The Exchanges

Q Sophia, was that how you thought of nasty gal? Like, did you see a problem or did it come more organically than that?

A I saw only the, you know, with Nasty Gal, I reverse engineered a lot of what other people were doing, and then I did it differently, and I did it differently enough to where it stood out. There were, all of the eBay sellers selling vintage were selling, like, hippy-dippy, you know, lady in the dust, you know. It was all very, like, 19 sixties, and I showed up and I was like, I'm gonna call it Nasty Gal. And I'm going to make it edgy. And there was nothing like it. And the models were edgy and the styling was edgy and the, you know, selection was edgy and it felt really different. And also, you know, when you're building on a marketplace, what's especially hard is to create a brand. And that was something that made nasty gal stand out in a way, uh, just among the pack. And that's something that I think people, a lot of people don't think about even on these marketplaces that they have the ability to do. And once you have a brand, you can take it everywhere with you. You can take it to other platforms. You can build that on social media. You can launch your own website, which is what we initially did, but it was really only with that, with that marketplace that we were able to do that. But I took it and I used every, I was coding templates and uploaded, uploading images into FTP servers for on the eBay platform for For my listing page with graphics that I designed and really crea…

AI assessment note: “I reverse engineered a lot of what other people were doing, and then I did it differently”

Q So you, you told, you told employees, like, if we do not hit X revenue target by Y date, we will have to let people go?

A Yes. Like, this is how a business runs. It won't be responsible for us to retain staff. Our greater responsibility is to protect the business and the business's longevity. You know, this is something that everybody should understand, even about their personal finances. Um, and people thanked us, like, would we had to make layoffs? I got thank you emails, and there's just like nothing better than having to make a decision that hard, having your team understand The entire context and appreciate the graceful, you know, dismount that you are able to give everybody with a sense of dignity. People just want dignity. And if you treat them like a human resource, that's when they sue you. That's when they come back and say, I wasn't treated like a human, like your company has money. I'm going to try to take it from you. And I've had that happen as well. And that is, uh, real hard.

AI assessment note: “Yes. Like, this is how a business runs.”

Q of opinions on this next topic as, uh, robots, uh, surrounding Sophia and that is executive coaching. We've talked about this a little bit in bits and pieces in past episodes, but I want to get to the heart of it. So I'm going to just start with a very simple question, and we'll start with Sophia. Have you used an executive coach, and do you believe in executive coaching?

A I absolutely believe in executive coaching. I have only worked with one, and I've worked with him actually for the last seven, eight, nine years, from the very beginning when my company could afford it, when Nasty Gal could afford it. Um, he was a big expense, nowhere near the expense I'm about to take on with Dave Cashin, who Jesse so generously introduced me to, who's the coach I'm gonna have my first call with in the next couple weeks, but what I got out of him Um, The executive coach I've had is very, like, has leads with heart, but for the most part has led with advice on how to manage people, how to think about, you know, when I was putting together my thesis for what was really going to serve me after I left Girlboss, my second company, thinking about, you know, I've talked about this before, business class feels like a project because we launch it twice a year. It's not something that's on every day where there's just this, like, onslaught of stuff and, you know, with Girl boss. We were doing brand deals. We were hosting conferences. There was such a like human capital lift. And so he helped me clarify that I wanted to do things that felt more like projects and less like an undertow of business. Um, when I had issues with executives, you know, or with management, for example, like my nature is to like run to the fire and fix things. I'm not avoidant. Like it's a problem…

AI assessment note: “I absolutely believe in executive coaching. I have only worked with one”

Q Yeah, what, what are we looking, what are we looking at in this screenshot?

A This is my Wells Fargo bank account that combined both my personal, I have a business checking and savings account, I have a personal checking and savings account, and then I got a 2500 dollar credit limit, and I've saved literally a million dollars cash out of the back of an 87 Volvo. And, uh, you can see in my personal bank account there's 9000 dollars, and in the business bank account there's 900,000 dollars. So if you want to ask how much to pay yourself, I can also show you the The place that I lived, which was, um, 500 dollars a month rent, and I had a hot plate, and, uh, my office was my kitchen, and I washed my dishes in the bathroom sink. I think I'm going to be there.

AI assessment note: “This is my Wells Fargo bank account that combined both my personal”

Q uh, first of all, how, are there any things that you do to your calendar to try to make context switching easier? Like, are you working on all of these things all days of the week? Are you blocking out certain times for the type of work that's most annoying in your day to get that done first? Like, do you do anything to help yourself with all this switching?

A I put on my calendar, you know, after this, I'm going to record content. Uh, if I, if something's due to a brand that I'm creating, uh, for a partnership, like that's on the calendar. And if I have to create content for that and it's due on Wednesday, Monday, it's on my calendar and my assistant's here. And he like is amazing Tyler and helps me kind of organize myself, prepare for that. We're looking at, you know, Hashtag, you know, add all the things that you have to draft. There's such a level of detail for that stuff. But right now I would probably ask advice of you two on how I could better optimize that because as an ADD entrepreneur with a lot going on, I think I could use some inspiration.

AI assessment note: “if I have to create content for that and it's due on Wednesday, Monday”

Q It's, uh, it's nice foreshadowing for us talking about your domain story in, uh, in, like, 30 minutes. But, Sophia, what's your view on side hustles? Like, are, do side hustles work for you? Do you have the same definition as Jesse?

A Everything is not everything, but a lot of what I start is not as it could be more strategic business class was actually a really strategic effort to build a side hustle, but it has kind of after a year and a half become a bit of a front hustle, which I'm trying to figure out how to change. And even though we only launch it on a cohort basis twice a year, the amount of push and prep that that takes and promotion And ad creation and ad strategy creation is a lot. Um, and so I'm putting business class on evergreen, which I haven't talked about or announced, but that'll happen at the beginning of next year, which, you know, I'm going from, wow, I have the summers off. I only launched this twice a year to, okay, it's on all the time, but it's on drip, right? Someone can join. It's a rolling enrollment period. Um, it's a little, maybe more passive, but We have to keep onboarding people and keeping them happy in the first several weeks as they join. Um, and so it became a bit of a front hustle.

AI assessment note: “business class was actually a really strategic effort to build a side hustle”

Q to play roulette, we're going to look at interesting startups, and we're going to analyze them as both investors and entrepreneurs. So let's hop into this thing. Generative AI. It's something that you hear it, and I feel like I just get a bad taste in my mouth. They really need to figure out a way to rebrand this. What do you guys think about just this space in general?

A I think it's super fun. You know, I took a, not the deepest dive, but a deep dive yesterday and came up with some really fun stuff on Dolly and have been thinking about all of the incredible applications of it. And it's something that I understand that can be applied in a way that's, that the metaverse doesn't. You know, there are other technologies being built out there and gold rushes happening. And what I love about generative AI is that There aren't any clear kind of financial reasons for pursuing it. Like there is, but also it feels like people are pursuing it because it's an important and interesting technology and not an opportunity to sell real estate to Gucci in the metaverse.

AI assessment note: “I think it's super fun. You know, I took a, not the deepest dive”

Q Apps that lean into authenticity, being real, positivity, whether it's Be Real or whether it's, uh, paparazzi and other apps like it, um, it clearly is something that works. So I think the timing of this is great. What, uh, Sophia, what are some lessons that you think entrepreneurs who aren't building in consumer social but want to learn from gas's success thus far can take away from this story?

A Yeah. I mean, I think creating, uh, any kind of product that people want to share, that they want to engage with, you know, I've spoken about this a little bit. I did it with products. You've done it with your newsletter, creating, uh, you know, habits, right? You, with the morning brew, someone has a certain amount of time to open their email, see the most important news, you know, with nasty gal, it was like a lot of, like, it was like new arrivals constantly. Things sold out quickly. So there's, I think scarcity is a really big mechanism, which Be Real is capitalizing on. I think with TikTok, even the trends, um, are a bit of a scarcity model in terms of like, you need to get on this now. It's going to become outdated. Same with fashion, same with news. So engineering those habits, obviously, you know, a newsletter is probably a little bit healthier of a habit for somebody to build, um, Then, you know, clicking on TikTok and seeing what dance someone is doing, and there's a lot to learn on TikTok. I don't want to shit on TikTok, but this is something that I would say exists across both social apps and media businesses and fashion businesses at the same time.

AI assessment note: “creating, uh, you know, habits, right? ... I think scarcity is a really big mechanism”

Q Well, you need to lead this off, because you're actually doing it. For Jessie and I, it's just hypothetical, so what are you doing?

A All right. Well, I did it. So in twenty-twenty, um, I mean, I've done it three times. All of my business, no, no, no, no, I'm sorry. Nasty Gal did 20, 75 K its first year, but, uh, Business class. I launched it in the middle of COVID. We shot it in my house. It's a digital course for entrepreneurs. Um, it's like, it's, 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 awhile. I decided, you know what, the third time around, I'm not going to try to invent a business model. Uh, I've did it with my second business. It was kind of a media company that was called girl boss. And with this one, I'm using all the existing tools available. Um, 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. Um, Um, 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, uh, 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 c…

AI assessment note: “Business class. I launched it in the middle of COVID... It's a digital course”

Q What, what, what assumptions did you get wrong that led it to being far more of like a full-time job slash business than you thought it was going to be when you started it?

A I mean, it wasn't for the first year and a half. I took like half of last year off. I bought a house in Kauai. It did so well. I took the summer off, right? I was on an island five months out of the year. I think it has to do with the world opening up. It has to do with the economy. It has to do with the shift in the business. Um, online courses, there was a big boon. Everybody was at home and that's really changed. So I don't know if it's the amount of work, it's the amount of effort to re strategize the business, uh, and to make up for lost revenue this year, unfortunately. And so in terms of the side hustle, there are still ways for me to not just try to bring in new students, but also provide low ticket offers or workshops to people that are 150 dollars. And, you know, eventually They're excited to learn from me or someone else, and they become part of the business class world, and they, you know, then upgrade to business class, which is huge investment. It's 2000 dollars, and also there are opportunities. I mean, again, it could feel like a side hustle, not to build like a YPO type thing, but yes, small groups that pay more than the cost of business class to join, and I hire like a few coaches to mentor them, but that doesn't necessarily have to be something where I'm building You know, what Sam Parr is trying to build in like a two hundred million dollar business. So, um,…

AI assessment note: “online courses, there was a big boon. Everybody was at home and that's really changed.”

Q times we were ambitious all at once in one point of time versus sequencing. Like, let's do this thing. Once that thing is done, let's focus on this thing. And so I think by sequencing, it allows you to both be ambitious, but also not dilute yourself or be unfocused. And so I think that's a huge point. Uh, Sophia, how, uh, how do you set the table for twenty-twenty-three?

A Yeah, I just discovered, and I'll, we can pull up a screenshot, um, in 2012, I discovered in my notes in my phone, just a few days ago, my 20 12 goals. Uh, so 10 years ago, my goals were something like take money off the table at Nasty Gal, buy mom a kitchen, I ended up paying off her mortgage, buy a house, and there was really funny things like Eat an apple every day or eat three pieces of fruit, which like, I'm sure I never did. Um, I actually have a goals guide, uh, that we created at business class. That's like a kind of huge guide on thinking through like setting your intentions all the way to creating actionable steps. And it's much more deep than the way that I think about it every year, which is a little bit more a nimble, which is in the flight front of the flight planner. And I, Go through what I want to quit, what I want to learn, what I want to have, what I want to start, what I want to stop, and then what I want to be. Um, and then go through intentions. And so those intentions, the categories for those is personal, health, career, adventure, home, and spiritual. And at the beginning of last year, I did that. I think I, I don't know if I burned it or I kept it. I tore it out of something and I put it in my journal. My journal is a bunch of pages that aren't even Bound, because I shove in so many notes, and then often never look at them again, but I think I did keep…

AI assessment note: “I go through what I want to quit, what I want to learn”

Q Okay, Elon, what are you gonna do? And we start now.

A Well, first I just wouldn't do it, because I don't want to be that guy. I don't want to be a multi-billionaire. I think it makes you weird. It's like, what's left after you buy everything? Nothing means anything. Uh, you've yachts, you go to Capri, you go, you stay at Les Sierra News, and, uh, you have, like, weird polyamorous, it's not weird, ok, I'm sorry, But like, it just becomes like, okay, my wife isn't enough. I'm going to get a divorce. Then I'm going to pursue orgies. Like, I'm like, I know these guys, like, I know these guys, like these guys created, like, I'm not going to tell you who, uh, and it's like, yeah, anyway, so everything kind of loses meaning. So then it's like, where do you go? Okay. Well, the outer frontiers of kink and like what I consider freedom. And then I want to control the media, right?

AI assessment note: “Well, first I just wouldn't do it, because I don't want to be”

Q middle layer where companies build, and his view is that, um, there's going to be training of AI in a vertical fashion, so there's going to be a business that does this for healthcare or biotech or financial markets, because you can't just rely on the data set that, uh, GPT-III has in order to do really interesting things in specific categories. That's his view. Sophia, what do you think?

A I mean, I think specifically for entrepreneurs looking at this, I'm realizing, wow, if this gets really sophisticated, there could be a computer that can like mimic my voice better than any human. I write every word of copy on every website that I've ever made, um, for business class. It's like, it's so much copy, every word of copy for the 300 pages of worksheets. Uh, I'm really, you know, it's like my voice, like you can't replicate it. It's what I'm trading on. It's why people are emotional about the brands I create. It's why they read my newsletter. It's not about news. And even that, you know, um, you know, Morning Brew has a voice, and that's something that you can input, you know, requests. So, okay, it's witty, but at the same time, there is that kind of human element and references to things that we've experienced that software is just never going to be able to predict. I think it can really drive costs down for entrepreneurs, and I would be pretty ruthless about that. Um, I think it can, you know, increase speed for your business. It's something like I would absolutely adopt, but primarily for creative work, um, as an introvert who has built my best things from behind a computer and then got pushed in front of a bunch of people to be like, yeah, I did a thing. And now I lead teams. Like I do my best work behind a computer with as few people as possible at dinner. I'm …

AI assessment note: “I think specifically for entrepreneurs looking at this, I'm realizing”