#261 – Self-Funding, Pivoting to a Better Idea, and Growing Beyond $10M with Kapil Kale of Tremendous
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Hey, what's up to do that's going?

Hey, what's up?

Have you ve been checking out the progress of this? A I generated art stuff. IT has gone off the oil since we last talk about using dolly. Yeah.

I saw there was a twitter war on this. There was a comment section. I read all of the angry comments and had a blast.

What are people angry about? Is that artists like this is the death of art. Yeah.

I think it's like a mix of artists and people who generally just don't like like tech giants. etta.

Hello, hello.

I go is a couple. Let's go on. Nice to see you both again.

Nice to see you as well. We're talking about A I generated art of you like seen dally to and stable to fusion on the other stuff.

I got yelled that backend is working in Angell list because we are doing this like blog post and I was like, no, so silly. Like we like pay five hundred dollars like have someone like you like an illustration and actually there's like this art that we can just use and we should just use this this ending and all the designers got, yeah really pissed to me is so funny .

because it's like, as a computer program i'm like, oh, helier, this is amazing. Know i've had some experiences, a designer, but i'm not an artist at heart. So the idea that somebody can type a prompt into a computer and generated image from scratch IT doesn't really threaten to me.

It's just really exciting to me, to be honest. But apparently there is some art competition. I know you guys read about this, but somewhere in the us.

This town was doing in our competition, and this guy used an AI to generate this very cool painting of these women dressed in Victoria air clothing. But they're like a spaceship in the school size I setting. And he want first place of her, all the real artists who had actually painted something.

And so people are pissed and they saying, IT shouldn't count and it's not real art. He's like, it's just a tool. But I think it's IT is real. T, I think he really is just a tool. And he had to sit down and design all the problems to get the eyes to make this image, and go back and edit the prom and a race part of the image, and do another prompt set and setter. So like there was some artists involved.

at some point, the A I will start generating the props, and then we and really go, okay, right?

They were all slaves. Slippery slope.

I'm not i'm not personally threatened to obviously i'm not an artist and at a painter, but I looked in the comments section, the angry comments section, about this art competition that everyone is freaking out and they're like, you know, what's going to happen next is there is going to be a writing competition where, you know, whatever C P T, whatever C P three, me GPT three is gonna win a writing competition and instantly felt like a heart competition.

Because OK. So will that. And rider, because you're a writer, you're a fiction writer, or that offends you. If people started generating AI that were creating fiction stories and writing that was and distinguish from one like a professional fiction right to the right, I was winning awards.

Like, no, definitely wouldn't fend me. I feel like i'm a hybrid. I'm like english major surround grew up surrounded by artist people but then I got an attack on a coder and so I see everything is a tool. And I just like, oh, what opportunity like what way is can I integrate my skills with like you know the efficiencies of a computer and then creates up being totally new on top of that.

But you've told me like plenty of times that when you're writing like the thing that you like the most is the process of like having these chAllenges, that what i'm going to do with this character, where is the story going to go and having these breakthroughs. And if you like working and sweating and like staying up late and up, bringing them want you to do all this like hard work, and someone else just click on a button, and then their story is more popular, respected than yours, do you not feel replaced?

no. I mean, look, you're kind of saying that there's two separate things you could care about. One of them is the feeling that you get inside your body, right, and inside your brain, just from the love of creating art. And then the other one is the whatever, the respect, the prestige of having a really core outcome, right? Like i'm not into writing because of status or money.

but if you are in writing, you're fiction writer. And then all of a sudden, A I starts producing these stories. We going to like, this is pretty good. Like and like, IT came through five minutes this morning as like a full novel. IT would be incredibly frustrated.

I think I would like one. My favorite thing is anew. I love anew. And I always frustrated that there's not enough good enemy like most of the shows that come out or just not that good. And so in some alternate universe, I would probably open an enemy city.

You would just try to create more shows because I think this should be Better shows. But if somebody came back in the future and said, hey, cortland, you know, ten years from now there's going to be a is that can generate entire anime shows. You just click a button, you tell you what kind of art style you like, what of stories interest to you, what kind of humor you like, and IT chunchuse some numbers for a few hours and spits out a show. I could feel like that's amazing. And I would completely eliminate the need for me to create my own studio, to try to, like, create more of good content for the world.

I feel that i'm not too worried about stories. I think that I can do in a really good job of things that are ultimately derivative, but a really good story. And I am reading a biography of a leo tolstoy, and it's like he would write the story and then he would rewrite at thirty different times because he wanted IT to be as organic and sort unexpected as possible. And it's like without that iteration, with the real human being.

I don't know, but that's what you can do. Like there is international. And so like the guy who won this real art competition by using AI, it's not like he just did a prompt and then he want with the first one, he just kept giving IT prompt after prompt, after prompt editing, IT racing parts of IT changing IT over and over and over again.

And even though he wasn't like, you know, a real artist with the skills to make this kind of painting, he did have like a fundamental role in that feedback loop. And i've on the same thing, like the shirts that we designed for andy, hackers that have come of the spaceman on IT, like that was me going to the ninety and nine designs that calm, hiring an artist and then basically giving the artist prompt for what I want. And the artist had come up with the design, and then I would reproach the artist, and they would change a little bit over and over. So like, how's that any different? It's literally so .

not computer generation. It's human computer interaction, which is which is still really interesting. But it's like .

just replace the arrest with the computer.

Well, it's an artist, someone like an artist and a computer.

You can still say this part of the story sux. Can you make you make this scene in a little bit softer and make you know this character a little bit more ruthless? And if you can just keep bit rating and applying your own judgment, computer isn't add to be that smart, just give you enough material that you can eventually say that once a good and we on, I digress here like a couple couple. Welcome to the show. How are you .

happy to be here? I'm good.

You are your stories for inspirational. You are the founders are one of the founders of kind of two products. Um the most recent one tremendous.

Does I believe that i'm wrong? Eight figures in revenue. You don't share the specific amounts, but it's somewhere between ten million and ninety nine million dollars year and it's profitable.

Yes, I I can. There's nothing to correct there.

And I think the two things that stand out to me the most here are the number one, you and your confounders. Just three of you. You GTA came back from the brink.

Like there is a point at which the company was basically like staging and almost dead, like a lot of people to just quit in that would have been the end of the story. And yet here you are like profitable eight figure revenue company. And secondly, you and your confounders is only one hundred percent of the company, but you didn't boot trap. You had investors and then you, an an amazingly smart move, bought the company back from them and then grew to millions of dollars in revenue.

which is pretty cool. Um the way that you make IT sound was that we knew was gonna just like over monstrously profitable great company and we were like kate investors. We're going to guess so you don't know this, going to check you and buy back the equity. But actually at that point when we did that, we had no idea that the business should be um what IT became today but is pretty worth me just like describing .

what IT is that we do. Well.

why do I give a .

shot and a two products? Give rocket was the first one, then it's a reprieve and became tremendous. Give rocket also a cool business in its own right.

I think you guys going to like almost four hundred thousand dollars in revenue. Ah I try to describe IT as it's basically was some sort of a digital gift card. So I say somebody wanted to give me a gift. It's my birthday. They would sign into gift rocket, give you guys my email address, pick a store like target or something or a restaurant you buy one hundred dollar gift rocket and I would get an email that's like, oh, you know, when your friend Johnson gave one hundred dollars and then I would have to go to that target and like press a button and you check my location and then I would like, unlock the money and I could spend IT there.

Is that how far yeah that was actually the original idea is that was um this is back in twenty ten when we came up with IT, which was like the hay day of force where and uh go bala at the time for those of us have fit in the industry for uh a really long time. But the idea was instead of like actually giving you a gift card, like you get money, that you would have to go to a specific location, have to check in order to get IT.

And that was the original variant of IT, though, you know, we went through Y, C. And eventually what we underlip doing was actually making IT, just like a much more flexible version of a gift card where IT was um like think about IT like people opposed combined with that, more IT was money with a nice suggestion of how to spend IT um and really low friction and easy for someone to sort of gather was a great wedding gift, for example. That's what I my all the wedding gifts I sent over the last. And i'm actually .

curious about even before give rocket and i'm curious about about you, like where do you grow up from?

The states uh so I was born in india um and came to the U S. When I was four years old. Both my parents are um back then they were uh engineering mechanical and electrical engineering what they studied and that's what they went to gradual for and eventually they actually became a computer scientists and south hadco.

Um I did took a masters program and computer science he had no undergraduate qualifications for and the slaves or talk to way in to the program and then to help my mom learn how to code. And they are still sort of engineers to our engineers in today. They actually try to talk me out of becoming a software engineer because I took some ap courses in a in high school and look, growing up on the west coast like you see, like computer scientist thing, we're like all these brilliant computer scientists are creating the companies like the future.

But on the east coast, it's more of like the office space notion of programmer, where you're kind of like the person who's doing the back office work. And you know, for my parents, they were like, we want something more for you and they didn't really know the west coast world. Um so they actually tried to talk me out of that and into becoming a business person and eventually guess I became a hybrid of those two things.

At what point did you like about a crossroads? And you had to decide, and I gna do with my parents while and be a business person, i'm going a software engineer. When did you decide to basically start companies?

Oh, good question. I think I like, wanted I knew I wanted to start a company like eight eight or nine grade. I like read some business book. My dad had lying around and I was like, this seems so cool and it's probably not a very good so I can reread IT.

Um but you know after your college, I got a job at a consulting firm, which is what you do, and you got good grades and didn't know what your next job was. Next thing was and h that was pretty good for a few years and then I I just knew I was like board there and and at that point, um nick, my uh cofounder and CEO tremendous here. And now i've been kicking around ideas for startups and we're like, let's do IT and we do really know we are going to work on at the time, but we both quit our jobs and and moved berkely where we eventually ended up founding gift rocket.

Do you quit before you had anything?

Yeah it's not like I actually don't really people like it's like a burn the boat strategy. But we knew that we had enough like money saved up for both of us like our jobs. And that was working in finest.

Before that we had at least the year of runaway. And um we also saw two of our friends from college to um had now like that the founders of C K K had done something similar were a couple years and they like kind of left their jobs. And we're like we're in run through a bunch of ideas and just built stuff because this is more interesting than like working our corporate jobs. And you know I actually think for us at that stage in life, like that was a pretty good formula.

It's interesting to me like who what kinds of people take that leap? Because for me, like that was also an easy leap to take. I graduate from college.

I had very little money. I guess I worked like an an internship, but I was enough that I could go to same as you and survive for a few months. And my point was like, I hope I get into my commentor, but I actually did the exact same batch that you did.

But I A lot of friends you like also like we're successful in college. And for them, I was the idea of not kind of sticking on the rails and going to get a high paying job was terrifying and seemed like a huge kind of waste. If you look back like, I don't think I was especially smart or even like Grace is taking, I was just kind of like reckless what what was going on?

我 弟， i don't know. IT was the same thing, I guess because I remember thinking that yeah, why wouldn't we were like Young and don't have like families? And this sounds like it's going to be interesting adventure at least, and optimizing for that and like taking risk was like that was super exciting and we didn't like sound like we were up their jobs or anything.

So this all seems totally reasonable. And yet when I ask other people from that era who are around me about IT, they are like you're crazy. Like you're out of your mind. Like isn't that so risk me like, I mean, what's the worst thing that happens? Like go to business scholar like IT wasn't a .

thing back then. Like I just wasn't that popular to start start up to, do you? Like nowadays, like every genes year, like they are number one.

I think the number one most desired profession is like a youtube as a common knowledge that you can go on the internet and basically work for yourself and build an order to build a products to make money. But what was this like two thousand and ten, two thousand and eleven, when you started to give rocket like that wasn't nobody was doing this. I was like a very underground called.

Did did you have like role models or or like people who were like maybe older than you are, just like slightly ahead of you somewhere in life where who'd done this?

Not really do. I was like the Price the same as you. I was like reading like pilgrims articles on his blog. And I like this sounds crazy. And in fact, from the time I was like a kid, I was, and I love bill gates, and that bill gates was cool. But the vast majority of my friends that mmt were not computer programmer, no idea what I was talking about. They had asked me questions, like, why do you think you can do this and like I didn't have already answer or just like this seems way more fun than anything else yeah.

you know that is crazy if like your role models or people who you d never spoken to, or like essays on the internet that you've read and then you decide to move, to think, go and really go for IT yeah that's a level of risk that I think is like past what I took, you know, for me. I had to go founder who was like, you know, my like back then. I went to start with, out of the C S.

program. There was like kids in there, and nick was one of the top students. And so to have someone who actually know how to code, I don't know how to code at that point, except from, like my high school programme classes.

To have someone that wanted to do that with you was like, okay, no brain or already and then hug, you know, we stated his dad's house and berkeley e to have a place to do IT that was like close to yeah. So for tisa o IT was a big deal like IT. Things felt like they were actually set up reasonably well.

So looking at the the stats for the gift card industry, just google IT. And I have found a quote and true, this is what he says. The global gift cards market size is valued six hundred and twenty billion dollars in two thousand and nineteen and is projected to reach basically two trillion dollars by two thousand and two and seven, growing annually, basically a rate of sixteen percent, which means like this is a huge market and it's also a market that's a growing, which is kind of like A A neat hack having a company that grows. It's like you just build inside of a market that's growing with somebody want to told me that uh ten years ago ah how did you guys I work and get rocket.

Okay river is August when we um August of twenty ten when we started working on ideas and we didn't really doing for the first month, was like decompressing from our jobs uh and we started kicking around ideas and actually the one that we applied to Y C with, if you remember, like the Y C application deadlines like october, was this like referral marketing idea.

We're like if you refer a restaurant to a friend, you would get like a sort of discount. And I was going to work through credit cards. That was a really bad idea um and we actually pitched IT to my c in our application and they think polygram actually if this is back in um on hacer news they used to be a functionality where you apply through hacker news and then P G pd message when he message us like something like you guys seem like you're smart.

Why are you working on this terrible and we were like, you know, I don't like that is that says at that point and this was like we just applied and were like like IT seemed like a good idea us and so what end happening was he accepted us for for this bad referral idea and like maybe three days before the interview, nick and I were probed late night like, uh, at kitchen island just like shooting the shed and I think he came up with the idea for like a gift card that was just like checking bed and well, no, that's a good idea and I I remember whether the name had come I think I think he did come up with the name pretty early to next credit. We were like, okay, let's just pitch this because like that other idea, they already think it's bad um and we went in and pitched the idea for a gift rocket to um the Y C team which was like paul jaska paul to hide and I think harder at the time and paul gram I remember in the center of view like freak doubt he was like, this is like twitter this is like the best idea that we've heard and so long it's like undiscovered. It's just waiting to be discovered I can't believe no one else speeches us on IT and really like, you know every ten minutes like, oh, we've definitely .

got this .

celebrating and here's the crazy part, the deck that night we ve got a rejection notice you thought about like this enough like you just came up with the idea two days I think um and you know can I really went out and like I think um drink some cocktails and start watching the jersey showers like that was how we would decompression ve at the time and actually what happened was three days later they changed their mind and they were like to know what we were probably being too harsh figure that out like we would like to let you into the problem.

Just out of the blue, you didn't like campaign in your defense. I go.

please change your mind. There was no campaign. And actually the thing that they said to us was you haven't thought about pain and raught enough. And I think what had happened somewhere in the background was um they are on the fense about us and P. G.

Spoke to one of the focus stripe was probably Patrick at the time and that's like these guys have no idea what they are doing, which is true. We actually have no idea what we are doing afterwards. B G change is mine, and actually set us up with all the folks and what I see who are working on payments. And this was like a huge boost to two kids who had no idea what they are doing to like, be connected to strive and we pay. And that was how we got a start as a feel .

in high insight, have been like connected to all these people who are now like legends because .

of successful.

Yeah, no, no one who patrols and was back then intervene. One of Youngest billion years earth founder stripe that anything like stand out to you about an any these people that you are really getting expected to do that IT seem like they were onna become what they became.

And no, I mean, I I had no idea for any of the people that we were around like I even remember gary ten who is now the president of yc yeah like gary was an advisor to our batch. He was like looking at landing pages that we are putting together for like looks like you could probably change like he was telling his pixel pushing with me. Um twelve years ago IT was like back.

He was he was like a design advice. And so I think back then we knew that we were surrounded by smart people in a special place like Y C. In twenty ten, I do think was like IT felt in some ways like the center of the tech universe. And i'm just grateful to have been part of that program back then.

Everyone, you are part of the same, the same bat, right? Did you did you get the sense that you were surrounded by any current or future legends?

Now you can you can really tell, because I also, for examples, is advised by gary tan, you go on to office hours and you would have like the people who were sort of a science to your company, and they would like look at your website, look at at strategy, talk to you. And I had gary ten and paul bu hite, who invented gmail. And I remember getting time, looking at our designs and saying, this is awesome.

And to scrap you, to change that, it's like today is totally different reputation. But I also, like took the opposite of you did couple because I ve been rejected from Y C. Before and I tried arguing to get IT into. So I ve an email I just pulled out from october two thousand and eight from paul m to me in my cofounder. I was I had to had, but really twenty one of the time, and I was still in college and like, hey, so you guys about the semester sort of graduating, why you use apply in six months for the summer back and watch the rush. I remember we got that the email, we are so excited, the sound of like, you liked what we were doing, and that was the only reserva me in my offend the cottage. And we like trying to figure out what we were going to say, know, we were both like h, we are so excited about the idea now we can delay our graduation and he said, take my word for it's Better graduate first, otherwise it's very attempting to return to school during the lean period that and inevitably happens about six months and plus you have more time to work on your idea and then he just rejected this. So aren't ginning back to next work.

Couple of A S that's what i'm gaining from all of these stories.

just like Robert stamp, like this person person out. But for all of us was like this, my life dream to do this. That was like such a big deal to get in or not.

So let's talk about a your experience with the earliest stages of gift rockets. So you eventually come up with this idea. You had a team that was you and neck to .

the cofounder we did um after we got A Y C, we convince next like elementary school friend JoNathan who um was in A P H D program um for computer size to drop out and IT IT actually worked partially because like the Y C stamp of approval and there's like you know there's something going on to what we were doing and JoNathan is like, okay, I was bored at this program anyway um and he uh joined us and he actually added the most credibility to our team because he had worked at facebook before.

Um you know at that point we had a sort of interesting well around the team. We just had to figure out what build I I mean, never remember what your time during why I see was like. I mean, I spent like we spent all that just building stuff and I was actually designing interfaces at the time.

Yeah, IT was such like a competitive environment because essentially the structure of the batches, like I guess, our batch is probably like four companies altogether, meeting every monday and every week, you would see what everybody else had built. And then we would like vote, like who's gona be the best and you could talk everybody like, remember Chris chen, he was always like pivoting with these ideas and doing crazy stuff. And music started at, I think.

and then there are the yeah and .

then there are the like, little guys we look, raised a bunch of money in the very beginning was that was very competitively escape codes. Like because we are all super motivated to build as fast as we possibly could, like every single, like social accountability and like you're pride and like you're bank actually, because we didn't get that much money in the beginning, like every single factor R S. Pointing towards.

like build this fast, possibly again. Yeah, I think it's actually what everyone needed at the time. I don't know if IT was healthy though, because at least for me, i'm like an extremely competitive person.

And you put me in like that situation where, you know, like there's a bunch of us on treat mall, like I gonna crack my speed up on the tread mall of pretty high. And and like, look at how fast if everyone else is running. And you like that, I think something i've had to work on because the reality is everyone is like running their own race and like products, like whatever held they are choosing.

The climb of like the product that they're trying to build is like, well, building IT faster is not necessarily the solution. Maybe need to take a step back and be like, does any of this make sense? Um I don't know if why he was great for that aspect, but IT did get us to get stuff out pretty quickly. Corner.

I just recommended that book the status .

game too right? Yeah actually .

reminds yeah yeah so couple I just recommended amazing book is by the sky will store about status games just is basically like you know hey makes the case that I mean basically all humans all the time are constantly being run by the the status machinery. We're all kind of playing these games kind of deep below the motivation layers that were conciousness aware of.

There's like three state games that book talks about like i'm still reading IT, but it's like, okay, there's the dominance game. And so a this is just like i'm very, very stronger than you.

I'm aloud to be more confidence and to listen to me uh then you've got the virtue status game, which is like I am made more pure and more moral person than you and shame on you and as a sort of way that you going to stand out, i've meditated long with the new am a more light person than you and then you've got the success status game, which is definitely what why committed was. I was like, who is the most successful? And whoever is most successful, everybody wants to emulate them.

Body wants to concept to them. Everybody wants to be like them or sor pass them and other people who are successfully. But you don't want to let let them down. You don't want to embarrass ourself in the meaning with program or people height or gary ten. And so like a lot of that was at work, I don't know how much the first two were at work.

I'm assuming the prime mix of the book is like we're really hard but heard on this stuff. And Y C. Was smart to use that because of their goal is to make this batches sort of successful and productive as possible, basically polish words that end like of me and courtland.

And what I see not really known anything about what we're doing, and they're trying to put us in front of investors prety quickly. IT does I think IT does have a really positive impact for like a short how come the problem was few things. The first is that the measure of how you figured out who was like doing well and who wasn't was like a boating scheme that happened. Like who's going to be successful like at the end of every batch reaches like figure, you know.

reality T V erly a popularity contest.

exactly.

Wait series I .

didn't know about yeah what most seed. I can't exactly how .

I think you wrote something down a piece paper and put in like a basket.

How did they how did they said? How did they explain the the .

usefulness of this happen? It's like you to be like what cup with team is like most likely to be successful after demoted. I was something you voted on, but what? I was never anywhere .

near the top of that list, but IT wasn't demotivate IT like there was never a point us like h we are not near IT was just like, oh, we need to get Better, right? You just like, I want to be .

Better the second thing that we were measured by, I was like, how much did you raise and who did you raise from? And obviously, here we are on the hackers talking about. There's actually a lot of different grounds to like, you know being successful for whatever you're measure of that is. But you know the Y C. Environment, so many good things that came out of IT.

The other thing I will say is that I don't actually I think like the forces that be of like putting all these people together and having like um no happened at the end of IT leads you to this but simultaneously like when we like post y see you and we started running in the like traction problems like programme is like. Um you guys trip with any more money like want you go like figure some stuff out and make sure you really have product market fit, which is actually quite contrary to like the advice that you get now, which is like raises much money as you can like war test. Like if it's out they take IT in.

Yeah so you didn't quite .

have like A A vote on whose growing the most growing the revenue the most. But he did say you a private memo at the end of voice c to give give you a hint that maybe should work on on product market of fact.

yeah, we were like, here's he was like, I remember this emails like, what are your attraction numbers he makes the founders and we replied like, here's how many of these we've per week and he was like, you know, double digits I think and he's like, oh, you're in the trough of sorrow just like, oh, okay, I guess that's where is like you guys should probably figure out how to grow here. Some people you should talk .

to you maybe warn before you definitely felt for after people.

and be happy before this call.

if he tells you should not feel sorry for. But you actually great a lot. I've ve been different rock. I got to about four thousand thousand a year.

And revenue, which is awesome for a small group of founders you just basically created so of facilities at air. Um why wasn't that? Could you know what was bad about that outcome?

There's nothing bad about the outcome. But if you wanted to great like a growing business, then one of the fundamentals you need is like you can't have crazy amounts of turn out the other end. And given the way that the product worked, we were like you know trying to get in consumers till I send to their friends.

Um they would find us sometimes like through search or I know we actually rank pretty well for online give cards at some point. I think we renew one back in twenty twelve, so they were fine us, but then they wouldn't repeat use the product because IT was a product for occasional use. IT was literally for occasions like weddings and holidays. So we would see Spikes for aggregation rates were so low that I was like, okay, well, maybe this grows like a little bit, but this in itself is not like A A big venture pack business. And we had some serious taxes around twenty twelve over twenty thirteen that we realized as well.

Like are we climbing the right hill? Like is this like wiki working on this exact product? IT feels like we're hitting a ceiling in this idea is like probably going to be somewhat uh, tapped out like we had other variations that but they all felt like they were still gonna come to the same problem, which is that if you are targeting consumers with a gifting product idea, like Carry going to get them to send all their gift, three events that didn't seem feasible ble.

And then even even if they send all the gifts through, I mean, I send four gifts a year on really hard table years. So what other acts is what what other levers can you pull? Well.

how much money you are you making? I if someone's using you four times a year, which I seem was probably less, but like, I don't know, like father's day, mother's day, somebody's birthday and other person s birthday, Christmas is said, like how much are you making per customer when they're sending hundred dollars?

Give just just not that much like the fees at front or like you know, we charge something, we get like discount on them. And but the reality is that the repeat rates were so low that even if, like, we didn't think that was possible OK think he was like if you sent one year, your chances of sending again like later that you are like within the next year or like five percent or something like that.

And I was a pop over time, so I was like, okay, we've like created this utility that is like good every once in a while, but it's not going to be like is a replacement for some existing gifting behavior you have like plus you want to varied up, you're going to send everyone like give cards or like give certificates, you're going to want to send like a physical thing to someone. And so there were a bunch of startups that um launched around the gifting space back in the early twenty ten like um carmo was one of them. There's another call thinkers and they all ended up fAiling. Um actually cm ended up getting acquired by facebook for thirty five million dollars, which arguably is probably bad decision by facebook.

okay. So this one on for a while, right? You can hung out in this trough of sorrow if we want to call IT that of sort of a situation with lower attention. But eventually, you know, you move forward, you decided this sort of crazy idea to buy out your investors. So what happened there?

Yeah, we were like, okay, well, we're making like you know size will like reasonable money, but this isn't onna grow and I don't know what the exit for this is. And investors like want to have their money like back in seven years or like this is really going to happen. So we offered to buy people out with the cash flow um and we said everyone can get pretty much double their money back.

And I think why he got a pretty like you even Better return and they all agree to IT. Um so there's just like you get your this much money back now and then then within two years you get this much more and everyone was happy. So we we sign the papers.

So I was really straight forward n negotiation and there was no negotiation. They were like all like, well as nice of you. So we raised ed him like pretty good people. That was IT.

I think the standard and sort of outcome for the vast majority of Y C companies was like you die. So the idea that for an industry that you're going to get to your money back um least they didn't completely the eyes like probably a good deal for most of them though. So does like you know frequently some investors out there were like, no, you need to push yourself and become a unicom and I don't care. I don't want my money .

back yeah that there's one that thought we were like Operating in bad faith and we were like, okay, they were like fine um but ultimately, like I don't think the investors scared. I think they thought that was generous of us for the most part. But like you know, no one's buying a state dinner or something like after we gave him return right now that cause for celebration for anyone.

So you've now started a company grown into hundreds of thousands of revenue to go. Founders decided it's not a great idea about how your investors and then I think like all of you guys went to work other jobs.

How do you decide like what to do and that sort of crash words here because I think that know my sort of philosophy, is that most intelligent, ambitious people, if you just keep starting companies, like eventually you have a company that works, you learn a lot of lessons. Maybe that number is like nine companies for someone. Maybe three may be fifteen, who knows? But like, you started to get for rock at this point, and a kinds sort of work. How did you decide what to do with your life?

Yeah I knew I wanted to start another company and I think that we still wearing A O so the two of us were black. Starting explore other things that we could do. Um JoNathan at that point wanted to take some time off and he ended up um doing that and eventually um becoming an investor uh and nick, I ended up starting a couple of real state company is actually for two years and fund fact. I think I was like the top of sellar of like single family homes and like the e pay for one of these real estate ideas. Fear like a summer and twenty fourteen or I think I saw like nine I was happen the real city.

I like nine homes um but this was an idea called american realities that nick N I actually started along with Sandy spicer, who is also in our Sandy yeah look we were three engineers at that point in real satis miserable business and so we end up like in twenty fifteen to shutting IT down um Sandy went over the flex part um and I was like actually working on get another idea but then I was like, you know after four years of like I was like I suck as an entrepreneur of this is working. I should get a job and um that's what I add doing I I took a engineering job at intro list like employee for twenty or something and nick, uh, at that point, was like the last founder who could possibly work on get rocket and there was some stuff to do there. So he actually went. Ca.

continuing to stay out cash while you guys are all doing like IT was like four N R, K. revenue. You guys is kind of quit to do other things. Still Operating in the background.

Yeah, I think IT actually grew, uh, size one out. So what was weird about us, like all, all the founders pausing, working on the business, was we actually did have one employee writing Operations and we were like thousand weird conversations. Like we had quite a commercial real state jobs like B R community measure.

That's what we entitled that. And he um really OK everyone's quitting and we're going to work on new ideas. And he's like White.

All my bosses is a quite .

and he he hadn't of doing fine. He became an engineer and I started founder just told his start up actually um and another friend of mine ended up taking like the core Operations role. But during this time, there's just one employee working on the Operation. The site and things are growing .

like at what point in time did you eventually transition to, you know, oh, this is something that we can yeah this is the real thing. We should really go all in on this again.

So the thing that initially pulled nick in was that, you know we're payments business and the bank that we were built on top of which at the time in twenty fourteen, a lot of startups were built on top of just bank for oak bank um had had to shut down all of their like vintage programs. And this affect in a lot of companies, including Angeles, where that was what I ended up working on the first project I did when I was there.

This transitioning all of like our drinking code um over a nick was the only founder left to a gift rockets, so he ended up doing that by himself is like negotiating another deal, the bank rewriting all like the code that interfaces of the banks like work and um that was like a pretty big six and eight months project and that was the thing that pull the back end. And at that point, you know you've got your anchor project and you're back in for him. That's when he started seeing the potential um in the b to C A market because you look at you know we we had this retention problem and you just do like the seal quality of like, well, who is actually sending over and over again?

And what we found was that, well, there were a bunch of accounts that had signed up that were businesses that were starting to that we're using gift rocket for the same use cases that we the tremendous now serves, which is like research incentives or are like a referral incentive or something like that. And because we were grouping by these users, we realize that there is no retention problem here because these businesses needed to send these and like give cards out as part of their line of business. And that was the first insight that LED neck to um transition the company that we had built over to being a business to consumer payouts company.

This is an idea of like the pivot. You know you just start a company and maybe he doesn't go well, but you keep working on and eventually you have this flash of insight, this realization and you pave IT into something networks. And in my experience is pretty rarely occurs.

It's not nearly as common and occurrence is like it's talked about IT or used to be talked about, but like that's what happened here. Tremendous ended up being again a business that's doing tens of millions of dollars in revenue, its profitability on by the founders. But at this point, like you, you have really much of anything like like a little bit inspiration.

He thought this was cool, but you were off doing other things, other coffee, hers, off doing other things. Like, what's the first thing that happened to sort of turn the ship around after nick decided hate? That might be some promise here.

So start actually expLoring this market. And there are two things that I believe si multi evensen happen. The first we start, you know, you talk about the Y C philosopher of doing things. First thing you do is talk to your users. And next started reaching out to, uh, market research firms, which ended up me or now are part of our bread and butter.

They send out like market research firms to research for on behind a fortune five hundreds about new products that they may launch um and they are constantly serving people are bringing and focus groups and they have to compensate these people for their time and input. And the nature of the market research industry is like there are so many small firms out there that all have this need for an incentives provider. And some of them started using gift rockets.

We just start talking to them, realized that there is some unfulfilled need here. And the first thing I I think he did was created something he was gift rock rewards is like what we all um that that eventually became tremendous, but that building that out and was actually a fork of the original gift rocket code. Building that out plus like doing the customer development and sales is like honestly outreach on link at the time LED to closing a couple multimillion dollar deals. And I was like.

oh shit, multimillion dollars like that's kind of the amount of money flowing through get rocket or the amount of revenue .

you guys got to pocket multiple millions of dollars of payments following which for some of the larger deals that we've close at, like some of the early deals we close are like now spending like nine million dollars on the platform, that being prety sizable .

margins for us. You're you're at Angeles at the time, right?

So and i'm sitting there like but what's on?

So so is he keeping you? Is he keeping you updated like throughout the entire process? Or does he phone you up after he is closed to multimillion to holy deals and a couple, you never believe this. Like.

how did that go down? Funny, quit and come back. The funny thing was like.

I was like, this seems like an interesting thread to pole and realizing i'm not actually in the business talking is so I don't know how well working and honestly, the initial sort of there is some scepticism around like, well, this is like a different business like is is actually gonna work and wasn't just me.

I was like other people that you know we were friends within the start of community being like and and IT just took two years of pulling on the strings, pulling on a thread to realize, okay, actually this is like a gigging tic. Undercover al and pets is like payouts, and like b to C, A gift cards is actually this big, gigantic that we just didn't understand very well before. So i'm like kind of you know Angeles, I I was a software engineer to start out and eventually I became the COO of like the job site, the talent business.

which is a huge part of Angels. So like you're basically kind of set like I have this .

like career that's like really burdening i've like never had a real job in tech like you know, i'm like now an executive at this like the hot start up and and simple things. They just like advising nit on the side and I become a manager, you know the talent business to become like eighty people or something like that. And so remembers to me as I was getting built was like kind of just the thing that I was helping nick with on the side um rather than being like something that was occupying a lot of my time so you know in in this paid all credit goes to make then who is a uh friend of hours who basically came on as a late cofounder friend of us from college you like help transition company over um and some of the early employees um where is like three is like a five percent four percent team.

Your website talks about you guys being in hyper growth mode so like you're like and some ask your boost trapped this point like the founders on one hundred person the company and like I think the traditional and I haka is okay when you just make a lot of money and then you pay yourself a high salary and like that, that's the dream about the business.

But there's also the sort of theoretical hyper girls so can vallely start a path through like, no, i'm not happy with that. I'm trying to take over the world and be a union company where billions of dollars and IT seems like you guys are still on that projector. You you're trying to go that out to despite the fact that you don't have high growth investors.

So and that that's not on common get hub is a good example. They didn't raise until the years after they are founded and they are required for billions of dollars. Example, we've interviewed weight Foster on the show.

They raise a tiny amount money and then just basically both dropped the rest and then later on raise money like a five billion dollar valuation. Why not just stay in the hackers? Like why do do you want to go for this a sort of huge valuation and grocery protest?

I don't think we're we're target the valuation um like what whatever like that, that seem like measuring steck. I think it's really bad delivering value users. And the reason we say we're in hyper growth is because there's two aspects of the company that just keep doubling every year and maybe maybe faster than that. The first is like the number of customers and accounts that we have and all that comes with complexity of like you know with five thousand businesses that are using our product or a use the product to to send payouts, which is like a really large number um and um you know a transaction volume is like well into the hundreds of millions right now. We are like the number of youth cases is proferred and so the complexity of the business is going up.

Um but along with that, like you know I rejoined tremendous nick group, had recruiting recruiting me back in twenty twenty um and I think the team was like eight or nine full time employees at the time and now you know within two years were like fifty five and I think will be seventy five or so by the end of the year and that doubling of the team size like um maybe every every year even faster than that, also comes with like this feeling of war. Things are not just like this, not some like incremental change. It's like a different company every year.

And so the hyper growth thing refers to the fact that you know every nine months that feels like a different company and that's not driven by or pulling in this VC money and have to spend IT. It's driven by the product market fit that we have our solid problems for users and they keep telling their friends about the product and those people sign up and we have to like we we say have to say no to business or sometimes we have to say no to business like that. Tell you know.

what do you what do you know about this industry, the gift industry that other people don't know? I an to take one example, you at least you started out pulling on the thread of these research companies or research teams at companies. I mean, is the market bigger than now or you kind of pulling on different .

threads like what I think the thing that people don't understand about this industry is the role that gift cards plan IT. And they think about us as a gift cards started and they tie that like, oh, I send my friend gift cards. But gift cards are actually this, like incredibly low friction wait transfer value from one person to another without having to let go through your payroll system, like you can buy an amazon carden trading around.

And that's the reason that they're valuable to market research firms is, well, if they have to send people like research incentives, all of the world will like something. Gift cards are kind of like one form of tender that allows them to do that in a low friction away. Now one of the other things that I think we got right pretty early on is we're not really just to give card company we started out as like this gifting start up, but it's really about low friction payout outs if you want to be able to transfer value to like some large number people on a one off basis.

Like can you imagine going into pay role software and being like let me upload this like it's gonna for everyone, social security number and they are going to be like no but similar eneus sly, there's a threshold of like you transfer more value than six hundred dollars to someone in the us. And then you actually have to collect A W nine form and like share that with your CFO, your finance person and all of the stuff like approaching payments from, like what you start with the low friction inside of like small amounts and build up lazy to all these other use cases that you never thought. And every time we looked at a uh vertical, we really ever like a department within company.

We realized that there are lots of use cases for this. So research is obviously a big one. Um and then you think about conversion rate optimization of like marketers like wanting to like make sure people actually book demos or you know outreach campaigns would like you offer an incentive to like take conversation with someone. Hr like you think about employee recognition of like wanting to send out, get to your employees or even like sales and bonuses like at those are huge pain to pay out at the end of the month. Like these low friction transfers are like as diverse as the payments ecosystem itself.

And you're just not seeing his head right, right? I'm always curious where like these ideas come from that can generate tens, millions of dollars, because everyone out there, every hit unsolved problem, is there where I can make a dent. And I think approaching this from the mindset of a typical consumer and transferring money is easy.

I just opened my while. I take out of bill and hand IT to someone I isn't. It's so easy. But that's a very consumer mindset.

And for businesses is like you're talking about, like they have a much more complicated process of like, okay, you know we're doing market research for ask your customers questions and serving them like we got to pay them, but they might live and dozens of different countries, they might accept dozens of different currencies. There's all these forms and taxes and other things. And so it's like one of these like almost hidden problems that the average persons will assume is really simple. But it's it's not and I think that you guys just stumbling on to all the ways that I was complex.

Yeah, you know I I don't know that like we could have know you give us like a case that has like all the information about like this market existing and we would like immediately crack the idea without having a long iteration cycle and approaching IT from like in a jacket market that was more accessible to like us. So we start out this like consumer gifting market. And then we noticed that some people um they were using our site.

We're using IT uh for business to consumer incentive fees. And then we realize like betsy, payout ts is actually this big industry that actually relies on stored value products in a way I told I actually transfer value. Well, that's like a lot of hops. And I think that the business that we built benefit from us having a lot of time to like notice those observations because there's no way that twenty five year old us fear this out.

Here's kind of slightly matter question about sort of like this being a hidden use case. In a way, a lot of these these market research firms that want to transfer this value that you are now selling to, did they all start knowing we already know we want to do give cards and then you are now the gift card provider? Or are you going and like selling them on gift cards as the thing that sort of like solve that problem for them make sense?

It's actually the former or like the things that research organza we're doing. The four tremendous was was really like one of two things. The first is they um are often like writing checks.

A lot of what we think about is like we replace checks. They're writing checks to people and checked D I mean, they're just a contract that has a bank account and routing number printed on IT. And you hope that someone doesn't commit fraud.

Um but but that that's what they are or they would use amazon cards or some other the single store value product and run into the issues of like recipes, preferences of like, oh, I don't want amazon card to me prepay Carter, amazon ism work here I can you give me a walmart card? And suddenly they had an Operations person who is spending all their time just managing like inquiries about this, the other place that they would come from a thers some legacy providers that like kind of created access to this. But the technology for those dividers was so bad that they couldn't get any of the reporting.

And like money movement was like a has. And so IT was something that some of the legacy providers, we're doing a bad job of servicing, but most people were actually using other substitutes that we happen to have a solution that really like a well, like this is amazing. Like IT just meet all my problems. Go away.

yeah. I also onder about growth in general as you ever run into any platos that are hard to get over because you can of doing like the sales live process, calling companies on the phone. You, hey, you guys research, we get the product for you.

Did that ever stop working? Did you ever like innovate to figure out how to move to the next step? Because I know a lot of people who try to do those types of sales and IT doesn't work very well for them.

Yeah IT IT was. So we didn't keep doing the sales LED strategy over like the entire last four years. The sales lead strategy worked pretty early on because like nick, the founder and CEO, who can also like design interfaces and like understood business and could just like right COO was like IT IT was the equivalent of like um whatever stripe was doing when they were just like set IT up for you in days of like you market research terms like can you build this report for us and like we chip IT and maybe like, oh well let's move all over the tremendous this seems great um what eventually ended up happening was um and this is something that I think is engineers and builders we take for granted when you make a site that's like open for anyone to sign up using IT sound like a close enterprise like you can't register for IT unless you're like a big company but anyone can sign up and starts sending on um we started running ads like pull in down and we got all of these mid market companies or a large companies even like the google came to us and bound actually um that could just sign up with the product and play with IT and then they would request a demo and this is like this think a lot of the new meta companies like plad really believe in product that growth and that was IT was huge rust as we would just bring in traffic, let them experiment with the product and then they would immediately see the value and want to figure out how they could do this in scale.

The rick get richer .

IT worked well too because you know for us, with a lot of the players in the face, they were legacy providers. They just didn't have the abilities to build like building something that anyone can sign up for is believed or not in the scope of like you know tech kind of a hard problem like it's not something that all the legacy players do. So this is a huge vantage for us.

although like problems you have uncovered while doing this that like you don't have time to solve, but you think others show tips. Could I know like part of the any company is cus, right? You a million different things, but you can do all of them.

Like what what have you seen in the intimate? Because I I think there's a lot of problems where, quite Frankly, like you're right, like the incubation can't really move fast enough to solve them. But like a scrappy .

team of creative hackers, can you ask me if there like any brilliant? This is a question. You know, I I do think that there's a lot in terms of just like simple primitives for the companies, like is a really simple example.

Like one of the sites that I use the most is like I P data that COO um and we use this easy for like front detection and G L location stuff in like i've now implemented this. I implemented this Angell to just like simple A P S that allow people to access information where like the core service is like um taking in some data. It's like a micro service like you put an nip address at you all the information about IT and he gives you some scoring on top and all IT is is a simple site with a great A P I.

And like their son, like, you know, usage based pricing. But for us, we're like I I will pay two hundred, five hundred dollars a month for this. And I and if you think about what all those primitives are within the first tec system, i've like know there's elements of K Y C, like there's companies that are trying to build these like all in ones.

But I think the opportunity for folks that are indeed is doing one of those individual things and just doing IT incredibly well in having to be some that that's the business that like you know max mind is another one that that does like uh um fraud services and I P like enrich ment. Clear bit is another example of like clear business incredibly ly simple. Just like I give you data when you make a request. Um I think those are incredibly interesting businesses when they get integrated, like no one wants to rip them out.

So what do you want what do you want to do now? I mean, you're kind of on top of the world you're talking about, okay? You want to provide more value. You grow your company. You have something like what is he like fifty employees now yeah how are you feeling personally as a founder when you look at like I know your career and your goals, so you like completely absorbed by your business and you're thinking about next steps, like how do you how do you basically plan to try a course for your life once you've already achieved like this level?

Success is a philosophical question.

Yes.

I try not to let the lows make me feel really low, and I try not to let the highs make me feel really high like it's really about being tempered and um somewhat um except in of like what's happening. And I think that we are in a good place as a business like when IT comes to work, like IT where tremendous is going. I have like a few desires.

I I want to build a great culture where all the people who work here feel like they were able to be part of something special like that is actually for me more my personal mission. Uh, and you think about how nick and I are able to divide a responsiblities s you really sort things about like the long term vision of the company. I really care about the organization and the people we have, like those that sort of place for a relative strength.

Um and I wanted to deliver value for our clients and just build good product. And uh that's like you know it's it's quite different than like the we need to save the world by doing X. Kind of philosopher, but it's always been the one that's more consistent with what we care about. So like you know, in terms of like company we were at, like we just have to hire more people and like maintenance culture and keep delivering value to our users. And we not really worry about the zeroes to match as long as we're making more money than we're spending.

Sound like a very loyal company man because it's somewhat different answer you can give like go you know like I got you love musk to do. I want to follow that path. I I .

mean, would you that sound exists, be not like take .

up for me, ella mask himself.

That sounds like I I think like being authentic to yourself in the life that you want to build this A A founder is like, look, you probably not to like this is really chAllenging to actually make IT so that you get that option. But when you do like don't try to live someone else's life, like you know all that seems fine, but who cares? Like I know what my life is and I don't think it's going to change very much because on how tremendous like ends up doing, but I do care about my relationships of all the people who I bring on and all the coworkers I have and how I spend my day. And I want to have that B E, like, amazing.

that sound so healthy, the idea that your life is going to change that much regardless of how your company does. And then the most important thing in relationships, because i've been reading like books and essays and stuff on happiness, and they all basically say the exact same thing. Happy is mostly comes down to the relationships in your life.

And I think people who think that making money is going to, you know, result is a massive change in their life, especially if there are already pretty well, often, probably going to be disapointment ool. Couple things to coming on. Um can I ask you to deliver us to the one piece of advice for fungi? And the hackers out there maybe don't have an idea yet or maybe struggling through the of early stages of getting started, like what something that you've encounter that maybe you need to you that they might .

not have encountered. Yeah, so give yourself space and time like this shit is hard. That took us eight years. And like we stop working on the company and started working on bought like IT. IT was a long journey.

And I think in the early days, we didn't give our spital space till I really try to figure this out. And that was why we did some of the bouncing around that we did then. You know like I think about myself twenty fourteen being like i'm a failure.

It's like time to get a job like I wasn't a failure or not any different than I am now. Like the card, like you you're going to get a Lucy hand or you're not. But if you start startups for long enough, you will be successful.

Um is is like one part of IT. And so if you believe that giving yourself time to like not believe that like the first thing that you start is automatically going to be at home, unlike IT, it's not here. It's onna take time and space.

Like if you actually give yourself that time and space, you have a much Better chance of discovering IT. Otherwise you going to shut down what might be a promising idea, you know, in our case. And Jason, to a promising idea.

I love that sounds like the number one hack is not how to build a successful company and how to give yourself enough time in space to then figure out a handful successful company. And if you have that time and space is just a matter of taking IT. Yeah, I pok all. I thanks the time for coming on. Can you let listeners know where to find more about you online and about tremendous .

yeah tremendous. You can learn about us tremendous stock com. And uh for me who I don't I don't know where to find me online, I just actually try to keep a very low online presence. You tweet a little bit I I very little increasingly.

lass, right. Thanks again for an later.