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Jan 23, 2016 · 16m · top-founders

How To Build an 8 Figure Business Fast with James Marks of WhipLash

James Marks · 7m spoken Nathan Latka · 7m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

In this episode of The Top Podcast, host Nathan Latka interviews James Marks, co-founder and CEO of Whiplash, dissecting the e-commerce fulfillment company's unit economics, operational growth, and sustainable fundraising philosophy.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 49.8% of the talking time here. How this is scored →

Nathan as informed peer 4.6 Guest teaching 1.8 Guest disagreement 1.0 Nathan pushing back 1.6
05100:0010:000:56–4:08 · Nathan as informed peer 6/10 Introducing James Marks and Whiplash Nathan digs into Whiplash's revenue numbers, dissecting the $330k gross revenue into carrier fee pass-throughs versus the actual recurring storage and handling revenue. James readily provides the numbers and breakdown without friction.4:10–6:43 · Nathan as informed peer 4/10 Warehouse Operations, 500 Startups, and Cash Burn James explains warehouse operations and their shift from profitability to burn rate after joining 500 Startups. Nathan connects empathetically over the fear of going cash-flow negative.6:43–8:50 · Nathan as informed peer 7/10 Fundraising Strategy and Valuation Traps Nathan brings up previous guest examples to criticize founders taking unrealistic valuations, validating James's moderate approach of targeting a $2M raise on an $8M to $10M valuation cap.8:50–12:12 · Nathan as informed peer 4/10 Team Scaling, Past Ventures, and Founder Strengths James shares candid reflections on past venture handoffs, personal founder limitations, and the complex tax implications of reallocating equity in a C-Corp. Nathan probes on equity splits.12:12–15:36 · Nathan as informed peer 2/10 Sponsor Promo, Links, and Contest Reminder Nathan runs through show promotions, links, and the Famous Five rapid-fire questions, concluding with friendly wrap-up remarks.0:56–4:08 · Guest teaching 1/10 Introducing James Marks and Whiplash Nathan digs into Whiplash's revenue numbers, dissecting the $330k gross revenue into carrier fee pass-throughs versus the actual recurring storage and handling revenue. James readily provides the numbers and breakdown without friction.4:10–6:43 · Guest teaching 2/10 Warehouse Operations, 500 Startups, and Cash Burn James explains warehouse operations and their shift from profitability to burn rate after joining 500 Startups. Nathan connects empathetically over the fear of going cash-flow negative.6:43–8:50 · Guest teaching 2/10 Fundraising Strategy and Valuation Traps Nathan brings up previous guest examples to criticize founders taking unrealistic valuations, validating James's moderate approach of targeting a $2M raise on an $8M to $10M valuation cap.8:50–12:12 · Guest teaching 3/10 Team Scaling, Past Ventures, and Founder Strengths James shares candid reflections on past venture handoffs, personal founder limitations, and the complex tax implications of reallocating equity in a C-Corp. Nathan probes on equity splits.12:12–15:36 · Guest teaching 1/10 Sponsor Promo, Links, and Contest Reminder Nathan runs through show promotions, links, and the Famous Five rapid-fire questions, concluding with friendly wrap-up remarks.0:56–4:08 · Guest disagreement 1/10 Introducing James Marks and Whiplash Nathan digs into Whiplash's revenue numbers, dissecting the $330k gross revenue into carrier fee pass-throughs versus the actual recurring storage and handling revenue. James readily provides the numbers and breakdown without friction.4:10–6:43 · Guest disagreement 1/10 Warehouse Operations, 500 Startups, and Cash Burn James explains warehouse operations and their shift from profitability to burn rate after joining 500 Startups. Nathan connects empathetically over the fear of going cash-flow negative.6:43–8:50 · Guest disagreement 2/10 Fundraising Strategy and Valuation Traps Nathan brings up previous guest examples to criticize founders taking unrealistic valuations, validating James's moderate approach of targeting a $2M raise on an $8M to $10M valuation cap.8:50–12:12 · Guest disagreement 1/10 Team Scaling, Past Ventures, and Founder Strengths James shares candid reflections on past venture handoffs, personal founder limitations, and the complex tax implications of reallocating equity in a C-Corp. Nathan probes on equity splits.12:12–15:36 · Guest disagreement 0/10 Sponsor Promo, Links, and Contest Reminder Nathan runs through show promotions, links, and the Famous Five rapid-fire questions, concluding with friendly wrap-up remarks.0:56–4:08 · Nathan pushing back 3/10 Introducing James Marks and Whiplash Nathan digs into Whiplash's revenue numbers, dissecting the $330k gross revenue into carrier fee pass-throughs versus the actual recurring storage and handling revenue. James readily provides the numbers and breakdown without friction.4:10–6:43 · Nathan pushing back 1/10 Warehouse Operations, 500 Startups, and Cash Burn James explains warehouse operations and their shift from profitability to burn rate after joining 500 Startups. Nathan connects empathetically over the fear of going cash-flow negative.6:43–8:50 · Nathan pushing back 2/10 Fundraising Strategy and Valuation Traps Nathan brings up previous guest examples to criticize founders taking unrealistic valuations, validating James's moderate approach of targeting a $2M raise on an $8M to $10M valuation cap.8:50–12:12 · Nathan pushing back 2/10 Team Scaling, Past Ventures, and Founder Strengths James shares candid reflections on past venture handoffs, personal founder limitations, and the complex tax implications of reallocating equity in a C-Corp. Nathan probes on equity splits.12:12–15:36 · Nathan pushing back 0/10 Sponsor Promo, Links, and Contest Reminder Nathan runs through show promotions, links, and the Famous Five rapid-fire questions, concluding with friendly wrap-up remarks.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 62% · guest 38%0:00 · Nathan 62% · guest 38%3:00 · Nathan 41.8% · guest 58.2%3:00 · Nathan 41.8% · guest 58.2%6:00 · Nathan 48.5% · guest 51.5%6:00 · Nathan 48.5% · guest 51.5%9:00 · Nathan 19.9% · guest 80.1%9:00 · Nathan 19.9% · guest 80.1%12:00 · Nathan 65.6% · guest 34.4%12:00 · Nathan 65.6% · guest 34.4%15:00 · Nathan 82.9% · guest 17.1%15:00 · Nathan 82.9% · guest 17.1%
Sharpest disagreement ▶ 7:24 James rejects the unicorn-or-bust VC mindset

James firmly asserts his refusal to seek aggressive unicorn valuations, arguing that pursuing reckless growth trajectories is unfair to both employees and customers.

 Hardest push from Nathan ▶ 3:01 Nathan presses for recurring revenue vs gross numbers

Nathan refuses to settle for the top-line $330k gross revenue figure and does live calculations to isolate the true $100k recurring component from carrier fee pass-throughs.

 Biggest teaching moment ▶ 11:23 James explains the legal and tax realities of shifting equity

James details how adjusting equity among co-founders after years of operation triggered unexpected C-Corp valuation and tax issues that they had to navigate.

 Nathan holds their own ▶ 7:54 Nathan lectures on valuation traps with Teachable case study

Nathan demonstrates his domain knowledge by referencing specific founder data points and valuations from past interviews to illustrate the danger of overvalued funding rounds.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Introducing James Marks and Whiplash 6113 Nathan digs into Whiplash's revenue numbers, dissecting the $330k gross revenue into carrier fee pass-throughs versus the actual recurring storage and handling revenue. James readily provides the numbers and breakdown without friction.
Warehouse Operations, 500 Startups, and Cash Burn 4211 James explains warehouse operations and their shift from profitability to burn rate after joining 500 Startups. Nathan connects empathetically over the fear of going cash-flow negative.
Fundraising Strategy and Valuation Traps 7222 Nathan brings up previous guest examples to criticize founders taking unrealistic valuations, validating James's moderate approach of targeting a $2M raise on an $8M to $10M valuation cap.
Team Scaling, Past Ventures, and Founder Strengths 4312 James shares candid reflections on past venture handoffs, personal founder limitations, and the complex tax implications of reallocating equity in a C-Corp. Nathan probes on equity splits.
Sponsor Promo, Links, and Contest Reminder 2100 Nathan runs through show promotions, links, and the Famous Five rapid-fire questions, concluding with friendly wrap-up remarks.

Statements from this episode (13)

Assertion Supported
Whiplash handles fulfillment for Betabrand's crowdsourced apparel
“The last customer, well, probably the last word that left the warehouse is a company called Beta Brand, and they sell online, they do crowdsourced clothing design, and when, after their stuff gets manufactured, They put it in our warehouse, and we ship it to t…”
James Marks Jan 23, 2016 ▶ 1:39
Disclosure
Whiplash generated $330K in gross revenue in October 2015
“October was around 330 K gross.”
James Marks Jan 23, 2016 ▶ 2:27
Disclosure
Rebilled postage accounts for roughly half of Whiplash's gross revenue
“About half of that is the carrier fees. What, you know, we rebuild the postage, whether that's UPS or USPS.”
James Marks Jan 23, 2016 ▶ 2:35
Disclosure
James Marks: Whiplash has about 157 customers
“We've got about a 157 customers.”
James Marks Jan 23, 2016 ▶ 2:56
Disclosure
Whiplash abandoned profitability to increase burn rate after joining 500 Startups
“Right now, we've just gone to cashflow negative, so we just joined 500 startups, and we're beginning a process of, you know, higher, higher burn. yeah, we were profitable before, but we just stopped that.”
James Marks Jan 23, 2016 ▶ 5:01
Disclosure
Whiplash Has Never Had a Formal Sales Process or Outbound Funnel
“We've never had a formal sales process. Everything we've done, I mean, we've got, we're in, you know, in the Shopify app store, we get a lot of referrals from existing customers, but we've never gone out and, you know, hit the pavement and had a hit list and, …”
James Marks Jan 23, 2016 ▶ 5:44
Disclosure
James Marks: Whiplash targets an $8M to $10M valuation cap
“You know, we think it'll be between eight and 10.”
James Marks Jan 23, 2016 ▶ 7:03
Insight
The 'billion-dollar-or-bust' VC path is unfair to startup employees
“You know, we want to be able to grow at, you know, two or three X per year and have that and have investors that want to be a part of that and not put us on this, you know, billion dollar valuation or bust path. It's important for us to have the company secure…”
James Marks Jan 23, 2016 ▶ 7:36
Assertion Not checkable as stated
Teachable was doing $110K in monthly revenue in early 2016
“They're doing about a 110 K top line revenue right now.”
Nathan Latka Jan 23, 2016 ▶ 8:08
Opinion
Latka: Teachable raising at $30M valuation is the 'stupidest thing'
“And he's right now negotiating an equity round with a pre-money valuation at thirty million dollars, which is like the stupidest. In my opinion, I told him this on the show. I said, that's the stupidest thing I've ever heard.”
Nathan Latka Jan 23, 2016 ▶ 8:11
Assertion Not checkable as stated
Marks: Whiplash employs 31 people, four outside warehouse operations
“Right now, we've got 31 people total. About four of those are, you know, not in the warehouse.”
James Marks Jan 23, 2016 ▶ 8:53
Assertion Supported
Whiplash operates the official merchandise web store for Modest Mouse
“We're running this web store for Modest Mouse, which we still do.”
James Marks Jan 23, 2016 ▶ 11:04
Disclosure
Whiplash is navigating tax complexities to equalize co-founder equity
“Now we're trying to have that be the case legally because we are a C-Corp and you can't just give people stock anymore because there is value being assigned, so you get into some complex tax issues.”
James Marks Jan 23, 2016 ▶ 11:50
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