How Liquid Death got a $700 Million Evaluation, Making Your Pitch Deck Undeniable, & The Hidden Truth of Being a Tech Entrepreneur

Alex Lieberman: What's up, everyone? This is Alex Lieberman, co-founder and executive chairman of Morning Brew. And I am so fricking excited to be bringing you what was once called Founder’s Journal and is now called The Crazy Ones. But unlike Founder’s Journal, where it was just me riffing on camera three days a week in these long-drawn-out monologues, The Crazy Ones is going to be the best co-hosted startup show on the planet. And I am so excited to be joined by Sophia Amoruso and Jesse Pujji as my co-hosts. Guys, we did it. 

Sophia Amoruso: Here we are, we're together. 

Alex Lieberman: Lot of practice, lot of talking, about 10,000 hours of tech checks, but we did it.

Sophia Amoruso: This is very professional, this whole setup. It's like live TV. 

Alex Lieberman: Well, I wanna start with a story. So this morning, came into the office, had 60 Second Startup, which is this other social series I did. I'm sure we'll talk about it at some point on the pod. And I get back into the office with one of the producers from Morning Brew, and I start talking about this company, Liquid Death. And I start talking about it 'cause I've been reading articles about it, and the producer stops me in my tracks and she's like, “Guys, best water on the planet.” And I just like, I couldn't take it seriously. I was like, you gotta be fucking kidding me. It's water. Clearly they've gotten you with the branding. Are you guys familiar with the Liquid Death story? I know, Sophia, you're an investor, right? 

Sophia Amoruso: I'm a proud investor. I was in their round where they were valued at like eight and a half million dollars or something in 20xx. 

Jesse Pujji: Nice. 

Alex Lieberman: That is insane. 

Jesse Pujji: I saw, I witnessed Peter Pham, who's a friend of mine, hand it out at every single tech conference I'd ever been to. He carried a big bag of it and would hand it around to people, and then people got to look super cool drinking this water that actually looked like beer. 

Alex Lieberman: Well, for the crowd, because a lot of people probably don't know what Liquid Death is or doesn't know the backstory. So it's this guy, Mike Cessario, 40-year-old guy who comes from an advertising and creative background who worked at agencies growing up, and the actual origin story, I don't even know if you guys know this, 2005, Mike, who was into like the punk skateboard scene. He goes to Warp Tour, which, sorry to date you guys, I don't even think I was around for Warp Tour, and he noticed that these bands had their water in Monster energy drinks and he was like, that makes no sense. Why do they do this? Oh, clearly it's like they don't like the look of just normal water bottles. So that was the origin story. He ended up creating Liquid Death, which as of a week ago raised $70 million bucks at a $700 million valuation. Most people, they look at this and they're like, this is fucking asinine. It is just water. But, oh wow. Sophia's got it on cam. 

Sophia Amoruso: It's like in my fridge. It's like in my fridge. I was like, Tyler, can you hand me this? 

Alex Lieberman: So, so I'll be honest, I was gonna try to rush to get it before the show but it was too tight of a timeline. But I think it's absolutely genius. Why do I think it's genius? One, I think it plays into like these three big trends. One, bottled water just became the largest category, ahead of carbonated drinks. I think it's at $29 billion now. It's supposed to get to $45 or $50 billion in the next few years. We have obviously this entire movement into like sobriety being cool and people not drinking alcohol again. And I'll say for me, as I've tried to drink less, I always feel the social pressure of not holding a can. So you get to basically mask your water in a can. And then the third piece is obviously the environmental component, where single-use plastic is just horrible for the environment and aluminum is way better.

Now, I think of Liquid Death as basically, it is a marketing company that just happens to have a product that is water because it's a commoditized product. They could have picked any commoditized product. I'm gonna… 

Jesse Pujji: Alex, how does, how does that make it any different than any other beverage business? Like Vitamin Water is just water with some colors and a cool…you know, Coca-Cola, like the story of Coca-Cola is literally water with some, a few additional ingredients and then marketing. 

Alex Lieberman: Yeah, but there's at least, you know, there's some differentiation to the taste. There is literal zero differentiation here. Yet somehow people still think the taste is different. And I will go to the grave believing that every water tastes the exact same. Before we hop into the actual show—this is like the prelude—two unbelievable marketing campaigns that Liquid Death has done recently, and they've done dozens of these. First was, in the last few days, they partnered with Martha Stewart. I don't know if you guys saw this. And they went and they created…ah, great, we got it on cam. A severed hand holding a Liquid Death as a candle. Just the most random thing ever. If you were to ask me to draw up who would the ideal collaboration be, it would not be Martha Stewart, but it's great. 

The second one, and this was a little while ago, is, rather than going to athletes or celebrities to do endorsements, I don't know if you guys ever saw this, they went to water boys. So they did a $100,000 endorsement with a professional team's water boy, and then they created a YouTube video of water boys and water girls running 40-yard dashes with Liquid Death in hand.

So is this company worth $700 million? I personally don't think so. Is it gonna have the staying power, the brand staying power, given it’s so sexy and cool right now? I don't know, but I think it is a genius business. 

Jesse: Yeah, I think… 

Sophia: I think when I first saw it, I was like, the packaging is like shareable. So that's something where it's like, it's a commodity, but I looked at it and I was like, one, this is something that someone's gonna get really excited about. Like a guy playing a guitar, like jamming out with his friends, is gonna like smash this on…you know, smash it on his forehead or something like that. And I think, yeah. And Nasty Gal, my first business, it was just like every single thing was like, if it's photogenic, if you wanna point your phone at it today, like that's the product that you need to make. And to turn something that is literally, you know, pouring out of the earth for free into something that people are like cultishly obsessed with is kind of like peak brand for me. 

Like if you can turn something you can pour out of a faucet into something that people are emotional about, are getting tattoos of, like that's the best brand you could possibly build. 

Alex: Best stat on that is 50% of people who buy Liquid Death online also buy a T-shirt, which is a ridiculous stat. Jesse, are you in or out on Liquid Death? 

Jesse: I'm in, dude. You're not, you're not selling water. You're selling being cool, and they did a great job of that. But what I was gonna say is, I mean, Vitamin Water had a multibillion-dollar exit. Like Coca-Cola is the original compounder; it's the original “I made a formula once and now how do I sell it over and over?” It's like an internet business. It's like software. And so I think drink do have that component to them and a brand and water, man, doesn't get more scalable than that. So I'm in. 

Alex: Love it. Okay, let's hop into the real thing. 

Steve Case: Here's to the crazy ones, because the people who are crazy enough to think they can change the world are the ones who do. 

Alex: What's up, everyone? I'm Alex Lieberman. 

Sophia: And I'm Sophia Amoruso. 

Jesse: Yo, this is Jesse Pujji. 

Alex: And this is The Crazy Ones. What's up, guys? This is Alex Lieberman. Welcome to The Crazy Ones. God, it feels good to say that. This is a show by entrepreneurs for entrepreneurs, and I'm gonna give you a quick rundown on what we are gonna be talking about on this very first episode. We're gonna talk about how to nail a pitch deck, and we're gonna do so by tearing apart my friend and cohost Jesse Pujji's deck for his very real e-commerce business that he has been raising for. The business is Kahani. And then we're going to figure out how to make a million dollars in the next 12 months. We had a very simple question for each other. You have to make a million bucks in the next 12 months. How do you do it? We're gonna talk about some ideas that maybe some listeners leave with on the show, but first it's our first episode and you our honorable audience. So in order to get this going, you guys need to know who the fuck we are. Sophia, you wanna start by sharing who you are? 

Sophia: Well, let's see. I've been building businesses since I was 22, kinda accidentally. One was called Nasty Gal. And I sold fashion, started with vintage, did that for 10 years, built it to over a hundred million dollars in revenue, bootstrapped it to $12 first, but then raised $50 and then wrote a book called Girlboss, a New York Times bestseller. And now my third business is called Business Class. And I'm teaching entrepreneurs how to build businesses through a program where I pour everything that I've learned with a lot of hardship, harvesting it for a new generation of entrepreneurs. And it's really fun. 

Alex: Love it. Jesse, we're gonna get you talking about yourself by going right into this first topic. So I wanna say it was in the last seven to 10 days, you put out a tweet about how you've been working on this B2B e-com business. You decided to raise money for it. You just raised a seed round. My first question to you is, what the fuck? Two, what the fuck? One, one what the fuck is, you built a business, you exited it, and you decided to go back into the arena. And maybe a questionable decision…I'd love to hear why. Second is, you went to the dark side and you raised VC money. Why? 

Jesse: Yeah. Yeah. What a cool, what a great set of what the fucks. So, you know my story. I grew up in a, my immigrant household, born and raised in St. Louis, very proudly. And I was away for 18 years. And I actually just moved back. So I'm St. Louis for life. You know, I was starting the businesses when I was 10, 12. I had a DJing company, T-shirt business in college. Just was always the kid hustling and trying to build something, and then spent some time in the more standard jobs of consulting, and then on in the finance world. But 2010 left and started my first company Ampush, which was totally bootstrapped. We were one of the first companies to crack the code on Facebook marketing and advertising. And our early customers were Uber, Dollar Shave Club, Peloton. We grew that business, had a liquid event in late 2015. And I continued to run it, actually, I met these guys from Red Ventures and learned a ton from them, basically through for a full decade. So I ran it for 10 years. And to answer your question, Alex, like, you know, as I went down that process, I realized, I started trying to pull out what was driving me every day. 'Cause it wasn't money anymore, and, it wasn't, you know, ambition solely. I loved helping people learn and grow, and I loved building businesses. And so I wanted to build something that would help me do that. 

And then, so I launched a venture studio called Gateway X in January of '21 back in St. Louis. And, you know, we've launched three businesses, and what I would say that each of them is a different business problem with a different set of customers and different challenges and risks, and they're all financed very differently. And so Kahani, we think it's a huge opportunity. We think it's a, you know, big SaaS business, we think it could be Shopify of 2020 in terms of its scale, and I think a combination of, on the exciting side, let's get money to go fuel that vision. But on the other side, I'd never built a product in SaaS business. And so I started realizing, like, unlike a services business where you can change things on a dime very quickly because you just get another person or change the scope of a project, that you have to, you have to build a product and you need talented engineers and capabilities and time. So those are kind of the two primary reasons, big opportunity and harder to build. 

Alex: I want to talk about why you’re the Darth Vader of bootstrapping, but first you mentioned that Gateway X is a venture studio. Some people may not know what that is. What's a venture studio in one sentence? 

Jesse: It's a business that builds other businesses. We take our ideas, our knowledge, we validate the opportunities, we test a bunch of stuff. And then when we think something's good enough to be an idea, we make it a business. 

Alex: Okay. I feel a level of sadness, and I feel sadness because basically for as long as we've known each other, you've talked about the bootstrapping way. You've put out tweets into the world, you've built up this large audience on Twitter on the back of telling stories of entrepreneurs who bootstrapped their businesses. And then you went and you pulled a fast one on us. 

Jesse: There you go. Well, look, I think it's a state of mind. I don't think it's a capitalization. I think it's like, do you worry about your revenues to offset your expenses? And I don't think a lot of entrepreneurs do that. Or there's certainly a genre there. And so to me it's just, I always think of this, how much do I need to sell of my product to break even? And that has not changed for me. That's not changed the way we're building the business. You know, the other thing I didn't mention, other reason for me was, I've never done it before and I'm ultimately somebody who loves learning. And a bunch of my friends who knew that go, why don't you do this? This is a cool idea. You got like, go give this a shot. So I don't know, I think it's, I don't plan on raising $50 to a hundred million. You know, I don't plan on raising a bunch of other big rounds. 

Alex: That's what he says now. 

Sophia: Yeah, I mean, that's the thing, is like, from what you told me when we talked on the phone, it was like, “I'm gonna raise this.” It sounds like there's startup costs and from what you shared, I saw your lead investors and they're like e-commerce through and through. So you didn't bring on money, you brought on smart money, which means that you know your weaknesses and you’re kind of expanding the, you know, the group of people that can guide you and probably the network of other companies in their portfolio that you can spend time with and really understand best practices. 

Jesse: Let me add one quick thing. Hold on, let me add one quick thing. Like, we started going down the path of bootstrapping and what I saw was gonna happen is we could do it, I could force the product in, I could sell it, we could get revenue to a certain thing to offset costs and we would've had a ton of churn, because the product wasn't quite there yet. And that was, I think the big thing for me was like, wait, we could go down this path. I could probably make it work, but it's gonna suck. It's gonna be painful. And I, this is one where I was like, well, I don't want this to be painful. I wanna do it the right way. And that might mean my revenue has to grow a little bit slower in this, in this early stage. I don't plan on going and raising another round and continuing to burn a lot. I don't like burning money. I don't sleep well at night. It's not a judgment on anyone else. I hate it.

Sophia: Did you find it hard to raise as a non-technical founder? Because a lot of investors, unless you have a co-founder who's specifically an engineer who has built things, they won't give you money. If you, if you're just hiring out an engineer, a lot of the time they're just like, they won't touch you. Did you have any pushback? 

Jesse: Yeah, I mean I had, well, I had the benefit of having a founding team member who's an engineer. He's a badass, and you know, there's a whole story I told on Twitter about he was the first engineer at Tovala. I was an investor in Tovala and then he, someone, you know…he was referred into me and he's amazing. So yeah, I don't know what would've happened if I was just…you know, it's a tough go if you're not, you don't have a product built and you don't have the right team in place.

Alex: Okay, I want you to give the spiel on Kahani, 'cause no one knows what it is. And I want us to then roast you in the nicest way possible. And again, just to set the stage here, Jesse had posted a tweet thread of, I can't remember what it was, like 12 to 14 slides that he was using to pitch seed investors. Give the spiel. But before that, just so people understand Gateway X, how many businesses do you have right now? What are the other businesses like in one sentence and then give the spiel. 

Jesse: Yeah, So, we have three businesses. One is called Growth Assistant, and it's offshoring for digital marketing teams. So the same thing that happened in software engineering we think will happen in marketing. We launched a brand called Unbloat. The term “unbloat” is searched as often as “erectile dysfunction,” but there's no pill yet for it, until now. And so we've launched that as a brand. And then there's Kahani. So Kahani, you want me to just jump into the pitch? 

Alex: Yeah, let's hear it. 

Jesse: Okay, I'm gonna do a shorter version, but…

Alex: Get your game face on. 

Jesse: I spent 10 years in digital marketing, customer acquisition for the biggest e-commerce brands in the world. And one of the biggest challenges they all have is engaging people on a mobile device, and therefore their conversion rates are crappy. It got even worse last year with Facebook kind of going through all these challenges. And I started thinking long and hard about that problem and looking at it and going, well, there's a big opportunity if someone can solve it. Who's really good at engaging people on the mobile device? And I said, well, we all know who's good at it. Instagram, TikTok, everyone sits there for 20, 30, 40 minutes, two hours flipping through it. And I looked at the e-commerce websites and I go, why is it that we spend all this money on advertising, and then we put people 10 years into a time machine to go back to this website that looks like a shrunken-down desktop, which was based on the catalog business of 50 years ago? That's the best version we have of an e-commerce website. I was like, this is not, there has to be a better version of an e-commerce website. And so that's when the big vision came up, which is the e-com shopping experience should look and feel like TikTok, Instagram, and to be specific, vertical video and pictures, swiping, tapping, engagement, liking things—that should be the experience that lets someone immerse into it, and start to become a part of it.

And so that's our big idea. Our big vision is, you're gonna land on a page, you're gonna swipe, tap, and you're gonna purchase straight through like a story-like format or like a vertical video-like format. To start, you know…every entrepreneur, this is a good thing for everyone listening, is find your wedge. What's the cheapest, fastest way to prove this out? And our answer to that was the stories product. So everybody, the customers know what it is. Merchants know what it is, you know, there's three circles at the top or five circles at the top. Tap on them and start to engage in a much more interactive way. And so, we've built that as a software plugin for Shopify stores. You can launch it within half a day, install it, get it going, get the content uploaded from our own interface.

And what we've seen, you know, is for a variety of use cases, it's creating lift anywhere from 20% to 50% in terms of revenue procession, and mostly because it's showing people more content in a shorter period of time. So if I see 10 SKUs in like 20 seconds, I tend to buy more stuff. And that's kinda what we saw when we ran it during the private beta, as we kind of grew it and built it out. And then the team, you know, is myself, our COO, who found me on Twitter, but he came from Boston and he's a SaaS guy. Like he's a SaaS CX office guy. And then our lead engineer, Adam, who's kind of like the dream first engineer. So we have this really unique team, and I'm the sales and marketing guy. So that's kind of the, that's the pitch, that's the two-minute version, 60-second startup.

Alex: I want Sophia to ask any questions, give feedback. I need to give feedback on one thing related to the deck. 'Cause we're not gonna show every tweet in the deck right now, but crew, can we bring up the one picture of his slide and the emoji, please. 'Cause I wanna make a point here. Jesse, you are a friend. You are an entrepreneur, a great entrepreneur. You are a shitty designer. You are a horrible designer. And you know, I know you've put consideration into, you had someone design your deck and then you took it back and you did it. I love that there are… 

Jesse: I worked at McKinsey. I'm a PowerPoint master, what are you talking about? 

Alex: My view on slides when you're pitching an investor is it's a lot like a job interview. You don't wanna stand out in either direction. You don't wanna be the person that shows up like a schlep with, you know, baggy pants and a belt that's off-center, and you don't wanna be the person… 

Jesse: What don’t you like about it? Pull it back up. Hold on. 

Alex: It's just bad design…

Jesse: Which one are you talking about? I gotta see it. 

Sophia: Rupert Pupkin. Rupert Pupkin. 

Jesse: Oh, this columns? You mean this columns? And I mean, that yellow thing wasn't actually there, you know that, right? 

Alex: No, no, no, no. To be honest, I just said take any slide from his deck and add a sad emoji to it. 

Sophia: That's a very large sad emoji.

Alex: I just, to me it should never be a thought to an investor that this, like, feels like it was designed by a middle schooler. And I just think, like, it shouldn't stand out in either direction. So that's my one big thing. Sophia, what do you think? Do you think I'm being too harsh about design? 

Sophia: You know, he sent me his deck. And I was like, this is a really great idea. I love this. You know, I come from a different era of e-commerce. I so wish there was something like it. And then I said, I would love to help you with your brand. You know, that's a very nice way of saying that…

Jesse: So that's what you meant by that. 

Sophia: But if you're talking about, you know, these people are, they're millennials, right? Like they're attracted to Shopify because part of, partially because it looks sexy, you go to Squarespace’s website, it looks amazing. You go to Webflow’s website, it's beautiful. So if someone's gonna come to your site and think about using your product over theirs, and spending time in the backend admin, which is kind of just like, super unsexy. If you're building a product that like they love, like, get people attached to that brand, it's maybe it's like water at this point. You've got a more important, like, a more, I guess, unique value proposition than water, which is even more reason to, you know, stand out.

Jesse: Yeah, I don't disagree.

Sophia: Totally happy.

Jesse: This, by the way, is like an interesting bootstrap thing. Like the bootstrapper in me hates spending money on stuff like that. And it’s an interesting like personal mental transition of like, no, it's okay to spend five grand on designing brand. We made that brand, I made that brand with an old designer at Ampush for $200. Like totally that was, you know.

Alex: And again, I don't think it would matter if you weren't pitching like actual VCs on this because it's, again, it's just like what's gonna increase the likelihood by any percentage point of these people giving you money. One other question I have for you is, I think the idea of mobile websites moving forward, mimicking the experience of TikTok or Snapchat, like vertical video as well as like the stories format, makes so much sense. It is how human beings interact today. My question for you is, it feels a lot like a product or a feature versus like this massive idea that can become something huge. So can you just like…

Sophia: Defend yourself.

Alex: Paint a picture of the, of what the vision is beyond just like bubbles at the top of the website where you can view a story. Like why is it more than just that? I’m being serious.

Jesse: No, that was like, well, I mean, it’s good you're bringing it up. There's a, that was the biggest question that came up, right? During the, during the fundraise process. And I think, you know, there's a couple ways I thought about…I'll answer the question and talk about how to answer the question. 'Cause I think that's just as important for anybody listening. You know, we ultimately said, look, there's gonna be a moment where we think somebody lands into this Kahani thing, you know, through a landing page instead of through the circles. And that's already a feature we're seeing people use. They tap through the product they want and then we build checkout in the product. So they, so the moment you can go from, I land into it, I go through it, I never touched the website. That was, that's the holy grail moment we're working towards in the next 12 to 18 months. And the way you get with…but if you wanna call an e-comm guy, and Sophia knows this, and say, “Hey, start using this brand-new tool I built to send all your traffic to,” they're gonna be like, “Sorry, Jesse, we like you, but you're not that good,” right? And instead you say, well, put these circles at the top, let's see if anybody engages, let's see what goes on with it. It was just kind of a wedge to get things going. And so, but the big vision is, could it, what would Shopify build today, right? They're a 17-year-old company, and I framed it as, we think they would build something that looks a lot more like this, and this is what the interaction would look like. The other…just a couple funny things we use over the investor process. 

And one thing I'd like to do just for people listening is like, investors give you ideas while you're pitching them. And then I'd be like, “Ooh, that's a good one. I'm gonna use that in the next, I'm gonna use that in the next conversation.” And so one of the ones that came up was, you're designing the airport kiosk retail format of the internet. And what they mean by that was, in a normal retail store in the mall there's hundreds of SKUs, you gotta wait in line. Airport kiosk is this really well-designed thing where you grab the five most important SKUs, you buy them and you get, you jump on your flight. And so as soon as I heard that I was like, yes, that's what we're doing. We're building the airport kiosk format for the internet. And so that's how I think about it is, it doesn't fully replace the website but it's a new way that people will buy inside of the website that every website will have. 

The other funny one we used was mattress topper. This is…everyone has a mattress. And everyone has a website. Now they need the topper, they need the thing on top of it that's gonna, everyone's gonna use on top of everything. So that's kind of the bigger vision. 

I think the other thing I would…kind of defensibility I think is another thing you guys are both asking. I am a fan of the flywheel concept of defensibility, which is like Bezos’s big thing, which is, no business starts being defensible. And I think it's important for entrepreneurs pitching when a VC goes, “Oh how do you make this defensible?” You go, well today it's not defensible. If it was, how the hell would I be starting it, right? But with flywheels, flywheels are basically things you do that the more you do of them, you can double down on them because they just keep getting bigger and better. And you know, Bezos has this famous speech of, the three flywheels of Amazon are low price, fast delivery, and vast selection. And the way he thought about it was, as long as I can do things that are gonna lower price over time, I'm going to, I'm gonna get more and more shoppers who are gonna buy more stuff from me, which means I can further lower the price, which means, blah blah blah, I get better and better at it.
So I thought of the flywheels for this business as like data. That was a really important one. So, we can get lots of data because people will use this. We can tell the brands which stories they're using, we can redesign certain things on the data, and then we can push that into their email marketing, into their paid media, and then we'll get more data, and then by getting more data, the stories will get even better. And so over time we can use data as this big thing. 

The other thing we started doing is talking about is building product into the inventory data and other data that we could start to kind of automate the process of stories. So the dream of it in the future is, you land on the site, you start browsing, and the stories will start changing. You know, your stories will look different than mine, it'll look different than Sophia’s, just like our newsfeeds look different from each other's on Facebook. And so that's another like thing we started to say: We're gonna pull on that string. None of it exists today, obviously, right? But that's how we think about building and creating something meaningful.

Alex: We need to move to the next topic, but I can't just finish this segment with roasting you the entire time. I wanna talk about just one thing that was my favorite part, which was you had a slide talking about the problem of the business. And I think one genius thing that you included in that slide, or that at least you mentioned in the tweet, was that you would ask every investor to start, “What made you excited to take this meeting?” And I just think it is the best lesson for entrepreneurs who think, either they think they're great salespeople or they're trying to figure out how to sell and they haven't really done it before, and they just assume they have to start talking and selling and storytelling the business. And to me that is the biggest mistake. Rather than taking in the information like, why is the person here, what are they looking to basically hear from you, such that it is gonna make it an easy decision for them to invest. So I think that was a brilliant question by you. Sophia, you want to tee up the next one? Let's talk about how to make seven figures in a year.

Sophia: Yeah, this was a tweet that I think, Alex, you made, right? And it's super interesting. I mean there's just this whole kind of Twitter world of people being like, you know, I found a dry cleaner business. And I turned it into like a $50…all these like kind of niche businesses that like, you know, people are really mostly talking about bootstrapping and there are incredible ideas out there. And I think it just got our wheels spinning on, if you had, if you needed to build a million-dollar business in 12 months, where would you go? What would you choose? And so I think there were a lot of ideas on there. I think a lot of 'em are super interesting. But I'm curious what you would do.

Alex: Well, you need to lead this off, because you're actually doing it. For Jesse and I, it’s just hypothetical. Yeah. So what are you doing?

Sophia: Okay, all right, well, I did it. So in 2020, I mean, I've done it three times. All of my bus…no, no, no, I'm sorry, Nasty Gal did $275k its first year. But Business Class, I launched it in the middle of Covid, we shot it in my house. It's a digital course for entrepreneurs. It's like, it's incredible. It's super comprehensive. It's like nothing out there. It's an amazing brand. And I think that's part of why it's been sticky. And also people were at home. So there's very much a formula for building online courses. And I had been watching it for a while. I decided, you know what, the third time around, I'm not gonna try to invent a business model. I did it with my second business. It was kind of a media company that was called Girlboss. And with this one, I'm using all the existing tools available, and anybody can really do this. If you have the knowledge to bring and you can leverage your audience or build an audience and share with people what it is that you have to teach them, it's an amazing way to go. And for me, you know, I was like all right, I've been feeding these beasts for now 13 years that are businesses that have, you know, with Nasty Gal it was 200 people. We were at maybe 25 people at our largest with Girlboss. And I'm like, I don't want stakeholders, I don't, I want something nimble. I want something capital-light, I want something human-light, I want something scalable, repeatable. I want it to be lather, rinse, repeat. And I wanted to feel like a project, because I don't wanna be, like, in it, in the undertow of entrepreneurship. That is what all of us definitely have experienced. And Business Class launches twice a year. So I enroll people in the spring, and I enroll people in the fall. It's all prerecorded. So I'm able to leverage the content over and over again. And my job is to promote it twice a year.
So the course is eight hours of video trainings with me, but then there's over 50 hours of interviews that I've done with amazing founders. We have Ryan Holiday coming on, we've had Daymond John and Norma Kamali and the founder of White Luggage and incredible people. And then there's 300 pages of worksheets. So it's not talking, we're not talking at you. I'm really taking through people, through something where they can take action, workshop their businesses, and it all comes in this really beautiful thing called the Flight Manual. And it's this blue binder and it ships to you no matter where you live.
And then of course there's The Lounge. So we have an app called The Lounge. We have over 3,000 founders in it. And it's really unlike anything else. It's where people are jamming out on, you know, workshopping their businesses, their brands, creating their logos, asking where you can find a drop shipper or a packaging supplier or what software to use to build their online business. And there are folks collaborating, they’re meeting up. It's an awesome, awesome place to be.

Alex: So just to put a bow on it…

Sophia: And it did over a, yeah, it did over a million dollars in a year. Did over a million dollars in its first launch. So I invested…

Alex: And profitable?

Sophia: Super profitable. I invested like a few hundred grand in the content, and you know, hired a couple people, actually, and launched it in fall of 2020 and brought in over a million dollars in our first launch. And last year we did I think $3 and threw off over a million in revenue. I bought a house in Kauai. It's pretty great. I work…

Alex: It's amazing.

Sophia: …in the fall, in the spring.

Alex: So basically, just to put a bow in it, the idea is you've leveraged this audience, you've built up over time, via just your personality with Nasty Gal and with Girlboss. You know, I think on Instagram you have hundreds of thousands of followers, you have a large audience and basically you're leveraging that audience, many of which are kind of like career-focused entrepreneurs and professionals. And Business Class is this digital course for entrepreneurs who are looking to, what, take their business to the next level or start their business?

Sophia: Yeah, absolutely.

Alex: And they're, you know, they're paying, I think it's two grand for the course. You market the course to them twice a year and it's super low-cost, because at the end of the day a lot of this is prerecorded. There was upfront cost, but you only have a few people that actively have to work on this throughout the year.

Sophia: Yeah. So I have one community manager, and I just hired an assistant, and I have one contractor, and that's my business.

Alex: Love it. I wanna go to, I wanna go to Jesse, but I want us to talk about, as we wrap things up at the end, like what's a realistic path for people? Because I think you have such an amazing benefit of two things. One is, you’re a proven entrepreneur, so people are going to trust a course around building a business from you. The second is, you have a built-in audience that you can market to. And I know you do a fair bit of paid marketing on this, but you do have the benefit of a lot of organic marketing. For people who don't have that, how, where do they start? We'll talk about that in a minute, but Jesse, what's your idea?

Jesse: Yeah, I mean, I would, well, let's just jump to it. Like, I think the formula, just hearing Sophia talk and thinking about my answer, which would be more valuable for people, is, I start with, what is my unfair advantage? What is something I know that other people don't know? And then I'd go, who needs to know this or would benefit from it? And who's the most, like, who can I charge the most money to, who would benefit from this thing that I know? That's my unfair advantage. And so, like, my one idea that actually is a business I launched was Growth Assistant, you know, with Gateway X, which within a year we were doing well over a million. We had offshore digital marketing at Ampush, and actually our former employees had left and been like, man, I still need that resource. I'm running growth for a brand now, but I don't have that offshore…and I was like, how is this not a business that somebody started? And no one had done it. And so similar to Sophia, it was a knowledge base I had, it was brand and I partnered effectively and launched it.
But to me the formula is, what's your unfair, what's the thing, you know…yes, Sophia and I have audiences, whatever, but like there's things you know that nobody else knows. Somebody listening right now. There's, especially, by the way, I like to look at cross sections of things, right? There's like Sikhs who know e-commerce. Like, I don't know, I'm one of like five in the world, probably, right? Like I can start a turban e-commerce business, it would be the bomb, right? This is not just turbans, there's beard tools and brushes and there's a whole…but the point is, what are like juxtaposed things that only you know, and it's usually, it's like has to be a cross section of a few things. Not just one thing, because lots of people know one thing, but very few people have that overlapping knowledge. And then figure out who's gonna pay you the most money for it and go sell it to them.

Alex: I'm gonna give you guys my idea in a minute, which I already…by the way I've already mentally prepped myself for you shitting on me for this idea. But I just want to agree with Jesse, what you said about really homing in on like what is your unique…so I think if you're listening to this and, say, you don't have an audience of hundreds of thousands of people, my basic view is, how do you find a niche in which you do build an audience and then you create a product around that niche, and then you use the audience that you build to sell that product? So I think there are three questions you ask yourself. What are skills or topics that I'm personally passionate about? Of these skills and topics, which of them will help someone make money, save money or accelerate their career? And the third question is, of what's left, so, of these skills and topics that actually can help people in their career or make or save money, what would I have the interest or energy to create content around for at least a year? Like, what will I actually get energy from creating content around?
And just to give one example, there's this guy, Thomas Frank. I don't know if you guys are familiar with him. But he has a YouTube channel with like two million subscribers. He has multiple channels, but that's his biggest channel. And he is a Notion ninja. He knows Notion better than anyone else in the world. He has, his two million subscriber channel is focused on productivity. He has a channel with only 60,000 subscribers on YouTube focused specifically around Notion. He is doing $120,000 to $140,000 a month right now in Notion template revenue. So he sells a template for $99 or a bundle for $199, and basically it's like your command center in life, to set goals, keep notes, organize your life in Notion. And he is doing, you know, let's call it $1.5 in ARR and all he is doing is marketing it to 60,000 YouTube subscribers. And I make that point because people think you need massive audiences. He just has 60,000 of the right people consuming Notion content on YouTube. And he is converting a lot of those people to that template.

Jesse: Yeah, when you're young, you may not have an unfair advantage, right? We've all started businesses, so we have some of that locked in already. One of the things I used to tell…we used to do these big training classes at Ampush of fresh grads, and they'd say, how do I get successful at the company? And I'd always say, find something where you can build your credibility. The person, you know, become the expert, leading expert on Pinterest, mobile app downloads for gaming, or like you can just, again, take cross sections of things and become experts. But I think another version of what you're saying, Alex, is this is one of my favorite stories about TikTok. I started getting into TikTok and not only is the algorithm so good at figuring me out, but also, like people who make interesting content. And you guys know this woman, I don't know her name, but there's like two things I like that are so weird. One is Excel…well, that's not weird, none of them are weird independently.

Sophia: Miss Excel.

Jesse: And the other one is like, “I love trap music and gangsta rap hip-hop.” And so this woman is doing like shortcuts to gangster rap, like the whole TikTok channel is, I'm gonna show you shortcuts while like Drake or Tupac are blasting. And apparently she makes like several million.

Alex: She's printing…she's printing money, She's printing money. And I gotta plug it, but we basically have a competitor to her at Morning Brew, part of the Morning Brew family, Excel Dictionary, who has 2 million followers on TikTok, 2 million on Instagram. And obviously the playbook is clear, which is people are super into Excel shortcuts. You start creating courses, you start creating templates, and it can be a really meaningful business.

Jesse: But even your notion thing, dude, you could do Notion for e-commerce.

Alex: Exactly.

Jesse: And that could become its own thing now, that's its own Notion templates for e-commerce store owners, or…and by the way, all these new technologies and tools, they just allow more and more of this, I think, than ever, than has ever been possible.

Sophia: And Alex, I think what you said, what you said about making people, making people money, saving people money, And it sounds like with both of these templates, we're talking about productivity. When I've thought about, you know, building online courses, I'm like, maybe I could do one on branding. Yeah, brands can make you money, but it's a little bit softer. People are gonna spend money to make money, they're not gonna spend money…they may spend money on needlecraft courses, I'm sure they do, especially during Covid. But if you're gonna create a course, creating one that is gonna make people or save money, make money, I think is a way to def…like, it sells itself, right?

Alex: Totally. Yeah. And just, you know, to give Jesse props, I think that's one of the things you really have going for Kahani, is at the end of the day, proof is in the pudding. If Kahani helps you convert more people to buy product on your site, you're gonna continue paying for it. Which I think is obviously a great sell.
Okay, we're gonna finish up with my idea, which is, I thought of this not just as how would you make a million dollars in 12 months, but what would be the easiest or highest probability path to do it? And so my answer, very simply, is executive coaching. And I definitely get a little bit of a bad taste in my mouth saying it, 'cause I do think there's some parts of the executive coaching world that feel like a pyramid scheme, but it's very, the numbers are simple. Million dollars a year, it's $83,000 a month. To do $83,000 a month if you are charging clients $5,000 a month…which, just for context, I've seen executive coaches charge anywhere from $2,000 a month to $40,000 a month. You need 16 clients and charging them $5,000 a month.
And so am I proud about this answer? Well, first of all, what I'm gonna say is, I think if you do executive coaching the right way, it can be a huge point of leverage for founders. I think the reason executive coaching gets a bad name is because the barrier to become an executive coach is so low. There's not like licensing that you need, and so many, the supply is huge, but the best executive coaches are great. Jesse, I know you would say that because…

Jesse: I know. I disagree.

Alex: You owe your life to your executive coach.

Sophia: And he sold me on his guy.

Alex: Yeah. So that's my idea, is I believe that in a year I could get 16 clients paying $5,000 a month for executive coaching.

Jesse: But you'd be an awesome coach, just for the record. Like you say it like you don't wanna say it, but dude you would change the lives of 16 people meaningfully if you did that. So I don't know…

Sophia: I mean, I think the reason I came on this podcast is because I get to be in a group text with you guys, and like grill you all day long on what I should do. Should I upsell people from Business Class? Should I start a lower-ticket product? Should I do coaching? Should I create a mastermind? And yeah, I'm so lucky to have both of you as coaches, so thank you. But you know, you're not making any money…

Alex: That was the nicest thing anyone’s ever said to me.

Sophia: No money, no money from me. I'm sorry.

Alex: Okay, so we are gonna finish this thing up with a segment that is called Startup AMA. And so I have four questions in front of me from listeners of Founder’s Journal. I'm gonna read one of the questions and then we're just gonna give our best advice. The question I'm gonna ask is, as a non-technical founder of a tech startup, what should I be doing while the product is in development? Jesse, what do you think?

Jesse: Yeah, what a great question. You know, just 'cause you're not a technical founder doesn't mean you shouldn't understand the technology and the data aspects of your business. So I think step one is, ask a lot of questions to your engineer and your developer. What database are they using? Why are they making that choice? There's a lot of underlying technologies that aren't just gobbledygook code. Why are we using AWS or Azure? So just learn, I think, is the number one thing. I think the second most obvious one is, start talking to customers and selling. You know, you can get out there with a pitch deck, you can start showing what you're gonna build. You can get people excited about it, ask people for advice, but that's really kind of a way of selling them and get out there in front of it. And I think the third one that Alex, you brought up earlier, which you know, is start making content, start writing things, start thinking about the business, start sharing the story even of how you're learning about technical stuff from that, you know, engineer, just anything you're living, make it, make it an angle around content. So those are my three. Learn, sell, and make content.

Sophia: Yeah, it's kind of, in my opinion, it's early to sell a product that isn't complete. I think you should be putting it in front of people and testing it and then iterating. And if you're showing them kind of like prototypes and Figma, whatever that is, if it's just the prototype that's one step ahead or you're having people, you know, hit buttons and watching them, you know, user testing, if they understand the product, if it's you know, intuitive, that's where I would spend my time.

Alex: Love it. Guys, this has been an awesome conversation. The first of many. And I'm…Jesse, we've already met in person, but Sophia, I am excited to meet you next week, and at some point we gotta get the whole crew in the office. This has been awesome. And I’m fucking pumped for The Crazy Ones.

Sophia: Me too. All right, thanks, guys. This has been awesome.