The Exchanges

Q really good article that, a blog post article, that you wrote in 2019 about kind of your reflections on Gumroad, um, at a point in time where kind of the trajectory changed relative to what you thought it was initially going to be. Before we hop into it, I just want to set the foundation for listeners. Can you share what Gumroad is, um, and how big it is today?

A Yeah. So Gumroad, we help people sell digital products and memberships. Uh, we started in 2011. I wanted to sell something to my Twitter audience, an icon, and basically just solved my own problem, built it over a weekend, launched Monday morning, and has kind of grown, uh, since then. Now we do about a hundred and sixty million dollars a year in annualized GMV. So that's sort of like the marketplace volume of that we take. 10% ends up being our revenue, and that's how we make money. Um, and about half of that ends up being our margin. Um, so you can do the math, we make about eight million dollars a year in like net income, uh, and Yeah, that's Gumroad.

AI assessment note: “we help people sell digital products and memberships... do about a hundred and sixty million”

Q investors who have different incentives. So how did you deal with your existing investors once you came to the reality of your situation, that you weren't going to be able to raise Series B, that wasn't going to be the path? What was the type of conversation you had with them to get them on board or not on board with kind of the direction you were going to head?

A Yeah. So in 2017, when, you know, in 2015, when we failed to raise the money, I just sent everyone an email and said, Hey, we failed to raise the money. Good news. We're not going to die. Uh, I'm going to just let everyone go and run the business myself and keep you in the loop basically. And so every quarter or whatever, I would email them and say, Hey, you know, this is how the business is doing. Uh, and then, and yeah, when I moved to, to Provo, as I mentioned, that was like the big thing where I was like, okay, this is really not recoverable in the sense that like next quarter, it wasn't going to like, I was going to hire a team and get an office in San Francisco. It was really gonna, gonna take a while. Right. And so I just sent them an email and said, Hey, I'm moving to Provo, like, you know, uh, going to do this class. Let me know if you have any questions, blah, blah, blah. Kept doing that. And then out of the blue, uh, basically like Investors would start reaching out and, and Kleiner at one point, I think we had one conversation before, but basically they were like, hey, we, you know, we'd be interested in selling our stake back to you, um, for a dollar. And I was like, okay, sounds good. You know, like, I think they invested six million in the A and a dollar for that. Great. Uh, but you know, they get a tax write off. They simplify their books. They had some internal…

AI assessment note: “I just sent everyone an email and said, Hey, we failed to raise the money.”

Q product features within the business and how that actually worked within the contracts of construct of running the company. So at least in the article, you talk about November of, uh, you shipped, uh, Gumroad memberships. You can use that as an example, or if there's a more recent one, but can you walk me through like, How big product features and are shipped within the business in this model?

A Totally. Yeah. So most things come from our customers, our creators say, Hey, we really want a feature like Gumroad memberships, which was basically like, okay, we have products for sale on Gumroad. We have like a really hacky way of changing the price to do memberships. We want like a custom memberships, first class citizen. Uh, and that's like one line and my job basically as, as sort of the PM of the company is, Is to basically turn that into like a set of atomic subtasks. It's like, okay, if we want to get there, what does that actually mean? And I do a little bit of maybe design. I do a little bit of engineering as part of that, but I come up with an often like a Figma prototype of like what I mean, I back it out in notion. And then I basically ping a designer and an engineer. And I say, Hey, I'm thinking about working on this, like Gumroad are doing this. What do you think? They kind of look at the scope. And we refine it together. And then once the scope is in a good place, we move to design. We kind of repeat the process with the scoper and the engineer contributing, and then it moves to engineering building. And then the builder builds it with the scoper and the, and the designer contributing and then shipped to production. And so we basically have these like three roles, right? We have scoper designer and builder. And like, it's very much like kind of like this assemb…

AI assessment note: “we basically have these like three roles, right? We have scoper designer and builder.”

Q series B. The, the next snapshot is June, 2016. Revenue is 160, uh, 176,000 dollars for the month. Net profit of 10,000 dollars, and this is, you know, post layoffs. What does the business today Like, what is the story you have around the business today? Meaning, what does it mean to your identity? Like, what kind of, what's the, what sort of attachment do you have to your business?

A Yeah. I mean, I think of, I think of Gumroad like a dragon now. I feel like it's its own living thing with its own agency, and it pays taxes on its own, too, as a C Corp., you know? It's truly considered, like, a person in law, uh, And so I, I find, I don't know, I think of myself like really honored that I get to work on it and make it better. Uh, but at the end of the day, it has its own basically desires and its desires are to fulfill this need for its 10 or 12,000 creators. Right. And do that better and better. Um, and I try to sort of like be its muse or like, you know, whatever. I try not to get too obsessed about like, oh, I need Gumroad to solve this problem for me. Um, it's like, no, like if I, as a company, it can, because it has cashflow. So I can sort of point it at certain things and say, Hey, we can take, you know, a million bucks in cashflow and like experiment with building a new product called Flexile and do dividends here. And like, we can, we can, we can sort of play around with it, but only so much because at the end of the day, like the core, like there are a lot of stakeholders in Gumroad because it's its own. It's a little, it's a dragon. It's like much more powerful than like a single human. So like the public deserves some level of control over it. You know, it's, it's people who've invested in the past totally deserve some level of control or ownership…

AI assessment note: “I think of Gumroad like a dragon now. I feel like it's its own living thing”

Q you were kind of, let's just say, in, like, chapter one of Gumroad building for, you know, again, this, like, billion-dollar valuation, this hypothetical IPO down the road, Do you, do you think like a lot of this was just kind of driven by your own story of, of how you attributed self-worth to yourself and kind of those end points you just associated with importance, i.e. self-worth for Sahil?

A Yeah, totally. I mean, I think everyone has a level of insecurity in terms of like, I remember as a kid, like learning about Like just being a professional, you know, like the difference between someone who plays tennis and like a professional tennis player and being like, holy shit, you can be so good that at some point you just make, start making money. Like people just start paying you for that. And that became my goal. Like I started freelancing doing web design when I was like, 13 years old because I was scared. I was like, what the hell? Like I have to be good enough that like people will just like pay me money to like make pixels. Like that seems weird, you know? Uh, but it was possible. It worked. Uh, so I do think a lot of people have that, and I, I honestly do think, like, even the billion-dollar outcomes are often driven by just, like, this desire to be, like, can I do it? Like, is it actually possible? Um, you know, and I think it's good, like, it's good for society that we have this, these impulses.

AI assessment note: “Yeah, totally. I mean, I think everyone has a level of insecurity”

Q Yep. Last question on this, and then I'll kind of punt it to you to, to talk about any other trade-offs or kind of, um, sticking points you've run into as you've built this model. But the, the other one that stands out to me is culture. Like, can you have culture? Whatever that means with this model or not really? Like, how do you think about that?

A I mean, I think you always have culture, right? At the end of the day, you have some degree of something has brought you guys together in a Slack, right? And it's like, we did a retreat in Rome. I hadn't seen most of these people ever. And it was super fun because people have all these shared interests. You don't know what they're going to be. And humans are humans. Like we're all very similar compared to like snakes and stuff. So we're like, we all get along roughly, you know, pretty, pretty well. Obviously like there's probably like people have crazy opinions in their own heads. People are coming from all their different own cultures and family histories and backgrounds, but like, it's fun to hang out with people. Uh, it just, it's just fun. And so I think we do that. We, we do in person. I still think that's important. I just don't do the fake stuff. Like I just like, I don't want to hang out on zoom and do happy hour. Like that's just not that compelling to me. I'd rather, like, fly to Rome and hang out and grab a drink. You know, like, that's really fun. We're even thinking about getting an office in New York so we can, like, do stuff every once in a while together, and that would be really cool. Um, I do think there are other trade-offs. Uh, I think recruiting is hard. I think the culture isn't that bad or missing, in my opinion, but It's scary to people who haven't exper…

AI assessment note: “I think you always have culture, right? At the end of the day”

Q Yeah, what was that like emotionally for you?

A Yeah, I mean, I had built, like, My whole social media following, my whole identity, like, basically I hadn't hung out with my, I mean, you know, every once in a while you hang out with your friends and stuff. I like, I grew up in Singapore and like, you know, like moved to San Francisco, dropped out of college, like my, you know, moved, you know, I'm basically like, it was very much like the thing that I, I was doing right in everybody's mind. And I was like, okay, it's kind of like, You got to recalibrate, uh, and that's going to hurt. Um, and also people are talking and like, you don't want to necessarily say anything, but you kind of don't know if they know. I remember someone years later telling me they like, we had a meeting in the office like the next week and it was empty and they're like, what's going on? And I was kind of sad or, you know, like all this stuff that like, who knows what I was going through in the, in the moment. Uh, But yeah, it wasn't, it wasn't fun. You know, it was just like, okay, like that wasn't, you know, uh, but I still run the business, right? Like the thing that I, you know, the, the, the sort of solace was that I still ran a great business. Like at the end of the day, it wasn't dead. It was just like, I no longer had any team members, right? Like I just had to run it myself. We were doing, I don't know, like 20 or 30,000 dollars in profit or …

AI assessment note: “You got to recalibrate, uh, and that's going to hurt.”

Q Out of curiosity, was the, uh, the writing course that you took in Utah, was that part of kind of this, uh, Journey to re-find identity outside of building your business, or did you just want to start writing?

A I mean, I, I felt like I knew like, and it's funny, like unpacking it, you know, because the sci-fi is really what led me to startups in the first place, because if you really, I feel like unpack, it's almost like this kind of religion where you read these books and you believe them, right? You're like, wow, like in the future, not today, but like in the future, we're going to have like humans on tons of planets and like spaceships and like all sorts of cool stuff. But this is like a, Part of the timeline. It's not like a fantasy. It's a sci-fi, right? Uh, it's just, it felt more real. Uh, and that leads you to like startups and venture capital and like all these things like, you know, AI now have playing out, right? Like it all is part of, part of that. And so I felt like, okay, if I'm not going to be the one that makes Tesla or SpaceX or whatever, maybe I can like contribute to it in some capacity. And I love reading these books. Um, and so, you know, I think trying to write Write one would be, would be great. Um, but yeah, I think on the other hand, it was just like a thing to do, right? Like a thing to just, I have a hard time. At least some people are maybe very good at just like relaxing or just being, and just like, you know, chilling out or whatever. And I'm like, I need to like do something else. Like I need to solve some other problem, uh, get into something that is g…

AI assessment note: “I need to like do something else... take my brain so that I can't think”

Q company. Tomorrow I start building it. Uh, when you wrote this, you thought Gumroad would become a billion dollar company with hundreds of employees. You thought about the prospect of IPO-ing at some point down the road. Obviously that didn't happen. Um, can you share with me why that didn't happen? And when you realized that wasn't going to be the path that you ultimately would take the business on?

A Yeah. I mean, I think the first time I realized that was not going to happen, which is, you know, I joke the, the blog post is called reflecting on my failure to build a billion dollar company. It's a little bit like tongue in cheek because it's sort of like not, you know, it's a weird failure to have, right? Um, it's like failing to go to the moon or something like that. Um, but it sort of just hints at like the, the, you know, the culture of Silicon Valley, um, in which I was living in at the time where you basically everybody inherently just signs up for this sort of journey where you're trying to build this billion dollar company that we call a unicorn. And, you know, the way you do that is by basically having some idea for this like really large market, having some software product that you build, you hire, you know, you raise some venture capital, you hire some engineers, you use AWS, you ship some app. And then there's sort of actually like quite a little bit of fuzziness in what happens like between now and like the billion dollar company part. But in theory, you know, you, you basically acquire customers if you're a B to B product and you just kind of like grow double or nothing, you know, every three months to two year, or, you know, you have a consumer product in which you basically get to like hundreds of millions of users. Then you sell ads, uh, you know, and I had…

AI assessment note: “I think the first time I realized that was not going to happen, which is”