← The Peel with Turner Novak
The Peel with Turner Novak
Sophia Amoruso on Bootstrapping Nasty Gal to $120M Revenue, Turning Down $400M, Declaring Bankruptcy, Public Failure, Starting Trust Fund to Back Other Founders
01:31:38
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- [00:03]
A
Sophia, welcome to the show.
- [00:05]
B
Hi, Turner.
- [00:06]
A
Excited to have you.
- [00:08]
B
Yeah. Finally we made it happen.
- [00:10]
A
I know. I was gonna say it's been two years. I don't know. We've been trying to figure this out.
- [00:16]
B
You, I guess you had invited me and then I forgot you invited me. And then I was like, when's he gonna have me on his podcast? Like, am I not good enough? And then I was like, hey, I want to be in your podcast. And you're like, dude, I asked you a long time ago.
- [00:30]
A
I feel like I asked you multiple times too. I feel like this was just a like broken communication. We just.
- [00:35]
B
It's probably my memory and ADD and you know, cognitive load and you know, all that stuff. Yeah.
- [00:44]
A
So I think we're going to talk about. You started pretty big company, a movement. You build a lot of brands, you sold some companies, started a fund doing a live investing. I think probably one of the most interesting ways to kind of start it. You initially wanted to go to art school way back in the day. So how did you try to do that? How did that get started?
- [01:08]
B
I mean, I still kind of want to, but I really wanted to be a photographer. And I shot this amazing portfolio and applied to California College of the Arts, which is in Oakland, and San Francisco Art Institute, north beach, which is unfortunately no longer there. Beautiful campus. And I got into both and I was nominated for a scholarship, but I didn't get one. And it was 50 grand a year and nobody had 50 grand a year to get me to go to art school. And nobody told me about debt. And I'm glad I didn't know about it. And I decided to. I was just working a bunch of shitty jobs and was. Yeah. So I kind of gave up on that. But I wound up working at an art school, which is the last job I had before Nasty Gal. It wasn't because I wanted to be close to art students. It was because I had a hernia and I needed health insurance and I had a preexisting condition, which now you can have applying for individual health insurance. But at the time you had to have an employer sponsored insurance plan to get something fixed. I was. I didn't have. It's crazy that I just didn't have health insurance at all before that. I don't know. My parents, they're like pretty decent parents. I just fell off.
- [02:24]
A
Fell off somehow.
- [02:26]
B
Yeah. I don't know. But I got back on.
- [02:29]
A
So you're working at the art school. I think you were working in the lobby and you had some free Time
- [02:35]
B
had some free time. At that time, my idea of working was how can I do as little as possible for as much as possible and as much as possible, like I don't know what, $13 an hour, which seemed like a lot of money at the time. This is 2006. And so I sat in the lobby and my job was to check students in to go up to the second floor to admissions or whatever. And I had to ask for their student id and if they didn't have one, I asked, had to ask for somebody to sign in. And I had some time to kill on the Internet. I was on MySpace like everybody else and was getting friend requests from ebay sellers who were selling vintage clothing. And I only wore vintage clothing at the time. I loved it, I knew where to find it. And I was like, oh my gosh. I clicked through and saw that these sellers were selling stuff for way more than I thought. Haight street was expensive, but their auctions were going crazy because there was a girl in Australia and a girl in Copenhagen all bidding on the same thing. And the US dollar was really weak at the time, so it was kind of cheap for them. But it was like a lot of money to someone in the US at the time. And I was like, okay, I got my health insurance, I got my hernia fixed, I quit the job and was like, I'm gonna try selling some stuff on ebay. I'm gonna try selling some clothing. And I went and found vintage clothing and not all of it worked, but it was my effort to not work for anybody else. It wasn't because I was ambitious. Technically it was entrepreneurial, but it was not some kind of long term plan where I thought I was going to build a startup in San Francisco. I was subsisting on Mission District burritos and dive bar happy hours at 22 years old. So it wasn't the beginning of something I thought would ever put me in a podcast like yours.
- [04:24]
A
Turner, you are the first vintage seller on the podcast. I think. What's the appeal of vintage clothing? Like why are people so into it?
- [04:36]
B
I mean a lot of the time the quality is higher than you can get today, especially for the price. I mean everything's like mass made cheap plastic garbage. I mean you find like a vintage wool coat, it's real, it's like nice. You know, the cut of the stuff was often really flattering. Like I liked high waisted pants and I liked shrunken T shirts and you know, it was hard to find things that fit well or look cool. I listened to a lot of old music at the time and I might have well worn a costume. I mean it was like high waisted pants and like platform shoes and like a wool pea coat and sometimes like a big belt or whatever. But I, you know, I looked like I was, you know, a Black sabbath groupie in 1970 something. So I just really, yeah, I just really loved it. It's also often cheaper, it's more sustainable and the hunt is really fun. I think people just love finding unique things and I absolutely did. It was like the biggest thrill to find vintage Chanel in a thrift store for $8.
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- [07:47]
A
And then you realize, wait a second, I can sell this for hundreds or even maybe more than that online.
- [07:53]
B
Yeah, it taught me a lot about perceived value, you know, because Chanel jacket could be $8 at thrift store, and somebody says, that's what it's worth. Or it could be worth a thousand dollars on my ebay store. And I wasn't the person that determined those prices. It was pure auction. There was. I don't even think there was a buy it now. At that point, I think everything was auction on ebay. And I started the bidding at 9.99. So anything could have sold for 9.99.
- [08:19]
A
This is $10?
- [08:21]
B
Yeah, $10. Everything I sold started at $10, and it was just. There was no reserve. And some of it did sell for $10, some of it didn't sell. Some of it. I paid a lot more than $10 for thinking that I could sell it for more than I paid for it. But you take the risk because the psychology is, you know, for the bidder, it's like, oh, wow, I might be able to get this for $10. And then they get attached to it and bid more on it. It's just an easy entry price. But ultimately, the customer set the value of the product. And, you know, something could sell for 10 or 50 or 100 based on how I styled it or what the model looked like or how I described it and what the title was, what the description was. And, like, there are all these things that I had to do to make this old thing look cool and something that someone today might want to wear. And so it was just an interesting experiment in turning something that literally had no inherent value to some people into something that other people were fighting over.
- [09:33]
A
Yeah, it was almost like you were so close to it that you could almost perceive that or you could, like, discover that perceived value maybe more than somebody who wasn't as, like, close to it. Like, that's why, because you were wearing it all, you understood how people would, like, upscale upcycle up, upwear. I don't know if that's the right word I'm looking for, but, like, how people address things and maybe what they might want. It's an interesting psychological trick, which I guess I didn't even realize where you started everything in 999. So someone might see something that's like, a $200 piece, and they're like, oh my God. It's almost like thrifting and treasure hunting for them too on ebay where, like, I think I found this good deal. Like I got a bid on it.
- [10:11]
B
Yeah. And it just taught me what people wanted and what they were willing to pay for it. So when I, you know, yes, continued selling vintage, but launched the website and started curating from trade shows, I knew what they wanted. It was like the ultimate, I guess, beta test to just see, you know, item by item, what it is that people wanted and be able to refine my, you know, product or thesis or offering or pricing structure, whatever it was. When I introduced things that were priced on a website just like anything else that you buy and weren't at auction. Because I really knew what people wanted and I really knew how to present it and I really knew how to describe it. I understood who my customer was really well. And yeah, it was just great training ground. Ebay was amazing training ground.
- [11:01]
A
I remember you were telling me when we talked a couple weeks ago that you would go into each thumbnail and tweaking everything about it, making them catchier, brighter, more contrast, literally each item. I mean, you'd have hundreds of listings at some points, right? Did you.
- [11:23]
B
I mean, it was usually like maybe 20 at a time. I would start the auctions on like a Sunday when people were sitting at home, and then they were 10 day auctions. So I think they closed on like Wednesdays when people were. It was kind of like a lull in the week. But the auctions went for 10 days and that was it. But I didn't put new things up. I just had those 10 days to go find and photograph and kind of list or, you know, schedule the next week's items.
- [11:51]
A
Well, you were like in the weeds, tweaking.
- [11:54]
B
Yeah, totally. Like, if there was something I thought was really great and it wasn't getting any traction, I was like, okay, there's something wrong here. And before a single bid is placed on ebay again, I don't know what it's like now. This is 20 years, literally 20 years ago. It's crazy. You could still edit the photo and the description, but once a bid was placed, you couldn't. So if something was sitting there for 30 minutes or an hour or six hours, I would go back in and I would tweak stuff and I'd wait a little bit longer and then I would tweak stuff until I saw it taking off. Yeah, no, it was dynamic, but I was the dynamic engine.
- [12:37]
A
And I think I heard you Say once that you made your first hire off of Craigslist. I mean, in 2026. That sounds pretty crazy to hear someone say that. But how did you know it was, like, time to make the first hire? How did you. How did you hire someone? Because I don't. Had you ever hired anyone before?
- [12:54]
B
I mean, I hired an assistant off of Craigslist like, a year ago to help me move.
- [12:59]
A
Oh, you're still using Craigslist? Wow.
- [13:01]
B
I mean, I did like a year ago, and he helped me for a few months, move to London, like, pack my stuff up and whatever, deal with dogs, vet appointments to get them here. But, yeah, I mean, where else was I gonna find someone? Yeah, I put the job description on Craigslist and it was just like, I need an assistant for a vintage ebay store. And, you know, listed it. And she came to the job interview, which was just me in, like, a messy warehouse in a shipyard in Benicia, way out in the East Bay in Northern California. And when she had, she came and she was like, I thought this website was, like, owned by Urban Outfitters or something. It was just like, me with, like, trash bags and, like, dirty clothes and, like, shipping packages and one computer and a little photo setup, you know, and a steamer. And she was working at a store on Haight street that went to trade shows and, you know, did the whole thing that I eventually ended up doing. She kind of introduced me to that. And she was like, well, I need a full time job if I leave. And I was like, oh, my God, like, I didn't even really pay myself at the time. And she was like, I want $16 an hour. And I was like, that's more money than I've ever made. How am I gonna pay somebody more money than I've ever made? And I was like, that's not fair. And I still wasn't really. I wasn't. I didn't want anything. I had, like, an old Volvo. My rent was $500 a month, and I was too busy building this business to want anything. I didn't even have expensive taste. I did, but it was, like, in old things, like, it was still in quality, but it didn't cost money. You know, it doesn't cost money to have expensive taste if you're. If you're resourceful. But I was like, okay. And I took a really big flyer on, well, one her, but also on having someone full time, because I didn't know if I needed somebody full time. And then it just kept exploding. Her job became very full time and more Way more than full time, not long after that. And I think, you know, it's one of those moments in, you know, building a company where you kind of have to believe that the growth will come. You don't want to obviously over hire, but if you have, like, inclinations and you know that things could really, really break if you don't bring help on board, you know, sometimes it's worth taking that risk so that you've got someone there to catch the demand when it does come. And that's exactly what happened.
- [15:28]
A
What were things that were breaking at the time where you kind of knew you needed help?
- [15:33]
B
Yeah, I mean, I was sourcing everything, shooting everything, writing all the product descriptions, uploading images to an FTP server, weighing them for shipping, measuring them because there's a small and a medium and vintage sizing, depending on the era and the brand is like all over the place. Then I was shipping them, Printing out shipping labels, answering customer questions. Yeah. Editing photos, casting models, feeding them in hamburgers or trade so that they could have cool MySpace photos. I mean, you could do that at the time.
- [16:11]
A
So you were like recruiting. You were recruiting models to come in and be like, hey, we have these cool clothes. We'll do this photo shoot. I'll maybe get you some McDonald's. But also you can use the pictures on your MySpace.
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B
Except it was a place called Burger Road.
- [16:26]
A
Perker Road.
- [16:28]
B
Yeah.
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A
That sounds like the most, like, side of the road. Like, mum.
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B
It almost sounds like roadkill. Yeah, yeah.
- [16:36]
A
I mean, I'm sure they were good burgers, though.
- [16:38]
B
They were good. They were good. I remember one time I went into Burger Road, I, like, threw on a sweater from, like the racks of clothing and it had like a 4.99 tag hanging off, like the front of it, you know, like, and the model was like, hey, like, you know, I'm like walking around wearing clothes that are like 499. I just was like, yeah. I was in full, like founder mode, I guess, before that was a term. And so she took on all the things that I didn't have to do, that didn't have to do with taste. She eventually learned my taste and learned what the customer wanted and became the head buyer for the company. But she was answering customer questions, she was shipping stuff. She was eventually wrote descriptions, but I trained her how to do that. And even like the voice on customer service, it's like, use an exclamation point. You know, if you're describing something, don't call it sparkly, call it glitter. I don't know why I cared about that. But things that I knew made a difference that made it feel like a human was talking to a customer or someone cool was writing description or how careful to be when you're, you know, putting a package together so it looks like, I don't know, somebody cared. There's a difference between slapping a label in a package or making it look like somebody kind of lined it up and didn't just crumple it and sit on it and whatever, trash it. And then eventually she hired someone to do customer service and she hired someone to do copywriting. And I kept buying and shooting and doing the things that I needed to do. Going down to LA and bringing, like, carloads of vintage back. So that's how. That's how it began.
- [18:21]
A
And I think when I just think about the space at the time, there was probably a lot of people that were kind of maybe doing similar things. They started ebay store. What do you think you did right in terms of, like, the branding around it? And because it feels like you kind of really had a strong connection with the customers and they really resonated with it. What do you think you did right?
- [18:43]
B
You know, I was looking at fashion magazines and following Nylon magazines and these cool Australian fashion magazines like Preen and Rush. I don't even know if they're around anymore. I don't follow fashion.
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A
Never heard any of those. Yeah, I'm not a fashionable guy.
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B
Yeah, and they were. I looked at the styling and I looked at the Voice and ID magazine with, like, the wink. And there was just kind of like a sense of irreverence and, like, also joy and levity in fashion at the time that I then kind of borrowed and turned into a retail fashion ecom brand for the first time when people were just dumping model, dumping a T shirt on a model, cutting their head off. And it was like, you know, that's what you got when you were shopping for clothing. Like, nobody had sunglasses on the model on a model. Why would you put sunglasses on a model when you're selling a shirt? You know, a model with a handbag that looks like she's going somewhere. That was like, for editorial photography, like, advertising photography. But ecom catalog photography did not have that at all. Like, Nasty Gal was pioneering in that. And I, you know, ebay, that did happen, you know, so I brought that from ebay. I wasn't the first ebay seller to, like, style a model in, like, a hat and look cute and make it look very, like, hippie, dippy or boho. Like, so many of them were, you know, at the time, the ebay stores were like Spanish Moss and Mama Stone and these like, very hippie, dippy granola e vintage brands. And, you know, I had worked in a record store and I'd listen to, you know, some more like vin, like old music, but also kind of like more hard hitting, like funk and stuff that was like riskier and edgier. And music has always kind of influenced. I don't know what I do in the names of things. Like, I always borrow them from disparate and often obscure sources like Girlboss, I'll talk about. But Nasty Gal is the name of an album and a song by a woman named Bette Davis, who's this incredible funk singer who was married to Miles Davis and who was allegedly like, too wild for him. And her lyrics are like, crazy. She was just like, such a punk. And I almost named it I heart Vintage. But I decided to name it Nasty Gal Vintage. And it just kind of cut through the noise because I brought this irreverent and edgy style and styling and voice to it. And while I was just an ebay seller, I made sure everything was coherent like a brand is. And the voice was always. We always made it sound much bigger than it was not. You know, hi, I'm shipping the package to you. Or I measured it and it was we. And it always looked much, much bigger than it was because, you know, everything was really consistent. The photography was insistent, the consistent the copywriting was. And I didn't know I was like a good writer or a copywriter, but everything was imbued with like a sense of humor or it was punny or it was like a funny portmanteau or there was like, you know, a way of describing something that was, you know, memorable. And the name was memorable and everything was very cohesive. And I never got a lesson in branding, but it was kind of like, what would I want and what do I see out there in the zeitgeist? And how can I borrow from that without ripping from it?
- [22:26]
A
Yeah, it's basically just understand what people want. And then maybe it's not like any single thing you did was that unique or you didn't really come up with anything specifically that was new, but it was just the ability to borrow from different things and kind of tie them together. Like, that's. I mean, it's. What's that one phrase? It's like good artists create, Great artists steal or something like that. Like, you just bore. You just took a bunch of stuff and combined into this new experience for people.
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B
Yeah, like a new, an entirely new channel. I mean, it was shopping that hadn't happened with online shopping in E commerce. It was like totally pioneering. And ultimately it created a, you know, something that people were obsessed with. It was I'm a nasty gal. I am a nasty gal. And you know, the peak branding is when someone says I am a and then puts your brand in the sentence and identifies as the name of the brand. And that's what Nasty Yale did. And it was much, much bigger than buying clothes. It was an emotional experience and a big part of the customer's identity at the time. And yeah, it was really, really, really cool what it became.
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- [25:14]
A
And it got like really big, right? Like what was like the peak of success for like how big were you at that point?
- [25:23]
B
Yeah, we did over 100 million in revenue. I don't know, it might have been 110, 120. I have like financials hanging around. I found the original deck that I raised 50 million from index on. Like it's crazy. I mean I've never shared it. I thought the growth went from one to six and a half to 12 to 28, but it went from one to six and a Half to 28. I'm like, something like that. Or to 30. Like, I thought there was, like, a stop somewhere along the way. In every podcast, like, I've ever been on, I'm like. And everyone's like, wow, when there's like, a 12 in there. But it was like six and a half to 28. And that was just purely bootstrapped. That was before I fundraised. But, yeah, it was. It was. It was explosive. Year one was 75K, and it was just like, me in, like, my step aunt's pool house with a hot plate and, like, you know, like, what were
- [26:16]
A
you cooking on the hot plate? Like, ramen or something?
- [26:19]
B
I had a. I had, like a. I had, like, a toaster oven, and I would get, like, Trader Joe's cornmeal pizzas that were so good. Okay.
- [26:27]
A
And you just cook them in the toaster oven.
- [26:29]
B
I'd just go to, like, Boston Market or, you know, it was, like, in a suburb. I moved out of San Francisco. I started in San Francisco, but then I was like, I need to be able to have a car. Put stuff in a car, take it to the post office. Like, who can walk all the shit to the post office in San Francisco?
- [26:42]
A
That'd be rough. Those hills, too.
- [26:45]
B
Yeah. So I went, like, you know, an hour outside of San Francisco and lived, like, really far from all my friends when I was 22. Cause I was like, this is fun. You know, I can flip clothes. I made $2,000 this week. Like that. Exactly. That is actually insane. So, yeah, first year was 75k, second was 250, and then left eBay about halfway through the second year, brought on my first employee, and then it was 1.1, then it was six and a half, and then 30. Something like that. I need to get my story straight because. But it's like. Because I know it's like, matters and it's lore, and it's like, you know, I fucking talk about this, but it's also, like, it's my story.
- [27:23]
A
Okay, so you said you. You said you found the deck. Do you have it? Like, can you pull it up? Will you, like, share the screen? Is that. Is that possible right now?
- [27:30]
B
No one has ever seen this.
- [27:32]
A
No one's ever seen this. This is amazing.
- [27:35]
B
I started in 06. Yeah. Then, you know, we hit a. Looks like we hit a million in 2010. And by the end of November 2011, 5 million. And then here we are. You know, I had done, like, a survey of customers. I felt like I had stumbled upon all of the cool girls from NYC in LA's little online shopping. Sick, crazy gray. I've been addicted ever since.
- [28:05]
A
You know, was it a lot of this almost feels like you see a lot of people talking about UGC today of like people posting content of the product. It kind of seems like you tapped into that just based on like just. Are the. Were these customers that were posting pictures about it or was that all the models that you brought in?
- [28:24]
B
It was, it was word of mouth. I mean it wasn't social media. I mean Instagram was emerging in 2012, but this is all happening before 2012. I mean I had like 60,000 friends on MySpace. But like you can't really attribute that either. But I mean like what, 25, 25% of our users came back over 26 times per month.
- [28:51]
A
Oh, this is per month. So you had people. Half of people came at least once a week and almost 75% came back more than once.
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B
Yeah.
- [29:04]
A
Wow.
- [29:07]
B
You know, competition. So then it was like this is visits revenue.
- [29:18]
A
This was, this is the nasty gal numbers.
- [29:20]
B
7, 25 million. And this was Feb through April of 2012 when we raised 50.
- [29:28]
A
So you basically did half of last year's revenue in one quarter?
- [29:34]
B
Yeah, yeah.
- [29:35]
A
That's crazy.
- [29:37]
B
Yeah. And then we raised 50 million and rounded up by 100 million and we were like, let's go from 28 to 128. And it was just kind of like waving a finger in the air and hiring 100 people and signing a 40,000 square foot office lease at 100,000 square foot fulfillment center lease in Louisville, Kentucky. And yeah, so all this kind of stuff. But that like really happened.
- [30:11]
A
And I know there, I mean there's been like a lot that happened after that. How would you describe like you closed the round. Did you and you said you're going to hire hundreds of people, open this facility. Did you end up signing a lease, moving in? It looked like I saw 40% international revenue in the next year or something. I saw one of those charts. I was like, we're going to expand to Europe and Asia.
- [30:33]
B
I mean the business was international by nature of me having shipped worldwide when I was on ebay. And so that's how the customer base grew. We never really had to open like a UK store or like we just shipped from the US So there was no like, I mean, yeah, we would, you know, I guess at a certain point we were running like programmatic ads internationally or. But it was just, it scaled with the like original, original customer base. We hired 100 people across like buying, design, production, planning, project Management, a cto, a whole team of engineers, you know, UX design, a chief people officer, chief financial officer, a controller, a whole finance team, performance marketing, a creative director.
- [31:30]
A
You know, like a full company. Like you had everything.
- [31:34]
B
Yeah. And it was like if, you know, some companies are able to inject that many people into an organization in a year and integrate them and everybody understands what to do and they're not stepping on each other's toes or duplicating efforts or, you know, I wasn't really very good at that. I don't think I even knew I was supposed to do that. I just thought all these people with more experience than me would like, show up and work together and like, solve the problems and like, you know, I don't know, have fun or something. Company would just, I don't know, just keep growing. I just, I didn't, you know, I didn't, you know, the job of CEO is kind of like drive all of that through an organization, drive it through the leadership team and for the leadership team to drive it through the people that report to them all the way to the bottom. And in a lot of companies, that gets lost somewhere at the top or somewhere in the middle. And depending on what team you're on, you know, there's an entirely different company culture over in finance than there is on the creative team where those guys are having to blast, you know, but some boss over here is like, awful. So. And it became very expensive. You know, like we, we just, it was like, okay, who cares? You know, it's extremely profitable before I raise money. And that just became, you know, as soon as investors came on board, they were like, who cares? Whatever, let's just plow all this money into growth and build a billion dollar business. And it wasn't a company that was set up to scale. It was like a mom and pop business that they injected 50 million into with like an ebay seller at the helm. So it was like, kind of naive on my behalf. It was, I think, kind of irresponsible on their behalf. And there was no number of executives around me that could like, I don't know, solve the problem of me not knowing how to lead them. But also there's a lot of other people who could have done a better job along the way with nasty L, including my investors.
- [33:35]
A
So it sounds like maybe the mistake was like, you shouldn't have raised money. Like, you just didn't. Did you, did you not have to? Because it looked like you were making three and a half million a year.
- [33:45]
B
We didn't have to in.
- [33:46]
A
In ebitda. Like, it's just sitting in the bank, right? Like, you were printing money.
- [33:50]
B
I can own 80% of a company that's worth $350 million. I control it. What's the downside?
- [33:58]
A
So in your head, it seemed like
- [33:59]
B
a great idea, changed the business in ways I never could have anticipated, and got really complex really fast. And, you know, financial statements went from a few tabs to, like, 50 tabs. You know, like, I can't build. Still can't build a pivot table.
- [34:17]
A
Maybe that's something you don't want to say publicly. No, just kidding.
- [34:21]
B
It just happens so fast. You know, there's things that I can do that no one else can't. And for everything else, you know, you can rent as long as you're.
- [34:38]
A
Yeah, so. So I guess, like, couldn't you have just decided, like, okay, we did raise money. The valuation's really high, but I don't have to spend it all.
- [34:47]
C
Or.
- [34:47]
A
Or, like. Like, why was it such a big deal that the valuation of the company was so big? From someone who just kind of hearing this for the first time, I was like, man, this sounds awesome. Like, it sounds like things would have. Like, this sounds like a great outcome.
- [34:59]
B
I mean, I didn't really negotiate that. I didn't really negotiate the valuation. I wasn't. I didn't. You know, I met Jeff Jordan from Andreessen who flew down. Jeremy Liu from Lightspeed flew down in 2012. I met with Kleiner. I met with, like, a ton of firms. Alfred Lynn from Sequoia, and, like, some of These guys are LPs to. Those are Jeremy and Jeff for LPs in the fund now. But I didn't have, like. I actually found a term sheet from Benchmark, which is crazy because I don't remember talking to Benchmark, but I found one recently, but I didn't have. Like, I wasn't. Like. I didn't know how to, like, play them off of one another. I wasn't trying to be like, oh, I want to. You know, I didn't. I don't think I cared that much. The valuation was just crazy. And I was like, okay. I mean, they were just like, please let us invest. That was it. It was just like, will you let us, please? So, yeah, that wasn't why I did it. But in terms of how we deployed the capital, I was really deferring to the people I brought on. I had an investor. I had a chief operating officer. These people. She had built startups. He had, you Know, taken, you know, been alongside founders and, you know, taken them public and invested in incredible companies and amazing founders. And so I hired people that were smarter than me and I listened to them and I don't think that's a mistake. But I also, I didn't, I don't think I completely grasped what it, what it meant. And you know how fast we were blowing through capital.
- [36:36]
A
Do you think if you could go back, would you have maybe sought out more like mentors to just spend a little more time talking through things with you or.
- [36:44]
B
Yeah, I didn't have any advisors. I didn't really know any founders. There were no, like glossiers and away luggages and I didn't have peers. It was like net a Porter and like Tony Hsieh and like Beachment. So like Diego Burdackin in la, who does, you know, has now done cloud kitchens, you know, is an awesome, awesome guy and a really good poker player. But I did not have. I had one advisor who had been the CTO at Tumblr and my board was me and my empty seat and Danny from Index and I kept my empty seat empty. You know, I kept my second board seat empty the whole time. I didn't build out a board because I had heard their nightmare. We never voted on anything until we had to vote to send the company into chapter 11. So it never really came down to that. It was mostly me probably not disagreeing enough and trusting the people around me who had so much more experience and were telling me like, no, no, no, turn down the 400 plus million dollar offer from Urban Outfitters. Like, that's child's play. We're going to build a billion dollar business. I would have made, I don't know, $300 million, $280 million on that sale. So.
- [38:06]
A
So Urban Outfitter said, we love what you're doing. We want to acquire the company. Did they actually give you a term sheet or like, did you go through any process?
- [38:15]
B
I have it. Yes, I have it.
- [38:17]
A
You don't have to bring that one up because that one might be a little bit confidential.
- [38:21]
B
Yeah, yeah, yeah. I think the whole thing is confidential.
- [38:23]
A
But okay, well, so you turn down, so you turn down an offer to acquire the company. So why'd you turn it down? It's just that you thought this could be worth billions. Like you thought you could build something like 10x bigger.
- [38:37]
B
Yeah, because I had signed up to build a billion dollar business and you know, 400 something million was not much of a markup to what index it invested in. They had underwritten, you know, a minimum billion dollar exit. And I bought into the fact that we were building a billion dollar business and wouldn't take that long to get there. And yeah, because I took advice. It wasn't because I was greedy. It was just more like, oh, no, we can keep going. Like, it wasn't really ever about money. It was about I was having fun and also trying to do my best on behalf of the company and the team and my investors.
- [39:24]
A
Yeah, I feel like there's that one saying where Zuck turned down a billion dollar offer for Facebook from Yahoo in the early days, and someone asked, why'd you turn it down? That's a lot of money. And he's just like, well, if I sold it, I would just start a new social network. I'd just start Facebook again. This is what I want to do. Maybe money went into the equation, but he's also just like, why would I sell if I'm just going to restart it? This is what I want to do. I want to keep working on this. So it's like, if you're having fun,
- [39:56]
B
it was so fun. It was like the best ride. It was the most fun.
- [40:03]
A
So what was the biggest thrill for you? What was the most exciting about doing this? Because some people might think that it sounds miserable running a company, like, being CEO. Some people might think, oh, being CEO, building my own company sounds awesome. What made it so fun for you?
- [40:17]
B
I mean, it wasn't miserable until, like, growth stalled. And then I was like, what? We have to lay people off? What?
- [40:24]
A
Yeah, that's hard.
- [40:26]
B
But it was exploding for a long time. I think it was getting to work with really great people, especially creatives, and execute on, like, amazing marketing campaigns, work with great photographers, make fashion that I really loved. Just work with, like, some of the most talented creatives and marketers in the world. And to be able to, like, see that out in the world, see it on, you know, a billboarder, you know, we ran a couple magazine ads, but not much. And then, like, see, see people, like, obsessed with Nasty Gal, like, run into a girl who was like, oh, yeah, I'm wearing Nasty Gal. Oh, my God. You know, it's just like, you know what Nasty Gal did for someone's confidence. And I'm not making this up. And it's like, you know, you can be like, oh, like, clothes shouldn't make you feel. Like, it should be like a. You know, you should intrinsically feel good about yourself. But it's like, you know, we, like, you know, feel different putting On I don't know what earrings versus not or. It's just, it's. It's human nature to like, decorate ourselves and, you know, how we do that and how we imbue our taste and, you know, our hope for our future and, you know, how confident we look and feel in what we're wearing, like, really does make a difference in how we move throughout our days. And Nasty Gal like, did that for women in a really big way. So it was just kind of the thrill of seeing the level of obsession that our customers had with the brand and that it really did make them feel good.
- [42:12]
A
It's like you just made something that people loved and people used and identified with your product.
- [42:18]
B
Yeah, it was, it, it was just like, okay, what do people want? It was less, much less about what I thought was cool. What do people want? Okay, give them that. You know, show it to them in like a different way. You know, we were, yeah, we were following trends, but wasn't like, you know, everything Nasty Gal did, was it done in its own way until everyone started copying US and Forever 21 was like hiring the same models. And Saks was going into showrooms asking, like, what did Nasty Gal order, you know, from a brand?
- [42:51]
A
Really?
- [42:52]
B
Oh, yeah, yeah, yeah. All that happened.
- [42:57]
A
So you mentioned that you said we, we. We only made one decision as a board and it was to declare bankruptcy, basically. So you mentioned the growth stalled. Is. Did everyone just kind of copy you and. And it was just harder to stand out or something or like, what happened?
- [43:14]
B
That's such a good question. You know, it's like, I, it's like, how do. How in retrospect, with all of the things that happened in the business, attribute what led to that? I mean, ultimately we ran out of money and couldn't pay vendors. That's kind of how it works. But the valuation was really high. I think even at 100 million in revenue, 350 for a private equity to come in and invest or buy the company, they would have valued the company at maybe 2x revenue, which is not the worst for in the world of venture capital, that's not the kind of you don't want to lose index would have lost money on the deal. Venture can be fickle. So what someone's investing in now may not be what VCs think is interesting a year from now. And if you go to fundraise a year from now and the thing that everyone thought was the next big thing, your Chrome extension or your whatever, live streaming, I don't know what is no longer Seen as like the future, then it can be really hard to raise money. And it was ultimately like a fashion, e commerce business. It wasn't a technology business. It. I shouldn't have, you know, I could have raised capital, but I raised capital at a very high stake. And yeah, so there were opportunities to sell the business. There were opportunities to, you know, have someone come in, like a strategic and invest and help us get to the next level. But those were things that kind of quietly. They were opportunities that kind of quietly disappeared. Even though I was getting, you know, those, those guys, like excited and on board and it seemed like they were like going to do like, be my partner for the next phase of Nasty Gal, even at like a 200 or $250 million valuation. There were kind of side conversations happening that I found out about later where, yeah, my investor was like, if you can't pay 350, like, don't bother showing up. But like, that decision was really up to me. I just never got to make it because they didn't. Because they ultimately didn't show up. I was talking to someone yesterday, founder yesterday, who was like, yeah, I've heard that so many times. He sold his company for like a billion dollars. But he's like, yeah, but, yeah, so I guess I didn't connect the PE thing and the venture thing, but like, when venture is no longer interested, there might be a different kind of, you know, allocator who would invest. But it's not a venture profile that they're going to, you know, it's not a venture valuation.
- [46:19]
A
Yeah, so it sounds like what happened was you can either confirm or not confirm, but it sounds like there was still a pretty good business that was there. It was just the valuation is going to be lower than what you raised at. And you were at a point where you were burning capital because you're trying to grow. And you hit a point where a deal was not going to close because the investors that you had disagreed with the decision. And so you had to shut the company down. Even though it was still a business that was working.
- [46:49]
B
It just put your can down the road. Then it became Hail Mary after Hail Mary, you know, fire sale. You know, one point, you know, someone did come in and invest after those much better strategic apparel retail opportunities had dried up. And I think they invested at like 100 post. But the only way I could get them to invest was if Index invested. I mean, Index must hate this. I mean, I've said this on like a bunch of podcasts, but this is my story. And this is a story that I want to pass on to other founders. And when I invest, you know, I want to make sure they don't make the same mistake or raise too high of a valuation or don't raise enough money or blow through capital too quickly. So the impact of, you know, bumming out a firm, you know, it's like the impact of telling the story, I think, is much, much bigger than the fallout. I could. I don't even know. So the only way I could get those guys to invest was if my investor, my existing investors put in some capital. It just looks really bad if your investors don't want to keep investing, like, even a dollar. Just like, okay, yeah, we're like, you know, we're invested in the company's future. And they were like, we own 20%. And I was like, you have to put like a dollar in or something. These guys are just not going to because it's just such a bad look. And what my investor said was, we will put. We will double what of your own money you put back into the. You put into the company of you personally. And so the only way I could get the new investors on board at the much worse valuation than the ones that had come prior to that was to dump my own money back into the business. And this was after I had hired a CEO. I was on the board. I wasn't operating the business. I did not like being a CEO at a certain phase. And by 2015, I had hired a CEO, and now I think it's early 2016. But. So I think the idea was that it was going to incentivize me to turn things around and double down on the business, but I wouldn't have known what to do. I'm not a turnaround CEO. I'm an eBay seller. I'm a great marketer and a great brand person and a great merchant and a great amplifier and a writer and a whole bunch of other things. A great recruiter and a really good investor, but.
- [49:29]
A
But not a turnaround.
- [49:30]
B
The idea was that I was, like, showing conviction, but it's like, I. I didn't know, you know, so I did and they did. And it just kicked the can further down the road. And then there was, like a sealed seal, you know, series of Hail Marys and, you know, exclusivity periods where we couldn't shop the business because someone was in diligence. And then time was passing, and then it became like, you know, people kind of circle, and they're like, okay, like, we see what's Happening here. We'll do some diligence, but, like, we'll just wait. And I hate to say it's what, like, smart people do because it's so fucked up, but.
- [50:11]
A
Well, because they're trying to get leverage and they're trying to get a good deal.
- [50:14]
B
Yeah. I mean, there was, you know, the company that owns Nasty Gal now had. You know, we'd spent a bunch of time with them before we filed for chapter 11, and they were interested in buying the company, and they just waited. They just waited it out, and then they bought it in bankruptcy for 20 million.
- [50:35]
A
Man. How do you feel reflecting on it all today?
- [50:43]
B
I mean, I just, like, talked about it so many times. I. You know, I think, like, I'll always have a bit of a. You know, it's like, it sucks. Like, it sucked. And the headlines were, like, awful. I mean, it was like, does the failure of Nasty Gal mean millennials aren't ready to lead? Like, what? I'm responsible. I'm the example of a whole generation because, like, I couldn't pull it off. Like, I built a hundred million dollar business. Yeah. The level of scrutiny really sucked. And then all the while, I had written this book called Girl Boss, and I was the girl boss, and I was supposed to be the, you know, example of female millennial leadership. And there was a Netflix series being made about my life that was due to drop four months after we announced that we had filed for bankruptcy. And then it came out, and then it was like, it was really bad timing.
- [51:43]
A
Geez.
- [51:43]
B
So it, like, almost got worse. Like, it was exciting. Like, a TV show was made about my life, but it was telling a story of who I was when I was 22, starting an eBay store four months after I, for the first time, really, in my adult life, was no longer involved with that thing. And, like, trying to, like, figure out what my next move was or my next identity was and not have everything hinging on this thing called Nasty Gal, which I was incredibly proud of, but also was like, so then there's Sophia the CEO. There's Sophia the girl boss, who's like, you know, on the COVID of a book, like, she knows what's up. And then there's this relatively abrasive, kind of bratty character playing me on a Netflix series that I thought was, like, really cute, but people were like, is she really like that? Like, you know, it was just this conflation of who I was and chatter and headlines. You know, like, the worst thing about Netflix's Girl Boss is its source material. That's me. Like, yeah, it's the book, but, like, that's me. So I think it was, like, the Netflix series that was the hardest part because it was, like, this crescendo. And then, you know, there are people whose jobs are literally titled critic in entertainment. You know, there's like, reporters in business, which I. You know, I'd experience that. But then there's, like, TV critics, and that's a whole nother thing, and that's being amplified into a. You know, this show's amplified into the time. It was 130 million homes in 195 countries in, like, almost every language. Like, that's. That was loud. That was really, really loud. But also, like, so entertaining to talk about. You know, it's like. It's like, yeah, it was really serious, but it's also. I don't take it that seriously. And it's, like, so funny to think that that happened in my life. It's still, like, very surreal. And, like, you know, it's all just. It's like it was. It was all very real, but it was also really fun and just really weird in retrospect.
- [53:50]
A
Yeah. Were you involved in the Netflix series and I'm assuming involved in writing the book?
- [53:57]
B
Oh, I mean, I wrote the book. Yeah.
- [53:59]
A
Yeah. Okay.
- [54:00]
B
What's this? Is that a hair? Oh, it's. Yeah, that's a hair.
- [54:05]
A
That's a hair. I just noticed it, too.
- [54:07]
B
What the fuck is that?
- [54:10]
A
It's okay. I noticed that.
- [54:12]
B
Had a guy do this on your podcast. Please leave that. Everybody knows that, like, it wasn't intentional.
- [54:19]
A
This is real. This is authentic. I actually do notice sometimes, like, part of my beard. I'll have, like. Like, I think this side is, like, just a little longer than this side right now. And it just throws me off. I'm like.
- [54:30]
B
It's like, is my face. Do people think my face is shaped like this? Yeah, we know it is. But, yeah, the book. I mean, I kind of left out the book part, which is what led to the Netflix series. But the book came out in 2014, so two years, two and a half years before Nasty Gal ended. And, you know, it's. It published at number two on the New York Times bestseller list. It spent 18 weeks on the New York Times bestseller list, sold half a million copies, and it became, like, a bigger Girlboss, became noisier than Asteegal was. Like, it was. Yeah, it was insane.
- [55:13]
A
So what was the girlboss movement like? I sort of remember this, but I don't really remember, like, what was it?
- [55:21]
B
I mean, it was just. It was a year after Lean in, and I didn't intend for it to be a counterpoint to Cheryl Sandberg's, you know, book. That was, you know, it was kind of the first story at scale that anyone, you know, that women had seen of. You know, someone who didn't go to school, someone who was, like, kind of cool, someone who didn't have a pedigree, wasn't like a squire, who, you know, had all the tools that they have at the. At their disposal. Ebay, an Internet login, a digital camera, access to thrift stores, and built something of consequence. And this was a time, you know, when, like, the freelance economy is, like, the gig economy was, like, kind of happening and creative economy, and people were leaving companies and freelancing more. And, you know, we used to describe our customer as ambitious. At Nasty Gal, it's like, I knew, like, I knew this. I knew this generation. Like, I knew them. And it just really struck a chord because it was kind of a mirror for what could be possible for a generation who had just, like, I had thought that people who ran businesses were, like, had to have a pedigree and had to, like, carry a briefcase or something. And it was like, no, like, it can actually be fun and cool and you can, like, learn things about yourself and be creative and, like, be yourself and be weird. And look at me like, I have choppy bangs. You know, I've got, like, a weird, you know, spiky necklace. And, like, I still pulled it off and, like, I made it cool. And you can, too. You can work for yourself. And like, that was like, really. That was really, like. That was really different at the time. It just. It struck a chord. And a lot of women quit their jobs and started businesses, and they still walk up to me in coffee shops, like, at least once a month and are like, hey, I read your book a really long time ago and I started a business. I quit my job, I got laid off, and, you know, the next thing, I read your book and, like, blah, blah, blah. I was so lost and read your book and blah, blah, blah. Like, you know, 10 years ago, or I was in high school, and blah, blah, blah. Like, you know, I was like, oh, my gosh, like, it's been so long, you know, so long, so.
- [57:43]
A
Well, I mean, talk about starting a movement. Like, not even just with Nasty Gal, like, people buying and identifying with the product and the clothing, but just the idea of even starting a company. You can own your own destiny, you can control it, and you can make things happen. You almost spurred the millennial generation to do it.
- [58:04]
B
Yeah, I mean, I was definitely part of it. I mean, I think we need examples of people who can show the rest of us what's possible, because it's when the whole world feels gate kept, like, why bother, you know, and, you know, with social media now? And of course, like, everybody's a finance expert and everybody's an expert, but it's like access to information is a lot more democratized. And, you know, Robinhood didn't exist at one point. Investing, you know, retail investing was hard. Like, you know, you had to. Logging into Fidelity was like, you know, really different.
- [58:46]
A
And you had to call your broker to place an order.
- [58:50]
B
Yeah, yeah. Like, we have access to so many tools now and so much information to educate ourselves. And that's not saying it's all correct, but we're able to make decisions and have agency over our lives and careers in ways that we weren't able to before, you know, you know, before for. In 15 years ago.
- [59:11]
A
Yeah. And how would you think about if you were starting a brand or a movement of some kind today? Like, what do you think is most important to sort of tap into or unlock? Or are there things you feel like people maybe skip on or don't put enough emphasis on, like, the under. Underrated aspects of it?
- [59:29]
B
I think, like, I think the whole every touch point of your brand, like, from the moment somebody hears about it to the time they open a package, to the time they make a return, should be cohesive and should all feel like the same thing. And what people are murmuring about the brand or talking about over breakfast and what you see in a press release and what you see on the news and what you see in a. In an ad on Instagram should all map to exactly what it is that you want it to. And you have to be really clear on what that is. And then, yeah, like, visually, materially, everything needs to feel like the same thing. And ultimately, you know, you want. People want to buy into a world. Like, Red Bull's a world. Liquid Death is a world. Glossier made a world. Nasty Gal is a world, you know, for someone to have, like, affinity for a brand that's greater than the product itself, you need to create that feeling. And I think that really, like, comes down to two things, which is a feeling of, like, belonging and I guess, for lack of a better word, community and aspiration. So how. How can I. Red Bull, like, oh, it gives me wings. Like, glossier. I can, like, do minimal makeup and still feel good about myself or Nasty Gal. Like, I can put on a leather jacket for the first time in my life and feel like I can take on the world. Like, this motorcycle jacket is. Transforms. Like, who I. You know, how I move through my life. And that's not an easy thing to do, but it's. That should be the North Star. Like, liquid death is like murder your thirst, you know, But I don't. I invested in liquid death. But, you know, they've done a really good job. I don't know if anyone's. You know, it's like, there's. I'm sure there's liquid death tattoos. Like, there's Nasty Gal tattoos, there's Girl Boss tattoos. I don't know if there's glossier tattoos, but. And then, yeah, I mean, it's. It's noisy. I mean, it's like, it feels like every brand is. Has, like, a Nepo baby celebutante attached to it now. So what.
- [62:02]
A
What is the celebrant? I've never heard that word before.
- [62:05]
B
I speak a debutante who's, like, a celebrity. I don't know. I haven't heard it in a long time. Like, it's probably actually a dated word. The creator economy is real. Like, distribution's important, Right. So there's all of the brand stuff, and then there's you talking about it, people talking about you, and then people talking about the product. Right? And that goes back to, like. And then people want to admire you. They have to see you as an expert, whether you're expert in style or an expert in venture capital, or it's like people are looking for proof or, you know, the science behind a skincare brand. Like, who's the doctor behind it? Do they have an Instagram following? Like, you know, it's like there's all these points of proof that people look for to triangulate influence and trust that now spans, like, so many channels. And it's much more challenging to. I mean, there was. There were less places to market a brand when I started Nasty Gal, but there's. And so it's easier than ever to start, but there's more noise than ever.
- [63:12]
A
Yeah, you. And I think one thing you've done pretty well just over your life is getting press and getting this, like, institutional kind of stamp of approval as well. How do you go about getting press? And maybe press is also, like, podcasters or creators. Like, how do you actually get them to care?
- [63:33]
B
I don't know. I think I'll be, like, riding on the coattails. Of Nasty Gal for a long time. And I have been for a long time, you know, and Girl Boss. It's like I did, I did something of consequence. And like that's. And there's this, all this lore that was built around me when that happened. I had the best publicists in the world and was on the COVID of Forbes and you know, Inc. And Entrepreneur and you know, whatever features in fastcom. Like that stuff built me over time. But it's been a long time. It's been a long time since I've had frequent press and I haven't had a publicist in as long as I can remember. But I'll get invited. I get invited to guest on stuff because people think of me and they're like, oh, wow, that's a Stephen Bartlett just Diary of a CEO. They just reached out. You know, Phoebe Gates and her co founders, Sophia, who do the burnouts, which has gotten to be a pretty big podcast. Like they DM'd me. And I'm an angel investor now, which is cool. Too expensive for the fund.
- [64:44]
A
Yeah, that's fair. One thing I love is that you did have all this press and I just met you at a hackathon, like the one hackathon that we went to like a couple years ago when we first met. I didn't even know Launch House. Yeah, Launch House. Yup. What a. What a time.
- [65:02]
B
I forgot that was where we met.
- [65:04]
A
Yeah. And I like didn't know that this was all a thing. And then I think I, when I looked you up at some point, I was like, oh yeah, I remember. I remember hearing about this like girl boss. Yeah, I think I remember this. And just you never know how you're going to meet people. And, but, and one thing you mentioned before is that you like being a founder, you thought you were good at that zero to one founding stage. You're not that good at the turnaround, really mature company type CEO, but you feel like you're really good at investing and then you're doing that full time now. How did that transition happen?
- [65:41]
B
Well, I did a bunch of angel investing. First angel investment was in 2013. I invested in first dibs and I invested in eight sleep and liquid death and public. You know, eight sleep was I think 200 posts. Liquid death was 50. The public.com I think was like 100. And I'm an advisor there as well. Invested in Kind Body, invested in Chill House that Sold and Passport, which has done extreme, extremely well. Passport Shipping and just really loved working with founders. Realized that I had a Lot of relationships that could benefit them. I have a platform that I can use to amplify what it is that they're doing, often to an audience who are interested in the kinds of things that I'm investing in would be users of those products that, you know. Yeah, I can get into deals, founders want to work with me. I can make a material impact both through making introductions that are relevant, through, you know, amplifying and evangelizing them, even if it's on like, a podcast like that. Like, I can list out my portfolio if you would like me to, but. And then, you know what? Even though I invest in B2B software with trust Fund My Fund, I bring a consumer lens to the way they present their products and their brand and their marketing, because they're often highly technical founders that I'm investing in now who are so in the weeds with what they're doing that being able to articulate that in a way that even a business user who's choosing between Squarespace and Wix or Shopify versus an alternative, they're still looking at the products as consumers. And the psychologies of a business user is much more similar to a consumer than it was 15 years ago when we were putting out an RFP for an email service provider. Right.
- [67:52]
A
Oh, my God, that sounds brutal.
- [67:55]
B
Yeah, you push a button. But it was like, someone who would come and do sales, and they were like, you know, okay. It was called Bronto, the email service provider that we, like, upgraded from Constant contact from.
- [68:07]
A
So this is the ability to email your email list?
- [68:10]
B
Yeah, yeah, yeah. Just mailchimp before mailchimp. But, like, some guy came in, you know, or like, Gusto, like, we had to choose benefits. Like, some insurance broker came to the office with, like, Xeroxes.
- [68:23]
A
He's got, like, a binder, he's, like, opening it up.
- [68:25]
B
It was like they had been xeroxed so many times, they basically had, like, black and white acne. Like, it was, like, really bad. And now you have Gusto and justworks and Dial, and you push buttons and you can run a business, but you're going to choose justworks or Gusto based on the kind of stuff that made Nasty Dial successful. And that's, you know, copywriting. It's design, it's brand. It's how you articulate what it is that your product is, how simply you, you know, simply simple it is to understand for your users and selling the aspiration. If I use Gusto, it's going to make it so much easier to build a team, you know, if I use QuickBooks over Xero. Like, oh my gosh, I'm going to have this whole suite of whatever it is, you know, that, you know that like, login should be an unlock in the same way that wearing motorcycle jacket at Nasty Gal, you know, buying a motorcycle jacket made someone feel. And that's like, again, I think, and I think software can do that. And I'll like log into airtable and be like, oh my God. And then I'll churn. And then I'll be like, airtable. It's airtable again. And I'll churn, be like, I don't want to pay all these subscriptions. But still, like, there is that, that, you know, software can give a user that kind of exhilarating feeling. And so after angel investing and realizing I couldn't just eternally deploy my personal capital into startups and that I had good taste and access and all this stuff, I just talked about that I could do it for a job and knew a lot of gps, knew a lot of investors at big firms and began to learn about what running fund entailed and listened to a lot of podcasts and read books and, you know, studied and talked to a lot of people who helped me along the way. You know, it's just like so many, you know, that's. I think one thing about venture is that. And I think more than VCs do this, more than founders, which is like, okay, how did you structure your blah, blah, blah, or, you know, what's your minimum check size? Or, you know, it's like you and I have talked about the mechanics of fundraising and deploying capital, and I don't think founders get into like the weeds as much with that stuff. But there's, you know, it's such a virtuous ecosystem of people sharing like how they've done things and then also like companies that they're investing in. Not as much LPs. Anybody who wants to share LPs with me, like, you know, or to find me, but. But. And then decided, you know, launched trust fund in announced at the beginning of 2023, raised a $5 million fund and have made 15 investments into some amazing companies. And just like love working with founders, love the 0 to 1, 1 to ish, you know, I know I want to play there over and over and over again. I have add, so I get to use like my taste and my access and my platform and my chops and, you know, look at a lot of interesting things, talk to interesting people, see what the, where the future is going. You know, place bets and, you know, make an impact and do it over and over again so that when these companies are succeeded, you know, they get to be successful, they get to do the really hard work, and they get to inherit the growth stage that I really don't like. So I feel like it very much plays to all of my strengths and the stack of things that I didn't know I had accumulated until I started doing this job.
- [72:21]
A
And then the name Trust Fund is like, probably talking about, like, branding and marketing, like one of the greatest venture firm names ever.
- [72:30]
B
Thank you.
- [72:30]
A
So how'd you come up with the name?
- [72:33]
B
I don't know. I don't know. I think I was talking to Abe Burns. Do you know Abe?
- [72:40]
A
Yes. He was at Sound Ventures.
- [72:42]
B
He was at Sound. Yeah. He's a funny guy. But I think at some point I was like, ha, ha ha. If I ever started fun, I'm gonna call it Trust Fund. I don't know, we just used a stupid stuff around over text, and I think I. And yeah, it was just like, that's such a great. I don't know, I like naming things.
- [73:03]
A
And then you've got. I think you have something on your desk right there. The trust fund. The bucket hats that you made.
- [73:09]
B
Yeah. So rich kids think they're funny and ironic, and people who didn't grow up with trust funds think they're funny and ironic. Right. So whether you're an Amagan set or, I don't know, I'm not gonna give an example. But, like, you know, Silver Lake, whatever. Like, this is funny.
- [73:34]
A
This is gonna be the thumbnail for the episode on YouTube, by the way. Just you with a bunch of trust fund bucket hats.
- [73:40]
B
Here it is. Yeah. Yeah.
- [73:45]
A
And so you mentioned you. You had to go raise money from LPs. What is that like for someone who's never done that before? Like, was it. Is it easy? Is it hard? Like, what are the things that you feel like you got to nail to get that done?
- [73:58]
B
I mean, I. I talked to a lot of different people. You know, I was able. You know, I got like, a fair amount of introductions to, like, institutional LPs, went to some of the GPLP matching events and conferences that are supposed to, like, help you fundraise as an emerging manager. And it's like I'm talking to B of A Ventures, and it's like, they're not going to invest in my $5 million fund, but I'm trying to get meetings with them. And eventually it was like, okay, I'm just going to raise a $5 million fund from people because it's too small of a fund for anybody who's trying to write checks out of a multi billion dollar fund because they're not going to write a million dollar checks. They don't want that many, they don't want to invest in that many venture firms. I don't want to deal with all of the whatever year long diligence that an endowment fund is going to put me through. I want to work with stakeholders that I like and enjoy and sometimes know who are like real people who are investing because they believe in me and have conviction and aren't necessarily running me through like a spreadsheet to decide if I'm a good idea. And so raised, ended up raising from, you know, a lot of like a lot of GPS at bigger firms and founders. So I mean like Ev Williams from Twitter and Medium and then Anthony noto who's the CEO at SoFi. But then it's like Marc Andreessen and Chris Dixon and Jeff Jordan and Andrew Chen and Jason Calacanis and David Sachs and Rob Hayes and Jeremy Liu are all, it's like all these Midas listers came in, which was really cool and super validating. Jesse Draper, Paris Hilton. So it just ended up people that, you know. And I met like a lot of these guys. Like I said like in 2012, what was that, 14 years ago. So people were like, how'd you do that? And it's like I've been around for a long time.
- [76:19]
A
Well, it wasn't like you showed up and said, hey, just like, give me some money. It's like you knew these people for a decade.
- [76:24]
B
Yeah. And they, you know, and that's, you know, one thing about ventures. Like, you know, even if you don't get it right, like people, if someone's seen you try to build something and watched you build and like even if it didn't work out, like people still have respect and will, you know, often continue, you know, possibly funding your startup or invest in a fund. Like, and it's like Nasty Gal's story is like an age old, you know, venture capital like story.
- [76:57]
A
You raised a bunch of money playing poker. I think that was like a trick that you used.
- [77:02]
B
I mean, it wasn't a trick, but I mean I played poker with Jason at CES like 10 years prior or something. But definitely like, you know, I met, you know, Jason hosted and Brooke Hammerling hosted a poker game after the Code conference every year for a very long time. And I would play in that every year. And it would be like Jeffrey Katzenberg and, I don't know, like, big, you know, executives and founders and stuff at the big boy table. And I'd play at, like, the baby stakes table, but there were always, like, interesting people around. And that's where I met Anthony Noto from SoFi, who became an LP, but like a friend, really. Kind of a friend and mentor first and then, yeah, like, playing with Jason. Sonny Madra, who founded Grok that sold to Nvidia, is in elp, met him playing poker. But it's like Jason stands up and he's like, who's going to invest in Sophia's fund? And somebody raises their hand. And that was pretty cool.
- [78:16]
A
Yeah, well, because I feel like everyone, you need to figure out some kind of advantage when it comes to raising capital. Whether it's like, you're really good at a certain thing and you lean into it, or you find, like, a channel, like a certain type of investor that you vibe with, whether you're a fund or you're a founder. Like, you need to figure out there's like, there's more than just like, here's a pitch deck and here's a spreadsheet and we'll give you money. There's, like, always some reason, like some kind of emotional connection, a thesis, something like that. There's always something else that you gotta kind of kind of like, figure out. I don't know if it's like a trick or like a hack is the best word for it, but you need to figure out how to almost like, crack something more than just, you know, people don't just give you money for no reason.
- [78:56]
B
What's your shtick?
- [78:58]
A
I think I'm still trying to figure that out, but it's usually people that are familiar with my body of work. I mean, maybe it's same with you where they followed along for a while. My pitch is usually I just have a pretty big platform I can use to help founders. It's pretty similar to yours. I've leaned a lot into the podcast, where I've had multiple portfolio companies that have hired over 10 people from their podcast episodes, which is pretty crazy when you just think about there's all these funds that they have, these big teams that are adding all this value, and, oh, we'll help you recruit, we'll help you do all this stuff. And meanwhile, I just put out a podcast episode, I'm sleeping, and, like, people are getting jobs. Like, it's kind of. I don't know, it's kind of insane. Like, I've had founders just tell me how impactful it is. So I think I don't even appreciate it as much as at times, because, I don't know, for me, it's just kind of fun. Like, it's just fun to talk about this stuff and put it out there and, like, thousands of people listen. I mean, I've had some podcast episodes get hundreds of. Or if you count the shorter clips, some of them have cleared a million views on the episode. So it's kind of crazy just to think that you helped someone get whatever word out that they were trying to get out. And I create all the content just as I would want to see it. I just kind of try to put stuff out there that I'd want anyway. It's kind of this flywheel that just kind of kept building to the point where, you know, you need to think about what your advantage of as an investor. For me, it's just founders want to meet. They want me to help them. They think that they can get value from tapping into kind of the distribution. They feel like they can maybe trust you. Like, they followed you for a long time. And for me, I do a lot of, like, humorous, funny stuff aside, the podcast is like, the most serious thing I do. But a lot of founders, like, I feel I just kind of know you. Like, you just kind of feel like it'd be fun to hang out with, maybe brainstorm some stuff or we'll work on. You know, I'm trying to. I'm trying to do the launch, like, help me plan this out or, like, I'm trying to get some press coverage for the Series A or, you know, we're thinking about our Series B. Who do you think would be worth talking to? You're just brainstorming, like, things that you've seen that have maybe worked in the past. Yeah, I don't know. There's just so many different things that go into it. But similar to you, I have add. There's no way I could actually build a company. There's no way I could spend 80 hours a week for 10 years on the same thing.
- [81:31]
B
Yeah, yeah, I did that. And that's what you tell LPs, that's what's in your deck. Or is it like, I have special access because of this, and I can choose good founders because of this? Because that's the value prop to founders. But what do LPC that differentiates you? Is it, like, access, obviously, impact, like, that's one slide. But, you know, pick, pick. You can pick. You get an earlier, like, what do you think it is?
- [82:02]
A
Yeah, I think there's a couple different reasons like you want deal flow for later stage stuff. So I'm usually investing in the first or second round. Usually a pretty attractive entry point prices. I think the average cost basis on my fund too that I finished investing like a little over a year ago was 14.8 million. So there's some companies that are 8 million post money, some are 20 million post money. But they're usually kind of right around that mid teens. And that's just you can, with someone, you can go to someone with a straight face and say I'm going to deploy this capital into 2025 companies and there's a chance that this fund is going to be a 10x returning fund and there's also like a chance we need to get really lucky. But like this could be a 20, 30, 40, 50x. Like that's kind of the point of venture capital. I don't think the point of it is like hey, we're going to get a 3x or a 5x return. That's actually not that good in venture in my opinion. So my pitch is generally like, you know, you need to get lucky with some of the stuff but you I've kind of set up the constraints where the fund could get 10x return on the fund if you like, following on to the breakout portfolio companies. And I will have some, I've had some in the past and there'll be more in the future. And you're looking for companies that you want to follow on to either doing SPVs or leading the rounds of. We can do that. I think a lot of the pitch to, I think a lot about how can I expand the fund over time. So I think a lot of people the pitches I'll get into super hot rounds and we'll get the logos on the deck, we'll get 100k check into this company. 250k maybe, maybe it's in a later round too. My pitch is I'm trying to invest as early as possible and I'm trying to be one of the first investors so that then over time instead of writing a 250k check, I could have given him a million, I could have given him five. I could buy 30% of the company over the course of those first couple rounds falling on over time. I honestly don't know how it'll all evolve over the next couple decades. But I just think about it as am I investing as early as possible, giving them money? Could I have invested more? Did the founders trust Me, would they have me invest again in their next company? And that's usually a stamp of hey, he did something, he didn't fuck it up. He didn't. He was responsive. At the very least, maybe he helped in a couple of ways. That's generally the pitch. And then generally you think you buy into the media driven strategy. You buy that the Internet matters, you buy that that can move the needle for founders. My pitch is usually not, hey, AI is the thing. I'm trying to invest in AI, I'm an AI investor or deep tech or web three is the thing. I'm an expert. I feel like one of the, one of the things I personally do not want to do is, you know, you kind of saw the swing to like American dynamism where everyone's like, oh, we're experts on defense and like American manufacturing. And meanwhile two years ago you were like talking about how every purchase was going to be on the blockchain and like you'd get an NFT every time you ordered a coffee. And then now you're talking about how like self defending missile drone things or like I just think there's a little bit of a disconnect there when you think about the people try to kind of brand themselves as being these experts in all these different categories.
- [85:25]
B
It's really intimidating. It's intimidating honestly, because overnight everyone else became an expert. And I still know I can do a very good job at this. But it's not going to be because I know everything about foundational models and like security. Like it's, that's not to be it but I, you know, have a good feel for what's defensible and why One of the LLMs would not touch a certain area because it's like too hairy or too specific or you know, that's the general knowledge is not going to benefit. It's just not going to work. Pulling from, you know, data or just having a customer's data in a silo. Like there are a lot of things that I do know enough about to know like to a certain extent what's defensible in AI durable or whatever D word you want to use. But like it's a, it's an intimidating time because it seems like everybody else has like a spiel for it and I don't have that spiel. And maybe that's the kind of honesty that people want or because I am investing in AI, but it's not the only thing I'm investing in. But I obviously also don't want to invest in Something that can be vibe coded in five minutes. Now, Now. And then it goes back to speed and distribution and ability to, you know, it's like anyway we can have that conversation offline but it sounds like we relate.
- [86:53]
A
And then what, what are you looking for then in the founders at you back it sounds like are there certain traits you feel like you really gravitate more to and do you think lead to building a company of consequence? I guess if we're using the same language
- [87:08]
B
I think it's a founder who's going to use like that I can see using every resource at their disposal to build, to build their product, build their company. And it isn't just looking at the obvious channels for doing it or the obvious channels for recruiting who are going to ask me for things. Like I want people who are. There's a healthy kind of entitlement that founders have to have and honestly I think everybody has to have just even if it's just like they're entitled enough to, they feel entitled enough to ask for advice or an introduction even if I say no, you're not ready for that. Like I'll introduce you when you know you've got another logo on board because it's too early to talk to Delta and I made that introduction and then founders I think can build with real product velocity. So the founders that like have gone on to raise subsequent rounds and begun to build critical mass and get buy in from their customers and build sophisticated products have done it quickly. So speed I think is important because Nectar Social for example it's like I invested in their pre seed when they had a deck and a year later Misbah came over my house co founder and showed me their product and I was like how did you do this? Like this is like witchcraft. Like it's a fully, this is like a very mature product. I have no idea how you agree.com is another example of that. Like founders who are just like I'm gonna go build this and then they just go build it.
- [88:44]
A
They're like the DocuSign with 10 employees instead of 10,000.
- [88:49]
B
Yeah, yeah. It's like it's free E signatures. Like I use it every day.
- [88:54]
A
Really?
- [88:55]
B
Yeah, yeah, yeah. So unless you're running payments through it because what they are is like the contract is the invoice and so you can connect your stripe and do one off payments and recurring payments. So it's great. For SaaS companies that's something you pay for but you get paid immediately because when your customer signs the contract it takes them through a payment flow and does dunning and payment recovery and all kinds of stuff for you. But if you do free E signatures, it's unlimited. DocuSign gives you one or two a month. I think it's insane.
- [89:33]
A
I do do some contracts because usually we're sponsors in the podcast. We just sign a contract because I got burned once someone didn't pay me. So I always sign them. Well, this has been a lot of fun. Thanks for taking the time to do it.
- [89:46]
B
Yeah, thanks for having me. It's like always. I mean, it's like cool. I just got to talk to you for an hour and a half. That's great. If anybody else benefits, like that's just, you know, icing on the cake.
- [89:56]
A
So yeah, where can people find you if they did benefit? If they're like, oh, this is. I love this Sophia, I want to send you a message.
- [90:02]
B
Reach out instagram.com Sophia Amoruso LinkedIn.com In Sophia Trust Fund VC Trustfund VC pitches and then if you want to see my website, it just has everything you already know if you've listened to this podcast about me sophia amoruso.com and thank you for listening.
- [90:28]
C
Thanks again to this episode Sponsors Flex Upgrade to Flex Elite and get a thousand dollars in the description numeral Put your sales tax on autopilot@numerol.com merge check out their new Gateway LLM product and Amplitude for AI analytics. Just ask Amplitude if you enjoy this conversation. Please like, comment, subscribe and share this episode with your friend who's bootstrapping and thinking about raising their first round of venture capital. Make sure to check out the back catalog of over 100 episodes with founders of companies like Robinhood, Sweetgreen and Mercury. Tune in over the next few weeks for guests like Mikhail Krishnan from Out of Pocket on how the US Healthcare system actually works in Alex Israel and Metropolis, who's quietly pulled off the most successful version of the AI growth buyout model strategy that everyone has been talking about for the past year. If you want to miss any of these, subscribe to my newsletter. The Split linked in the description to get each episode plus a transcript emailed directly to your inbox every week. Thanks again for listening. See you next time.