Founders Talk – Episode #66

Failing to build a billion-dollar company

featuring Sahil Lavingia

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Sahil Lavingia is the founder and CEO of Gumroad, a platform for creators to sell the things they make. Since 2011 Gumroad has sent over $200 million dollars to creators. That’s a big number. Sahil’s ambitions lead him to believe that Gumroad would become a billion-dollar company, have hundreds of employees, and eventually IPO. That didn’t happen.

We talk through Sahil’s journey with Gumroad, why it failed to meet his goals, the path he’s on today and the things he now values…but to understand why Gumroad didn’t live up to his expectations, we really have to understand the backstory of Gumroad.

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Gumroad is a startup that I started in 2011. I wanted to make it really easy to sell content online if you’re a creator. It’s pretty easy to make stuff these days; it’s only getting easier… And it’s only getting easier to share stuff for free too, with Instagram and YouTube and everything… And I just felt like there was this weird use case of actually selling the content that didn’t really exist.

It started out just as a weekend project; I just wanted to sell an icon I designed in Photoshop, and I just got really excited about that potential. It seems like a really simple thing, but the impacts of it fell pretty broad and deep. I love creators; I always considered myself a person that built products. Yeah, so that’s Gumroad.

I think to your question of happiness, in the beginning I was all about “I wanna build Gumroad into this huge company.” I think I can do it, I think I’m gonna learn a lot by doing so and leading a team of hundreds of employees, or whatever it is… And I felt like it would give me opportunities, either through wealth or through influence or access to people, or being internet-famous, or whatever… Those were always my ambitions - to be an important, interesting person, leading an organization that is having a really large impact, that everyone knows about. Sort of like a household name.

It was going swimmingly. We raised a bunch of money… It was funny, I was talking to a founder yesterday who was sort of jealous of where Gumroad was. He had built sort of a tangential startup and started a couple years before Gumroad did, and then all of a sudden Gumroad appears out of nowhere, and in six months we raise (it was just me at the time) around a million dollars seed round from All Star Investors, and then six months later or less we raised seven million dollars from a top-tier venture fund… And he was like “Oh, crap. We’re dead. These people are gonna kill it.” Sort of filled with jealousy. Things went well - that was 2012 - until 2015, when we started to raise money again and we realized that we just weren’t growing the business fast enough to merit another round of financing, a series B, 30+million dollars etc.

[00:04:05.05] So we did a big round of layoffs, got to profitable… That hit the news again, and he felt validated; he was like “Ha-ha! Look, the things that they tried didn’t work out”, and they ended up selling the company. He made a few million bucks etc. I think it just goes to show that so much of our egos and of our self-worth are not based on ourself, they’re based on these other factors and our relation to those things… Which I think can be pretty unhealthy, because you aren’t really in control of those things anyways.

So you’re actually the exact same person, but all of a sudden this person enters the room, that’s whatever better at than you at some specific thing; you feel like you’re lesser now, even though nothing has really changed about you. I think that’s just a pretty toxic attitude that everyone has. I think it’s sort of like built into humanity, our monkey brain or whatever, to think like that.

Our monkey brain, huh?

Our monkey brain, or our lizard brain, potentially…

Yeah, that’s it. Lizard brain. We have a lizard brain, mammalian brain and our prefrontal cortex - the three structures of the brain that we operate under. Do you study brain science then?

I don’t study brain science as much as you probably do… But I guess I study humans, and inherently studying human beings is gonna need that, right?

Of course, yeah. That’s me, too. I study humans.

Yeah, they’re interesting things.

And I’m only educated around brain science because I’ve got a friend who’s a doctor that we’re doing a show – I think I mentioned it before the show… But to those listening - we have a new show coming out called Brain Science, which is around really brain science applied; how do you better your life through a better understanding of the brain.

We’re gonna tackle some interesting topics. We’ve already got some shows recorded… But it is in preview right now, so if you’re interested, e-mail us at editors@changelog.com. The subject line should be in all caps “BRAIN SCIENCE” if you’re really excited about it. That’s my short plug there. But back to studying humans and ego and stuff like that - take us back there.

Yeah, so we went through some downs at that point, in 2015. We shrunk the team to five, and then shrunk the team to one, just me… No one had joined the company to build a lifestyle business basically, so I was like “I’m gonna go run this thing… At some point it’ll grow to a point where I can start hiring new folks again. And if Gumroad doesn’t grow, I can shut it down. If it does, we’ll figure it out.” It ended up doing great actually. Even though basically we didn’t ship any new features for almost two years, it continued to grow, which is the power of technology and the power of software.

I think we’d built a solid product, with venture capital; we didn’t do it for free. So in late 2017 Kleiner sent me an email, wrote off the investment that they had made six years ago. Our partner at the time, Mike Abbott, had left Kleiner Perkins; they were trying to probably readjust their books a little bit… And just took the write-off for their taxes.

That gave me this newfound – our liquidation preferences fell from 16,5 million to 2,5. So all of a sudden I was like “Maybe I can do something with this business, and maybe this commitment that I made to this investor to build it into this–”, you know, our valuation at the time, that Kleiner gave us, was 28 million dollars. So that commitment, that promise, implicit or explicit, is now gone. So I felt more comfortable saying “Okay, I’m gonna do what I think I should do with this business.” We had the profits at that point to build a team out and refocus on that.

I think the thing that really changed is writing this piece – I wrote this piece called “Reflecting on my failure to build a billion-dollar company.” That did really well on Medium in February 2019… And writing that and editing it - I sort of had to answer all these questions for myself, like “Who am I? What am I doing? Why am I doing it? What is Gumroad? What does Gumroad wanna be? What do I wanna do long-term?” I had to start thinking about all these questions as I was writing that piece. And then the fact that it did super-well made me accountable to those decisions. If I had written those and no one read it, I could have disappeared off into the internet and done whatever…

That’s right.

[00:08:16.28] But unfortunately, or fortunately, it ended up doing really well. I think at this point probably over maybe 550,000 people have read it… And I gained a bunch of Twitter followers, or whatever metric success there is for article writing. But yeah, I’m sort of excited about that. I’m excited about – people are telling me “Hey, this is so cool. It’s so cool that you shared this thing…” As we talked about, I’m sort of in this reactive mode where I’m like “I’m open. Tell me, what should I do?” I have time, I have money, I have this product… I use the word “vessel”, I think of Gumroad as a vessel. So what do I wanna do? What do other people want to be done, either by me or somebody else? How can we vet and do those things? There’s a bunch of stuff that I’m thinking about…

And happiness - to answer your original question - before it was about creating this billion-dollar company per se, and all the things that tie into that. And I think now it’s just like “I wanna build something really cool”, and I kind of want to be absurdly – I wanna build a company that just doesn’t even look like a business, like it’s just too good, because we’re not competing on those metrics, you know? I think if you stop competing on growth, if you stop competing on revenue, on team size, on these things that are typically used especially in Silicon Valley to gauge where you are relative to everybody else - what does that look like?

We’ve just launched this thing called the Gumroad Creators Fund where we’re donating $50,000 to a bunch of creators this year… And it’s not huge, right? Startups can totally blow $50,000 (and often do) on things. But they don’t in this case, because the ROI just isn’t there. If you’re trying to build a billion-dollar company, what does $50,000 donated to a bunch of creators do?

The things you’re doing are counter-cultural, in a way…

Yeah, I guess it’s true. Counter-cultural is the definition, I guess, of what we’re trying to figure out…

I mean, you can’t compete on a platform you’re not competing on, meaning that if… You know, I’m this billion-dollar startup or whatever, or someone that’s competing with you, and we’re competing on completely different metrics, then we’re not really competing.

Totally, yeah.

If I’m trying to squash you and you don’t even care… You’re happy with where you’re at, or thriving in these areas where you’re trying to thrive at, then we’re not really competing.

Exactly. I’ve lost the billion-dollar company race. I don’t even really aim for that at all anymore. But what races can I win, you know?

Do you see it as a loss, though?

I mean, part of me yeah…

That’s why I opened up with happiness, because it doesn’t seem – like, you say that, but I don’t feel like you live like you’ve lost.

I don’t think I live like I’ve lost. Part of that is because it’s like the game isn’t over, in the sense that – you know, typically when you lose it means someone else has won, and no one has won.

I think in this context there’s no winners and losers. There’s just people that are happy and people that are not happy… And at the end of the day, life is this pretty small thing… Which is great for everything, as well; it’s small, and also everything… I guess depending on your faith system, or whatever. But yeah, to me it’s just a milestone, and that’s been a big shift for me - I used to think of Gumroad as… It’s weird, it’s sort of counter-intuitive, but I think Gumroad used to be my life’s work, my Magnum Opus, this thing that I wanted to do forever, and I was gonna be like Steve Jobs or Bill Gates, and instead of Microsoft it was Gumroad… And now not thinking that; thinking of it like a stepping stone, has actually elongated my willingness to work on the thing, because it gives me all this – I don’t feel the stakes anymore. I’m just like “Hey, I have this thing. I can do whatever I want with it.” So inherently it’s what I wanna do, you know?

[00:12:06.10] I can hire the people I wanna hire, I can work with the people I wanna work with, I get to build the product that I wanna build, I get to spend the money on the things that I wanna spend the money on etc. So it’s like “How do you lose compared to that? What is a better option?” And I’m sure they exist; I’m sure there’s people that are happier than I am, but I think just based on where I was, I’m in a much better place. At the end of the day, that’s all you can really compare yourself to, because those are the things you can control - where you were and where you are, sort of on an internal mind-state level.

There’s some out there that might look at where you’re at and be like “What?! How does he feel this way? Geez, building a billion-dollar company is amazing. Why wouldn’t you wanna do that?” and you just said obviously you didn’t fail, because someone would have had to have won if you lost… There’s people who pursue what might have – this might not be the best way to say it these days, but I know it as the American Dream, right? To pursue enterprise, to pursue capitalism in its healthy states to better their lives, better their family’s lives, and things like that, and to pursue the biggest opportunity might be the best… But I think there’s people who go, like you have, through that journey and learn through that journey [unintelligible 00:13:18.25] like “Well, I thought that was my goal, but in hindsight, now that I see what I really went through, now I really truly can appreciate…”, and you’ve said “lifestyle business”. Nobody wants to get hired to build a lifestyle business.

I kind of feel that way about what we’re doing here at Changelog, because I resist and I wanna resist, and Jerod and I both resist this notion that we have to be huge, that we have to have some sort of New York City downtown office studios, or something like that, at some point, because that’s the next milestone. I reject that. I’d like to have that, it’d be nice, but it’s never gonna happen; not because we can’t afford it, but because I like living in rural Texas; Jerod likes living in rural Omaha, Nebraska. So there’s something special about the way we’ve rejected it, and I think we’ve gone through similar – we weren’t trying to build a billion-dollar business like you have, but there’s some out there who might say “Sahil, you’re crazy, man… Adam, you’re crazy for doing that.” What’s the lure of a lifestyle business for you, now that you’ve kind of gone through the journey and realized this is where you’re at?

I think part of it is – David Brooks calls this the two mountains, where people have this American Dream, this sort of enterprising attitude to life, and then they go through it, they either succeed or fail, but typically they often end up at the same place, which is like “What do I actually wanna do?” Bill Gates - it might be the Gates Foundation, for example… And things like that. It’s funny, because you can talk about all this stuff, but at the end of the day people still have to go through sometimes that first mountain, whatever that thing is.

For me it’s gaining competency, gaining a reputation as someone who can build a really world-class product, and things that allowed me in some capacity to do this and feel confident that I can do this. I think that’s important to acknowledge - sometimes you can’t just go straight to building a lifestyle business, because the fact of the matter is that I have influence, I have fame, I have money and I have friends, I have been able to meet people that I never would have been able to do, that now that I’m doing this lifestyle business thing (or whatever you wish to call it), it doesn’t have all the trappings of it. I get to kind of keep some of the cool stuff that I liked about this American Dream, I guess, and get rid of the other stuff, if that makes sense. I try to think about it like it’s the best of both worlds.

Well, you’re in charge, right? You’re in charge and you’re running your own show, meaning that – not that venture capital is wrong, because it’s great in many scenarios and there’s many great things about venture capital, but maybe in your particular case where Gumroad wasn’t growing at the multiples it needed to to raise (as you mentioned) the series B, you had become no longer precious and shiny to venture capitalist because, well, you know, the nature of venture capital couldn’t play well with the way Gumroad was growing…

So for those reasons you were in sort of this trap because you were forced to build a business that Gumroad wasn’t evolving to be. And maybe even something that made you happy even.

Yeah. I think part of it is that there is the – I think they call it the anchoring principle, where you have like a fancy menu, and you have some dish that’s $600, and then everything else is $50. And what it does is it creates this context where everything else looks cheap compared to the most expensive item. I think of that like – basically, people make decisions based on choices they would never actually pick… Whereas really what you should do is you should make decisions based on the choices that you actually would pick; because what’s the point – there could have been a Ferrari on the menu for $600,000 that you never would have thought about, right?

That’s how I like to think about it now - what are the actual things that I have available to me, and how do I pick between those things? Because if you start saying “Hey, if one of these options is raising 30 million dollars, if one of these options is selling the company” - those are gonna start distorting the ways that you’re actually thinking about the actual choice that you have to make, instead of these macro things that you actually have no interest in.

So getting rid of those choices I think to me is really important, to say “I’m not gonna sell the business, at least not in the next few years. I’m focused on these things…” I wanna ship certain product features that I’ve been really excited about, I wanna build a team to a certain size, I wanna recruit people that I wanted to try to recruit for a long period of time to see if I can do that, I wanna open-source the product entirely… And THEN I can consider all those other choices. But to me, those choices are not even worth really even evaluating, because I just know I’m not gonna pick them anyways. You’re gonna trick your brain if you start doing that. If you start thinking about a choice, automatically you’re gonna start weighing it more. You just can’t help but not do that.

Interesting.

And that’s beneficial. I think there are times in which you wanna do that, and you want to sort of artificially inflate a choice, because truly you wanna make it and it doesn’t make sense, so you kind of need to make it make sense first… Like moving to Provo, Utah for me was like that, I think. Or leaving school to go to Pinterest, or leaving Pinterest to do Gumroad, or whatever. But I think I’m sort of in the opposite state, where it’s just like “I’m happy with where I’m at. How do I maximize what I have right now? How do I really execute on these markers that we’re competing on basically with nobody else?” In terms of transparency, in terms of building by far the best company for creators - how do we do that in a way that’s gonna help the world? …because they have this anchoring principle, they have this company that is doing all this weird stuff that they would never do… It’s kind of like the Overton Window - it’s gonna force change. That’s the theory. And the impact that we can have through forcing that change, by being this sort of ludicrous outlier because we’re not trying to raise money, we’re not trying to sell the business - what is the impact of that? I don’t know. Maybe there’s nothing. Maybe people are like “Oh, whatever. They’re just that weird, hippie company, doing weird stuff. Let’s ignore them.”

But I’m hopeful. I feel like I’ve noticed more transparency, at least in our competitors, and things like that. The example I use often is football helmets; basically everyone informed on the issue disagrees with football helmets, and the danger that they have to the brain, and things like that… But no player is gonna be the first person to take it off. It’s just counter – what you have to do is you have to get everyone in agreement to do it at the same time, or whatever the change happens to be. It’s sort of like a prisoner’s dilemma sort of thing. That’s how I think about Gumroad. We’re the player that is willing to take off the helmet, and create the controversy, in a sense.

[00:20:05.28] What’s with the helmets? I’m not familiar with the details… I mean, I know about brain injuries in football and whatnot, but what’s with the helmet? What’s the controversy?

Yeah. Well, typically the brain injuries are a result of the helmets and the padding that football players wear, because it sort of allows you to hit people harder than you ever would without any of that stuff tricking your brain into thinking there’s not that much pain or damage that’s gonna happen.

Oh, wow.

For example, if you look at rugby - I played rugby in high school… You basically have no padding.

And if you look at rugby, it looks more dangerous, because you’re not wearing anything, and your head is hitting the ground… And it’s true, there are plenty of injuries in rugby for sure; I’m not saying it’s a safe sport, or anything like that. But if you actually look at the injury rates and brain damage, things like that, it’s much, much lower, because you don’t have… Like a human, you’re primal in that sense. When you fall or when you hit someone, you’re doing it in a way that’s gonna protect your body in the best way that your body is going to be able to do that instinctually, whereas the minute you have paddings and helmets, these things that the brain isn’t fundamentally aware of - that’s not an instinctual thing, it’s a surface intellectual thing - you make different decisions. You’ll head-butt someone, which you never would do in rugby. You would die, you would go to the hospital.

Yeah. I like how you’ve used this as a lens to view choices in a business though.

I think that makes some pretty interesting sense in the way you’re saying to trick your brain… I think in boxing as well - you’ve got these gigantic gloves on; you’re gonna hit much harder than you might in MMA, or in another sport… And the way you consider the trade-offs… Because if I’m wearing super-comfortable shoes, I can run. But if I’ve got no shoes on and I’m just flat-footed, I might not run quite as far, because my feet will eventually hurt and my brain knows they will heart, so it operates and reacts in a way that is in line with my equipment, so to speak…

Yeah. Well, there’s all this sort of new – I don’t know if it’s called controversy, but buzz around stoicism, and Jack Dorsey doing all sorts of stuff, and meditation, and fasting, and keto…

We just logged about that today, so I’m down with this…

Oh, yeah?

Yeah. I mean, not the stoicism, but I’m down with the fasting and the interesting things and the bio-hacks…

No, I think it’s super-fascinating, but I think a lot of that just comes from this idea that we’re so padded… Especially in tech. Especially if you’re in San Francisco, raising billions of dollars in venture cap.

I think there’s this need for people that are running these companies to get back to reality, to go barefoot running, because they need to balance out their literally absurd lifestyle, that doesn’t really have any bearing in reality, with very, very real human experience, like being hungry. I think the world can benefit…

You think that’s why he’s doing it?

I think that plays a part, yeah…

Yeah? Okay…

I think so. I think there’s some of that, for sure.

I would just think of it like he’s in this kick of the bio-hackers, and it’s very common for bio-hackers or people who are into this – they start to get into one thing; it’s almost like a layered onion. You get one layer, and the first layer might be your wellness generally, and then maybe how fasting impacts that. And then how intermittent fasting or long-term fasting has regenerative properties, and then meditation, what that does to your overall anxiety levels in your brain, to be able to control or better understand your thoughts, and the whole walking or running to work I think is kind of interesting… That one’s probably the one I would see more in your line of like “taking off the padding”, so to speak. That’s the weird one to me, honestly, walking to work…

Yeah… [laughs]

[00:24:09.26] The fasting is the normal one somewhat to me, and the seven-minute workouts, I think of it like “How does a farmer work out?” A farmer doesn’t work out, a farmer just works. Jack Dorsey is not a farmer, so he’s got to literally go to a gym, or be down with seven-minute workouts, or getting to workout in any unique place… Or maybe gyms are just like anti-Dorsey, like “Hey, I’m not going to a gym…”

Yeah… I think it’s a combination. You need a motivation, and then you need a reason… And I think the motivation, the impetus is “I feel uncomfortable with where I’m at” or “I feel disconnected”, and then the reason is “Oh, there are also these health benefits to doing that.” Even though I do agree, I don’t think there’s a downside to walking to work… But I do think with bio-hacking – and I’m not super-familiar, but I would be cautious with a lot of it because… I think of it like fat and carbs; I feel like every ten years carbs are evil and then they’re awesome, and then fats are evil and then they’re awesome, and then proteins are evil and then they’re awesome… Same thing with egg yolks, and coffee, and wine, right?

That’s right.

So I think at the end of the day it’s probably [unintelligible 00:25:15.17] The way I think about it is if you feel pretty healthy and you’re doing pretty healthy things, you’re gonna know. So I think at the end of the day most of it is like – yeah, he could go running in a gym or running outside, but he’s choosing to walk to work; why is that? I think part of that is the motivation behind like “How do I engage with my monkey brain a little bit more?”

Right. “How do I feel again?” is what you’re saying…

Because you’re sort of numbed… As you mentioned, with the absurd abilities of someone like Jack Dorsey in running Twitter, and doing all these different things, and having what seems like to some people endless finances, or endless power or opportunity in anything he does or could do… So a lot of what some might consider freedom in that.

And I think what you’re saying, if I understand you correctly, is he does these unique things, not so much to be weird, but to feel again.

Yeah. I think people that write him off as sort of an exhibitionist, or something - to be that’s probably a shallow interpretation. I’ve met him in person, in a private setting, and he had no incentive to “be weird”, and he definitely was not… The most normal person I’ve ever met. So I think these things are sort of true to him. I don’t think he’s doing it because he wants an extra million Twitter followers, or something like that.

He can just buy them, right? He runs the platform.

Yeah. [laughs] There’s more efficient ways to get that done.

Let’s talk about transitory, as you mentioned in the pre-call; you touched on it a little bit, and this ability to be reactive versus proactive. What does that mean to you today?

People typically would want to be proactive. That’s the positive word.

It’s the expectation. It’s the way of life.

Yeah, there’s a positive connotation to it. And “reactive” typically means that you’re failing at something. You’re failing to be proactive, therefore you are reactive. I think it’s sort of like the way that we set these two words up; if put next to each other, that is the context that automatically appears around them. And I’ve always been super-proactive, and doing what I wanted to do… Sort of the product visionary archetype, where we’re building the product, we’re gonna go raise the money, we’re gonna do this thing, we’re gonna will it to be… And I think part of it was realizing there’s certain things you can’t will to be.

We were talking about how Gumroad had continued to grow, without me really active working on it for a while… And it gave me this sense of independence from Gumroad, because it seemed like when I was a product visionary, when I was working 12 hours a day, 16 hours a day, and when I wasn’t doing any of those things, when I was just fixing bugs - it seemed like the company was growing at a roughly similar rate, so it gave me the freedom to say “Okay, what does this mean?” Does it mean that I can just sort of listen to creators? Maybe I should try that.

[00:28:15.12] Maybe I should just go the totally opposite direction of product visionary and just say “Hey, actually I’m not interested in building the car; I actually am interested in the faster horse. What do you think the faster horse is for you?” and just doing that.

I think there is this attitude, I think you have to be proactive, because why would someone give you a bunch of money to be reactive to a market? Venture only works in theory because you’re proactive; because if you’re reactive, the proactive competitor is gonna beat you, or whatever.

That’s right.

But I think there’s a lot of value in being reactive. I think there are opportunities that I think I would have said no to, that I say yes to, because I just wanna see where those doors lead…

What are some examples of things you said yes to that you would normally have said no?

Yeah, I’m thinking about writing a book, a traditionally-published book. Penguin Random House, after that article did as well as it did, reached out and offered me a book deal to write on similar topics… So I’m weighing that. I think I never would have considered that. I was all-in on Gumroad, and if it wasn’t 100% Gumroad, I wasn’t doing it. I didn’t make any angel investments; I do that now a little bit.

I just wanna do more. I just wanna experience more stuff, and I wanna be in a bunch of different buckets. And I just wanna see stuff. Thinking about Gumroad like it’s not my end goal, like it is a means to other things, I think gives me a little bit of freedom to do that… Where I can say “Hey, I’m interested in animation. Can I try to raise a syndicate to fund a project that will teach me about this market, or this set of consumer behaviors, or Netflix as a company?” Because I think it’s so important to be equipped with knowledge… And being so proactive, I think you can do that about a couple things. But I think just being in a place where you’re just seeing stuff, you’re hearing stuff, you’re meeting people that you normally wouldn’t meet with - to me, that can create really cool opportunities, too.

I don’t know what those things are necessarily, but I think moving to Provo, Utah, which felt reactive to me, ended up being totally worth it, and I learned a ton about people that had very different faith systems than I had, that thought about money in a very different way, that gave me this perspective…

I think the thing with being proactive - typically, you’re just doubling down. You have a set of beliefs and you’re using that to inform the decisions you’re making, which are typically just gonna reinforce those belief systems that you already have… Whereas when you’re reactive, you’re kind of saying “Hey, tell me what to believe. Tell me that animation is an interesting thing I should be working on. Tell me that I should move to Provo, Utah. Tell me that I should become Christian, or that I should not become Christian”, or whatever it is. I don’t really have a point… When I wrote that essay, I didn’t really have a point, and I think that’s kind of what people liked about it.

Yeah. I mean, the title says it all - “Reflecting on…” It’s not like “How to not build a billion-dollar company…”- that would have been a how-to, for example… [laughter]

Exactly. Actually, it was one of the titles that I was thinking about, and I ended up with this very – yeah, “How not to build a billion-dollar company…” It was a little too tongue-in-cheek, where I was like “I don’t know if people will get the joke of it” almost… But yeah, I like the idea that I’m just relaying a set of experiences. I wrote this other article about moving from San Francisco to Provo, Utah, which is the most conservative city in America (over 100,000 people), called “From bubble to bubble.” And I’m explicitly not trying to say “This is what you should believe.” But with the book, it’s actually the opposite; typically, if you’re writing a book, 50,000-65,000 words, 300 pages, you’re trying to be a New York Times bestseller or whatever - you wanna make a point; you want it to be controversial. You wanna say something that actually maybe 30% of people believe, or 10% of people believe, because that’s how you get on TV, or whatever you need to do to hit the list… So I’m reactive to that, too; I’m like “Okay, if you want me to make a point, let me try. What would my point be…?”

[00:32:22.18] But I think the things that work about me, and I think why people latched on to that article and other things that I’ve done recently is because they feel like there’s no point. It’s like the anti-point, it’s like the anti-hero. It’s like you’re not following this person because they think they’re gonna change the world, you’re following this person because they’re sort of actively not.

Yeah. Counter-cultural, as we’ve said before. The lure to you, or at least the figurative you that’s perceived through what you share with the world is that you’re different, in a way, because you’ve been down the road to reflect on not building a billion-dollar business, and sharing the road which you took to get there… And in some ways, informing those attempting to or desiring to go down the same road or a similar road about potential bumps and bruises along the way that they can anticipate, and how that may or may not change their life. I think it’s interesting that you’re so counter-cultural… Maybe we could even go into the whole move from San Francisco to Provo and how that was reactive. I don’t even understand how is that reactive. It seems proactive; how is it reactive?

I think it was reactive in the sense that I was spending a lot of money in San Francisco, my landlord was about to increase the rent on me, Trump had just won the election, and San Francisco became this not super-fun place to be… And it felt like everyone just was very comfortable; even though upset with the election, I think people were like “We’re on the right side of things, so we’ll just have to wait it out” sort of thing. To me, that just felt like “Why?”, like “What am I learning from being here right now?”, besides watching my bank balance go down, or whatever… And so that was reactive in the sense where I’m like “I need to leave.” I think everything can be looked at probably in both lenses, reactive/proactive.

Then a fantasy author that I really like – so in the meantime Gumroad was going through that slump, and I had started trying to figure out what I could do to have goals that I could measure, things that I wanted to do for a long time and never could, and one of those things was writing fiction. So I started writing a fantasy novel.

I wrote the first draft, and I was working on the second draft I believe at the time, and a fantasy author that I love, this guy Brandon Sanderson, who lives in Provo, Utah, and teaches a class at BYU, the local university, run by the LDS Church… And I applied to it; anyone could apply and get in, and you just had to move to Provo. Then I got an e-mail saying “Hey, you got in.” I submitted the first chapter of my book. They told me “Class is in two weeks.” I was like, “Okay. I guess I’m moving to Provo, Utah.”

Okay, that is reactive then.

[laughs] And as we were talking about before, I kind of deferred the due diligence. I was like “I’ll apply to this and then I’ll do the due diligence, to make sure it’s a good decision.” Then when it came in, I was like “Oh, I guess I’m going.” I decided in both senses that the decision was gonna happen at a different point… So I put all my stuff in five suitcases, booked a flight and just got on the flight with a bunch of check-in baggage, and then I was in Provo… Which is funny, because it felt like leaving Middle Earth, or something… But I was really just taking a 50-minute flight two states over, or something like that. But it is kind of like a different world over here.

How long had you lived in San Francisco? Because that would make the mountain bigger for you, given all that you’d done there, or all that it meant to you.

Yeah, six years, I think. Significant…

[00:36:00.24] That’s comfortability. Six years at a place you’re comfortable…

Yeah. Friends… Totally. I had a strong network there, and people to hang out with, and things like that, and people I was always meeting… But it was also – like, what was I in San Francisco? I was the Gumroad founder. And it was such a vague thing, because I didn’t know – like, did you know about the lay-offs? Did you not know about the lay-offs? Did anyone really know what I was doing? And I just felt like I couldn’t be open about any of that stuff.

Hm, interesting…

And living in Provo really reframed that for me, where people would be like “What do you do?” and I literally could say whatever. No one knows who I am.

Is the general norm in the circles you ran in in San Francisco - was the normal MO “I’m building a startup and I’m raising venture capital, and so Sahil, since you’re not doing that, you are (or would be) kind of weird”?

I think a lot of it was self-inflicted, probably… Honestly, I think the way to think about it is that those social circles exist, came into existence because of the transactional value of investors meeting the founders, the founders meeting employees etc. It’s just the way that it’s set up; if you’re not doing that, it doesn’t work for you. You don’t get invited to the same stuff…

Yeah, and you have to participate.

Yeah. It’s like going to an orgy or something, and not doing anything. It’s just weird.

I was gonna say a dance, but sure, orgy works, too.

Yeah, that’s the San Francisco in me.

Okay, there you go. Let’s use my dance version, just because we have some young folks listening to this show…

You don’t go to a dance and sit on the sidelines. You go there to dance, right?

Or at least – maybe that’s counter-culture these days, because nobody goes to dance these days. When was the last time you danced?

That’s true…

Probably a while, right?

Yeah. In that sense, yeah.

But either way, if you’re not participating in the event, the dance, several people dancing, whatever, then you’re kind of like the weirdo on the outskirts. Think of it like a high school dance, or something.

Totally, yeah. Or you’re like the stranger at the wedding, or something. You’re just there, chilling out, doing whatever, but why are you there? You’re there to meet people, or talk to people, so if you’re not doing that… And you can’t really participate in those conversations, because it’s like what do you even say? It’s like “Oh, how’s it going with your startup?” and I’m like “Oh, I’m just writing a fantasy novel.” They’re like, “Okay.” What do you do to that?

You’re not really interesting to them, because you can’t really give them anything, theoretically…

Yeah, and they’re primed for a specific type of conversation too, right? When you go into this stuff, you just came from work, you’re gonna work tomorrow, you’re probably gonna answer some emails when you get home tonight… So you’re in that context, and when people penetrate it, it’s just wrong. It’s like if you go to church and come up in shorts. Technically, there’s nothing wrong with it, and actually there is very much a culture of being accepting to everybody - hopefully - but it’s still weird; it’s still sort of an unwritten thing that if you’re not somewhat formally dressed up… If you come in wearing a tank top, it’s noticeable.

That’s right.

In any homogenous culture it just inherently happens. It doesn’t have to be forced or intentful. If you’re 1% of people, like if you’re the only brown person in the room - which I often am, basically all the time… I might be the only brown person in a two-mile radius right now… It’s sort of why people complain about people that say they’re colorblind; it’s like, well, you just can’t be. You have to be at such a state of zen to look past that, because it’s just noticeable. And I think it’s the same with these startup things, and I think I can totally go to the First Round CEO summit, I can show up at the dinner; I think everyone still likes me, knows me, respects me, but it’s kind of like “Why are you here?”

Yeah, “You’re not playing the game the way we’re playing the game…” You’re playing by different rules.

Yeah, and I really think it’s not out of malice at all.

[00:40:01.24] And a lot of these people I will hang out with and talk to at a coffee shop or something, because these things are interesting to them. But in the context of a social dinner, for example, it’s like we’re learning about how to grow a team from 20 to 200. Why are you here?

So it is interesting…

Well, good for you though to have the wisdom to see that. We got on that story from the reactive moments of San Francisco to Provo, and good for you to be hyper-aware; I would say even self-awareness is a big thing people are not that keen in on… And that kind of stems from the whole Brain Science show, and being more aware of different things we are aware of.

Yeah. Well, sorry to interrupt… But to me, self-awareness is almost a misnomer really, because I feel like you’re always relatively aware of yourself, but it’s really like monkey brain awareness. Or awareness of the situation, awareness of other people; that is kind of what we refer to a little bit as self-awareness. Honestly, I’m interested… I haven’t been back to San Francisco since – I’ve visited the week before that article came out, and so I’m actually interested to go back and just see how my conversations with people, how my meetings with people… You know, every time I go to San Francisco I tweet “Hey, I’m gonna be in San Francisco” - like, who reaches out, you know? I don’t know, it’s gonna be reactive. I’ll basically probably say yes to every single meeting and just see what people – because I know basically everyone that has read the article has a relationship with me that is one-sided almost at this point… A lot of people at least. So it’ll be interesting, for sure.

Yeah. Well the awareness thing though – and it’s okay to interrupt; I love that. That’s what I love about this show - it’s not about me talking, it’s not about you talking, it’s just about what can come out… I think to use your words, this show is a very reactive show. I come here with some version of an outline, and some desire to talk about certain things, but you know what, I prefer to have a conversation that nurtures the listeners in a way that shares different perspectives than simply like “Hey, you subscribed to Founders Talk because you wanna hear how to grow your team from 0 to 200.” No. I think we bounce around, and for purpose. I wanna talk to everyone, not just people who agree with me, or I agree with, or look like me, or smell like me, or whatever… Smell is probably an interesting variation of that; sorry about that one… But I don’t smell. Maybe somebody smells; maybe you smell, I don’t know. I’m off that joke. But you get what I’m trying to say - it’s very reactive. I love that about it, you know?

Yeah, totally.

But I think maybe that’s me showing that I’m hyper-aware of me. I want to do a show that people really find interesting… But coming from the transitory, you’d mentioned – so you didn’t dig into that piece though… What does “transitory” mean to you?

Yeah, transitory basically means I don’t know where I’ll be in a year. Similar to when I knew I was moving to Provo, but I didn’t know anything really beyond that, like what I’d be doing in Provo, where I’d live… I did no research, because I didn’t have any time to do it.

Is it like you don’t have a plan, is that what you mean by that?

Yeah. I don’t have a plan, I don’t have a roadmap… I do have goals, but they’re very loose goals, and there’s a lot of freedom in the goals. There’s goals that I can get done with 10% of my time, so what’s the other 90%. And more specifically, to answer the question, I wanna spend probably 3-4 months in L.A. this year, and then I’m moving to Portland at the end of the year. My girlfriend just got a job at an animation studio out there… And I’ll do trips to New York and SF this summer, and I have this book deal that I’m thinking about…

I’m still running Gumroad, and beyond that, I’m open; I still have time in my life, I still have probably 20-30 hours a week of time, and I have this new serendipity factor where because of the article, and because of my Twitter – the algorithm has just sort of loved me recently, for some reason… It sort of allowed me to meet these people that I normally wouldn’t have had a chance to meet with… So I’ll meet with everybody, I’ll remain as accessible as possible within sanity, and then see if there are cool opportunities… And have the space to be open to those things, I guess.

[00:44:17.19] What do you think is gonna happen? What do you anticipate? Or do you not anticipate anymore?

I really don’t, yeah. I mean, I have these broad goals, as I mentioned. I really want to work on an entertainment project, a visual entertainment project; either a short film, a movie, a Netflix show, a Hollywood blockbuster, an independent film… I think there’s something really interesting with video, VR, AR, Netflix, HBO, Apple…

It’s never been a better time to make content, and to consume content therefore… And I would love to be a part of that. I don’t know what that looks like. I’m learning how to paint, and write, which are sort of tangential to that. They’re necessary components of making a movie, for example; you need to write a script, you need to paint the layouts and figure out the character designs, and costume designs etc. And through Gumroad - actually, Gumroad is a really interesting thing too, because it exposes me to all these creative industries. We have all these creators on the platform, and so instead of just research on Wikipedia what the animation process looks like, I can email the guy who did all the 3D models for Spiderverse, and be like “Hey, you don’t know who I am, but I help you make a bunch of money on the internet…”

[laughs]

“I’m gonna be in L.A. I am interested in animation, and I have a little bit of money, and I have rich friends that have a lot more money than I do, and I’d love to hang out and just talk through if you have any cool projects, or how you would tell me to think about this problem of making something in entertainment.” And the great thing is I have enough competence, because of that first mountain, that most people would say “Sure, let’s have lunch when you’re in town.”

I don’t know what will happen with that lunch. He might say “Hey, I have this project. I need $50,000. Go get it and we can make something.” Or he might say “It’s not possible. You need to learn these skills and come back in ten years.” But to me, the North Star is I wanna make something. Ultimately, I wanna direct a billion-dollar movie before I die, basically, is how I think about it. A Jurassic Park, Matrix sort of style movie. And I wanna think about what I need to learn now in order to be ready for that in 30 years. And I know I need to learn that at some point in the next five years, in terms of I need to make something.

You could look at the Wikipedia profiles of a lot of these people and sort of see “Oh, this is what they were doing in their thirties, or thirty years ago, or whatever, in order to be in this position now.” So you can kind of reverse-engineer it a little bit. In that sense I am proactive; I’m setting myself up for – I would say I’m proactive, but not targeted maybe. I’m not specific about the idea. I really want someone to be like “Hey, I’m an amazing artist. I have this project, please help me make it a thing”, and I’ll be like “Cool. I can do that. I know how to do that.” So that’s what I mean by transitory, I guess.

Break

[00:47:27.13]

It seems like you’re playing the long game, and the fact that you’re willing to and even desire to gain the necessary skillset to play that kind of game, so to speak… I mean, you mentioned Spiderverse, which was just amazing visually; I’ve never seen that kind of comic/film/animation in a single take, ever. That’s just phenomenal.

Yeah, it’s insane.

It’s visually very phenomenal, and very different than any other Spiderman-type thing that’s been in film, you know?

True, yeah. Totally. And I think you said it well, there is a long-term focus instead of a short-term focus, which is very similar to Gumroad. Most venture-funded startups are competing on a short-term basis, because their metrics need to be short-term, their milestones are short-term; an 18-month sort of cycle, let’s say… Or quarterly cycle, internally to the company… And I don’t have to operate on that. So if I’m okay with a longer time-scale, what opportunities were off the table that are now on the table? Because if I wanted to make a movie, short-term is not the way to do it. You can learn how to code and make six figures in a year; you cannot learn how to paint and make six figures in a decade. So that short-term thinking is limiting in certain ways, right? So what can I do with that?

This reminds me to some degree of Jeff Bezos, because I think the reason why Amazon was always this weird company to people up until maybe five or six years ago, when they started to be like “Wow, they’re really kicking some major butt”, was this whole idea of Jeff Bezos having this long-term vision, even back to investors. It’s not about profits today, it’s about owning the market.

Yeah, totally.

I don’t know how much you subscribe to that idea… What do you think?

It’s fascinating, because as I’ve been researching for this book, it’s funny because some of the best examples of this mindset I think are billion-dollar companies, frankly… So I don’t think it’s mutually exclusive. I think in the context of that essay it sort of was, but I think that yeah, you can totally take this mindset and apply it pretty broadly.

The famous one, I think, pre-Bezos, was Henry Ford, and the Ford Motor Company.

That’s right, you mentioned of your Ford, the faster horse.

The faster horse, yeah. You can probably reverse-engineer the type of book I’m trying to write from the references on the music… But there’s this famous case - I think it’s the Michigan Supreme Court versus Henry Ford, where he made this announcement where he wanted to cut car prices. They were super-profitable, they were gonna pay employees more and charge less, and the shareholders, the investors in the company sued him, and said “You can’t do this. The role of your company, the role of your job as a CEO is to maximize shareholder value.” You hear that phrase all the time, “Maximize shareholder value.” And it’s true. That is legally in America what you have to do. You cannot not do that. You can get sued like Henry was sued, and lose, like he lost.

Today if you have a corporation (a C corp, an S corp), your fiduciary responsibility is to your investors first. The reason that maybe we got through it - we were able to say “We’re gonna build for customers first, and then investors” is because we didn’t get sued. Who knows what would have happened if investors were really concerned about that, right?

[00:52:05.11] Well, not everybody pushes the button. Everybody has access to a button, but not everybody pushes it.

Totally, 100%. Yeah. So with Bezos and Amazon I think it’s interesting, because he has a similar mindset, I would say; the faster horse thing. He always says “Look, we know exactly what we’re gonna be doing in ten years. We’re gonna be dropping prices, we’re gonna be shipping faster, we’re gonna have more inventory… It’s not that complicated. Stop focusing on the things we don’t know about, and do the things we already do, better.” That is his ethos. And even when you think about the Alexa, and things like that, Kindle etc. I think it’s still core to that vision. But he’s built the most valuable company on planet Earth maybe; I don’t know, it depends on the month, I guess.

So I think it’s a mindset, and I agree with it. I don’t think they are mutually exclusive at this point. I think you can totally build an Amazon by just this ultra-relentless focus on the customer. But I do think you end up with issue. You just have to acknowledge – look, there are a lot of Amazon employees that are pissed off, that are frustrated, that are peeing in cups in a warehouse because they can’t take bathroom breaks, or whatever… And I think you have to understand that Amazon lives in a broader world that is increasingly concerned about “late-stage capitalism”, billionaires, income inequality - these very prevalent issues in our time… And how does Amazon fit into that? Because I think at the end of the day you wanna be loved.

And I think even though Jeff Bezos executes on everything, I think the thing that Bezos and Dorsey share - and maybe this is just what happens when you become rich - but people don’t really like those people that much. And how do you do those things, how do you fulfill the customers’ needs and still be loved? Because I think that is a central component. And Bill Gates for me is still an all-time hero. He does that; people love Bill Gates, because he is running this amazing foundation, the largest in the world. I think he employs more people today than he did ever at Microsoft through it. So he made the leap. He is relentlessly focused on the customer. He doesn’t give a shit about profits or revenues (sorry for swearing).

Yeah, I think they are different attitudes. My guess is that Bezos will probably at some point have a similar realization to Bill Gates. Bill Gates is on his second mountain, and Bezos is still on his first, and Jobs died before he had the opportunity… So I don’t know; I don’t really have an answer for you, but I think it’s interesting to think about.

I think what’s interesting is how you’ve said for Bill Gates, and I agree with Bill Gates, him being a hero to you as well… He used – maybe he didn’t; I don’t know if this is true, but it would seem to be the truth… That he used Microsoft similar to the way you’re using Gumroad, as a transitory, or your leap path so to speak to the next thing. Not so much bailing on Gumroad, but more like now that it’s in a state where you have full control, and no one telling you “Hey, Sahil, you’ve gotta 10x this thing, man… Shareholder value”, or whatever fiduciary responsibility that gets pushed on someone in your position… You now can say “How can Gumroad be used to serve? Rather than serve me, how can I serve the creators?” Can you talk about – it sounds like maybe it’s Provo, maybe it’s Mormons, maybe it’s Christians near you that’s kind of giving you the servant kind of ideal… Is that true?

[00:55:41.09] Yeah, honestly I think that’s a great phrase. I love the term “servant”. It’s one of my favorite words that I’ve sort of restumbled upon… And I think the difference between serving and slave, at least in the way that I think about those two words, is that being a servant is a choice; it’s an agency-led choice. So I love that word. This idea that you are doing something for someone else because you choose to and you’re making their life better, because you want to… I think that is totally how I think about Gumroad right now. It is a vessel, it is a servant. How can I serve creators, how can I help the world, and how can I do it in a way that is truly selfless? Obviously, as any Christian would tell you, it’s impossible. There was only one person on planet Earth that has ever done that, in Christian doctrine, which is Jesus Christ…

So I think it’s a great mentality. One thing I love about – whether it’s the LDS faith, or any Christian denomination, and really a lot of other faiths too, I think, is that you have this North Star, in a sense. You have an ideal, and sort of acknowledging that you will fail to achieve the ideal, but you can at least try. And to me, that’s super-appealing.

I don’t think I will ever be a Jesus Christ-level figure, but if you really think about it, our zeitgeist is sort of dominated - even this conversation - by people like Bill Gates and Steve Jobs and Jeff Bezos. But if you really think about impact, true impact, whether you believe Jesus was God, or sort of his only begotten Son, or anything like that, you can’t really deny that the impact that he had on the world is much greater than anything Bill Gates has done even, right?

More songs, more books, more studies have been done about him than about anybody else ever, in the history of humanity.

Ever. Totally. And obviously, he had a little bit of a headstart… But yeah, I think it’s true; there’s this profound difference, this order of magnitude difference, hundred-thousand-x difference between those two people’s impacts…

When people look at Gumroad and they say “Oh, it’s a lifestyle business. It’s minimal”, I don’t disagree, but I also think – I mean, how much was Jesus worth? In the essay I mention this idea - and it came from Bill Gates - that there’s a difference between capturing value and creating value. Companies can typically only capture a certain percentage of the value they create, which is their revenues… And some companies are really good; if you’re building an enterprise sales product, you might be able to capture 30%-40% of the revenue that you’re generating for people. Gumroad captures much less than that, as a payments company, or an e-commerce company or marketplace, or whatever the designation for it is.

And you look at figures like Jesus, for example - zero is probably closer to the number of value they “captured”, but the impact is still massive. So I think it’s just a difference in focus. I’m more interested in creating an insane amount of value, like 1000x the revenue that we’re doing in value… And what does a company that does that look like? It’s not a very great capital investment for an investor; I would not go to a venture capitalist and say “Hey, give me ten million dollars. I can turn it into five million dollars, but generate a ton of value for other people.” It doesn’t really work.

Yeah. The serving aspect is pretty interesting, because that’s certainly an aspect that we have here as well at Changelog. We exist to serve the software world, I suppose - software creators, software makers, the world of software, developers… These types of shows we produce exist to inspire and inform, and we’re here to in any way we can serve the future of software, because – I wouldn’t say any way we can, but… The people, not so much the software itself; the people of software… Because that’s our desire, is to have a servant’s heart. That’s also why I think we’ve never really pursued venture capital or anything like that. We could easily. Similar to you, we have rich friends as well; we could always call somebody and say “Hey, we’ve got this idea, we’ve got these things…”, whatever. We choose to maintain a servant posture, and then also a lifestyle business approach.

[01:00:09.25] And I guess if I’m being honest, the one fear I have - and maybe this can dovetail into something you can share - is the market forcing us to change… Because you’d mentioned before competitors, and how because you operated in a certain counter-cultural way you sort of forced change, you said before… And I wonder if change will ever be forced on us to step out of this lifestyle business, or quit this thing… What do you think about that idea?

Yeah… I think that’s accurate. The average life of even a large company is 30 years. Jeff Bezos said it himself, “There’s a good change Amazon won’t even be around in 50 years or 30 years.” It’s sort of built into the model. And I think part of it is you have to separate yourself from the business; you have to say “I’m greater, or at least different than this thing that I’ve built”, and that’s kind of how I think about Gumroad now. I would love for it to be around forever, but I’m certainly not gonna be around forever anyways, so…

I don’t know, I think it’s interesting. Yeah, that’s definitely a thing that I have to think about more - this idea that like “Is this possible?” It’s probably not. I think there are probably certain opportunities that cannot be captured by a counter-cultural “startup” like Gumroad. You can’t ship super, super-fast when you don’t have venture capital to raise money etc. And I’m sure there are companies that try to compete with us, that were bootstrapped, that failed. I know that they were, so they might say “That’s not fair. You’re talking out of both sides of your mouth” which I don’t think is totally inaccurate; I am doing that, I just am trying to do that openly, and be self-aware about it.

But I do think there are probably a lot of opportunities that don’t have those issues. I think probably most businesses in America (and maybe the world) have been around for a long time, especially if you leave the coasts. You have restaurants that have been around for 40, 50, 60 years. There was a company in Utah, Winder Farms, that’s I think something like 180 years old, or something like that.

Wow. It’s unheard of these days. If you meet a company that the establish date is past the ‘90s, you’re like “Whoa…”

[laughs] Yeah, it’s weird.

You know what I mean? It’s almost like a double take.

Yeah, totally. It is. It’s like a startup that launched before 2002, or something.

Yeah, but I think it’s a framing thing. Typically, those companies are not that interesting, right? And literally, they’re not timely anymore, and news is timely, so they’re not gonna be in the news, they’re not gonna be seen… So I think part of it is just trying to broaden your point of view, and seeing that actually there are a lot of companies that don’t have these issues. I think there’s a sort of rhetoric, the Peter Thiel 0 to 1 rhetoric of “You need to conquer the market, because there’s one winner, one Facebook, one Uber etc.” But really when you look at the broader world - sure, if you’re trying to build a billion-dollar company, yeah, you might run into more of those things; but if you’re not, there’s plenty of opportunity. And actually, I think with being so transparent about Gumroad, we’re sort of signaling to everybody like “Look, it’s not that big. Don’t try to compete with us. Go solve another problem. If you really wanna build a big business, don’t worry about this one”, you know?

And I think that’s happened. I’ve had people reach out to me that are like “Wow, I had no idea the creative market is so small.” I’m like “It is. It really is.” I’m not saying it’s tiny - certainly there are companies doing well - but if you think about it, there are only really two platforms that are considered billion-dollar companies that are built upon serving creators, which are basically YouTube and Instagram. They are not doing any commerce. I mean now they are; Instagram is, a little bit… But really, if you’re trying to monetize content for creators, maybe Spotify…

Arguably too, YouTube and Instagram stumbled into those businesses.

Totally. It’s not even the thing that they do.

The number one use case for YouTube is music videos, and advertising; they’re all advertising-dominated anyways. And before that it was user-generated content. The word “creator” didn’t even exist back then. Yeah, it’s a pretty fascinating topic for a discussion.

[01:04:14.06] Let’s go back to the idea of conquering. You’d mentioned Peter Thiel and having to conquer and own a market, and I’ve always kind of camped on this phrase that sort of describes our DNA, at least - “You don’t go around building a nice city, but knocking people’s buildings down.” So I get that in capitalism to be a winner – you know, for every Uber there is a Lyft, for example… And at some point one of those two brands will be the “winner”, and maybe they can co-exist; I don’t know. But the point is that I don’t feel like it’s my job or my duty to build this business, and I feel like maybe you feel the same with Gumroad, that it’s not your business to go knocking people’s buildings down.

Instead, I wanna come by and I wanna say “Hey, good to see you, buddy. Your street light’s out. Can I fix that for you? Can I help you pave your roads better? Can I nurture your community better? Can I help you be happier in your life to serve this community in positive ways?” That’s my perspective. What do you think about that?

I agree. I think most change – especially living in SF and then Provo, I think I’ve come to the realization a little bit that typically change happens at a micro-level. It happens at a community-by-community basis, and typically a group of people or one person enforcing their view over a large chunk of the population that is much more diverse than they are - typically it doesn’t work super-well; it’s not super long-term sustainable anyways.

Charles from Kickstarter - one of the co-founders of Kickstarter I was talking about - has a really great phrase… He calls it “the Main Street startup.” Kickstarter and Gumroad and other companies - I think we’re trying to create more Main Street businesses. And Main Street doesn’t exist really, in New York, right? Or Tokyo, or San Francisco. But if you look at population by population basis, most people have their local Main Street, their local businesses that they go to. Their communities. The word typically used is a community where everyone knows each other. To me, that’s the definition of a community… And it’s great.

There are networks. Network connect communities, but I think you need both. If all you have are people that are trying to build a network, all you do is you end up with Walmarts, you don’t end up with anything really cool. I think the way that people think about their lives – typically, Walmart is great, but when people are on their deathbed, they’re not like “I’m so glad that Walmart exists”, even though I’m sure Walmart had a positive effect on their life. I think they’re gonna remember the community moments - the neighborhood coffee shop, or the flower shop, or any of the artists nearby…

Real connections.

Yeah, the human connections. And human connections are not scalable at all. You can only have so many of them, whether you think that’s five or 150… And really all software does – anything we’ve ever done since cave paintings has been to help people connect in a very non-scalable way. I always tell people, at the end of the day the reason you’re friends with people on the internet is because you wanna be friends with them in real life. And if there’s not that chance, you’re probably not gonna be friends with them. Humans still crave that. That’s still the goal for a lot of these relationships - to eventually connect with them in a visceral, primal way, which you can only do (at least for now) in person.

Let’s close with Gumroad - what can we expect from (in a sense) the underlying current of everything we’ve talked about? It is Gumroad, it is your platform that gives you the financial independence, and the extra 30 hours a week to focus on a fiction novel, or to travel, or to move to Portland and just say yes to unique, reactive things. What’s the next stages for Gumroad, for the creators that you’re serving?

[01:07:57.21] Yeah, on a very feature-by-feature basis, we’re really excited about discovery, and really launching discovery features on Gumroad to allow creators to build their audiences. We’re working on redesigning all our core UI, our edit flow, and product creation flow, and things like that… And then probably later this year we’ll try to launch a more full-featured, Kickstarter sort of feature set, so people will be able to create membership businesses.

But really the goal – I mean, you can tell when I talk about these things; I’m not that excited about the features, I’m excited about what can creators do if they have more opportunities to get paid…

I think my North Star for Gumroad in a product sense is – Gumroad gives me this financial independence; it gives me this monthly salary, I get to do all this stuff, it’s awesome… How do I take that and give it to creators? How do creators get independent financially, how do creators have 30 hours a week to do what they wanna do? This life that I have is pretty nice, I think, and I think more people would appreciate having it, and how does Gumroad give it to them? How does Gumroad give it to thousands and thousands of people, so that more people can do what I’m doing and have the impact that I’m having? …and that ripple effect will continue onwards.

That’s awesome. We’ve mentioned in the pre-call this is the first time we’ve ever talked in real life; I’ve known of you for ages. I think we’ve tweeted at one another at some point in our lives… Maybe even DM-ed if I was cool enough… That’s just a joke. Or maybe if you’re cool enough. But it’s so cool to finally catch up with you, and it’s interesting to actually have caught up with you after you’ve transitioned into this transitory, reactive state, versus before. Had I talked to the Sahil three years ago or whatever - not so much a different person, but different perspectives…

Totally.

And I’m thankful that you’ve gone through the journey you have and we finally had this conversation now, rather than a few years ago, because I think we had a very much different conversation than 1) anticipated, and 2) that I think we would have had a couple years ago… So I’m appreciative of your perspective and I’m thankful you shared that at-length article on Medium (we’re gonna link that up in the show notes, of course). Man, I’m so excited to have you on the show, and thanks for sharing your wisdom and being honest.

Thank you so much for having me, I really appreciate it. It was super, super-fun.

Changelog

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