things don't bother me as much. Like, the little things don't bother me as much. But the overall win or loss of the company will come down to, you know, I'll feel good or bad about it and whatever the outcome is. And I don't really know any way for it not to. I just want this to succeed. And if it doesn't, I'm going to feel bad about it. I'll say it, call a spade a spade. I don't want to lead listeners to think any differently that there's something wrong with them if they're feeling that way.
- [22:19]
Morgan Lavoy
Well, it really resonated with me on a personal level because I've put so much of my life savings into a company right now.
- [22:26]
Jason Pfeiffer
For context, just Christina and for listeners, this show that you are listening to, if you're listening to it, Christina, the show that you were on because you're on it, is part of a media company that Nicole is funding. And like any company, and particularly in media, you know, there's ups and downs. And I, as you know, Nicole's friend and joining her on this journey, I see at least some of it. And they're really hard days. And so you're at the very early paces of the longer journey that Christina's been describing. But I'm sure it's. It connects a lot right now.
- [23:02]
Morgan Lavoy
Yeah, it really resonated with me. And you've always been so real, and I've always admired that about you, Christina, and love listening to you talk about business because it's, like, so not BS at all. And when you were talking about the unit economics of your tea, like, I. It really stood out to me because, you know, if I put all of my money into this company, it's like, yeah, I could get a dog walker for my dog who's sitting here right now, or I could hire an editor. It's like it all comes out of the same pot. And there's so much psychological mind that happens to that that you really articulated in a way that truly helped me as I was trying to navigate some of these early days. So thank you.
- [23:45]
Christina Stempel
Oh, thank you. That means a lot to me. I can be transparent because I don't have a board. I don't have, you know, all. I have some lawyers sometimes that tell me to keep my mouth shut a little bit and some stuff. But everything else, I just wish people would talk about more, you know, how hard it is. You know, I think there's shame in it sometimes and, like, you know, wanting everybody to think that everything is just great and, you know, you're this powerful CEO and everything's, like, amazing and all that, and it's just not. That's not real. It's just not real.
- [24:12]
Morgan Lavoy
And you've been talking lately about bringing a badge of honor to bootstrapping and sort of. We've seen this general shift away from glorifying unicorns and placing more value on strappy businesses. I mean, we've Seen a lot of these glorified unicorns fold lately because they were bloated with funding and they, they grew and they tried to appease the board or the investors and the multiples that they needed to hit because of that money that they took in. So talk to me about placing that badge of honor on bootstrapping, but also at the same time talking about how shitty it is.
- [24:47]
Christina Stempel
Yeah, yeah.
- [24:48]
Morgan Lavoy
Like it doesn't, it's not convincing anyone to want to do it.
- [24:52]
Christina Stempel
Yeah, yeah. Well, I really appreciate you having me on because I think more people need to talk about the realness about bootstrapping and also the other side of it and how it's, it's an option. Like, I think so many people I talk to just think if they don't get funding, they're obviously going to fail. They're not going to be able to, you know, succeed at their company. I'm like, that's, there's other ways. It's just not as sexy to talk about, you know, Inc. And Entrepreneur and Fast Company and Forbes aren't, you know, talking about media company, you know, that like it's easier to pull that information from Crunchbase on who got funding and write a story about it because they have to turn that around so quickly because they need, you know, 30 stories a day that they're, they're churning out. And that's easy. That's the easy thing. You know, there's no list of like the best bootstrapped companies out there, you know, and self funded companies like Jason.
- [25:40]
Jason Pfeiffer
It's true. It's because it's a much harder thing to put together. That's the problem. Christina, you're totally right that all that information is just on Crunchbase. So it's easy to round that kind of thing up. But I really do, as the editor in chief of Entrepreneur magazine, I really, really do believe that I and my peers at Entrepreneur and throughout the media are definitely part of a perception problem. And that is that the amount of focus on funding and treating funding as if it is its own kind of success, that somebody who had raised a large amount of money has succeeded in some way. I mean, they, they have, they haven't. All they did is they gave away some of their company and now they have other bosses. It doesn't mean that they're going to succeed. And so treating it that way, I think has probably done a disservice to founders who now think that that is a metric of success that they have to hit.
- [26:33]
Christina Stempel
Yeah, this is my favorite topic. And then probably the one I'm most passionate about. Because the most freeing moment of my life since, you know, since starting Farm Girl was the moment I realized in that hundred and it was actually the 401st pitch that I did. In that moment I realized that success does not equal funding. And my whole like, it improved my self worth so much I can't even state like once I realized that the investors weren't the smartest people in the room, like, and it sounds like body and arrogant of me to say, but they aren't. You know, when I was like researching the people I was pitching to, I'm like, you've never run a company. You've been a consultant at, you know, like Bain after going to like prep schools and then colleges and stuff. And yes, I know I didn't even go to college. You can, you know, shame me all you want, but I've run a company, I haven't run out of money for 10 years. And that's something that means something. But I agree. And I'm friends with the CEO of Crunchbase and we've talked about this many times on how, like, how do you get that information of companies that haven't just, just raised, you know, because that does not equal success. You know, when you pull up and they have negative EBITDA and they've raised $300 million and I'm like, there's no path to profitability with that much money. To me, that does not mean that you're the smartest person and that you have the best company and that is doing the best. That's not a success metrics at all. Like, what is your path to profitability? And I think that that to your question, Nicole. And you know, why do I. Why am I talking so much about it being a badge of honor? Because now in this economy, I am feeling a little bit like a superstar in these rooms where, you know, among my peers, where they're just like, how do you spend less than you make? Like, break it down for me. How do you have a $6.10, you know, customer acquisition cost? And I was like, you're just gonna have to be a smaller company for a minute. If you want to make a profit, you're gonna have to not be growth at all costs. You're gonna have to look at like, does that make Sense to spend $85 to acquire a customer, to spend 96, like things like that, that, you know, that to me, like, those are the smart people that are looking at it and saying like, no, we shouldn't spend more than $25 on customer acquisition cost. If we can't do that and hit this number, then we should be a smaller company right now to make sure we can make it through. Yes. I, I didn't go to college, I don't have a fancy degree. But I know how to like, work numbers in a spreadsheet to make sure that I can, you know, have that number at the very bottom be black in some, some respect. And so I think it's important right now, especially because money is hard to get. It's very expensive. You're going to give away a lot of your company to get it, and it's probably not the best thing you should be doing, especially in early stage. Do you really want to give away 50% of your company for $1 million? You know, like, I'm talking to people where there's term sheets where I'm like, are you crazy? Do not do that right now. You know, stick around.
- [29:05]
Jason Pfeiffer
Help Wanted. We'll be right back. Welcome back to Help Wanted. Let's get to it.
- [29:15]
Morgan Lavoy
Well, I think it's important too, as, as we've been thinking about this and thinking about taking on money, that reaching a certain revenue threshold is super important before you even think about taking on money. Because I'm assuming, Christina, you got to a point and a threshold where you could raise money. Like if you continued on past 104 pitches, there was a point, right, where you were like, no, I'm not gonna even take money. And was there that moment where you were like, I'm just gonna say no because I've gone this far without funding.
- [29:43]
Christina Stempel
Yes, absolutely. Like now I could go raise money if I wanted to based on our profit margin or ebitda. But it's a double edged sword because in order to get that, I had to become a smaller company to get, to show that there's profit, right? But then early, that's just because the environment has changed the environment before when I would go pitch me, but we're profitable, I would literally have people tell me, well, that means you're not taking big enough risks. And I'm like, okay, so as a guy sitting in a conference room with a healthy salary where I'm like, I have to make payroll, you know, so I have to be profitable. So that does not mean I'm not taking big enough risks. It means that banks won't give you loans for E Commerce unless you, you know, are a B2B company, not a B2C one where I don't have a big, you know, Walmart, PO to show them because that's not how we sell. They haven't caught up with, you know, modern E Com companies. So I can't go to a bank and be like, please give me $2 million. Some of the newer finance options like Clear Co and things like that have been very helpful for us as we needed things for inventory and things like that. But traditional models didn't work. And when I was pitching, they're like, well, your margins are, you know, gross margins are too tiny. And I'm like, yes, I mean I understand that. But that's because we are reinvesting into growth right now and we don't have the scalability factor for our buying power and things like that. So I have to become a smaller company, add, you know, points of margin. Now they'll invest in us because they all the investors aren't growth at all costs now. Now they're going back to their portfolio companies and saying you have to have a path to profitability, which is basically like trying to make, you know, mom jeans into low riders or something, right? Like that. For like five years they've been telling them, growth at all costs, grow the company, grow the company. And now they're coming because, you know, the economic environment right now, they're saying, oh, but when are you going to make a profit?
- [31:23]
Morgan Lavoy
Profitability is back all of a sudden.
- [31:25]
Christina Stempel
Back to basics.
- [31:26]
Morgan Lavoy
Hello, C.R. crazy breaking news. Companies should make money. Imagine that. Yeah, I mean it's so interesting and it's ironic because you, I think, want to get to a certain level of revenue before taking on money. But once you get to that level of revenue, then you don't need to take on money.
- [31:44]
Christina Stempel
Yes, it's a double edged draw. It's like chicken and egg thing. Now we don't need the money and now we can get it, you know, and people say like, get the money when you can. I don't agree with that either. Like why would I give away a percentage of my company right now? Maybe go get a bank loan or things like that, lines of credit, if that's helpful when you don't need it. But otherwise I'm just like, why would I give away, you know, a chunk of my company when I don't need to now, when there's really no risk for the investors? Very little risk, I should say, for the investors.
- [32:08]
Jason Pfeiffer
This conversation has, for the person who is not building a business that has reached $60 million in revenue, you know, sounds complex. And all the different things that you're juggling and the big numbers and talking to Investors. But I have been continually struck in listening to both of you about how a lot of the fundamentals of this conversation and of the decisions that you've made. Christina, in a way, come down to this very simple human thing that Nicole, you and I have talked about a lot, which is how you define success. Because, you know, there are a lot of people who would hear the phrase out of your mouth, Christina, which is, well, you just have to decide to be a smaller company and think, oh, that means you have to decide to win less or to give up something or to be weaker. But it's like. But no, that's only if you define success in a certain way. If you define success like the guy in a boardroom with a spreadsheet who's saying, well, you didn't take big enough risks, but that guy's got a different definition of success because he's able to, because all he cares about is the company that 10 xed his money and everybody else folded. And that's a write off. And who cares? Except that there were actual founders involved who had poured the $49,000 that they had in their life savings into the company. Now they don't have anything. So you have to define it for yourself. And so, Christina, for you, I think it's really valuable for people to hear you so confidently just talk about the intentionality of being smaller, because that's what makes a successful or sustainable business for you right now. And that that's just the right decision and that you're comfortable doing that because you have a logic behind it and you have an ultimate goal. And then, Nicole, it reminds me of some of the very first conversations we had in you building this company where there was a decision very early on, which was like, like, how big do you go? Do we just launch with, like 40 podcasts? We just try to roll up everybody. Here's a list of like 5,000 people we should reach out to. Do you remember those conversations? And then, and I remember you said at some point you're like, your instinct is usually to go very, very big. But actually, in this case, I think the smart thing to do is to be manageable and to step into it with intention and not just go big, because that's what. What it seems like you have to do. Do you remember that?
- [34:40]
Morgan Lavoy
It sounds right. I think that, you know, I remember being on another panel with the founder of Sugarfina, and she started with her, I think, boyfriend at the time, and. And we had dinner one night and she was so excited. She's like, I forgot to tell you something. We're going bankrupt. And I'm like, I'm so sorry. Are you okay? She's like, no, this is great. We're back to, like, what the goals were when we started this company. We took on all this money, and they wanted us to grow so quickly, and that's actually not what we wanted. We wanted, like, a $10 million business, you know, and that's what I thought of, too. I don't know if we need to build a $5 billion business. Maybe just building a $10 million business is where it should be. And going along that path is clearer than getting bloated super quickly. But I'd love to know, Christina, how you've been able to, if at all, compartmentalize. Because along the way, if something bad happened in business, I mean, I'll just speak for myself. I have a bad day. I'm like, crying or having an anxiety attack or drinking a lot of wine or having CBD gummies or all of the above. And I can't dissociate myself from the success or failures of what happens in the business.
- [35:51]
Nicole Lapin
Could you?
- [35:52]
Christina Stempel
No, not in the early days. I can. More so now. Definitely more so now. This was a learned behavior, so, yeah, there's hope, I promise. I. In 2021, I had to, like, very consciously work on separating my ego from growth numbers. It really was a lack of self confidence I had when I would go to, like, networking events or, you know, I'm in YPO, you know, an organization for CEOs, and one of the only bootstrapped ones, and, you know, everyone's talking about how much money they raised. Well, my thing that I could talk about was what our growth was. I'd be like, well, you know, we just had 220% growth or whatever, you know, and that was my, like, my ego was tied to that. And once I realized that's why I was like crying in the shower every night, you know, and it was this attachment I had of, like, to what you said, Jason, of, you know, my success was tied no longer. It wasn't tied to raising funding. I'd finally gotten over that, you know, in probably 2018 or so. But then I attached my ego and my self worth to the that growth percentage or number, and I no longer had that anymore. So, you know, what I did as an exercise was I looked at big companies that everybody thinks are hugely successful at Stitch Fix and Chewies. The real, real. One of my favorite ones that I shot for him and stuff, and I took a deep Dive at what their numbers actually were and what their EBITDA was. And I compared mine with theirs, and I felt much better than. It's probably not super healthy because now I attach it to profit margin. I'm like, well, we've done this in profit margin, but at least it attached it to something that is healthier. I think for our company. Your ego's going to be attached to things. When you have a bad day, you're still gonna, like, you know, have ugly shower cries like me, or drink a bunch of wine like unicorn or something to cope with it. But segmenting my ego, like, I'm kind of embarrassed to say this, but, like, my goal when I started Farm Girl, if you ask any of my first employees what I said my. My success goal was, it was to be on the COVID of Entrepreneur magazine. Like, literally, that was what I attached. Like, I'm going to be on the COVID of Entrepreneur magazine, for what it's worth.
- [37:52]
Jason Pfeiffer
I've heard that so many times. Yeah, it's really fascinating. I've heard that so many times.
- [37:57]
Christina Stempel
Why is that?
- [37:59]
Jason Pfeiffer
I mean, it's because it's a marker of. I don't know. You tell me. Because it was your goal, status, accomplishment, something about made it. I think that when you are there, then it's some kind of external validation. But I think that that is a crazy thing to set as a goal. And the reason for that is because it is completely out of your control. Completely. Right. Because it is not tied to anything. It's not tied to any kind of success metric. There isn't, like, a thing to work towards. It's not like, well, if I become a $500 million company, then that is what qualifies me for the June issue. And so it's crazy to outsource your satisfaction and your goals to things that you can't control. And that's why I think it's nuts for people to do that. But I've heard it so many times.
- [38:53]
Morgan Lavoy
Blocking and tackling wise. How would you suggest to separate bank accounts or money in the early days?
- [39:01]
Christina Stempel
Yeah, I didn't do it soon enough. So learn from me and do it sooner. I think it worked for me because all of my money went back into the company. It can be really messy if that's not the case. If you're, like, buying personal things, you know, with it and things like that. But from accounting standpoint. But I would say segment it just so you feel more in control of your destiny. Being able to pay your rent or mortgage or things like that instead of it being so tied to the company, like, whatever's happening with the company, and pay yourself again. I'm just going to keep saying it. Pay yourself at least what you can pay your living expenses on as soon as you can. But don't think of it like you said earlier, because I thought the same way.
- [39:40]
Jason Pfeiffer
Yeah. Nicole made a face.
- [39:41]
Christina Stempel
Just to be clear, I don't pay myself.
- [39:44]
Nicole Lapin
I don't.
- [39:45]
Morgan Lavoy
I'd rather pay other people. But then I have gotten to a place where I have these, you know, thoughts. The. The Lipton tea thoughts. And I'm like, oh, maybe I should buy less groceries or something like that, because we need to, like, buy all these things to grow and expand.
- [39:58]
Christina Stempel
I mean, buy cheaper groceries, buy generics or whatever, you know, like, don't, like, splurge as much as you typically would or, you know, I remember the first time we were on the Today show, our publicist asked me. It was very embarrassing. She's like, could you buy something that doesn't have holes in it? Like, I literally had shopping for clothes in, like, five years. And I was like, no, no, I can't. Florie. Literally, like, I can't. I. It's not. I don't have $30 that I can spend on something right now, even from Target or something. Like, I'm gonna wear a ratty sweater now. I look at that, and I'm, like, so embarrassed that I wore that on tv. But, you know, that. Do those things, but pay yourself enough to pay your rent and utilities. And instead of, you know, hiring a copywriter or hiring a. You know, like, I was like, I just want a floral designer. So I don't have. I still had a quota on the floor making 100 bouquets a day until 2016. Six years in, because there's one less designer. Two, really, because I could make what two designers could. So, you know, I still have. Have that. So I say, like, kind of go in the middle. Like, buy generics. Don't splurge as much on things that you want to splurge on, you know, but hire one less person. It might mean a little bit more work for you to be able to pay yourself what you would have paid them.
- [41:04]
Morgan Lavoy
Well, thank you so much for coming on, Christina, and being so open and honest and. And sharing your story.
- [41:11]
Christina Stempel
Thanks for having me. Literally, this is. I probably shouldn't say it's one of my favorite podcasts I've ever done. Like, the. The topics you guys are talking about, I think are so important and things that people aren't talking about and so I just really appreciate it and I hope the people listening really appreciate it too because if we get more of this, this messaging out and Nicole, you need help with any like, I am so proud of you for doing this and I'm here with you if you, like need anything or just somebody to drink wine over zoom with at night.
- [41:37]
Morgan Lavoy
I'm gonna maybe take you up on that if you don't mind.
- [41:40]
Christina Stempel
I'm there.
- [41:41]
Jason Pfeiffer
Help Wanted is a production of Money News Network. Help Wanted is hosted by me, Jason.
- [41:46]
Nicole Lapin
Pfeiffer and me, Nicole Lapin.
- [41:48]
Morgan Lavoy
Our executive producer is Morgan Lavoy.
- [41:51]
Nicole Lapin
Do you want some help? Email our helpline@helpwantedoneynewsnetwork.com for the chance to have some of your questions answered on the show and follow us on Instagramoney News and TikTok MoneyNewsNetwork for exclusive content and to see our beautiful faces. Maybe a little dance?
- [42:07]
Jason Pfeiffer
Oh, I didn't sign up for that.
- [42:08]
Nicole Lapin
All right, well, talk to you soon.
- [42:26]
Christina Stempel
It.