Jul 27, 2018 · 29m · 20vc
20VC: GOAT's Eddy Lu on Pivoting From Failing Social Dining App To The World's Largest Sneaker Marketplace, How The Best Founders Pick Their Investors & Why It Is Better To Be Hated than Unknown
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In this episode of The 20 Minute VC, GOAT co-founder and CEO Eddy Lu details his transition from corporate finance to scaling the world's largest authenticated sneaker marketplace. He shares key insights on recognizing when to pivot, managing co-founder and investor dynamics, and converting operational crises into customer trust.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 34.4% of the talking time here. How this is scored →
Harry as informed peer 3.7 Guest teaching 3.7 Guest disagreement 1.6 Harry pushing back 1.4
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 22:26 Calling out VCs for stringing founders along
Eddy candidly criticizes venture capitalists who continually ask founders to meet round after round without intending to invest due to market size skepticism, calling it a multi-year waste of time.
Hardest push from Harry ▶ 7:42 Challenging the necessity of overarching visionHarry brings up perspectives from Marco at Thumbtack and Adrian Ayun to challenge Eddy on whether the conventional belief in needing a grand initial vision is actually a misnomer.
Biggest teaching moment ▶ 14:55 Reframing supply differentiation in marketplacesEddy pushes back on the dogma that marketplaces require exclusive supply, educating Harry on how building trust and authentication mechanisms on top of existing commodity supply creates true marketplace differentiation.
Harry holds his own ▶ 7:42 Citing external founder frameworks to test guest claimsHarry demonstrates active domain knowledge and past guest insights by pitting Marco from Thumbtack's procedural framework against standard founder mythologies regarding startup vision.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| From Corporate Burnout to Launching GOAT | 2 | 3 | 0 | 0 | Harry sets up the interview with a broad question summarizing Eddy's career progression. Eddy walks through his transition from corporate jobs to 99-cent apps, bakeries, Grub With Us, and finally founding GOAT after buying counterfeit Jordans on eBay. | |
| Recognizing Failure and the Mechanics of Pivoting | 5 | 2 | 2 | 3 | Harry presses Eddy on whether founders need an overarching vision, citing opinions from previous guests Marco from Thumbtack and Adrian Ayun. Eddy offers a nuanced counter-perspective, explaining that micro-pivots happen constantly even when a startup has a vision. | |
| Navigating Investor Communications During a Pivot | 3 | 3 | 1 | 1 | Harry asks about managing investor relationships when pivoting a company that raised $7M+. Eddy transparently details offering investors their remaining capital back and highlights how Greg Bettinelli shielded them during the transition. | |
| Investor Selection and Co-Founder Dynamics | 3 | 4 | 1 | 1 | Harry explores investor selection criteria and co-founder relationship dynamics. Eddy shares a vivid story about a physical brawl with his co-founder on the basketball court that cleared the air, contrasting their ego alignment with high co-founder breakup rates in YC. | |
| Scaling Marketplace Supply, Demand, and Physical Retail | 6 | 5 | 3 | 4 | Harry brings quotes from Canvas founder Paul claiming startups fail without differentiated supply. Eddy directly reframes this premise, demonstrating that marketplace differentiation can stem from trust and verification rather than exclusive inventory, sharing how GOAT staged photos with DIY floor tiles. | |
| The Black Friday Crash and Managing Startup Crises | 3 | 4 | 0 | 0 | Harry asks about crisis management through the lens of GOAT's 2015 Black Friday crash. Eddy recounts how overwhelming demand crashed servers and caused massive social media backlash, citing investor Greg Bettinelli's advice that 'it is better to be hated than unknown.' | |
| Quickfire Round: VC Advice, Personal Milestones, and Mentors | 4 | 5 | 4 | 1 | During the quickfire round, Eddy delivers sharp commentary criticizing venture capitalists for wasting founder time across multiple funding rounds when they lack market conviction. He also shares a cautionary story about turning down a Series A term sheet on Paul Graham's advice. |
Statements from this episode (14)
Eddy Lu: Operating a bakery is definitely not a passive income source
“Let me just say that there are very few passive income opportunities, and bakeries are definitely not one of them.”
Eddy Lu: Founders should execute daily micro-pivots when things are not working
“You make micro pivots even when you're building a startup and you have that initial vision. So for me, it's, you know, whether it's a micro pivot on a daily basis or a big pivot, if you know that something's not working, Just change it up.”
Eddy Lu: High customer acquisition costs made Grub With Us unviable
“What we saw was that it cost so much money to acquire a customer because of all those friction points that we knew that, This wasn't going to be a just a mass market business.”
Eddy Lu would have written off Grub With Us as an investor
“If I were them, I probably would have written us off too.”
Eddy Lu: Grub With Us pivoted to GOAT with $1.5M remaining
“We raised over seven million dollars and had only about one and a half million dollars left.”
Eddy Lu: Half of GOAT's Y Combinator cohort split over co-founder friction
“Half our white combinator batch broke up right after the batch because of co-founder issues”
Eddy Lu: Co-founder breakups stem from ego and fighting over CEO titles
“One place where I see that it goes wrong is ego, to be honest. When we saw our Y Combinator batch, there was a lot of people who wanted to be CEO because that was the position to be, rather than saying who's the best person to be CEO.”
Eddy Lu: 30% of Yeezy sneaker listings on eBay are counterfeit
“You go to eBay today and type in Yeezy, and about 30% of the listings aren't real.”
Eddy Lu: GOAT faked early seller listings using different Home Depot tiles
“In the beginning, we were the only seller since no seller would wanted to list on code because we were unknown. So what we did is that we went to Home Depot and bought a bunch of different tiles. So you see, you have like the wood tile, those one foot by one f…”
Eddy Lu: Prime physical retail rent is equivalent to digital ad spend
“Well, for me, I don't think it impacts margin structure too much because while there's store overhead, if the store is in a Class A location, it's no different than spending money on Facebook marketing. Instead of spending it on digital ads, you're spending it…”
Eddy Lu secretly bought shoes on GOAT to fake their first sale
“And I went in and secretly bought a pair of shoes so that I could tell the team, Hey guys, we sold something today.”
Eddy Lu: GOAT gained 100,000 users in one week during Black Friday
“So that week leading up to black Friday, we had over a 100,000 users sign up and it crashed our site every single day.”
Eddy Lu: GOAT rejected a $5M Series A offer post-Y Combinator
“We went out to raise, and we actually got a five million dollar offer from a top tier VC, and it was sitting for us, waiting for us at the table, and, you know, we saw the valuation. It was a fair valuation, but we actually said, Hey, you know what? We're goin…”