Minted: Mariam Naficy (2018)

In 2000, Mariam Naficy sold her first company, an online cosmetics store called Eve.com, for $110 million. Several years later, she got the entrepreneurial itch once again: she founded Minted.com, an online stationery store that solicits designs from artists all over the world. Today Minted is one of the biggest crowdsourcing platforms on the Internet. PLUS in our post-script "How You Built That," we check back with Christopher Rannefors who created BatBnB, a sleek wooden box that hangs on your house and provides a safe home for mosquito-eating bats. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

  Hey, everyone. Just want to let you know that the How I Built This elves are hard at work. And over the next few weeks, we're going to be sharing some of my live conversations from our recent summit in San Francisco. You'll see them every Thursday in your podcast feed. In fact, we posted our first one last week. It's with Sarah Blakely of Spanx, and you should definitely check it out. And we've got a bunch more on the way. Kevin Systrom and Mike Krieger of Instagram, Tareek Farid of Edible Arrangements, and many, many others. So keep checking for updates. All right. Today's episode is my conversation with Miriam Naficy. She founded a beauty company called Eve, and then the stationery company Minted, which almost died before Miriam figured out how to grow it into a multimillion-dollar brand.

• 0:43Guy Raz?

  It first ran in June of last year. Here you go.

• 0:49Guy Raz?

  So April 2008, you launch Minted. And you're like, the doors open, the shingles out. You're excited. You pop the champagne corks and...

• 0:57Speaker 01

  Nothing, nothing. Absolute dead silence.

• 1:00Guy Raz?

  No orders.

• 1:01Speaker 01

  There was not a sale to be had. It was terrifying and horrible, horrible. And we almost-- I really contemplated that moment. This is a failure. We need to shut this business down. We need to give whatever remains of the money back to investors because it's a total failure.

• 1:22Guy Raz?

  From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 1:34Guy Raz?

  I'm Guy Raz, and on today's show, how Miriam Naficy turned her online stationery store into one of the biggest platforms for emerging artists on the internet, and in the process, transformed the business of personalized stationery.

• 1:52Guy Raz?

  Back at the end of the 1980s, at age 13, I was getting ready to officially become a man. This is the age at which, according to Jewish tradition, boys enter manhood and they have a bar mitzvah. There's a big party. You get hoisted up on a chair and paraded around a dance floor. You serve salmon or chicken. You get the idea. Anyway, about eight or nine months before the big day, I remember going with my mom to a stationery store to look at tons of invitation samples. We checked out fonts, paper stock, colors. We ended up going with burgundy, black, and gold. She put down a deposit. It was a long process. Now, compare that to when my son was born 25 years later.

• 2:37Guy Raz?

  I went online. I uploaded a photo of his pink little face. I picked a layout, uploaded my address book, put in my credit card details, and bam! Within like three days, everyone on my list received a beautiful birth announcement in the mail. So, thank you, internet. Now, this is the revolution Miriam Naficy tapped into in 2007 when she launched Minted. But what differentiates Minted is a major pivot Miriam would make early on. Because instead of just selling personalized holiday cards or wedding invitations, Miriam actually built a platform for artists to showcase their work. And she did this by tapping into another revolution that was happening in the early 2000s: crowdsourcing.

• 3:22Guy Raz?

  But before Minted was even a thought in Miriam's mind, she had ridden the dot-com wave of the late 90s with a company called Eve. Eve was a website that sold cosmetics. And at a very young age, Miriam and her partner managed to sell it before the dot-com bust. And the thing about Miriam is that despite launching two successful companies, she never intended to become an entrepreneur. Miriam grew up in Tehran. Her mom was an artist, originally from China. Her dad was an economist from Iran. And toward the end of the 1970s, as the situation in Iran became more volatile, the family decided to pack up and flee.

• 4:04Speaker 01

  You know, the environment was unstable and we did not, you know, it was very unclear what was going to happen. I think that we were really worried about what would happen to us in the new regime. So, you know, I guess my dad thinks of us as refugees, which is when you leave unwillingly. When we got here, it was the, you know, soon after we arrived, the hostage crisis started.

• 4:29Guy Raz?

  Yeah.

• 4:30Speaker 01

  And that was not a great time to be Iranian in the US. And being a kid in school, that was really difficult.

• 4:40Speaker 01

  I basically really honestly tried to Americanize and fit in as fast as I possibly could. I really wanted to integrate. And when I came here, I actually had a pretty, I had a strong accent. I was two years younger than everybody in my class all the way through, basically, school. I was two years younger, so I was small, small, young and foreign. And I just, I really wanted to be American. And honestly, I sort of feel like the whole time, even when I was in Iran, I felt like a little bit of a, you know, an outsider there as well. So you're always, if you're like me and you're, you move around a lot and you're of mixed cultures, you're never really going to feel like you belong to one place or one culture, right? You're always going to feel a little bit like the outsider who's traveling through time and space as, as an observer.

• 5:26Guy Raz?

  Were you a pretty good student as a kid?

• 5:28Speaker 01

  I was. I was, I was that nerdy girl who sat at the front of the class with glasses on, who everybody wanted to get help from with their homework.

• 5:38Guy Raz?

  Quiet?

• 5:39Speaker 01

  I would say quiet and pretty competitive, very competitive, yeah.

• 5:43Guy Raz?

  And did, I mean, as a kid, did you have any real interest in like business or entrepreneurial stuff?

• 5:52Speaker 01

  No, my, my parents, I come from a completely non-business family. And honestly, you know, with the Iranian upper class, you know, you didn't, you didn't, they didn't set up business as sort of the vaunted thing that one goes into. Things that were in my family very admired were things like being a doctor, going into foreign service in the government, for example. So when I was growing up in Chevy Chase, not once did business cross my mind. I was thinking law. And I, I do remember my mom, on the first day of first grade,

• 6:27Speaker 01

  Sort of bending down to say to me something. And she said, I want you to go to school and I want you to beat all of the boys.

• 6:36Guy Raz?

  So you eventually went on to, call it, to Williams College in Massachusetts. What did you do after you graduated?

• 6:46Speaker 01

  So that's where I did do the expected thing. And some of my fellow classmates who were in economics and poli sci were interviewing for jobs on Wall Street and in management consulting firms. And those firms had these huge processes, on-campus recruiting processes. So I just, so I went to Goldman Sachs as a financial analyst in their investment banking division.

• 7:08Guy Raz?

  And you loved it?

• 7:12Speaker 01

  I can't say that I love being a financial analyst. It is sort of like loving boot camp. I don't know if you're familiar with it, but you end up working very, very long hours. But I will say it's a great training ground as to what work ethic really means. Because you can't imagine working harder than what you actually physically pull off as a financial analyst.

• 7:33Guy Raz?

  You were like 22 or 21 and you probably moving to New York and all you were doing was working.

• 7:40Speaker 01

  All I was doing was working. So I was 20 and I was eating breakfast, lunch, and dinner at the office. And I was actually selling, I had a desk on the bond trading floor and I was selling bonds as well as doing, working with clients. So before I could actually drink, I was selling bonds. So before I could drink legally.

• 7:57Guy Raz?

  So I guess you were doing this for a couple of years. And then at a certain point, you decided to go to business school. Were you, were you thinking in your mind like, okay, I'm going to go to business school and then I'm going to start a business?

• 8:11Speaker 01

  So what happened was I, at first, was just thinking about going to business school because I'd actually done investment banking and management consulting. And I thought perhaps I would want to go into consumer products or retail. But I didn't get into Stanford the first time I applied for business school. And so I decided to take a year off and try to boost my resume with something that was a little bit more differentiated. And went to work for an entrepreneur, Maurice Wardigar, in the restaurant business, actually, who was a Stanford grad. And he became a key mentor to me. And he was starting a chain of restaurants in Palo Alto and all over California.

• 8:52Speaker 01

  But I was so inspired and bitten with the entrepreneurial bug during that experience. And Maurice importantly said to me, you really, you really could do this. You could start a company. I think you should really consider it. Because we would spend hours talking about entrepreneurial ideas, venture capital, and just becoming completely obsessed to the point where I thought, why go to business school? A real entrepreneur doesn't go to business school.

• 9:14Guy Raz?

  Yeah, right.

• 9:15Speaker 01

  I'm not even interested anymore. And at that point, I thought, all right, I'll apply one more time. Because my boyfriend, who became my husband, was applying. I thought, all right, I'll throw my hat in the ring one more time. And then Stanford accepted me.

• 9:25Guy Raz?

  Yeah. So you go to business school.

• 9:28Speaker 01

  Yeah.

• 9:29Guy Raz?

  By the way, I read that you, while at business school, you published, you published a book called, I'm going to read the title of this book, called The Fast Track: The Insider's Guide to Winning Jobs in Management Consulting, Investment Banking, and Securities Trading. A book that has sold like 50,000 copies. That's very precocious. I mean, that's like, super, like, that is, it's like, overdrive precocious.

• 9:50Speaker 01

  Yeah, so the reason I did that was I thought, well, one, it's a market need.

• 9:55Guy Raz?

  Yeah.

• 9:56Speaker 01

  I know how to fill this need. I've done so much recruiting at the two firms I was working at that I knew that there was a need for the book. And I wanted to experiment to see what would happen if you create a consumer product that you know that there's a need for. Can I actually put a product together and sell it? And I also thought it would be a good project to demonstrate that I had some, I guess, chutzpah to be able to get into Stanford. So I sold the book, right? And then I knew I'd sold the book to a publisher, Broadway, before I, as I was applying. And I think that helped differentiate me as well. And then I used the advance to pay for business school, which I needed to pay for.

• 10:29Guy Raz?

  Yeah.

• 10:30Speaker 01

  So it was a way to pay for school.

• 10:36Guy Raz?

  So at Stanford, did you, did you actually have a business plan or idea that you wanted to put together?

• 10:41Speaker 01

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

• 11:18Guy Raz?

  What was her name?

• 11:19Speaker 01

  Varsha Rao. And so we decided to pursue cosmetics because I thought, sure, why not? I want to work with you and I need to convince you to come out, so let's work on cosmetics. I've used cosmetics before. We can figure this out.

• 11:35Speaker 01

  And so I convinced her to move out.

• 11:37Guy Raz?

  To come to San Francisco to help you start an online cosmetics company?

• 11:43Speaker 01

  Mm-hmm, yeah. And she slept on the couch in our studio apartment, or our one-bedroom apartment. And in the morning, we'd get up in our pajamas so we wouldn't wake up my now-husband. And we'd sit on the couch and call all the New York cosmetics companies from our couch in our pajamas and convince people to sign on with us to distribute on this thing called the Internet, which most of people were extremely suspicious of. So that was an adventure.

• 12:11Guy Raz?

  So the business was going to be just an online store selling all kinds of cosmetics to every different brand? That was the idea?

• 12:19Speaker 01

  That's right. So the idea was to create a replenishment brand for cosmetics. We thought skincare, meaning things that you want to replenish, skincare, haircare, you know your favorite, and you just want to replenish it. Because at that point, everybody was telling us, nobody was going to buy cosmetics online that they'd never tried.

• 12:35Guy Raz?

  Yeah.

• 12:36Speaker 01

  And moreover, women don't shop online.

• 12:38Guy Raz?

  Right. That's a fact.

• 12:40Speaker 01

  Yes. Women don't shop online, and nobody will ever buy makeup online. And I'll just say, in my career, that has happened repeatedly, right? Where people will say, no one's going to buy paper online.

• 12:50Guy Raz?

  Yeah, who's going to buy that?

• 12:51Speaker 01

  No one's going to buy shoes online. No one is going to do this. No one is going to do that.

• 12:54Guy Raz?

  Glasses? No one's going to buy that online.

• 12:55Speaker 01

  Yeah. So I mean, if you hear that as an entrepreneur, you've got to discount that massively. Because, trust me, it's been everything. All of those things have been said.

• 13:02Guy Raz?

  So when you approached these small brands, didn't even, why didn't any of them just say, well, we'll just sell them online ourselves? Why were they attracted to what you guys were offering them?

• 13:13Speaker 01

  Well, in those days, there was no, you know, solution that would easily allow a small brand to actually sell online. I know it sounds crazy, but there was no solution. And so, first of all, nobody wanted to sell online. We would have to go in there and convince them that the internet was not bad. We also actually hired a woman from Macy's, who was formerly from, at Macy's as a big manager of the cosmetics business, and she ended up being our river guide, making introductions for us, helping advise us, you know, if you go to Chanel, wear the Chanel nail polish, for example. That was, that one stood out. They'll recognize their colors on you.

• 13:51Guy Raz?

  So you and Varsha, and by the way, what's your husband's name?

• 13:54Speaker 01

  Michael.

• 13:55Guy Raz?

  Michael, okay. So you, Varsha, and Michael are living in this apartment. You and Varsha decide you are going to start an online cosmetic store, which today doesn't sound like that big of a deal, but I guess in 1998, that was kind of revolutionary.

• 14:11Speaker 01

  Right. Nobody was selling cosmetics online. Nobody. Can you believe, literally no one.

• 14:16Guy Raz?

  Insane, yeah. I wish I had a time machine, I could go back and start a cosmetics company.

• 14:20Speaker 01

  Yeah. And then, you know, to start a company, you know, I basically took a white sheet of paper out and started drawing a website on a white sheet of paper in my kitchen, along with another sheet of paper where I was trying to come up with metrics as to what I would call different things, like people coming to your site, and what would you call the metric where someone converts into a customer? And everything had to be invented, literally, for the first time. Then we went through a really insane year. So I graduated in 1998. We immediately started fundraising.

• 14:56Guy Raz?

  But was it easy to raise money in 1998?

• 15:00Speaker 01

  1998, it was getting pretty easy. 1999 was crazy.

• 15:04Guy Raz?

  Just because it was the dot com boom?

• 15:06Speaker 01

  It was boom, it was starting to boom. Yeah, it wasn't the height, but it was getting there. And I sensed that there was an opportunity for me to get capital, even though I was 27, and had no work experience, really.

• 15:17Guy Raz?

  And people liked your pitch?

• 15:19Speaker 01

  They loved our pitch. They loved us, and they loved our pitch, and we had a lot of interest. And we ended up in an interesting situation where we did experience some collusion, actually. This was a really difficult part of that journey where In the old days, you could have VC firms gang up. If they could find out who else you were talking to, they could collude and basically work with each other and partner together to drive your price down, your valuation down. And I had heard about it at business school in a lecture, and sure enough, it happened to me. So we had a couple of term sheets come in for our first round of financing. And it was Idealab plus a couple of others. But two of the firms decided,

• 16:02Speaker 01

  first they found out about who we were talking to, and they decided to collude. So we signed a term sheet with one player, and they were valuing us straight out of the blocks just as people and with this PowerPoint presentation at $6 million.

• 16:15Guy Raz?

  Right, which sounds pretty good, right?

• 16:17Speaker 01

  Yes, we were very happy. It was a prestigious firm. They had an office on San Hill Road. But they turned around and actually decided to partner with another firm. And they called us and said, "We're sorry, this is now their deal. The terms are changing." And the terms now became, "We need you to move cities to where this other firm is. We're going to bring the valuation down to 4 million." And it was a collusion, like a textbook collusion.

• 16:46Guy Raz?

  Hold on, this is like Darth Vader territory, like the terms have changed. Just explain to me how that worked, how that was allowed to happen.

• 16:55Speaker 01

  Yeah, so the term sheet is unfortunately not binding. It's an indication of interest that's really a buildup of good faith. And so you could do it and get away with it, absolutely. And it happened a lot in the late 90s when you didn't have online transparency and reputation where other entrepreneurs could learn about what people were doing to you. And so there was no consequence. And so you could become, as an investor, much more abusive.

• 17:24Guy Raz?

  So what did you tell them when they said that? They said, "It's 4 million bucks, and here you go."

• 17:30Speaker 01

  So what's fascinating is we had not yet called Bill Gross to tell him that we were turning him down.

• 17:36Guy Raz?

  Bill Gross was the guy who...

• 17:37Speaker 01

  At Idealab in Pasadena. So we had had this third term sheet. And we were planning to call him, but we just didn't have the time. We hadn't had the time to call him. So instead of calling him to turn him down, we put the phone down with the other group. We picked the phone up. We called Bill Gross, and we said, "We're signing your term sheet. We'll be in Pasadena tomorrow morning." And we exited the side door.

• 17:57Guy Raz?

  Wow.

• 18:00Guy Raz?

  Okay, so you raised some money. It's 98. How long between the time that you went to investors, received money, and you actually launched the website?

• 18:12Speaker 01

  We took the money in 1998, and we launched in July 1999.

• 18:18Guy Raz?

  And what described-- by the way, we should mention, the name of the website was?

• 18:23Speaker 01

  I'm sorry, the name was Eve.com.

• 18:26Guy Raz?

  Like Adam, but Eve?

• 18:28Speaker 01

  At Eve, yes.

• 18:29Guy Raz?

  So when you launched Eve.com, did people find out about it right away? How did people even know where to go and how to look for it?

• 18:37Speaker 01

  Yep, so we ended up with a massive amount of press coverage, and we actually had a lot of money for marketing. And we were encouraged to spend it because at that time, it was land grab time. Everybody was trying to grab market share as fast as they could. We launched in, and there were four competitors who launched right behind us. And one of the big things I learned to do was just completely block out any fear or notion of the competitors, keep your head down. And so the minute we opened the doors, literally, the product started selling ridiculously quickly.

• 19:06Guy Raz?

  Wow.

• 19:06Speaker 01

  I mean, we did $10 million in sales in our first year.

• 19:09Guy Raz?

  Amazing.

• 19:10Speaker 01

  Yeah, it was a runaway year, given that it was our first year of business.

• 19:13Guy Raz?

  That must have just been amazing. You were so young, and you were like huge.

• 19:19Speaker 01

  But we were-- lest anyone be confused here, we were working until 10 o'clock at night, every night, in the office. This is where the investment banking background came in handy because we were trained to operate like that. And my husband would come meet me at the office at 10, and we'd have dinner at 10:30 every night.

• 19:34Guy Raz?

  So you, in 2000, like a year and a half after you launch, you guys get an offer, and you sell this company. Eve.com is sold for $110 million.

• 19:50Guy Raz?

  I mean, I don't even want to ask the question why. I mean, it seems obvious. It was a lot of money and a no-brainer, I guess, right?

• 19:58Speaker 01

  Right, so, you know, this was a time when we were trying to raise a Series D. And honestly, the market was starting to get a little skeptical. You know, when are you going to make a profit? What's going on? And so I start for the first time in that, for the 14 to 16 month period, I started realizing that getting the next round was going to be difficult. And we could take, have safe harbor for the company inside another company. I thought it would probably be a wise move. And we closed it in April 2000. Two weeks later, the market started crashing.

• 20:28Guy Raz?

  So you made it just like by the skin of your teeth?

• 20:30Speaker 01

  Yeah, we, yes, we had the foot in the door as the door was closing.

• 20:34Guy Raz?

  Do you, were there other people in your position in the industry who maybe didn't have as good timing as you guys did, who were, I don't know, maybe resentful of your luck or your foresight?

• 20:49Speaker 01

  I think there were a lot of cases where people were convinced by investors or convinced themselves to keep going and wait for the public exit. Because clearly, at that point, everybody was enamored of the IPO. And I do think people were resentful of us for this, and they considered it lucky versus any type of hard work or intuition or anything else. And that was unfortunate because we worked our butts off to build this business. I mean, we were working, I basically lived at the office during this time. I never left. So we built a pretty good business in a year. It was $10 million in our first year. Yet, yes, people, I think, were very resentful that we had sold at the right time.

• 21:33Guy Raz?

  So, did you just like go to Hawaii and like kick it and drink pina coladas?

• 21:40Speaker 01

  I did take a year off, and my husband and I traveled around, it's true. But about two months into it, I was absolutely miserable. I felt like I was missing out on what was happening. And fundamentally, there was a perception that we got lucky with Eve.com. And I had this feeling that, you know, that saying, once you're lucky, twice you're good. I wanted to see if I was actually good or not, you know? And so I think I needed to prove to myself that I could do it again.

• 22:15Guy Raz?

  In just a moment, how Miriam got into the stationery business and almost abandoned it right before stumbling on an idea that would transform the entire industry. Stay with us. You're listening to How I Built This from NPR.

• 22:45Guy Raz?

  Hey, welcome back to How I Built This from NPR. I'm Guy Raz. So it's 2002, and after a break from work, Miriam Naficy decides to get back in the game. And it turns out, The Body Shop wants to create an e-commerce division, and so they ask Miriam to run it. But after a few years working for a big company, Miriam starts getting that entrepreneurial itch once again.

• 23:10Speaker 01

  When you have entrepreneurial tendencies, sometimes you'll see something that you can't resist. And I saw a change in what consumers were willing and excited about consuming. And so, for example, bloggers were starting to emerge that were disrupting journalists at really established institutions. And consumers were willing to read them over those established institutions. And there was great talent coming to the fore. And so I was thinking to myself that perhaps in product design, there would be a similar opportunity, that you could find talented designers that people would rather buy than not talented designers. So I started getting really interested in the idea of having design competitions and this idea of crowdsourcing.

• 23:54Speaker 01

  And so I decided to take stationery, which was an interesting model for me, and mash it up with this kind of experimental idea, which was crowdsourcing.

• 24:05Guy Raz?

  And at that time, if you met a friend at a coffee shop and they said, hey, what are you working on? You would say, I'm working on this business that's going to do what? Like, what would you say?

• 24:18Speaker 01

  At that point, I would have said, we're going to sell stationery online.

• 24:21Guy Raz?

  Hmm, which sounds, sounds pretty clear.

• 24:24Speaker 01

  Yep, and it was one foot back in the old world of just take the brands, consolidate them online and sell them.

• 24:29Guy Raz?

  Yep.

• 24:29Speaker 01

  There was this slightly embarrassing idea I had, which was to run a design competition around the side and crowdsourced designs that weren't available through the established stationery brands, and I was going to do that on the side.

• 24:42Guy Raz?

  In other words, you had, you said, I'm going to have a site that sells stationery and then on the side, we're going to run like design competitions and, and maybe we can develop stationery based on the winner of that design competition.

• 24:53Speaker 01

  That's right.

• 24:54Guy Raz?

  I got you.

• 24:54Speaker 01

  Exactly.

• 24:54Guy Raz?

  All right.

• 24:55Speaker 01

  So the idea was focused around stationery retail and it had fantastic economics associated with it. Good margins, it was inherently viral product because your name is on the back of the card, your, your company name. But the shopping experience offline was pretty archaic. You'd go to a store, there'd be a piece of paper you'd fill out to order some custom cards. You'd have to fax it in to the supplier. It was an archaic, slow and really inconvenient process. And I thought, in my opinion, the design could be improved greatly. And that gave me an opening for crowdsourcing on the one hand. On the other hand, I was a little bit, honestly, a little bit risk averse and I thought that I did not want to raise venture capital again

• 25:38Speaker 01

  because I had had some bumpy experiences in the first, in the first go around. So I thought, I need to find a business model to apply this idea to that is very, very cash flow positive and doesn't require a lot of cash and I'm going to run it as a cash flow business.

• 25:55Guy Raz?

  In other words, a business that could just self-fund, right? Because of the revenue.

• 25:59Speaker 01

  That's right.

• 25:59Guy Raz?

  Yeah. So you didn't want to have to raise a lot of money, but you still had to raise some money, right? To get this off the ground.

• 26:06Speaker 01

  Right. So at this point, I was going to friends and because I had successfully sold Eve, they were willing to listen. And so I was actually able to raise a pretty big angel around of two and a half million dollars, which is big for an angel round.

• 26:22Guy Raz?

  So you decided you weren't even going to go to VCs initially.

• 26:25Speaker 01

  That's right. At this point, I wanted much more control. I decided not to have a co-founder from the outset. And so I put the plan together. And what I found was, many of my friends were a little bit, they were very, very supportive, incredibly supportive, but they were all a little bit wary of crowdsourcing because it was not a tried and true model at this point. What was tried and true was e-commerce 1.0, which is take all the brand names, put them online, and provide convenient access online.

• 26:56Guy Raz?

  Yeah.

• 26:56Speaker 01

  So that's what I did. I signed up all these stationery brands, and I put them online. And then in the background, I hired a coder who was in college in Portland. And I would work at night on the competition structure, which was my real passion, which was to try to crowdsource the content.

• 27:11Guy Raz?

  So you raised about $2.5 million in angel funding, and you are ready to launch this site, which is going to sell stationery. And by the way, how many people did you hire? Did you bring aboard to help you launch it?

• 27:25Speaker 01

  To launch Minted, I had virtually no one. There were maybe five of us, something like that. And I, that's when I raised, I finished the angel round. We sublet a little bit of space in Jackson Square. And we started with just a few people first year.

• 27:41Guy Raz?

  And who built the website? How did you do that?

• 27:44Speaker 01

  So we spent almost all the $2.5 million on an in-house team who came on board, an engineer. And the key challenge was how to render the customization of your stationery online. That was, and that wasn't something we could buy off the shelf from anyone. So we had to build it ourselves.

• 28:03Guy Raz?

  In other words, just to be clear, a way to be able to see what your stationery would look like?

• 28:08Speaker 01

  That's right. So our engineers built a way to see your customized text appear on the screen inside your stationery design. And that you couldn't buy from any other technology company. So I spent most of the $2.5 million I raised going around, signing up all these exclusives with stationery brands that you would see at a papyrus store, for example. You see them They've already gotten distribution. They're well-known wedding brands, stationary brands. I spent most of the time and the money doing that. And then I just couldn't let go of this other thing that was really risky and unproven, which was to have a design competition. And I really, really wanted to let myself do that, but I just

• 28:48Speaker 01

  couldn't let myself do it. It was this tear. So at night, I worked with a college student who I found on rent a coder, which is embarrassing to admit. And we worked on this at night. After everyone at Minted went home, I would build the competition structure with this guy. And I really wanted to do that full time, but I just didn't let myself.

• 29:11Guy Raz?

  So April 2008, you launched Minted, and you're like, the doors open, the shingles out, you're excited, you pop the champagne corks, and?

• 29:19Speaker 01

  Nothing, nothing. Absolute dead silence.

• 29:22Guy Raz?

  No orders?

• 29:23Speaker 01

  There was not a sale to be had. It was terrifying and horrible, horrible. With Eve, we opened the doors and the makeup was just flying out from day one. I mean, it was this massive amount of sales. Here, there was not one thing sold in the first 30 days, not one sale.

• 29:38Guy Raz?

  Ooh.

• 29:39Speaker 01

  And we almost, I really contemplated that moment. This is a failure. We need to shut this business down. We need to give whatever remains of the money back to investors because it's a total failure.

• 29:50Guy Raz?

  Did you at least have like positive buzz around it or anything like that?

• 29:54Speaker 01

  We had a really negative article from TechCrunch.

• 29:57Guy Raz?

  What did it say?

• 29:58Speaker 01

  Terrible idea. This person's failed before. I think that they didn't really even understood that we had successfully sold the company for as much money as we did.

• 30:07Guy Raz?

  You mean eve.com?

• 30:08Speaker 01

  Yes. So they just made some assumptions and had just a terrible, like that was our freshman, our debut. And so what happened was, and this is what was really fascinating when you look back on it, is we just didn't have enough data. And so what happened was we didn't have enough traffic to really Assess whether we were successful or not because nobody, nobody knew about us and nobody was coming. And then when they did come, what they were buying were the, it was a tiny little crowdsourced selection that I mentioned to you, that was my little personal secret hobby, passion.

• 30:38Guy Raz?

  Explain, explain how that worked for, for a moment.

• 30:41Speaker 01

  Yeah, so, so when we opened our doors in April, we had our very first design competition for what people call save the date cards that people send out when you're about to get married.

• 30:50Guy Raz?

  Yeah, yeah.

• 30:51Speaker 01

  And, and we had very few entries and I think what would happen is we picked something like 66 cards out of that competition based on voting. So the way that Minted works is everything is submitted to us via a design competition. We picked about 66 designs and we launched those, but we had hundreds, if not actually really thousands of SKUs that we were carrying from established stationery brands that we launched at the same time.

• 31:17Guy Raz?

  That already said save the date.

• 31:18Speaker 01

  That already said the save the date or wedding. It was all, all sorts of things, wedding invitations, other things that people provide. And we launched all of that stationery, wedding stationery product online. And then just our little tiny collection of 66 crowdsourced save the date cards. What was really different is that immediately the submissions that were coming in were breaking a lot of barriers and a lot of molds that had been assumed about that category of product. For example, people started putting photos on them. And I remember our printer, who we signed up to do this tiny little bit of business, said to us, you know what? In our industry, people don't put photos on save the date cards, Mariam. They don't, they don't do that. I said, I, I understand, but that's what's actually being submitted and that's what's winning. So we're going to sell them.

• 32:01Guy Raz?

  Yeah.

• 32:02Speaker 01

  So what happened was within a couple of months, we started getting, let's say, one order a day. Seriously, one order a day, maybe by June. And then, you know, a month after that, it went to two orders a day, maybe three orders a day. Still nothing to write home about.

• 32:17Guy Raz?

  And you were probably not, you're running out of cash. I get it.

• 32:22Speaker 01

  Absolutely. Our runway at this point is running out. Our conversion rate, which is a critical metric that e-commerce companies use to determine success, was something like 0.1%, meaning out of all the people who come, 0.1% buy. And that is really, really low.

• 32:36Guy Raz?

  See, you're in trouble. Like, I'm getting nervous.

• 32:40Speaker 01

  Yes, and we have, you know, a couple hundred thousand dollars left in the bank. But then we started seeing the tiny sign of life and I thought, well, maybe what I can do is take some capital and at least save this business just to recoup the initial investment and that's it. So my good friend and angel, one of my really good friends, Alex Sluski, called me and said, you know, I'm just getting, he's like, I'm just getting nervous about this market. I think you should take some capital, some institutional capital. And I thought, you know, I feel the same way. I should get on it. So I went out and I decided to break my own rule and actually raise venture capital. And we raised and we basically closed our first institutional round of capital.

• 33:25Speaker 01

  So that's where we raised a couple of million dollars.

• 33:27Guy Raz?

  How were you able to do that? If you, if you, if what you had to show for was a company that was getting no orders, you were losing money quickly, like, why would a venture capital firm give you cash at that point?

• 33:39Speaker 01

  That's a great question, Guy.

• 33:40Guy Raz?

  Yeah.

• 33:41Speaker 01

  That's a great question. So the reason why they invested in us was personal reputation. That was it. You know, I delivered one thing successfully before and this one brave investor from IDG, now Ridge Ventures, Alex Rosen, decided to take a chance on me. And that's it. That's the only reason. And nobody else was interested.

• 34:01Guy Raz?

  Do you think, I don't want to, I don't want to put you in an uncomfortable position, Ariane, but do you think that, oh, I'm going to do it anyway. It's like that, the way I frame that question. Do you think if you would have been a man, there'd been no doubt, oh, yeah, stationery sounds great, here's the money?

• 34:17Speaker 01

  I think that if I were a man, I would probably have gotten a little bit more credit for what I had previously delivered. I think the personal reputation effect of what had happened with Eve would have magnified. But I don't think stationery was very, and design was very interesting to a lot of male venture capitalists. And I, I don't think that when I say Silicon Valley doesn't have design confidence, I mean the investors in Silicon Valley don't really understand design and why it's important.

• 34:51Guy Raz?

  So when you, so explain the business model. I mean, obviously, you were selling all of the stationery from other brands. And so you would get a cut of that, and that would fund your business. That would bring in revenue. But also, you had this crowdsourced, these competitions from designers. And then, how would that work? Like, they would, their designs would be printed by you guys, and then they would get a cut of that?

• 35:18Speaker 01

  Well, the way it worked back then was that we had the stationery brands, who were basically in a wholesale relationship, where we would take the product and resell it and earn a cut. And we had the crowdsourced side, where designers would submit, and they would receive a couple of things. First of all, they would receive peer critique and feedback from their peers. We built in a critique phase into the process, which was a benefit. And second, if they won, they would receive an upfront cash prize that was completely at our risk, meaning if the product never sold, they could still keep the cash. And then, on top of that, if the product sold, they would receive a percentage of every sale. And so, that's how the business model launched. But because the only thing that sold was the crowdsourced product, and not what we

• 36:03Speaker 01

  spent the entire year launching, which was all the stationery brands, we actually made a hard cut over. And by Christmas of that year, we went 100% crowdsourcing.

• 36:14Guy Raz?

  Wow.

• 36:15Speaker 01

  And so, we turned it around. We actually decided to move into the holiday cards business, against the advice of all of our investors, who probably rightly said, "You should focus on what you started," which was wedding. We decided to ignore the advice, launch into holiday cards, and we were, we had an exceptional first Christmas. I mean, we were so oversold. It was, we had to actually shut off our marketing, our search marketing at one point, because we were getting too many orders. So, that's when the company went through a huge increase in sales.

• 36:47Guy Raz?

  So, at what point did you decide to drop selling other stationery brands?

• 36:54Speaker 01

  Yeah, so that was really rough because I had gone and sold Minted as a partner to all of these stationery brands and I felt very ethically bound. Like, you know, I've made a commitment, I've explained why we brought them on. And now instead, this crowdsourced design coming from unknown designers from all over the country is just taking off. And I felt very uncomfortable. And I was lingering in that discomfort for many months. It took me at least nine months to say, we've got to cut and run, we're going to lose all the money we put into those, building out those brands on our site. We've got to just cut that and shed all of that work, all that money and all those relationships. And we need to completely pivot towards a crowdsourced model 100%.

• 37:37Guy Raz?

  I'm assuming you had a lot of tough conversations with your partners?

• 37:42Speaker 01

  I did. But I think also, they understood, why tie themselves up selling online at Minted if that's just not what's working and the sales aren't happening. In the meantime, we couldn't print fast enough, the work of the emerging designers who the customers themselves were picking.

• 38:00Guy Raz?

  So as you started to gain traction those first few years, did any, I mean, did any competitors try to go after you?

• 38:08Speaker 01

  Yes. So it's 2013. We have two printers who handle all of our holiday card orders. One does 50%, the other one does another 50%. The first week of October, my cellphone rings at about 5 o'clock. It's the CEO of a much, much larger competitor. And they basically say, we want you to hear the news from us. We have bought this printing company of yours that you use, you know, this 50% player. And we'd love to talk to you about how we could continue supplying you with printing services through the holiday season. Now, this is, mind you, two weeks from the start of the holiday season when all of the,

• 38:51Speaker 01

  you know what, hits the fan, meaning you have to be prepared. You're spending, you know, 10 months of the year preparing for this moment because the seasonality is so high for holiday cards. And basically, he said, you know, can you come in next week to talk to me? And invited me, I think for like a 6 o'clock meeting, you know, the following week. So I went in for the meeting and after a little bit of chatter, he said, we'd like to buy you. We'd like to buy your business.

• 39:21Speaker 01

  And I realized in that moment that that whole thing had been constructed to basically force us to sell our business.

• 39:27Guy Raz?

  They basically bought that printing facility knowing that you guys would be in like in a corner, backed in a corner.

• 39:35Speaker 01

  That's right.

• 39:36Guy Raz?

  So what did you do when when he said, we want to buy you? I mean, I mean.

• 39:40Speaker 01

  Well, I was in his office, kind of stuck there. So I had to say something. So what I basically said was, well, let's talk about it. Let's how, you know, how would this work? And I thought, in the meantime, God, I cannot, I got to get out of this meeting right now and call my head of supply chain so he can end the engineering team so they can work, start working on this immediately. Like, you know, I left the meeting and I called everybody. The team is waiting and we had a conversation and they were racing around the country trying to find printers who would work with us.

• 40:08Guy Raz?

  Did a part of you think that you might actually have to sell?

• 40:11Speaker 01

  No, I never feared that we would have to sell, not once. I knew we would find a way around it. I just, I just, there's just no way I would let that happen.

• 40:20Guy Raz?

  So what did you do? I mean, where'd you go?

• 40:23Speaker 01

  So we found, we found another two printers who were gracious enough to take us on and we, we called, still inside the company, it's called Printer Get In at Minted.

• 40:37Speaker 01

  Because the amount of work and hell our people went through to do that integration at top speed was dreadful.

• 40:45Guy Raz?

  I bet.

• 40:45Speaker 01

  It was dreadful.

• 40:46Guy Raz?

  Yeah.

• 40:46Speaker 01

  And to this day, that, that has left a taste in those people's mouths, you know, around this potential competitor that's still, I think is still there, you know?

• 40:58Guy Raz?

  And at that time, I mean, when they were going after you, I mean, there were other companies who were doing what you were doing, right? There were companies doing custom stationery that you could buy online.

• 41:09Speaker 01

  That's right. So the first generation of companies had been around that captivated people just by the sheer fact that they could make custom stationery for you at a decent price, right? That was just, they're almost like an outgrowth of the printing and manufacturing industry, frankly. We came along with real design vision and really tried to change that entirely into a branded, high-end, European stationery product with lots of bells and whistles and really changed the industry. So that, yes, there were choices, but we felt the design could be better and more exciting. And then as this community, creative community blossomed and developed, we realized that we were a creative community of all kinds of different people. Some people who were former lawyers. You know, there's an oil rig worker from Alaska.

• 41:54Speaker 01

  There's a plumber, a master plumber in New York City, who's winning stationary challenges. There are all kinds of people who want to be creative and who want to earn money creatively. And Minted is a platform for these people to be seen and discovered.

• 42:07Guy Raz?

  Is Minted a profitable company today?

• 42:11Speaker 01

  Yes, so we are in the low hundreds of millions of dollars in sales. And we are EBITDA, we're cash flow positive.

• 42:19Guy Raz?

  Are you able to kind of just relax now and know that your business is fine? You will be fine. Like, can you go on vacation and disassociate yourself from work for a week and not take calls? Like, is that, or are you still always thinking about the survival of your company?

• 42:39Speaker 01

  That's a great question because I think for the first, believe it or not, five or even six years, even longer of the company, there was constant survivability risk, actually.

• 42:51Speaker 01

  Now, I feel differently. I feel like the company, given that it's profitable, given that it's growing so well, it's a great feeling and yes, I can breathe. This, the paranoid immigrant mentality that I've, I think, grown up with.

• 43:08Speaker 01

  And then, of course, a couple of crashes of the market. You know, it tends to make you a paranoid person. You tend not to forget any of this. It just stays with you. But yes, I can now say that a yes, I can guy go on a vacation for a week and not worry, maybe even two weeks, and not worry at all.

• 43:28Guy Raz?

  How much of your success is because of?

• 43:32Speaker 01

  Of luck versus skill and intelligence and hard work.

• 43:38Speaker 01

  I think so much of it is luck. I mean, think about what would have happened if I had not been able to leave Iran, right?

• 43:48Speaker 01

  How many people are in areas around the world where they can't escape what the situation that their governments are creating for them? Think about all those talented people who won't ever have a chance. And I guess I would say the other thing is just sheer wanting it very badly, right? I mean, there are a lot of people who are smarter than I am. And I think it's just, I really focused in on something I'm happily, extremely passionate about and love to think about all the time. And I would say that's luck and passion probably outweigh the raw skills.

• 44:25Guy Raz?

  Mariam Naficy, founder of Minted. Minted's also become one of the biggest crowdsourcing platforms for emerging artists. Tens of thousands of artists submit their work to the site each year, and only a tiny handful are chosen to have their artwork and designs sold on Minted.

• 44:53Guy Raz?

  And please do stick around, because in just a moment, we're going to hear from you about the things you're building.

• 45:03Guy Raz?

  Hey, thanks for sticking around, because it's time now for How You Built That. And today, we're updating a story that we first ran about a year ago. And this story does not start in the typical way.

• 45:14Speaker 02

  A lot of people think of starting a company, they think, oh, I gotta wait for that lightning bolt moment to just hit me, like that amazing insight that I'm just like, oh, my gosh, I gotta build a company around this.

• 45:25Guy Raz?

  But that is not what happened to Chris Ranifors. He did not have that lightning bolt moment. What he did have was more of a restless itch. He and his friend Harrison were feeling bored at their nine-to-five jobs in Louisville, Kentucky, and they knew they wanted to launch a business. They just had no idea what to sell.

• 45:44Speaker 02

  So we would actually walk up and down the halls of Walmart and say, okay, what if we took that toy and smashed it with that home object? What would we get? And what if we took that thing and tweaked that thing? And what if we smashed this with that and now with this?

• 45:57Guy Raz?

  And on one of those brainstorming trips to Walmart, they wound up in the garden section.

• 46:02Speaker 02

  And they had a pretty big selection of birdhouses.

• 46:05Guy Raz?

  And Chris looked at those birdhouses, but he didn't think about birds. Instead, he thought back to how he and his dad used to build little houses for bats, literally a place for bats to hang out and sleep in the backyard, which I know, sounds kind of creepy.

• 46:22Speaker 02

  50% of people out there will think, oh, bats, horrible, scary. The other 50% will think, huh, bats.

• 46:29Guy Raz?

  But whichever camp you're in, Chris wants you to know that bats, they get kind of a bum rap. The vast majority of them do not want to bite you and do not carry rabies. In fact, in many places, bats are in trouble. They're actually running out of habitat. So a nice little wooden house in the suburbs could be the perfect refuge. And as a bonus, they will also eat your mosquitoes.

• 46:53Speaker 02

  A common bat will eat up to 1,000 mosquito-sized insects an hour. And that makes them one of nature's greatest forms of natural pest control.

• 47:01Guy Raz?

  So that was it. Chris and Harrison had their idea. They were going to sell wooden bat houses.

• 47:08Speaker 02

  So now that we found this concept, we started digging further into the bat house market, this very niche and particular space.

• 47:15Guy Raz?

  Who knew that the bat house market was even a space at all? But clearly it was.

• 47:22Speaker 02

  And we started noticing that most bat houses on the market, they lack proper ventilation, they're too small, they don't have proper gripping for the animal to hang on, or they just don't look good.

• 47:32Guy Raz?

  So Chris and Harrison designed a prototype of a wooden bat house with grooves inside that the bats could grip onto. And then they launched an Indiegogo campaign and were kind of amazed when about 500 people signed up to buy bat houses.

• 47:46Speaker 02

  We asked them, why did you buy this thing? And I think about two-thirds of them said, like, I hate mosquitoes, but I don't want to buy pesticides. I hate pesticides even more than I hate mosquitoes.

• 47:56Guy Raz?

  So the two partners found a manufacturer in Missouri, and they shipped out their first bat houses in January. And you should check out a picture of these things. They're made of red cedar. They attach right under the roof of your house. They hold up to 100 bats. And they look, well, sort of like Scandinavian furniture.

• 48:14Speaker 02

  If you get a bat house that's beautiful, you're going to want to put it up on the side of your house, right in the middle of your yard. And then when you have your friends over for a barbecue and they come over and they say, hey, what the heck is that thing? You've got to say, oh, yeah, it's my bat house. And they're like, bat house? What? And you say, no, no, no. Like, let me tell you about bats.

• 48:31Guy Raz?

  Chris and Harrison's company is called Bat B&B. And earlier this year, they appeared on Shark Tank, where they got an investment of $100,000 from Shark Kevin O'Leary. And they were both just named to Forbes 30 Under 30 list for social entrepreneurship. To hear more about Bat B&B or hear previous episodes, head to our podcast page, howibuiltthis.npr.org. And of course, if you want to tell us your story, go to build.npr.org. And thanks so much for listening to the show this week. You can subscribe at Apple Podcasts or wherever you get your podcasts. And while you're there, please do give us a review. You can also write to us at [email protected]. And if you want to send a tweet,

• 49:14Guy Raz?

  it's at howibuiltthis or at Guy Raz. Our show was produced this week by Ramtin Arablouei, who also composed the music. Thanks also to Candice Lim, Julia Carney, Sanash Meshkhanpur, Niva Grant, and Jeff Rogers. Our intern is Sequoia Carrillo. And before you go, I just want to remind you to please consider donating to your local public radio station by December 31st, because your gift helps bring public radio to listeners like you. Donate to your public radio station at donate.npr.org/built. I'm Guy Raz, and you've been listening to How I Built This.