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About Sahil Lavingia
Sahil was born in New York to Indian immigrants. When he was four, they moved abroad to Singapore. At 18, he returned to America to attend USC.
Sahil was interested in starting his own business from an early age, and his founder journey began with building iPhone apps for startups around Silicon Valley. In fact, he attributes most of the rise of the big companies around 2010 to the invention of the iPhone.
One company that hired him to make their iPhone app was Pinterest. This eventually led to him being one of their first hires, and he stayed at Pinterest until he was ready to start Gumroad.
Dropping out of college
As mentioned above, Sahil always had the desire to build a company. This 10- or 15-year plan included some pretty common steps—get a degree, work at a big company, spend some time at a startup, and then move on to founding a company.
On paper, it was a smart way to go about this. However, just one semester into his time at USC he dropped out. As soon as he got to California, Sahil was taken with the entire Silicon Valley culture. It was the early days of the iPhone, and he decided to test out his mobile coding skills in the marketplace.
He used Hacker News to find clients indirectly. Companies that did not yet have iPhone apps for their startups would find his submissions useful and send inquiries to Sahil about building their iPhone app. These clients eventually included Pinterest.
“It’s weird because semester is not even a word people say outside of school. It’s like, ‘One semester, what? What even is that?’ Yeah, I was there for one, just from August to December. And honestly, I swear to God that I did not intend to leave when I got there. It wasn’t like … It’s funny because people look at my past sometimes and they’re like, ‘Oh man, you’re so smart. You started designing when you were young, and then you learned to code, and then you learned iPhone stuff, and then right before it blew up, and then you got a job at Pinterest because of that, and then you did this’.” – Sahil Lavingia
Joining Pinterest as its second hire
After delivering their app, Pinterest asked Sahil to join them as only their second hire. As the fourth person in the room, Sahil learned a lot with Pinterest. He found the entire period, right around 2010, incredibly optimistic.
First, the era of the smartphone led by the release of the first iPhone opened so many avenues for new ventures. Second, social media was slowly rising with a similar air of opportunity. Being inside Pinterest having created their iPhone app, Sahil had front-row seats to this new world.
“I would say, yeah, 2010 was weird. It was so different. It was so optimistic. It really was because of the iPhone. I would say it probably deserves 100% of the credit. And the later Android, but really iPhone started it. Instagram. Agora. Square. Pinterest. It really was … Slack I think started around … Snapchat. They were all really like late 2010.” – Sahil Lavingia
Sahil was witnessing a completely new set of behaviors. People were using their iPhones to create and their social media to share. This democratization excited him and formed the basis for Gumroad.
“It was really this idea that it was a new behavior, that I think could have enabled a whole new type of commerce, and content creation. Just like why the iPhone I think was so powerful. There was social media and everyone was getting a Twitter account, a Facebook account, Instagram account, Snapchat account. There were all these different ways to communicate online and there was no commerce. That democratization happened to text and all types of free content—video, audio, things like that—but it wasn’t being applied to paid content.” – Sahil Lavingia
The missing ingredient in this new economy was, well, the economy. People could create and they could share, but there just wasn’t any way yet to bring commerce into the equation. Nobody had figured out an answer to how people could actually profit from all this work they put into creating.
“And the idea was, could we make it as easy to sell content as it is to share content today? What would that do to the world? Would it be helpful? Would it create … ? Would it take all these people that have been sitting in their basements or their bedrooms making stuff but not being able to connect to an audience, and now they’re all of a sudden being able to connect to an audience but they still weren’t able to monetize properly. That was the idea that got me really excited about it. I didn’t know what it would do but it was like, ‘No one’s tried this. This is new.’ That’s what really drove me to be really excited.” – Sahil Lavingia
Raising millions of dollars
As the idea for Gumroad really formed, Sahil realized that he’d need capital to make it happen—a lot of capital. This was an idea that was going to require a lot of effort and a lot of buy in from creators to really take off. He wanted to find enough venture capital that he could spend five years really finding the community and market.
This proved easy for him as his time at Pinterest had earned him the clout needed to get VCs to go along with his long game. His first two seed rounds totaled about $8,000,000.
“Yes. Raising money was easy, yeah. I think the fact that I was an early employee at Pinterest, which had really just been noticed by VCs and had just raised a bunch of money.” Sahil Lavingia
Every company has a different timeline to profitability. Whether it is five years like Gumroad or six months, you’ll need to understand your growth metrics keep on track.
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Laying off 75% of the team in order to achieve profitability
While Gumroad is a huge success today, the path to profitability had some potholes. Their burn rate over the first year was much higher than expected.
Sahil brought this conundrum to the employees and asked for their input on what they’d rather do. Basically, his options were to keep all twenty employees for six months and hope to find profitability fast or to cut down to a team of five and keep going for two years. As difficult a decision as it was, the second option was selected, and it proved to be the right one.
“We’d burned a lot more money during those nine months and so we still had tie back. I was like, ‘We could lay off half the team or whatever, but then we might have to do it again.’ I wanted to be confident in the fact that we do this, and this leads to us controlling our destiny. It’s not like an awkward halfway point. It’s like we are really committed to this totally new way of thinking about Gumroad. And we need to be as invested in that as we were about being invested in raising money and doing that. If we just decide kind of to make the leap, we’re just going to fall right down it the metaphorical abyss.” – Sahil Lavingia
This decision didn’t come without a cost to the company. The publicity around the decision spooked a lot of users. A 75% staff reduction is often the first sign the company is closing. Since users relied on Gumroad for their income, many decided to find somewhere else to sell their content.
“I told people, ‘Look. We’re aiming for profitability. We’re going to get there. But it’s trust. If you want to leave Gumroad. If your business is on Gumroad. You’re doing $200,000 a year and you don’t feel comfortable anymore, then I wouldn’t hold it against you if you left.’ And people did leave. A lot of people did leave.” – Sahil Lavingia
The future of work according to Sahil
Profitability has completely changed the mindset of Sahil and how he approaches his employees at Gumroad. When revenue is scarce, it has to be the first and only concern of the company. Without money, the company can’t keep operating.
Now that Gumroad is self-sustaining, he is encouraging his employees to go work on side projects, try new things, and really find out if there is anything they can create to help Gumroad and all the creators who use it.
“I’m sure the team would get upset at me, you know? When they’re like ‘Oh we have such a cool idea,’ and I’m like ‘But that’s not in line with what we want to build. That’s not in this direction that we’re going in and that’s the direction we’re going in because we need to raise money.’ Whereas now it’s like ‘Oh yeah, that’s cool. Yeah. Work on that in your spare time and you’re being paid hourly so it doesn’t matter if you do it on a weekend or in six months. Just keep plodding along and let me know how it goes’. And there’s that trust there, you know, that they’re not going to abuse that freedom, and it’s worked really great for us.” – Sahil Lavingia
Get in touch with Sahil
You can find Sahil on Twitter and LinkedIn. Be sure to also follow @gumroad.
This week I talk with Sahil Lavingia, Founder of Gumroad! In this episode we talk about dropping out of college, being the second hire at Pinterest, the history of Gumroad, raising millions of dollars, laying off 75% of the team, profitability, the future of work and more! Enjoy!
Josh Pigford: All right. Sahil, how’s it going, man.
Sahil Lavingia: I’m good. Oh, sorry, I picked the absolute worst time. That was amazing.
Josh Pigford: That’s technology, man.
Sahil Lavingia: I think she knew.
Josh Pigford: She wants to be on the podcast.
Sahil Lavingia: She does. Hopefully that doesn’t happen again.
Josh Pigford: All right. Hey, if she has something to say, we will let her speak.
Sahil Lavingia: We’ll get to that point at some point in the future where we just be talking Alexas.
Josh Pigford: They’re just spouting off the facts about their owners. All right. Cool.
Josh Pigford: So to kind of kick things off here, I would love to get your backstory, like early, early days. You as a kid. So starting things off, where’d you grow up?
Sahil Lavingia: I grew up in Singapore for most of my life. I was born in New York to parents that immigrated from India, but when I was four we moved abroad. And then I grew up abroad. And then I went back to the U.S. for college, when I was 18.
Josh Pigford: Gotcha. So what was the move to Singapore at an early age, your parents had immigrated to New York, but then what took you guys back to Singapore?
Sahil Lavingia: My dad’s job really was the reason behind that, and it was an interesting experience. It’s so hard to say what it felt like because I’d never grown up non there. You kind of grow up in one way and that’s just the way that you know things. But I do think that it was a pretty important step in my child development, just seeing that there’s more than one way that certain problems are tackled, and the value systems that are very different in America and Singapore and other places that we traveled. It’s critical because I think it shows you that the world is just … Humans are a very reactive species and I don’t think there is some grand master plan and that every city, every problem is supposed to be solved in a certain way. We’re not all headed towards a single place.
Josh Pigford: Right. Right. You mentioned through your travels. Did you guys travel a lot even a kid?
Sahil Lavingia: Quite a bit. I definitely grew up in a very privileged family. My parents didn’t, but they broke down those barriers for me. And so, yeah, I’m not shy to admit that I did grow up in quite a bit of privilege. We traveled quite a bit, at least once a year, to somewhere in the … Vietnam or Cambodia or something like that.
Josh Pigford: You mentioned that you guys moved to Singapore for your dad’s job. What did your dad do?
Sahil Lavingia: Investment banking. So he worked for Deutsche Bank for 20 years or … as long as I can remember.
Josh Pigford: Right. As a kid were you into computers at all?
Sahil Lavingia: I started getting into computers when I was probably 12 or 13, maybe a little bit earlier, doing Photoshop. So I started out doing more graphic design stuff. And I had a friend who was into it in school that I would do it for, something related to World to Warcraft. And I was like, “That’s cool. I think I could do something like that.” And so I started messing around. And everyone, you know like their first project is like a website for their clan or something like that.
Sahil Lavingia: And so that’s similar to how I started. And then doing it for other people. Getting paid next to nothing for it. And that kind of just … You know someone’s friend’s parents would be like, “Hey, we have an art auction thing that we’re doing that we need a website for.” And it just kind of happened. I was not very strategic about, “Oh, in 10 years I want to be here.” It happened in a more organic way.
Josh Pigford: So as a pre-teen, early teen, you started getting into computers, and then when did you head back to the states for school?
Sahil Lavingia: In 2010, when I was 17, 18 years old I moved back to L.A. to go to USC.
Josh Pigford: What were you majoring in there?
Sahil Lavingia: Computer Science and Computer Engineering.
Josh Pigford: That time frame when you started poking around with Photoshop and then till, what was it, five, six years later going to USC for computer science. When was that shift from design focus stuff to more of the programming, engineering side.
Sahil Lavingia: So that probably happened around 2008, or ’09. I was doing sort of design work for two or three years, just freelancing. And then, I think kind of inevitably as you do freelance you have your own ideas for things that you want to make, little products or little web apps, or something like that. So I started hiring like a friend that I was working with to do little PH feedbacks ends for these things. And over time, I was like, “This is costing me money. I would prefer that they did not cost me.” So I’m just going to learn that. And so I tried. I did a little bit of PHP. I was terrible at it. But that’s how I first got into it, and really struggled. And I was like, “Oh, I’m just going to be a designer. I’m not going to be that sort of designer/engineer hybrid that I’ve always dreamed of.” You know like the Shaun [inaudible 00:06:42] of the world, these people that can do both.
Sahil Lavingia: So I stuck to that until 2009. Another couple of years. And then the iPhone app store was released, with the SDK and all that sort of stuff. And that clicked for me. So I started doing some design work for the iPhone of course, and I had my own app ideas, as everyone did at the time when it was so brand new and everything was doing super well. And I think that just the way that Apple approached the way that they thought about their tools. It made a lot more sense to me as a designer, coming from a design background and a UI background. And so I started making iPhone apps and I was pretty successful at that. And then I sort of backed myself back into doing web stuff with Python and Ruby because I needed sort of APIs and things for my apps. So it’s sort of a weird path to it.
Josh Pigford: Do you feel like, I don’t know if relate is really the right word, but connect more with the programmatic side of things or the visual side?
Sahil Lavingia: I connect with more the visual side I think. I think I will always consider myself more of a designer that an engineer. But really I’m interesting in solving the problem. So sometimes that does have an engineering point of view, an engineering bent to solving a certain problem. To me, I think of good design like architecture, where you can’t really be in architecture and be a purely visual person. But you also can’t be in architecture and be a purely engineering sort of technical, physics, whatever, person. I don’t know. You kind of have to straddle both. And I think product design is like that. Industrial design is like that a lot. To me design, it needs that component of … You need to know how things work in order to make them pretty and make them work better. They are two sides to the same coin. But I would say I’m definitely more a designer.
Josh Pigford: Gotcha. So you go to USC for essentially computer science. Did you finish there or did you move on to … You ended up at Pinterest pretty early, correct?
Sahil Lavingia: Yeah. Correct. Actually I was there for a semester and then I-
Josh Pigford: One single semester?
Sahil Lavingia: Yeah, one. It’s weird because semester is not even a word people say outside of school. It’s like, “One semester, what? What even is that?” Yeah, I was there for one, just from August to December. And honestly, I swear to God that I did not intend to leave when I got there. It wasn’t like … It’s funny because people look at my past sometimes and they’re like, “Oh man, you’re so smart. You started designing when you were young, and then you learned to code, and then you learned iPhone stuff, and then right before it blew up, and then you got a job at Pinterest because of that, and then you did this … “
Sahil Lavingia: And I’m like, “Yeah, it all looks awesome in hindsight, but …”
Josh Pigford: But I planned none of it.
Sahil Lavingia: Yeah. I think if I had planned it, I would have hit a wall and given up. Because from beginning to end it was like a 10 year journey. But I started, I was in school. And when I moved to California I was like, “I’m here. I’m in the hotbed,” or as close as I was going to get for a while to Silicon Valley. I was aware of [inaudible 00:10:29] Silicon Valley. But even at USC there wasn’t much going on. And so I started contributing to Hacker News and commenting there a lot to kind of get some of those requirements of being in California fulfilled for me. And I started posting my work on Hacker News and that got me interests from start-ups, that were like, “Hey, we don’t have an iPhone app. We need one. Could you help us make it?”
Sahil Lavingia: And this is 2010 where Ben, the CEO of Pinterest, or now at least, he wasn’t at the time. He emailed me, one of the founders, and he was like, “Hey, we work on this thing called Pinterest. It’s like this app that lets people share, organize, catalog, the things that they love, that they’re really into. And it’s awesome, but we don’t have an iPhone app and we need one pretty badly. Could you help us out with that. We saw some of your work online.”
Sahil Lavingia: I did that for a few different start-ups. I started just helping people with their iPhone apps from USC and pretty quickly … I wasn’t aware at the time but these guys are hungry for talent. Still today I think it hasn’t really changed. People need people. It’s like the bottleneck to growth for some many of these larger companies, and smaller start-ups too. It’s the hardest thing that we ever did at Gumroad was hiring.
Sahil Lavingia: But I didn’t know it at the time. But quickly they were like, “We would love if you … Have you thought about just coming full time and doing this full time?” And so those contract gigs turned into full time job offers and then I decided to work at Pinterest.
Josh Pigford: So were you … This is super early at Pinterest. How many people were even at Pinterest in 2010?
Sahil Lavingia: I was the second employee. So two founders and one other employee and then I joined. The same day as another employee, so I was four and a half, I don’t know.
Josh Pigford: Right. Right. Right. So to me that whole 2010-ish, give or take a couple of years, was a different type of … Like to me almost reminded me of early days of the web itself where everything felt new but hadn’t gotten to the point of being jaded yet. Especially with the iPhone, right, just mobile stuff in general felt like this new frontier and so many companies were popping up then who are still around today. What was the feeling like? What was it like in 2010 at a company like Pinterest who at the time was still, obviously, really new? But was there still a lot of buzz around it at that point?
Sahil Lavingia: Pinterest was a weird company. Is a weird company be it doesn’t have the same tech aura that a lot of the other companies did, and do. Like, for example, I can talk to most of my friends and they might know who Jack Dorsey is or Mark Zuckerberg is. But if I ask them who the CEO of Pinterest is a lot of people don’t know. And I think it’s their approach to PR, like Ben’s never been like a really big, hot, flashy person in the same way.
Sahil Lavingia: Yeah, but to answer your question I would say, yeah, 2010 was weird. It was so different. It was so optimistic. It really was because of the iPhone. I would say it probably deserves 100% of the credit. And the later Android, but really iPhone started it. Instagram. Agora. Square. Pinterest. It really was … Slack I think started around … Snapchat. They were all really like late 2010. I remember having an Alexa dashboard up, and I would check every couple of week and it was like all those sites and how they were growing.
Sahil Lavingia: Yeah, it was just a sign of … It was a new platform and tens of millions of people were getting it. And it was an entirely new way of solving a problem. It was like learning a new language, learning algebra, whatever metaphor. And one thing that I think that people don’t really … When I got to Silicon Valley, I don’t know what I imagined. But I almost imagined like a South by Southwest where everyone was hanging out all of the time. But it’s really like you work at your company. And we were in Palo Alto at the time, so we weren’t in that stuff. But you work at your company and maybe you go to certain events and things, but you’re not really like in some community. It’s not like going to church every Sunday or something. It doesn’t have that vibe of “I know everyone around me. I know my neighbors.”
Sahil Lavingia: It’s really like you are there to build something. And it was easier to do that because it was so growth oriented in a product development sort of way, because this was all so new. At the time Instagram didn’t have commenting. Or Twitter didn’t have re-tweeting. Pinterest didn’t even have an iPhone app. It was just so new that it was almost easy. It was like, “We know what we need to do when we get to work. We need to build our iPhone app.” It was obvious. Now I think it’s matured. It’s not as obvious any more.
Josh Pigford: There was so much low hanging fruit then. You could just like throw a dart in the dark and you would almost certainly hit the target because it was obvious what to do. It was who could get there and do all these things the quickest.
Sahil Lavingia: The iPhone it was like a third world country, you know. You get there and you’re like, “Okay. We need to build this and this and this.” You don’t really credit people doing that as necessarily smart, ingenious, but opportunistic, lucky. Hard-working for sure. It’s not easy but … yeah, sorry.
Josh Pigford: You mentioned sort of opportunistic. So much of this came down to timing, right? And being in the right place at the right time. For you, you just happened to be like … Like had the iPhone come out a few years earlier or a few years later, then that would be a different story for you because all that came out at the right time.
Sahil Lavingia: Yeah. 100%. Like people ask me, “Do you wish you’d dropped out or not?” And I’m like, “If I didn’t pick Pinterest. If I didn’t pick 2010.” I don’t know. I could have been better. It could have been worse. I can’t imagine it being better, but …
Josh Pigford: You could have picked some like really obscure start-up that didn’t make it, right? And you could have got burned out. Six months later you’re back at USC and totally different story.
Sahil Lavingia: Yeah. 100%. No argument with that. That is true. It’s hard to see that sometimes because you see my path and you’re like, “Of course you would have been successful.” And it’s like, “Well, you’re only listening to me talk right now because of this path.” So if I’d ended up taking a different one like seven forks down the road, you’d be listening to somebody else who did take the path that I took. It’s so tricky.
Josh Pigford: Have you read the book “Dark Matter”?
Sahil Lavingia: No.
Josh Pigford: The basic premise is that there’s all these parallel sort of realities that exist. It’s like every choice that you could have ever made there is some reality that exists where you did make that choice. Everybody’s like that where it’s like, “Oh, man. What if I had done this. And then what if I had done that?” And then all these different paths that you could end up going down. So it’ll hurt your brain if you think about it too much.
Josh Pigford: Okay. So Pinterest, you’re there for a couple of years.
Sahil Lavingia: A year.
Josh Pigford: One year?
Sahil Lavingia: Yeah. One year.
Josh Pigford: A year. Okay. So after Pinterest is that when you started Gumroad?
Sahil Lavingia: Yep. Exactly.
Josh Pigford: So what was the impetus for that? You’re building the mobile side of things for Pinterest, and then you’re got this idea for Gumroad?
Sahil Lavingia: Yeah. I think a lot of it was just restlessness. I think that’s a skill that I’ve gotten better at over the last five years. But just like I got to USC and I was like, “I’ve got to build stuff and do stuff for multiple clients.” And I got to Palo Alto. And I was super happy at Pinterest. We were building some awesome stuff, and the usage was amazing, and things like that. But I still needed to solve different problems on my own. So every weekend I’d build an app. Or every few weekends, or something like that. And one of them was Gumroad. I built a few other ones, and there was just something cool about Gumroad that struck a chord in myself and other people in a way that nothing else I had build had. It just was on my mind, really, for a while.
Sahil Lavingia: Yeah, I was at Pinterest. And Pinterest started to mature as I got there. Quite quickly. It’s interesting. You look at Pinterest when I got there and you look at Pinterest today, and it’s not the different. And that’s not to say that they haven’t done stuff. Of course they have. But we kind of nailed what we were building. We knew what we were building then. We’d figured that out. And it was really just scaling the beast at that point. Really I’d say the sentiment that I felt was, “I don’t think I need to be here for this company to be successful any more. I think someone else could come in and solve. The framework is there. We just need to move on these things.” I felt like I got a lot of the creative stuff done. I made the iPhone app. I built the basis of the iPad app. I did the Pinmarklet and the share … I felt like I made a lot of the impact that I was going to make, which I think was maybe me just not understanding how start-ups work at the time.
Sahil Lavingia: But, yeah, I felt like I wanted to learn. That’s why I was there. And I was successful at Pinterest. And I had all these investors that were like, “Hey, you should start a company. You could totally raise money, and blah, blah, blah, blah.” And so I did. I was like, “Yeah, I’ll try that out.” Kind of similar to my … I joined Pinterest because I was like, “If this works out I don’t have to go to school. I can save money and time and I can go do this thing that I’ve wanted to do. And if it doesn’t work out, I can go back and have more insight into how I want to tackle my college career in order to be more successful the next time around.” Or something like that.
Sahil Lavingia: Starting a company was sort of similar in which I was like, “Okay. I really want to do this.” When I was 16, or 17, before college, I had a 10-year plan to go start a company. Or 15-year plan, whatever. And I would like get a good degree, and work at Google, and work at a start-up, and then do this. And so I was like, “Oh, I can do this now. I can see if this is something that I want to do or if I’m good at now. And if it doesn’t work out I can always go back and work at a start-up, like Pinterest.” So similar mentality. It was like people are always talking about safety nets and like, “Oh, man. You’re so risky.” Silicon Valley is full of risks. And I’m like, “Silicon Valley is actually I think the opposite of risks.” There’s such a powerful safety net there that it lets people do things that look risky from the outside. But it’s like if Gumroad hit a wall and exploded I have 15,000 job opportunities yesterday. It’s just not … whereas if you’re trying to do a company in Thailand, it’s a different story.
Josh Pigford: I do think that most entrepreneurs are actually quite risk averse. They happen to have a skill set that gives them so many fall backs, right? You would have so many job offers. I could go and pick up a bunch of clients and do a bunch of design and development work within a week. So that removes basically any risk. And it makes it sort of like this expensive playground, right? But that you can kind of do whatever you want.
Sahil Lavingia: Exactly.
Josh Pigford: So you got Gumroad. You had the idea for Gumroad. You mentioned that you had all these ideas, like every weekend kicking out something else. What was it about Gumroad that really sort of stuck in your mind as the thing to focus on.
Sahil Lavingia: It was really this idea that it was a new behavior, that I think could have enabled a whole new type of commerce, and content creation. Just like why the iPhone I think was so powerful. There was social media and everyone was getting a Twitter account, a Facebook account, Instagram account, Snapchat account. There were all these different ways to communicate online and there was no commerce. That democratization happened to text and all types of free content — video, audio, things like that — but it wasn’t being applied to paid content.
Sahil Lavingia: And the idea was, Could we make it as easy to sell content as it is to share content today? What would that do to the world? Would it be helpful? Would it create … ? Would it take all these people that have been sitting in their basements or their bedrooms making stuff but not being able to connect to an audience, and now they’re all of a sudden being able to connect to an audience but they still weren’t able to monetize properly. That was the idea that got me really excited about it. I didn’t know what it would do but it was like, “No one’s tried this. This is new.” That’s what really drove me to be really excited.
Sahil Lavingia: And also the scale effect, the leverage of it, which is we were going to help people build businesses, right? And so the value of what we’re building is not only the value of Gumroad as a company but the value of all the businesses that now exist because Gumroad exists. And that ripple effect?
Josh Pigford: Was there an altruistic element to it? Like you felt, “Man, I really want to help other businesses”, or was it more entrepreneurial like, “I want to build this huge business”?
Sahil Lavingia: I think it was a combination. I definitely think it’s important to think about the social impact of what you’re building. And I don’t think I ever have build anything that was purely about just like, “I want to build a big business.” But I think they sort of go hand in hand, right? If you do something that really has a lot of social impact, there are business opportunities to that.
Sahil Lavingia: Gumroad is an interesting example. I think Gumroad is a lot smaller as a business than people think sometimes, which we can definitely get into. But, yeah, I’d I start with, “This is a problem that hasn’t been solved yet, at least in the way that I think it should be solved. What will solving that problem do? If we remove this roadblock, is there a cliff on the other side, or is there a highway?”
Josh Pigford: Yeah. So from a technical standpoint, at that point this is, say, what 2011? 2012? Is that?
Sahil Lavingia: Yeah. So I left Pinterest in late 2011 and I started Gumroad at the same time. And then I raised money sort of almost immediately after. By February 2012, we’d raised 70 million dollars.
Josh Pigford: At this point to me it’s like 2010, things have really started heating up. There’s tons of buzz, especially around on the VC side of things. Was raising money for us guys a pretty easy thing, relatively?
Sahil Lavingia: Yes. Raising money was easy, yeah. I think the fact that I was an early employee at Pinterest, which had really just been noticed by VCs and had just raised a bunch of money. At the time people weren’t raising the rounds that people have started raising since 2012 or ’13 … people raising 40, 50 million dollars [inaudible 00:27:21] was not really a thing back then. So that helped. And the fact that I could design in code I think was really important. As you mentioned it just lowers the risk factor a lot because I can build, I can get quite far with really just my own abilities. I don’t have to hire anybody.
Josh Pigford: So, did you say that … Did you say seven million is how much you raised?
Sahil Lavingia: Yeah. We raised one million [inaudible 00:27:51] and then a six million dollar[inaudible 00:27:55].
Josh Pigford: Gotcha.
Sahil Lavingia: I could be wrong. It might be one and seven to total eight. I think it was eight. Eight point one, something like that.
Josh Pigford: So eight total. So what was the plan? You did that early on with still essentially just an idea, right? So what was the plan to use all the money for?
Sahil Lavingia: I mean just hiring, really. I think that’s the answer for most companies at that stage, at least for what we were building, like just software. I would say it wasn’t … We had a plan in the sense that what I told VCs is like, “Look I don’t necessarily know what’s going to happen but I want to work on this problem for at least five years. I want to give it at least five years to see what’s possible with this. Because I think it might take a long time. We might try for a couple of years and not see anything.” That’s why I raised the amount of money I did. Besides the fact that I could. It was like, “Yeah, I want to spend five years on this thing. I want to hire as many people as I want to be able to. And I don’t want to really have to think about anything else.” And if we raise, hell, a million dollars or two million dollars in 18 months we’d have to think about raising money again or … and I just didn’t really want to be concerned about that.
Josh Pigford: Right. Right. Right. Well that’s … A lot of CEOs end up being chief fund raising officers. They’re just one round after another constantly working on that stuff.
Sahil Lavingia: Yeah. And I think that’s fine. Some of those companies end up doing really well. But we just weren’t there yet I think. I didn’t get into start-ups because I want to spend my days raising money.
Josh Pigford: So the first few years. I think I first heard about Gumroad maybe 2013. To me where it really started getting a lot of headway was like online content creative kind of people. I found out about you through Ryan Delk and him talking at all sorts of conferences that I happened to be at. Did you guys have a focus on a specific niche as far as content creators go, or was it just like, “Let’s cast a wide net and see what happens?”
Sahil Lavingia: For the first year we focused actually on more the entertainment verticals, like music and film and publishing. We did [inaudible 00:30:38] the whole time but we also, we did cast a wide net and after a couple of years … yeah, 2013 or so we noticed that sort of the content, make money online crowd, higher browed than that, but the Mason Berrys and the [inaudible 00:30:57] and the [inaudible 00:30:57] really gravitated towards using it. So we spent a lot of resources. Ryan was definitely involved on that side. And that drove a lot of revenue for us.
Sahil Lavingia: But now it’s like software apps, a lot of art, art education. I think of it like education, educational content. Less so like how to make money online. It’s really like you can learn a certain skill. And that, we have people selling like ultimate Frisbee videos, basketball, really the gamut. I don’t think that any one vertical is any bigger than maybe 10, 20% of the whole pie.
Josh Pigford: Gotcha. So those first few years, between, let’s say, 2012 when you first started and then, we’ll say, 2014, a couple of years later, what had changed for you? Was Gumroad as a company doing what you had hoped or expected, or had it gone down a different path? What was that like?
Sahil Lavingia: Yeah. It didn’t grow as fast as I was expecting. I had a lot of buzz for sure, but I think in terms of actually turning in to revenue we weren’t seeing the uptick that we thought we were going to see, in terms of GMV mostly. I think that was mostly due to … There’s a whole bunch of reasons I think and we can delve into all of them, but it was really I think that … The simplified version of it is that the people that we were building for, there was not that many of them, and they weren’t making as much as we thought they were going to make. Like creative people. And the way that selling digital content online, it just wasn’t a huge market.
Josh Pigford: Gotcha. So what did you guys to do adjust for that?
Sahil Lavingia: Honestly, we didn’t. We thought internally a lot about should we go more Patreon, should we build something like that, or should we focus on businesses. Like should we focus more on high volume content creators, the schools, or should we go more marketplace and build something more like a Skillshare, something like that. And I think the jury’s still out on how successful any of these companies are going to be. Some of them are bigger than Gumroad. Some of them are not. But I don’t think anyone’s really broken really what I think you need to break to be a successful business in thus sphere of commerce is a billion dollars a year in GMV, is roughly the number that people will say you need to be at to be like an interesting company.
Sahil Lavingia: And really for us it was just like an identity thing. Like why did we start building this company? And can we really change our DNA so much? Can we say we’re now not focused on individual content creators, we know focused on the million dollar [inaudible 00:34:33] businesses and helping them sell courses online. And, yeah, I think we could have done that. I still think to this day that we had the best team that I’d worked with. And we could have build anything. If we were like, “We’re just going to copy them and make a better version.” I think we could have done that. But that’s not what we wanted to do. That’s not what I wanted to do. And so I decided, we’re going to keep doing what we’re doing. We’re going to solve the same problem for the same people. And just get lean about it, and not raise more money, and just try this other path out.
Josh Pigford: So when you say like, “Get lean”, that was, what?, 2015 or so. You had pretty big decision to make, right?
Sahil Lavingia: Mm-hmm (affirmative). Yeah. We did a round of lay-offs, which I assume is what you’re referring to. Yeah. We did a round of lay-offs. That was hard. It was interesting. A lot of people … I think from the outside, it looked harder than it was, honestly. I don’t want to give myself too much credit.
Josh Pigford: What was the tone? What was it like? What was the overarching feeling or buzz within the company at that point?
Sahil Lavingia: Yeah. So the way it happened was in January … So maybe late 2014, I started meeting with investors, and I was like, “Hey, this is what the business looks like. What do you think?” People that I was really close with. And they were like, “This is an awesome business, but it is not venture backable. You’re not growing at the rates you need to to raise money from us, frankly.” They were really up-front about that. And so I told the team. In January we had an all-hands, and I was like, “Look. Raising money is going to be super hard. And if we want to do it, we need to be growing at these numbers in September.” Like we’re going to go out and raise money in September. If we have enough runway to do that, but if we don’t hit these numbers in nine months we going to have to not do that. We’re going to have to rethink our position.
Sahil Lavingia: And the whole team bought into that. Nine months, 20 plus people.
Josh Pigford: They were in for this big push for nine months?
Sahil Lavingia: Yeah. They were. I think the credit goes to the team for having the … and I would say it wasn’t a tone of cynicism or depression or anything. It was optimism. It was, “We might be able to do this.” It wasn’t like naivety, like “This is going happen.” But I think if you give a team a goal, they get excited about it. And everyone joined Gumroad not because Gumroad was going to be a Facebook, because it was solving a real problem that we could see it. And that’s the thing that was fascinating, really interesting, because we talked to certain people, like Nathan Berry, or Kyle Webster, a lot of these guys that use Gumroad. It was like the best thing for them. It was perfect. It was like they were making a ton of money. They were doing exactly what they wanted to do. It was such a good product. They loved the experience. We loved talking to them because they were just like us. They were entrepreneurial and wanted to solve problems themselves. It was really like can we get, are there a million Nathan Berrys out there? Can we find, and can we get to them all in time.
Sahil Lavingia: And so we did that and then September came around and I decided, “Look, we’re not where we said we were going to be, but where we needed to be at least, right? for this to work out.” And it wasn’t like a knock on anything except it didn’t happen for us. And so the nice thing about the lay-offs was that it wasn’t a surprise. One of the first things that Abbot from [Kleiner 00:38:24] who was on our board, one of the first things he told me is like, “If you make a decision and it’s a surprise to anybody, you messed up. That’s your fault.” When you fire someone, when you make a product decision, when you change something, if anybody is surprised you’ve got to really think about why that happened.
Sahil Lavingia: And same thing with our lay-offs. I made sure that that Friday meeting that all hands, no one was surprised when I was like, “Hey, look guys. These are the numbers. This is where we said we were going to be. I honestly don’t think we’re going to be able to raise money.” It wasn’t like … There was no anger. Really the only sadness that I think I felt in the room was for me. It wasn’t anybody on the team being like, “Dang it. I’m fired.” Or “What the hell”. Or “My life sucks.” Everyone knew they could get a job. It’s Silicon Valley. Everyone is really qualified. I think in a month everyone that wanted to be employed again was. It was just, “Oh, man. We tried this thing. You started this thing. We tried this thing together. It wasn’t exactly what we wanted it to be.”
Josh Pigford: So you had to lay off half the team, is that right? Or more than half?
Sahil Lavingia: More than half, yeah. We went from … One of the things that I said in January. I was like, “Look. We can do a lay-off now and do this for two years and see if it’s going to work. Or we can just say, ‘Look, we’re going to stick with the team. And we’re going to try really hard and see what happens in nine months.’ What do you guys want to do?” I always said that running Gumroad was more a conversation and not a speech. And I think that what people wanted was, “No. We want to try. We believe in ourselves. We’re going to try this. And we’d rather know sooner rather than later if this thing’s actually going to work for us or not.”
Sahil Lavingia: And so we went from 20 to five in that lay-off. We’d burned a lot more money during those nine months and so we still had tie back. I was like, “We could lay off half the team or whatever, but then we might have to do it again.” I wanted to be confident in the fact that we do this, and this leads to us controlling our destiny. It’s not like an awkward halfway point. It’s like we are really committed to this totally new way of thinking about Gumroad. And we need to be as invested in that as we were about being invested in raising money and doing that. If we just decide kind of to make the leap, we’re just going to fall right down it the metaphorical abyss.
Josh Pigford: So what was the response like, not really the company, but outside of the company to Gumroad having to make all those cuts?
Sahil Lavingia: Yeah. I would say fear for a lot of our users. Fear, which is think is fair. A lot of times you see this happen and six months later the company’s dead. Or six months later the company’s sold to Facebook. And then a year later the company’s dead. It’s a story that people have read quite a few times. And I couldn’t really help it. I told people, “Look. We’re aiming for profitability. We’re going to get there. But it’s trust. If you want to leave Gumroad. If your business is on Gumroad. You’re doing $200,000 a year and you don’t feel comfortable anymore, then I wouldn’t hold it against you if you left.” And people did leave. A lot of people did leave.
Sahil Lavingia: But I don’t blame them for it. Investors, honestly, were like … You know, investors don’t like the type of business that Gumroad is right now as much. They want the home run or the zero. I would say the consensus among my investors was like, “We really like you. We still believe in you. We want you to do something else. And try again. With a new idea. Because we want to invest in that and see if you can build the next billion dollar company.” And maybe I will someday. I’m not opposed to that necessarily. But I wanted to make sure that Gumroad is there for people, is there for our creators.
Sahil Lavingia: And I don’t say it like some schmooze-y business talk, like PR talk. I really believe that. I’ve been doing it since 2015, for over two years now. I wanted to make sure that Gumroad stayed around. If we were building like a photo-sharing app or something like that, I probably would have shut down but the fact that we had so many thousands of creators relying on us for their incomes. And Gumroad was still growing. It wasn’t like we weren’t growing at all. It’s just that we weren’t growing at the 20% a month that we needed. Last month we grew 12% or something like that. So we’re still growing. We’re just not big enough and we’re not growing fast enough for the venture scale, venture-backed businesses.
Josh Pigford: Sure. So how did the company itself change other than, obviously, the size of the company from a team perspective dropped dramatically, but what sort of from a culture perspective? How did that change the company?
Sahil Lavingia: The biggest thing is we said we’re going to stop investing in things on a whim as much. We still have, “Oh, let’s try this. Let’s do that.” And we’re just like we’re going to work on the core product and making it really, really good. And we just can’t afford any of the other stuff. And we’re going to have to rely purely on word of mouth. We’re not going to have a marketing budget. We’re not going to have a sales team. We’re just going to focus on building an amazing product. And the nice thing about building a software company like Gumroad is the vast majority of the team was working on new stuff. So it wasn’t like, “Oh, we have five people. Gumroad has to shut down half the features.” No. It’s the same product. It’s just that we’re not building new stuff as fast anymore.
Sahil Lavingia: And so that was a shift. And the second shift was a focus on revenue. So we focused on how do we … We were very altruistic in the sense that we were building all this functionality and we weren’t really thinking about how we make money off if it. We had that 5% fee and that was it. We didn’t think about how much it cost to trans code videos or giving everyone unlimited file storage or all of these things. And we still really haven’t done that yet. I’d say we could make a lot more money if we really were like, “We’re going to charge for this and that and that.” But, yeah, it was just like, “Okay. Can we have a premium plan? What does that look like? Can we get that to a point where it’s making us 30,000 dollars a month so that we are profitable?” Things like that.
Sahil Lavingia: And we did those things. And it only took maybe from October or so to March to get profitable, to make all those changes, and increase our bottom line by the 50 or so thousand dollars we were burning after the lay-offs. And that’s where … We’ve grown since then, but we’re in a similar place now.
Josh Pigford: I wonder how long … We have a sort of similar story where we realized where we probably won’t be able to raise more money and we’ve got to figure out how to get profitable quickly. It took about six months as well for us to like cross that threshold to profitability. In hindsight, do you wish you had started that journey to profitability sooner? Or are you happy with sort of the way things played out from a business perspective at this point?
Sahil Lavingia: Yeah. Honestly I don’t regret. I don’t think I would have done anything differently. Maybe it seems weird because it’s like a bunch of failures got us to where we are today. But I was talking to an ex-employee of ours, Alex, one of our designers, he was telling me … This was just six months ago or so. He was like, “Man, if you told me where you’d be right now, like you have this company. It was build by 20+ people. You’re running it like a bootstrap business now. And you get to focus on your art and your writing. I would have thought you were like some super cunning person, that you like led to this outcome. You somehow manipulated your employees and your investors.” You know, he was joking around and stuff.
Sahil Lavingia: And I was like, “Yeah. It kind of looks like that.” Gumroad I think couldn’t have been built as a bootstrap business because the functionality that we have, that we needed to be useful to creators required a lot more people than I think we would have been able to hire for a long time. Even in 2013, ’14 when we had maybe six, seven, eight people you need to be doing 30, 40, 50,000 dollars in revenue to do that. And if you’re charging 5% and then you have credit card fees afterwards, and other things, I don’t think the economics would have worked.
Sahil Lavingia: You look at … I don’t want to deride any clones of ours, or copycats, or inspirations or whatever. But there are a lot of people that have seen Gumroad and said, “Oh, we’re going to do this slightly differently, or focus on books or whatever.” Not to say that Gumroad was like the first one either, or anything. But typically we see this a lot. They work, they build on, but they don’t really reach any significant scale. And that’s because I think people look at Gumroad and they’re like, “Oh, this is so easy and simple, and I could build it and charge less, or whatever, and it will be a great business.” But people don’t really realize how complex Gumroad really is.
Sahil Lavingia: I realize it every day as we work on the product. But I even forget. I’m like, “Oh, yeah I totally forgot that …” Like we’re working on this feature right now to duplicate products. So if you have a product on Gumroad and you want to create a new product that looks identical except you want to change the price, or change some stuff around, or add some files, or whatever. We’re going to have this duplicate feature which is awesome. People have been wanting it for a long time. And that’s so easy, right? Like duplicate, copy, or whatever. Ruby.copy, I don’t know whatever. Dot.save. And I see the request, the code for it now and I’m like, “Oh, yeah. I told you.” Because it’s huge. It’s big. You realize how much, how complicated Gumroad really is. There’s variance. There’s product options. There’s prices. There’s subscriptions. There’s subscription payment plans. There’s offer codes. There’s shipping and destinations. There’s third party tracking. There’s all this stuff. There’s trans coded videos. There’s [inaudible 00:49:40] PDFs. It’s a long, long list.
Sahil Lavingia: And yeah, I think people look at Gumroad, “Oh, yeah. It’s just a file delivery service. You just put stuff of S3 and you send it out.” And it’s like, “Yeah, at some point, but not any more.” It’s a lot more complicated than that. I wish we could go back to that.
Josh Pigford: So you mentioned the sort of personal stuff that you’re able to do now — art and writing and all of that — so last year you moved to Provo. Why? What was the reason for that?
Sahil Lavingia: That’s a good question. Sometimes I have to ask myself that too. I joke a little bit. But I would say I didn’t answer your other question completely, and I’ll answer it as part of this. We went remote, right? So one of the things we did to cut costs, a huge percentage of our costs, was we got rid of our San Francisco office, which was tens of thousands of dollars a month. And we went remote just in San Francisco. And that really got me thinking about like, “Oh, I’m spending $2000 a month on my apartment. I’m not hiring. I’m not trying to be CEO. I don’t need to be in San Francisco any more.” And I had a network. I was there for six years. I really had a strong network of people that wouldn’t go away if I left and came back, or whatever.
Sahil Lavingia: And so I started thinking about maybe I’ll leave. So I started writing a novel on the side, and I wanted to build more empathy for our creators and really think through Gumroad from a different lens. So I started working on some creative projects like that novel. But I wasn’t super serious about it I would say. And then Trump happened and I was like, “Oh, Gumroad is in a great place. Maybe there’s another problem that I can be working on.” Not just like, Oh, Trump, right. But all these problems that I think became more clear to me because of that. Income inequality. Healthcare. Immigration. All these sort of … I was like, “Oh, there’s all these other problems out there that we don’t really think of because we’ve been in this bubble of Silicon Valley and software.”
Sahil Lavingia: And so I started looking around and like, “Oh, maybe I’ll move.” In parallel to that Brandon Sanderson, a fantasy author that I really love, he teaches a course at BYU, and it’s open to anybody not just BYU students. And I was working on this fantasy novel and I was like, “Oh, this checks all the boxes.” And so I applied to that. I submitted the first chapter of my book and got in. And this was like December, or January 3rd, of last year. And I was like, “Oh, I got in. I guess I kind of have to do this now.” It was like one of those things where you don’t … It was kind of similar to Pinterest and things like that. I don’t know how serious I was at the time, but I kind of kept going along with it until I was like, “Oh, I guess I have to now.”
Sahil Lavingia: And so I told my landlord, “I’m not paying your rent increase. I’m moving to Provo.” And I sold all my furniture and a week or two later, in January I was living in Provo.
Josh Pigford: Wait a second. It was like one or two weeks from the time you got accepted to the time that you were in Provo?
Sahil Lavingia: Yeah, I was in Provo January 15th. I remember that. And I’m pretty sure I got accepted January 3rd, or something like that.
Josh Pigford: You mentioned your network of people in San Francisco. What was their response to, “Hey, Sahil is leaving San Francisco, now”?
Sahil Lavingia: Yeah. It was interesting. I think it was weird. A lot of people were like, “That makes no sense.” But it was also fascinating because it also felt like really perfect to a lot of people that really knew me. The people you know that you’re like Twitter friends with or whatever, they’re like, “What the hell?” But the people that I grab beers with and things. They were like, “Oh, yeah. You’re working on this novel. You’re working on Gumroad, but it’s not like your 60 hour a week commitment anymore. You’re paying a lot of money to be in San Francisco. You’re already thinking about open sourcing some stuff. And how you can work on politics on the side. I can see like living in a conservative, religious bubble for a year workout. That could be a really interesting experience, and you can always come back, right?”
Sahil Lavingia: That’s the catch, right? There’s no risk in this decision really. And so yeah, it was still surprising, because most of the students, everyone except me actually was a BYU student, or at least lived in Provo. So it wasn’t like, we’re going to make you move, right? So I emailed back, “Hey I live in San Francisco. I just want to make sure I can actually take this class before I move there.” And he was like, “I don’t think we’ve ever had anyone move. But, yeah, I think it’s possible.” And so I was like, “Okay.”
Sahil Lavingia: And the great things about technology is you can do this. Because of Twitter, because of Uber, because of Airbnb. It was possible before but I didn’t know how to drive when I moved to Provo. And it made it so much easier to move and get connected to a new part of the world really quickly.
Josh Pigford: Sure. I mean it’s amazing. Utah isn’t that far from California.
Sahil Lavingia: Yeah, it’s really.
Josh Pigford: But it’s also, it is I’m sure, culturally like a different country.
Sahil Lavingia: Yeah, it’s fascinating, because yeah you’re right. The flight, is an hour and fifteen minutes. From LA it’s not that far at all.
Josh Pigford: So what’s it been like, if the company is remote I assume that running the business itself isn’t that much different at Prov compared to running it remotely from San Francisco. But are there any major differences or ways that it’s made you run the business differently?
Sahil Lavingia: Yeah. I would say the biggest difference has been in general really focused on finding people that want to work on Gumroad and less so people that want to work for Gumroad, if that makes sense. So before it was like oh, you’re going to work here for four years, get a bunch of stock and it’s going to be great. Now it’s more like you know, Gumroad is not going to be a billion dollar company. We’re not pitching anyone on that potential anymore. But if you really think Gumroad is cool and you want to work on for six months or a year or take it as it comes as a contractor, we’re very open to that. Actually right now I’m the only full-time employee of Gumroad. Everyone else has moved to a contract model.
Sahil Lavingia: And actually, one of the things I’ve been thinking about is I’m like, at some point, could be in five years could be never, but I think I want to work on something new. And one thing that’s been really fascinating to me is this idea of remote work. I think that’s a trend that I really am interested it. It’s a lot cheaper and it’s really like you know, are you really hiring the best people if you’re only hiring from one location? Probably not. And we’ve been able to work with people that I don’t think we would have been able to work with as contractors, that are amazing but they’re not … Because they’re amazing they don’t attach themselves to a single company. Or if they do they’re not like “Oh, I want to work on Gumroad for four years.” But they’re like “Yeah, I would love to help out on this one thing for six months or a year.”
Sahil Lavingia: Which is kind of what happens to a lot of start-ups anyways, you know? You work there, like me and Pinterest, and then you leave. But yeah, I think being just more open and being, like yeah, more sort of direct about that has been really exciting and a lot lower stress. When you run a company and you have all of these employees, there’s this constant fear that people are going to leave. There’s definitely that vibe, and anyone leaving a company is always a very dramatic thing. And yeah, with this new model it’s been so much easier to be like “Hey, I think we finished this project. I don’t think there’s any more work. Is that cool?” And they’re like “Yeah,” or they might be like “Actually there’s this other thing I want to work on.” And I’ll be like “Awesome, cool. Let’s figure that out”. And it’s been this very organic process, and a lot lower stress for me.
Sahil Lavingia: Really, Gumroad has been growing and we’ve been shipping features again at a faster rate, and I don’t think necessarily, it’s worse. I don’t think so.
Josh Pigford: That’s interesting. Bare Metrics, we’re totally remote. But I mean we’re also, our remote employees, even the ones in other countries are full time. But I mean the idea of employment itself is sort of fluid. Already it’s like especially people our age, certainly in their 20s and 30s, compared to our parents who had the same job for 20, 30 years, now it’s like everybody does a little more floating from one company to the next, for better or worse. But it’s like, when you have the full time bit attached to it, I wonder if it keeps people in jobs that they, they stick around whether it’s for the stock options or whatever. But when you do it like you are mentioning, people can do their thing and I don’t know, maybe find more happiness in the work.
Sahil Lavingia: Yeah, I think that’s true. Of course full time job is probably going to exist for quite a long time, but yeah I think the trend is more people are trying stuff and having things on the side. We haven’t done this yet I don’t think unless someone secretly has another job, which would be fine. But if someone is like “Hey, I’m a full time Facebook designer, but I want to do some work for Gumroad, is that cool?” I would be like “Yeah, that’s great,” you know? I think in the next, at some point we’ll see definitely an innovation. I think the fact that you have a company, you work at a company, and they’re the ones responsible for your healthcare and your salary and all this sort of stuff, I think that will change. I don’t think that’s super sustainable.
Josh Pigford: It’s a weird thing, you mentioned the healthcare thing, it’s kind of odd that your employer is the one that’s responsible for that, or at least that’s how the system works. To me it ties people into jobs that they don’t want.
Sahil Lavingia: It does.
Josh Pigford: Because they can’t afford to take care of their own healthcare outside of that, you know?
Sahil Lavingia: Yeah, and even now, even me moving to Utah was kind of a pain with my healthcare, because my healthcare is attached to California, right? So it’s like, how do you figure that out? And I didn’t know how long I was going to be in Utah and all of this sort of stuff. And it’s also a headache for the employer, because it’s like well now this is a thing that if you start a company you have to do all of this un-sexy work that prevents you from writing, from building the product that you actually want to build, which is kind of what you want to do most of the time, I think. You know, you want to build an awesome work environment and then you want to build an awesome product. Those are the big two outputs. And yeah, healthcare and taxes and accounting, those are things that are sort of necessary evils in a way. Lawyer-related things.
Sahil Lavingia: And so yeah, I’d say … I’ve very interested in that. In is it possible for someone to do more of that? Like “Hey I want to go work here for bit”. Could they even get stock? If someone is like “Hey, I want to work at Gumroad for six months, do this awesome project that’s going to be really valuable for you, and I want some amount of stock for that” …
Josh Pigford: Why not?
Sahil Lavingia: Why not, yeah. There’s nothing necessarily wrong about giving a non-full time employee … I mean you do that with investors. You do that with advisors. I don’t think there’s anything necessarily …
Josh Pigford: I mean I think, I’m pretty sure Starbucks does that with their part-time baristas.
Sahil Lavingia: Oh yeah?
Josh Pigford: Yeah, that’s one of the perks of that in addition to them paying for education and this stuff, is …
Sahil Lavingia: Yeah, Starbucks is a great company.
Josh Pigford: Yeah. Okay, so what’s the next year look like for you and for Gumroad?
Sahil Lavingia: Yeah, well really for me personally I’ve been working a lot on just my creative pursuits. One of the nice things about the remote stuff is it’s not like I have a traditional nine to five or whatever hours I’d be normally working. And so I’ve been spending a lot of my time working on art and writing fiction.
Josh Pigford: Presumably you’ve almost finished the BYU class?
Sahil Lavingia: I have, yes. Somehow it’s just, now I’ve just been working on short stories now for the last, since like September. I hopefully will be published soon. There’s a few things in the works, so that’s exciting. The worst way to make money ever, but … I will tell you, I have a whole newfound respect for creators and how hard it is to make a full-time living creating stuff. It’s so hard. Creating code I’m like “Oh, this is so easy. I can totally make money doing this”. Software, yeah, great. People will pay for that. But yeah, so that’s, my personal is just really working on those skills, so I don’t have the stress of like I need Gumroad to be growing at this certain rate, because I feel so much fulfillment from those things, from my personal growth.
Sahil Lavingia: And then, it’s also just really cheap so the financial stuff doesn’t really factor into it anymore. And then on the Gumroad side we’re really excited about really a fundamental change in our business model where we’re going to go pure SAAS. And so to date for the last six, seven years we’ve been a payments company in the way that we’ve charged, right? Like a Square or a Stripe. We charge a percentage fee on transactions. And since from the layoffs we did the premium SAAS thing that’s been going really well for us, and now we want to transition to that completely.
Sahil Lavingia: What we want to do is say “Hey, if you’re part of the premium offering, you have the ability to connect your own Stripe account, to connect your own PayPal account, and we won’t even take a charge fee anymore. We’ll just pass through 100 percent”. And so that goes away entirely. And that’s not purely altruistic. That’s not like oh, we don’t have to make money anymore so we’re just going to be an awesome business for you. No, we actually think it’s going to make the business better because it’s going to make it so that with a smaller team we don’t have to focus on all of the payments-related stuff anymore. And we can say “Hey, Stripe’s going to deal with pay outs. They’re going to deal with currency. We’re going to focus on what we think we’re really good at, which is the UI, the front end, the commerce, the e-commerce parts of things.” The email marketing, that sort of stuff. And so yeah, we’ve been working on that for a long time. That should come out hopefully in the next three to six months.
Sahil Lavingia: And it’s really, so much hinges on that, because I think if that goes well and we turn into more of a SAAS business that opens the door to doing a lot more stuff that we’ll be, things like cryptocurrency, things like allowing other different types of payment methods, things like allowing people to say “Hey, actually I want to redirect all my earnings to this charity for this month,” these things we haven’t really been able to do because Gumroad has always been the middleman, and for tax reasons and other reasons it just became really complicated to ever really invest in those ideas. But if we can say “Hey look, it’s your Stripe account, it’s your PayPal account,” we can do whatever. The whole world opens up, you know? All of a sudden there are all of these different things that we’ve not been able to build that we can now think about building.
Sahil Lavingia: And then the other thing, so that’s one angle of it, and then the other thing that I wanted to do for a long time that we’ve been making a lot of progress on, is open-sourcing Gumroad. And so just really as simple as that. We want to take the Gumroad code base and make it public. And that’s also not purely altruistic, I think as I said, like I said, I think every good idea has both selfish and selfless benefits. With that we hope that, sort of as I mentioned, this kind of contributor model that we’ve been doing, we want to open that up and see if we can actually build Gumroad out in the open and get people to actually help us build Gumroad, and have a component … Like imagine if you’re open-source contributor to a bunch of stuff and you’re like “Hey, I want to build this feature for Gumroad,” and we were like “Awesome, we’ll pay you 2000 dollars to do that,” and it’s literally, it’s a PR. There’s a 1099-MISC and all that stuff too, but it all happens in the open.
Sahil Lavingia: There was actually a company a long time ago that tried this and failed, so we’ll see what happens. But I don’t know, I’ve been kind of obsessed with this idea of there are all of these people that I would love, there’s a lot of people that used to be at Gumroad that I would love to bring on again, but they’re now busy working at different companies and I’m like “Hey, it would be cool if one weekend we all got together and everyone got paid and we just built a bunch of stuff together again”. There’s all of this stuff that I want to do.
Sahil Lavingia: But Gumroad is now more of a playground to me, you know? I think you did, you saw my Tweet yesterday where I tweeted that Gumroad revenue numbers which we’ve never done before, and it’s just to see what happens. There’s no grand plan behind any of this really. It’s more like I want to try it, I want to see how it feels and see if it helps anybody or see if it helps us, and maybe it opens a door that wasn’t open before or at least we didn’t know about.
Josh Pigford: I think, and we’ve felt this way really since we got, since we became profitable, this sort of like well, we do whatever we want kind of thing? And who cares if an experiment works or doesn’t work. But I feel like there’s so much sort of business or just innovation in general, maybe even outside of the technology side of innovation, but just employment innovation, whatever you want to call it, that can happen when it doesn’t matter what the outcome is. You’re not forced to choose the return on investment kind of outcome. The influences are different. You try different things that you otherwise wouldn’t have.
Sahil Lavingia: I think that yeah, that’s a better way to put it I think than I was able to. Yeah, you’ve done what you wanted the business to do, you know, you’ve achieved profitability, you’re able to sustain yourself. It’s Dick from Twitter, he talks about it like oxygen. He’s like “Revenue is like oxygen. When you don’t have it you really need it, but once you have it you don’t need it anymore. You’re not looking for it.” That whole drive to like “Oh, we need to,” it’s nice, it goes away. And you’re like “Okay, now that we’re able to breathe and we’re able to tread water, what else is out there?”
Sahil Lavingia: The way I think about it is like we built this platform, you know? We have tons of people, everyone, not everyone, a lot of people know what Gumroad is, tens of millions of people a month visit it, we have thousands of creators, a lot of them pay us money every month or all them do I guess. But we have this platform. What can we do with this platform now? It doesn’t have to be, can we take this platform and make it bigger? Can we increase the revenue? It’s like no, we have this awesome thing that we’ve built, how can we help ourselves and help the world with what we’ve built?
Josh Pigford: It gets you back to the way that the company even started, right? It’s just this whim, hey let me try this thing and see what happens. Well now you get to go back to just trying things and seeing what happens, and if it becomes successful great and if it doesn’t, no real skin off your back because you’ve been profitable.
Sahil Lavingia: Yeah. It’s like when you’re not profitable you have a ticker in your head, right? And every time you decide to work on something you’re like “Okay, well we have one month left to work on anything else we could have worked on”. But that number is now infinity, really. We can take as long as we want. So that competition between features, of oh should we work on this or work on this or prioritize … You know, of course you want to work on things in a certain priority, but it doesn’t have that same sort of “Oh yeah, if we do this we can never work on this other thing. It’s this or this. That’s it”.
Sahil Lavingia: And also yeah, even with teams, I’m sure the team would get upset at me, you know? When they’re like “Oh we have such a cool idea,” and I’m like “But that’s not in line with what we want to build. That’s not in this direction that we’re going in and that’s the direction we’re going in because we need to raise money.” Whereas now it’s like “Oh yeah, that’s cool. Yeah. Work on that in your spare time and you’re being paid hourly so it doesn’t matter if you do it on a weekend or in six months. Just keep plodding along and let me know how it goes”. And there’s that trust there, you know, that they’re not going to abuse that freedom, and it’s worked really great for us.
Sahil Lavingia: Yeah, things like opening up the numbers. I don’t think I would have done that if we were hiring, if we based in SF, hiring in SF, raising money in SF, that’s a whole …
Josh Pigford: You have to keep your cards close.
Sahil Lavingia: Yeah, it’s very different. Whereas now I’m like “Look, we’re building this thing”. I don’t really know why, honestly. Someone asked me that the other day, I’m like “I don’t know why I did it”. I really don’t. Maybe I’ll just gain more Twitter followers, maybe someone will use Gumroad that wouldn’t have used Gumroad otherwise, sure there’s that. But really it’s just like, I want to see how it feels and it’s like I don’t know what I don’t know. I’ve never tried it before, right?
Josh Pigford: Alright, I think, we could talk about the future of work forever here. But let’s call it. So how can people get in touch with you?
Sahil Lavingia: Yeah, well the easiest way is Twitter. My handle is @shl. You can message me on Twitter. My DMs are open. You can send me an email, email is probably not ideal. Twitter DM is probably the best, but if you want to email me it’s my first name at Gumroad.com. You can send me a DM on Instagram if you’re interested in buying one of my paintings. But yeah, Twitter, email, the standard stuff.
Josh Pigford: Right on. Alright, well that’s all I’ve got. Thanks for hopping on the call Sahil.
Sahil Lavingia: Awesome, thanks so much for having me.