In this episode, we sit down with James Beshara, a seasoned entrepreneur, angel investor, and founder of Magic Mind and Tilt.
Before founding Magic Mind, James created a company called Tilt, which was acquired by Airbnb. He has been a big supporter and investor in the DTC community, with a lot of cool companies under his belt.
In the episode we talk to James about his background, founding two companies, and how a scary reaction to caffeine led him to create Magic Mind.
00:01
Welcome to the DTC Growth Show.
Phil 00:03
Fantastic.
James 00:04
How are you doing, Phil?
Phil 00:05
How you doing, James?
James 00:07
Good, buddy. How are you doing?
Phil 00:09
I'm well, I'm well, thanks for thanks for taking the time to join us.
James 00:13
Of course, I'm excited. And this is a cool app I, I have not really explored chalk. But this is really cool. It's great to see all these avatars and faces. And for a digital audio app, it feels lively and fun. I'm excited. Yeah,
Phil 00:30
it's a fun one. It's a fun I've been playing around with chalk for for a while. We started this up in middle of the summer kind of on a whim and took a life of its own. And now I've created a new thing on my plate, which is, I'm having a lot of fun with.
James 00:44
That's so cool. Well, I'm excited to be here. Awesome. Well,
Phil 00:48
thanks a lot, we can jump right in, we'll be here for you know, an hour or so. top of the hour, I guess seven o'clock eastern. We'll wrap up, usually like to leave the last few minutes for for questions from the audience. So if anyone here is listening and has some questions, write them down, drop them in the comments, we'll create some space for folks to come up. But until then, I'll give a quick intro and then pass it off to James to share a bit about himself and we'll dive in. But James is a seasoned entrepreneur, I'm really excited to have you here today. You are the founder of magic mind. And before that founded a company called tilt, which was acquired by Airbnb, I remember being in university and tilt was all the rage. A while ago, it was super cool. And I know you've you've been supporting through some of your angel investments, a lot of really interesting companies. So I'll pass it off to you to just share a little bit about yourself. And maybe just dive into a bit of the background kind of pre magic mine and how you got to where you are today.
01:43
Happy to Well, first off, thank you for inviting me to join this is a cool, cool community. And I'm excited to stay in touch with the community afterwards. z. I'm an investor in a handful of DTC brands. And so this is a world that, that I know and love dearly and, and I'm sure this community has a lot of experience that that the brands that I'm an investor, I'm an investor in could benefit from so magic. And I'll also just say one more thing on this chalk app, I am an investor in clubhouse, and I am loving this interaction experience more to be honest than then what I've seen in clubhouse. So love it just going going to give props where it's due. So if anyone's connected with the creators of the app on here, kudos. So my background, I really don't know where the best place to start. Because every few years, I just decided to jump into a different a different realm. But my original background was development economics and working in poverty alleviation in South Africa for a few years. And and then while I was working on the ground in development, I saw the role of software, this was 2008, nine and 10, I saw the role that software could have in impacting the world broadly. But even specifically within poverty alleviation, it just felt like the most scalable way for a motley crew of 10 2030 people, this most scalable way to try to affect change. And I was I was working on the ground in right outside of Cape Town with 30 people in a nonprofit. And just felt like that was not the approach to scale change. And at least it could impact a community but you get it working in one community. That's what we had the issue of, we had it working in one community and really struggled 10 years in to try to get it to work in another community, the work that we're doing. And so I compare that to something like Google as grandiose as as, as that comparison was, I just was like, man, Google is doing more for education than any educational organization in the history of the world. And they're doing that with software. So maybe I need to figure out what this whole software world is, is all about. And so that took me into building fundraising software for nonprofits, and felt like that was a scalable way to to impact nonprofits around the world building really great software for for them to fundraise on and, and built that company out tilt out for about five years. And we're able to grow it to a couple million users but could not monetize it for the life of us is for people in the room that are in the US. Venmo is growing faster than us. They're about two years ahead and had a similar issue of not really being able to monetize it, but they had the backing of PayPal Pell and, and a massive about $90 million a year of just subsidized growth and so felt like, Alright, we've taken this as far as we can take it. We tried monetizing it every which way that we could and consumers just aren't having any of it. When you try to charge people for sending money between their friends, it's, it's a really dicey proposition. And so I felt like we need to partner up with someone, someone much bigger, like Venmo had done. And with PayPal, and so it was between Amex and Airbnb, and ultimately, we partner up with Airbnb and, and I went over to Airbnb and built out a couple business lines there. But But always knew I was going to end up back at the early stage side of things, and the, the traversal, from their software to, to a drink company was kind of accidental, I just was making this little thing in my kitchen. A concoction that started from I, about seven years ago, was in the ER, and I developed a heart condition from drinking way too much coffee about six to seven cups of coffee every day. And long story short,
06:20
I develop this heart condition, and my doctor had said many things during that day, which was everything from like, we're about to go to the ER, across the street, to a heart condition, to to your heart's beating at 170 beats per minute. But the two big memorable things was that caffeine was was in my caffeine, true addiction was contributing to it. And I just had never heard anything bad about caffeine, even though I suspected that there were some less than that healthy side effects. I just thought, oh, everybody loves coffee coffees everywhere. It's, you know, especially in San Francisco coffee is like, you know their religion, and thought there couldn't be anything bad from it, come to learn that it can really there really is biological cost to a caffeine addiction. And to that my doctor said to me, have you ever tried green tea with your condition, you really can't drink more than 80 milligrams of caffeine a day. And that's about half a cup of coffee. And you might want to consider switching to green tea, it has this compound net called l theanine, which will help extend your body's absorption of caffeine over a longer period of time. And it will decrease the cortisol spikes that come with each cup of coffee that you're having spikes your body's natural stress hormone. And so all of these like, the background being the biological costs me go into the ER, all that stuff was kind of brought into the foreground with the fact that there I could be drinking something else. And this this little kind of thought got lodged my brain of this LLC, and even stuff that if it was paired with caffeine, I'd get more out of my morning ritual. So it's, that was the beginning of seven years later. 120 different iterations of a morning ritual drink and, and magic mind was the creation. And then yeah, it just started out in my kitchen. It had like 200 subscribers from my kitchen before I ever made it into a brand and launched that like nine months ago.
Phil 08:34
Okay, super cool. And the branding on that website is fantastic. So I mean, what a journey to get there love to dive into to magic mind in a bit, but actually wanted to chat about tilt for a moment. Just before that, you know, yeah, it was an incredibly popular product back when, you know, back in its time. And I think you've touched on that nicely. And the way that you shared that millions of people were using it, I almost feel like it was ahead of its time, right. Like, even though the challenges you face then were around the competitive landscape and the deep pockets of a competitor and Venmo. What maybe what do you think you had right versus wrong with tilt when it comes to timing?
09:15
Oh, that's it's a great question. I think right off the bat, it's you got to nail three things. To build a company of massive significance, in my opinion, you have to you have to have a product that people truly love. You've got the second hoops to jump through is you've got to figure out growth and distribution. And then third, you have to have a great, you've got to have great business mechanics beneath beneath at all. And we've all seen products, maybe love products that maybe check the first one, but they can't nail growth and so then it's just maybe acquired by a behemoth and wound down or they nail The first and the second. And they can't build out the business model. beneath it. Vine is a good example, kind of was this wildfire for that people really loved for two years, three years. And then they had about 18 months to figure out the business model once they are acquired by Twitter and couldn't really build out a business model that that, you know, justified of the growth and, and dilution of sorts of mindshare within Twitter's offices. And so they ended up winding it down, and, and so and it's a bummer. And once I saw up close how hard it is to nail all three, then it just made me really appreciate the businesses that do and the leaders that build companies that do. And ultimately, we couldn't nail that third bucket of a compelling business model. It's, it's I think Venmo is starting to get there now. But they're about 11 years in, and all told, PayPal has spent somewhere between 400 to $500 million to subsidize the growth. So it's, yeah, it's and it's still unclear if it really will have true, you know, really special business mechanics beneath the surface. So that's what I think we got right those first two and what we got wrong with that last one
Phil 11:26
really interesting framework. Apologies, if you see me throw that up on Twitter, but I love that it's a it's a really good POV, you know, product people love being able to figure out growth and distribution than having a really strong business model or business mechanic underneath it all. And you can have two or three and, and you can't capture kind of that that mass opportunity, which is really interesting. I think one thing tilt nailed was kind of like some of the social commerce features, I think we're really ahead of their time, especially given social commerce is like a huge buzzword these days, you know, with a lens leaning towards kind of some of those social commerce features. If you relaunch something like tilt today, what would you do differently? Or to put another way? In? What kind of space Do you think exists for people to attack that social commerce space in an interesting way?
12:13
As another great question, I think it would be, well, here was my big mistake, my big mistake was that I even even listing those three buckets that you have to nail to create a company of massive significance, I think I got the order wrong and thought, okay, nail something that people love. hard to do, but doable check, and then grow it and grow it as fast as you can. We used to I used to parrot the phrase that Larry Page is known for, if you can always monetize usage. And, and that might have been the case in the arts. But now in the last 10 years, we've seen that you can always monetize usage. And and it just was, I would say that phrase just and believe that you will be able to monetize it down the road. And I think that the the real order should be built something that people love with and then the next thing is with great business mechanics beneath it, and then grow it and and that that rubric probably would have led to a different product roadmap. And and would if to answer your question for today, I would build, tilt, but start and solely focus on businesses first. And for for people in the room. Tilt would allow you to pull your money together for anything. Literally, like party buses to two presidential campaigns, it was used for all those different things that 10 people or 10,000 would pull their money together for and it was just built in a very mobile friendly, very just in social way. Yeah. So it was a really fun product to build. But we focus too much on those social aspects of the tailgate on Saturday, the group gift for the friend's birthday, and and those who are good for growth, but they it's really difficult to get seven friends to say hey, you're all pitching in 50 bucks, let us take 250 each, you know, 5% each when you know each other, but if we focused more on businesses, then you know if we can get you distribution, and you're going to sell something maybe for 24 hours and if 100 people buy it, it you unlock different prices 150 kind of group on Ask but instead of coupons, it's four batches of products. I think it would have had a better shot. I don't know if it would have grown, it probably would not have grown as fast, but it certainly would have had a better shot and better shot as a longer sustainable company. How do we nailed those economic In the beginning, businesses are willing to pay quite a bit for customers. And, you know, friends and nonprofits just just weren't
Phil 15:10
really interested in reflection. Is there anyone you've seen, take a similar tactic or approach to what you just shared kind of on the b2c ecommerce brands side of things where maybe they crowd dollars from their users or their their audience to maybe activate a product or something along those lines is really interesting idea.
15:31
No, no, I haven't I think what's interesting when I, when I do tell people about that idea, they, I think there's two modes of thought one is, oh, that's basically like Groupon. So why would you do it that didn't work out. And my response to that side of thinking, is, well, Groupon was the fastest growing business to a billion in revenue, it just might not have been the behemoth that people wanted it to be. But it was, it was quite the compelling customer experience. It was really awesome in the early years. And and then the other mode of thinking people kind of just say, well, is that really that important? And, and I think when, when you are trying to sell a product, this room is perfect. The social proof that goes into selling a product and the other constraints, like 24 hours only, being able to see the thermometer of progress grow. A lot of people just don't think it's that compelling. Because they don't have maybe the the professional background to know how just how compelling those things can be together. For for someone, you know, on their phone, deciding whether they're going to buy something or not. And so, a lot of people just don't see the magic in that if you do combine those those features. We saw it we just saw it around the last seven months of the company's life, we saw that started to grow, and it was just too little too late, have an emphasis put on that customer segment.
Phil 17:07
Really cool. Good, a good piece of advice or idea there for any entrepreneurs in the room thinking about something to work on. I could imagine DTC brands picking something along those lines up.
17:18
Yeah. And Phil, I might add, if you don't, if you don't mind, just a little color there. So I host a podcast called below the line. And it's all about the psychological side of the founder, journey and, and creator journey because there's comedians and authors and, and musicians on the podcast that I'll interview as well. And, and I, it took a long time for me to, to really internalize a few things around failure that I think is just I wish we talked about more and, and, and it revolves around the number one predictor of failure, one of the biggest reasons that companies fail according to Y Combinator. And we're lucky enough to go to go through yc, like eight years ago, and it's a it comes down to premature scaling. And we we did that at at Tilton. we scaled prematurely we had nailed a few things. And and then we just started grow the business grow, grow, grow. And I think for this group, it might be this extra context might be relevant around. Why do businesses prematurely scale like we knew that that was the number one reason that businesses fail, and yet, we still did it. And I can speak to my experience, the reason that I, I kind of led this, this team psychology on let's keep growing, keep growing, keep growing, I think comes back to when you're early in your career, when I was early in my Creator journey, I really sought every piece of external validation, I could because I just didn't, I really was pretty insecure with my own abilities to build something. And so I looked everywhere for external validation. And the easiest way to get external validation is to have a graph that's going up into the right, because everybody will buy into whatever you're doing, just keep doing it, if you grow the thing that you're building. And so from my experience, the why behind Tilton achieve it's it's my ambitions for it was these very short term searches for validation, short term thinking searches for validation of growing 25% month over month or getting this new feature to grow and validate its its own feature version existence. And instead of every single day, and looking at what we could grow and how we could grow faster instead of every single day, eating a bit of poison on. Let's look at the whole equation. What isn't working And let's spend more time on on those areas of what isn't working, that should be working like the business model, or, or just you could replace it whatever is in your own, you know, your own day to day lives. But the things that aren't working, and just, I wish I'd created more space, just felt like I was we were always 20 miles behind where we needed to be. And, and I think that it led to a lot of unhealthy growth decisions and business decisions, because it just always felt like we're behind, we're behind, we're behind and worried about it, instead of just saying, We're exactly where we should be. Because something isn't resonating with this customer segment, or something isn't working with the business. So we're actually exactly where we should be. And let's take a really deep breath, be okay with it. And every single day, consumed the bad news. And, and yeah, I don't know if this will make sense to folks or if I'm making any sense for you feel but being able to, to actively pursue the bad news each day, is what ultimately I think frees you from the terminal bad news of a business not working out. And I didn't do a good enough job of that I would seek out the good news like chocolate and and say, Okay, let's get more of that more of that.
Phil 21:27
That was incredibly well said. And it, it pulls that up my personal experience of mine, we, in my previous life, I built a fitness app called pump up and we grew it to over 6 million users. And we couldn't figure out monetization. And we, we definitely just focused on that graph, and maybe not more of those fundamentals. And I think, you know, where my mind goes, when you share this as a I resonate, and thanks for kind of getting very real there. It's, it's, it's something that I think a lot of entrepreneurs face, and it's a hard thing to face, right? It's that comfort, and that ego that comes with the validation of the graph going up into the right and the dollars that come your way and the team you can hire and so on. And I like how you say it to just pursue the bad news each day. And to almost appreciate that you have the opportunity to fix those fundamentals. And, you know, almost that concept of go slow to go fast. And I think a question that comes to me out of kind of a bit of what you just shared there, as you know, what advice or point of view, can you share with an entrepreneur who is just focused on, you know, that validation and that short term kind of growth, that are the validation that comes from that short term focus on the graph going up into the right, but ignoring the fact that there's just other problems that require you to solve today, otherwise, you will have you know, not the outcome you're looking for down the line.
22:47
It will, you know, there's, as the adage goes, only generic startup advice is that there's no generic startup advice. And so it's always stage dependent of you know, where the company is or where the founders, but I think the one thing that everyone can implement, you know, the second day here, the the advice is to eat a bit of poison every day. So just to reiterate that, at that point from, from the last answer, just just seek, seek, I mean, that's the way to inoculate yourself from poison, right is to have a little bit of it each day, if people didn't know that, biochemically, that's the that is the case. And, and you become immune to it in a really good, healthy way you can withstand it. And that's what I loved at Airbnb is working shoulder to shoulder with Brian chesky every day for two years. He loved taking in the bad news. And and he really sought out the bad news, but didn't have a negative reaction to it was just like, oh, okay, that's awful. X percent of employees this quarter don't see themselves at the company in a year from now because of, you know, the ongoing reorg or something like that. And he just owns it alone in a massive team wide meeting alone in a small team meeting. And and I think I was it just comes from a well seated place. Yeah. And maybe that comes once the company has 4 billion in revenue, but I have a feeling he had he had that early on as well. And I think that my mistake as a founder was I really wanted I was so addicted to the good news and and really didn't want to pay attention to the the the bad news and I think that was that was for maybe some some healthy reasons of when you are just starting out. It's fucking awesome. Bad news. I mean, when you're, you're just getting going and building something. It's, it's, there's no good news. And so in many healthy ways, maybe it's important to focus on the good news, when, when you're just getting going to a certain extent, but but I think I took that just too far to where even five years in it was like, No, how can we reframe this to where here's the opportunity over here, here's the opportunity over here. And, and I think it's a real disservice to a real disservice to a team effort, because everyone is adults, everyone can handle bad news. And, and ultimately, it just gets harder and harder and harder to, to digest that bad news to digest that, that poison, it's more poisonous, it's more costly. If you aren't just eating a little bit of that poison every single day. Going into I mean, I have to remind myself today, all right, when things aren't going well, don't just kind of like, put that email, flag and put it on the back burner. But like, no, read it right now, go pour through it, tell the team about it, and just say, yeah, that's this is what it is on a Monday and, and November, and this is this, there's there's no changing and, and you It's so interesting, you just start to do that. And then it changes the dialogue for the team members around you, they start to do that, they start to feel like it's okay. And that just highlights even further. How unhealthy it can be when I look back, if the leader isn't doing that, how it limits the dialogue around the leader of you know, what people can say or what people should say or focus on. When when attention really needs to be placed on, on the things that aren't working out.
Phil 27:01
Well said, Thank you for sharing all that. I think you know, on that there's a lot of insight there. And and I think just one piece that you wrapped up there with around leading by example, you know, that if you as the person in the leadership role or a person in any leadership role aren't questioning the status quo and focusing on eating the poison, as you put it, and just making the fundamentals of this business better, people will not follow your lead. And if you do, you can create comfort in not being the norm and probably way better decisions and a much better product will come out of it and as such a much better business. So really interesting, I want to jump a little bit to magic mind. And we have a lot of DTC folks in the room. And you spoke a little bit about what magic mind is and how you got to, to starting it, you know, in your kitchen, just to make that transition from the tilt side of things. What have you applied from tilt to magic mind maybe more tactically outside of some of what you just shared around, you know, eating the poison and focusing on the hard things that are in front of
28:02
you? Well, the, I'd say they're probably a bunch of subconscious things that I don't even realize I'm applying. Certainly, it's been the conscious things have been, I mean that, like I said, I waited till I had about 200 subscribers, before I ever gave it a name. But if I was asking for the negative feedback for two years on it, and didn't, and really didn't even want to create it into a company, I was just asking for the negative feedback because I was so passionate about getting the product right. And, and for listeners, magic mind is a I call it a productivity drink. And so instead of energy drinks, that are hot, full of caffeine, and stimulate you, as we all know, you're one to many coffees, it's the antithesis of of productivity or jittery or anxious. And so I realized early about seven years ago, midway through my entrepreneur path that that productivity was so much more than just energy. It was energy cognition, like flow, focus, memory, and it was balanced, or just basically being able to de stress and that once I pulled on the threat of this LLC and stuff combined with caffeine will extend your body's absorption and lower your cortisol. I was like, What else can I add to my morning caffeine and and then my engineering brain just went crazy for Well, it still does for the last several years, but certainly over the next six months, I was just concocting all kinds of different things. And, and and so I was just, I think I was instead of rushing to start something new, it was the polar opposite of I just want to make this great for my own mornings and get the most out of my day and then I was like the nootropics guy at tilt and at Airbnb and within Y Combinator and so people would just always ask me questions about should you? Have you ever tried this? Should I try this? What dosage should I use with this? or How should I cycle that, and I, and so I started to just send out the the list of stuff to buy on Amazon, and realize it was so expensive for four people, and if I bought it wholesale, then I can make it for friends for, like, 75% less, and so per day, and, and I would just give it to people, and it was just so self validating, there was no external validation needed. It was, I would have a great day of flow and just get, I don't know, 40 or 50% more stuff done. And then I'll give it to a friend. And, and they would say the same thing. And they would ask for more. And so just kind of snowballed. And I think that everything about that, subconsciously and consciously was very different than tilt of Let me think through something big and concept out something big, versus Let me pull in this little string for my own issue, and, and then just see a friends have the same, same effect. And, and with tilt, it was like, let me register a domain name and, and start thinking about the brand. The night I had the idea. And with a magic mind, it was just James's list of stuff to buy on Amazon, and then it became James's magic potion, and joke. And then and then two years in became a brand.
Phil 31:45
Really cool. How do you go about developing and iterating on the formula behind magic?
31:50
Do well, it's a lot of self experimentation. And then we have five doctors on a scientific advisory board that I I put together that I'm just destroying their inbox by asking him about this and that, or this new research or that new research and, and the drink is built to be a like software where you just have one subscription. And, and we're on version 3.0 right now, and and every few months, it just gets automatically updated with the latest science or latest understanding of different ratios and things. So yeah, it's a lot of self experimentation, then we have a beta group of about 20 people that help help us experiment with potential new, new versions.
Phil 32:37
That's interesting. And how do you incorporate user feedback on version one or 1.5 or two to get you to 3.0 outside of the beta group?
32:48
There I don't I we do keep you know, Excel spreadsheets and things every time someone unsubscribes we check with them of why and review that. But it's a lot of lot of qualitative. I just I try actually, even though I love software. And, and I love technology, I just try to keep it as human as possible. And as qualitative as possible, because I think humans are, especially if you really care about what you're building, you're going to be a better pattern making machine then, than any survey software things that you could build. And that in that vein, and you just get these, these extra bits of context when you make it conversational. And we do do in NPS we do you know do judged at me reviews and things like that, but just nothing changes. Nothing beats just being on a text thread with a friend that's been four months in and he preferred the old taste to the new taste. And you asked him why and and then you follow back up and five days and like no actually think I'm getting used to it now I actually prefer the new taste. And that's that is a perfect, tiny micro example where you couldn't capture that in a survey would be kind of a snapshot in time and not an ongoing conversation.
Phil 34:19
Very cool. What's what is the magic mind team look like today?
34:24
Well, it's a this is a very, this might be I think it's perhaps the most interesting part of the company for started, folks. Is that just the way that we're building it? I there are many things I'm not I'm not good at one of the things I was pretty decent I was raising capital, but it became a crutch and became any overused strength is a weakness and it was a real weakness just whenever we'd hit problems, let's go out and raise more capital and and Especially on if you're if you're really good at making the graph go up into the right, then you you can lean on that unhealthily. And so with magic mind. It's everybody's part time, there are no full time employees, we're at about 1.5 million in annualized sales and for 10 100, maybe 1500 subscribers, and it's just super lean, have have no full time employees, and it's all asynchronous as well. So we have one meeting, would you have one meeting, that synchronous meeting each week? On Mondays? We just had it? And then, and then it's all it's email text. And I love loom loom comm for, for making things as asynchronous as possible, and I can't tell you how liberating asynchronous is. There is remote is cool. But a synchronous, is it's game changing. It's incredible.
Phil 36:10
What do you what you love so much about it?
36:14
If you think of the, the line items of the true expense reporting line items of a company's operations, the most expensive thing it does, oftentimes, it's just meetings. And the most expensive thing that a company will do tomorrow at name, the company Airbnb will be the the meetings that are on everybody's calendars that are scheduled for an hour, but it's to make a presentation that is 13 minutes, and then people lobbing questions, long, short, short, it's just incredibly inefficient. It's arbitrary timescales of 30 minutes or an hour, and you have to coordinate everybody together. And then when you think about, Paul Graham has a great essay of maker schedule manager schedule. And, yeah, it's so so you know, the concept makers really require long blocks of uninterrupted time. And when you toss in a meeting, there might only be 30. And I remember I tried to introduce Paul Graham, to someone that was coming in town. And he replies like, I would if I you know, I'll meet them if I need to, but but one meaning can destroy a whole morning for me, and, and I was like, wait, what, what does he mean by that? It can't, doesn't destroy me and just make it a, you know, 45 minute coffee. And he linked to that essay. And yeah, the 30 minutes before, you can't do anything, the 30 minutes after, you're kind of just trying to get back into context. So you add up all of these things. And meetings are, I mean, they're the they're so anathema to, to real productivity. So I just started to hold like a really hardcore line of like, no meetings, no meetings, even outside partners, like our branding agency, I was like, No, here's this tool called loom, I recorded a loom form, we kind of onboard them to using the tool. And then within like two weeks, every partner that I introduce loom to or just email in a synchronicity. I don't know 60% of the partners, right, something within two weeks being like, Whoa, this is awesome. off of a first impression that might make them feel like we're kind of stiff arming them and not wanting to meet.
Phil 38:41
super interesting. And I see some of the product managers that hashtag paid in the room who I expect to be messaging me after this, because we have far too many meetings. But what do you think is lost without meetings?
38:53
Yeah, it's not perfect. Some things are lost some of that extra context. Certainly, if it is a where you are gathering information, a meeting can be better when you're distributing information than loom and email threads, I think are really great. But but I think you you miss some of the gathering of information when you when you do it, but I think you pay, you pay 30 cents and you get $1. So it's, it's not all perfect, but I think you know, just, it's so amazing. So a 30 minute presentation, instead of 30 minutes for five people to be in a room the 30 minute presentations sent out and loom everybody can listen to it on two x speed. So it's six and a half minutes. You do it on your own time. Maybe it's in the time that you have blocked off for doing emails, and and then you reply thoughtfully with your own thoughts versus even in the information gathering, you know, you really get to look up the answers to the questions rather than We all have been there where we're like, oh, yeah, I know, I think users are saying because there's like a vacuum you got to fill it with, with some directional data versus Okay, let me go look this number up and and presented on the thread a little more, you know, fidelity.
Phil 40:19
Super cool. I love how granular you get with productivity. And I think there is no surprise you're working on a productivity beverage company right now.
40:28
Yeah, it's, it's weird how the? I mean, that's why I got into creating the beverage to begin with was how can I? How can I will, how it started was how can I get the most out of each day? And now I try to have a healthier perspective of productivity being measured and, and years and decades and Ethan no longer, you know, minutes and days. But But yes, certainly part of my makeup for some reason.
Phil 40:58
How did you think about or how have you financed magic mind.
41:03
I finance it myself for a while for a year and a half or so. And then Mike maples. And this is this is also just like a it's when you when you're doing things in the right way.
41:22
positivity.
41:24
Momentum kind of compounds.
41:28
Me,
41:29
I wish I had a better way of articulating this. But I think in general in nature things either either compound positively or compound negatively. And when you're taking shortcuts, and and you're raising capital to then to go out, you know, build something, you're selling part of a company that doesn't really have any value for this future company that you're going to build to where it has value. I've done that. And it just makes everything hard. You set these massive expectations, and you might not deliver on them, you recruit on these expectations rather than reality. And that's not all startup founders. But that's certainly what what I have done in with Magic Minute was just the flip. It was just like, this. Works for me, works for friends. And then Mike maples who's like the OG seed investor, from from from can't believe I'm blanking on his on again from floodgate exactly from floodgate. I only know him as as Mike, but the he texted me one day, and he was like, Hey, I love this. And can I write an angel check. And I was like, Man, you're like a legend. So I would love to get you involved. And then that snowballed to, hey, I can't deal with it. And I was like, Okay, if I'm gonna bring on an LP, I don't just want a small check. So long story short, he ended up writing a 500 k check. And it was large enough to where it needed to be from from floodgate. So he joined and then similarly, Justin Kahn, just emailed me out of the blue after, he'd been taking magic mine for like, a month. And then Kevin Rose, he shot me a note, like two hours into magic mining. And so a few people just started to try it, and reach out. And I've never put a deck together or, or anything in and done a fundraiser is just been on the heels of people really trying and enjoying the product. And on the heels of a strong product.
Phil 43:49
Very interesting. You touched on some really interesting points of view on financing a company and I know you were involved with yc. So I if this question is not one you want to answer, please, you don't have to. But I know yc is so focused on setting companies up to at the end of their, you know, of the cohort to pitch on Demo Day and raise capital, and kind of with some of the thoughts you shared around some of the dangers that can come with that. Do you think that an environment like that is setting up founders to focus on the wrong things?
44:22
It definitely can it definitely can I I'm an angel investor and in 40 something companies and it's and I and I've just seen both sides of the table. And I just I would say you know, just proof of the pudding is in the eating. I ended up building a company where I didn't raise capital for a year and a half, almost two years. Outside capital and just working on it and and on the side So I think that, you know, it's just, that's what I did, knowing both sides of the table. And I think that it's I was in a very, in a very fortunate position to have spent 13 years building things to get to the point where I could financially have that, that, you know, just financial bandwidth to to explore a side project, on my own dime. But, but I also know, within specifically this, you know, this room DTC, I know, a friend that started a company with $30,000. And, and I think they did, like 800 k in revenue last month, last month. And, and they started with 30 K, and there's a lot in between that, but a lot of work, a lot of smart decisions. But they did. They did it with, you know, the amount that I think probably anyone in this room could raise from family and friends, if you, you know, you worked at it. So that's one of my favorite aspects about DTC is is that you get to the product as I think you should, I think you really should get to a product that people love before you take on a dime of outside capital. And if you require outside capital, to to try to build something that people love DDC wise, then, or CPG. It's just it, you might be doing it for the wrong reasons, you might be raising capital for that external validation for you to soften the blow of going into full blown entrepreneurship and taking that dive. You might be doing it for who knows what, what reasons that maybe to have a salary from day one. And in those can make logical sense. But they, they might come up with some some unexpected, costly side effects of that just comes with raising outside capital. And I just think, if you're building software should if you're building loom, then yeah, you probably need three years, and seven to 12 engineers. to nail it software is really hard, but for this room, I think having that first bucket, you can do it without raising outside capital, that product that people love.
Phil 47:23
Very interesting. You obviously work with a lot of CEOs in the DTC space within that portfolio 40 companies, what what do you see what are the common traits you see amongst the best founders or CEOs that you've invested in?
47:37
Well, real quick, you're wanting to know a little trick, a mental hack for some energy late in the afternoon, where you don't want to hurt your sleep with caffeine.
Phil 47:46
Yes, I do.
47:48
Dark Chocolate baby.
Phil 47:51
So, love, love it. Zero, like zero, or I mean 100%
47:56
No, Hell no, I'm not that hardcore. But like, anything over 70% and me I have dark chocolate covered almonds. Nearby is like my go to snack with anytime after, after 2pm. There's no caffeine whatsoever. So to close for missiles, switch to guns. That's the phrase I say in my head probably four times a week. And I've never said it out loud. To anyone. So enjoy. What was the question, Phil?
Phil 48:30
It's all good. I love the anecdote. It's gonna be my last one. I'm gonna open up the floor for the audience because I see a few in the comments. Just what are the commonalities you see across the best founders and CEOs. And in the, you know, of the companies you've invested in?
48:45
Man, you were asking me the that's the through line of the podcast as well. It's below the line is all about just what is happening. It's the the metaphor of an iceberg and 90% of the iceberg is below water. And yeah, so what's happening beneath the surface, and the patterns with with the best founders, there are these there are patterns that I've noticed, with the best founders beneath the surface, even though one might be building a SaaS business and one might be building an ice cream business. And, and the out of the 40 investments, probably 11 or 12 or DTC companies. And, and the rest are are mainly software, the SA some of the biggest, some of the biggest patterns that I've noticed. First one I touched on was eat a bit of poison every day, the best founders. They're really good at bringing in and incorporating the bad news into the conversation openly and almost embracing Li and it gives everyone in the team this psychological space to be like, oh, wow, okay. So part of the buildings burning down But the founders kind of like acknowledging it, and joking about it and being like, Yeah, we got to fix that. Because at the end of the day, it's not that none of this stuff is that serious building companies is not that we should do it sincerely. But we should not do these things seriously. Because it's just, it's just, you know, it's, it's not a healthy psychological approach, to feel like, and to make the team feel like you're curing cancer, if you are, you know, building a really awesome whatever salad dressing company. And it's really cool. And it just, it is enough to build an amazing chocolate company or an amazing salad dressing company. That's, that's cool in its own, right. So you really can, if you don't take it too seriously, you can incorporate the bad news on a daily daily basis, and then it gives the the sunlight to, for everybody to acknowledge it and start to solve for it. That's a big one. That is everything I just said, The antithetical that is the hallmarks of, of, maybe not, I wouldn't say bad founders, but founders that might be holding themselves back and their team back by only focusing on on the good things. Because it feels good in the moment. But but then it's, you just, you don't want this creeping divorce of reality. And, and, you know, fantasy between the way executives talk about a company and, and all the individual contributors talk about the company. So that's one big thing. Another big thing is, I'd say, my favorite thing that, that I've noticed a few founders do, and it's not a major pattern yet is is they really walk through the founder of hims. Andrew doodle talks about this on the episode that I did with him and but he, he talks about exposure therapy. So exposing himself to a really articulate thought out world in which the company fails. And he called it exposure therapy, or his his approaches of exposure therapy, therapy, the larger pattern is, these founders are not just willing to embrace the bad news, but they get really comfortable. George Bernard Shaw had a phrase that he can be comfortable in any scenario if he imagines the worst case and gets comfortable with that. And that more or less is, is similar to what Andrew was saying, around exposure therapy. But the best founders, they, they're not only embracing the bad news for today, they're, in many ways, kind of
52:52
seeking out the worst possible scenarios and, and becoming comfortable with them. And the inverse of that, I think, is where I've been as a founder, where you, you're just like, No, I'm going to will this into existence, and it's going to be amazing. And I have this powerful vision of what it's going to be. And VCs really encouraged this type of thinking, and they don't know what they're doing. When in doubt, remember, VCs are money managers, that's all they are, is like an investment banker. Yep, an investment banker trying to tell you how to build Amazon, maybe they're a little bit closer. But they aren't in the building, they aren't building the companies, they're certainly not the founders that are seeing all of the visibility that comes with it, and of what's going right, what's going wrong. So just keep that in mind. And they encourage this this, like, have a 30 year vision. And, and I think that that, really, oh, you're gonna lose your Alright, so yeah, I think that does some, some harmful things, for especially young founders, then getting really tied into this vision, versus being very flexible, and where that vision can go differently, you know, listening to different customer segments that might be pulling you in a different direction. And I think that goes back to being comfortable with plans not working out. And when you're really comfortable, and that, you know, I don't know, series of potential scenarios, then it really allows you to become a great listener. And that's my third piece is the best founders are really good listeners. So though all three of those things are somewhat in the same area code. So I think there it's a, you know, there's reason that the best founders in embody those three things, but, but yeah, the third one's kind of self explanatory.
Phil 54:57
Totally. Thanks, James. I have more questions. But before I'm not going to do that, I'll just open up the floor to the audience to jump up and ask a question or two if you're down to bleep past for a couple of minutes.
55:10
Sure. And I'll try to do rapid fire with the answers to try to get to a few questions.
Phil 55:14
Okay, love it. I just opened up the stage Josh and diamond. You both are excellent questions. But why don't you jump up and ask James yourself, you can just tap the speak button. Oh, Paul beech into it jumped in Paul.
Question 1 55:27
Hey, Jim, just quick question for early stage direct to consumer brands that are looking to go omni channel. What advice do you have for for that? And about that?
James 55:41
Say that one more time, Paul?
Question 1 55:42
Yep. direct to consumer brands, just looking to go omni channel. So you know, either wholesale? Yeah. Or just marketplaces. Any advice? Um,
55:54
let's see if this pans out. I have no idea. But I have invested in brands have gone omni channel. And I have decided to go super hardcore on e commerce and in just one channel at a time and really own the channel. I think that it's if everything's going well, then yeah, let's let's get 10 spinning plates at the same time. But when three or four of them start to wobble, and you have 10 different plates spinning, then it makes it really, really difficult to even keep the six that are spinning well, to keep spinning. And so I that's my that's my viewpoint on it. But not every brain can just focus on e commerce, but I focus is power is the overarching thought.
Question 1 56:47
Make sense? Thank you so much. Pressure is a good
Phil 56:51
diamond that you came up next. Just wanna make sure you get your question. Just gotta tap off.
Question 2 56:57
Okay, this is on enemy. Thank you for putting this together. My question to you is, how do you balance your health as a founder and building these companies? I know you spoke earlier about some conditions you had with drinking tons of coffee, I'm also that person. So how do you balance yourself out? as it seems to be a person who's like, high functioning has high output? Like how do you make that balance? Because I think sometimes founders forget to implement that balance when we're building things at the foundation. Yeah, I
57:28
wish I had a pithy phrase for this one, this is a certainly a really important. This is, this is like the question, I think, because it's tied into the domain of magic mine for sure. It's, it's all about upgrading our personal productivity with with a morning ritual drink. So I'd say maybe the best place to go for a good answer there is, is if you google mental wealth, I got a blog post that I called mental health, that goes into depth of the five key areas in my 19 years of dealing with all kinds of mental health issues and, and, and being able to find groups in life. And it's sleep, diet, exercise, stress management, and then exogenous compounds, things like magic mind, that stuff, I think is fifth on the list from the first four. And so yeah, mental wealth is is the name that is the title of a blog post. And it's all it's oriented around investing in this part of life, that you're talking about diamond, investing in it, like you invest in anything else, a new skill or you know, your career. It's constant daily investments, and not something that switches on it at, you know, 7pm or switches on on the weekends or switches on during the, you know, we go on vacation, but it's, you know, daily, I'm thinking about it all the time, when I'm blocking off my calendar for thinking time, when I'm waking up every morning at the same time. When I'm just creating boundaries for the day where I don't have outside meetings, I've got three outside to outside meetings today. And, and so it just, I'm able to, I'm able to breathe in between them. go on walks in between them and, and, and so yeah, everything I just talked about, I touch on in the essay.
59:29
Okay, I appreciate you. I'm gonna check that out now. Thank you.
James 59:33
Course.
Phil 59:34
Thanks, diamond. Joshua Jay.
Question 3 59:37
Hi, James. Josh here. Huge fan of your podcast, by the way. thank our product manager at lasting it's a couples counseling app. And actually now at talkspace. We were acquired a few weeks ago. I'm really curious about how you use loom and what that what those workflows actually look like. I am a huge fan of asynchronous work. We're constantly on slack and It's a tough little productivity killer. So I'd love to hear what that actually looks like for you.
James 1:00:04
Yeah. Oh,
1:00:05
man, I and that reminds me, I need to write a blog post on this. Because it's been probably the most interesting thing that I've observed in life in the last three or four months. That, and usually when that happens, I figure I need to start jotting my words down on it. But, but this asynchronous nature is just blown my it's blown my mind how beneficial it is to getting work done. We do not use and this is like by design, we don't use slack. I hate slack. slack is the enemy of productivity, being reachable is the enemy to productivity. And so we use tax, like worst case, you need to, you know, you need to get in touch with me real quick. Shoot me a text. Otherwise, it's email and loom. Google docs for kind of like presentations, and then zoom for when there really needs to be a meeting or the weekly kind of sync. And and that way, I just, you can I think it's a better mental filing cabinet to have those tools, then and always on chat client, where the expectation is that everybody's going to reply quickly. So I know you're asking about specifically how he's loom. But surely the most fruitful thing I could say is slack is, is is awful. And I think a work messaging app is that is better than all work messaging apps is, is cool. But work environment that doesn't have work messaging apps is better.
Question 3 1:01:42
Love it. Thanks. Sure.
Phil 1:01:45
Jay, last last but not least, and we'll wrap up. Thanks, Josh.
James 1:01:49
Thank you all for joining us. This is fun. And these are great questions.
Question 4 1:01:55
Yeah, my question is a question you've probably been asked a lot and people give hot takes on a lot. I've got friends that are founders that are across the spectrum on this question. But I'm just curious, like, you know, I've got some people say that, like, you know, when you enter a category, you basically figure out whether you have product market fit or whether it's possible to get product market fit within that category pretty quickly. And it's either like kind of a, you know, kind of people that think it's a bit more deterministic, and things are like either a hit or they're not. I'm curious kind of where you fall on that spectrum as it relates to? I mean, I would say CPG. But you know, you've got experience across the board. I'm just curious, maybe more generally, what your thoughts are on that topic?
1:02:40
I don't I don't know if I have a good answer for that. I think it's I think it's really hard to come up with, like I said earlier, there's no, no good, generic Stark advice. And you could find examples in both buckets. And but I do think that the unity between all these buckets is there is a lot of luck. involved in a product taking off, I don't think there's a lot of luck in a founder, establishing something special bit or, you know, builders, building something special, I think that is that's only a matter of time. But having a hit is, is a lot of luck. And what I mean by that is, you know, you stick with it, great builders are going to build something special in in a 10 year time horizon. And that's the great thing about businesses, you only need one thing to take off and, and you can be set for for life financially or career wise. And so just sticking with it. But yeah, if you're making a you know, XYZ DDC product, it might not be a journey of iteration until you make it work. It might be three ideas in totally different categories, that that end up working, I do think zooming out, that people should be category category creators, rather than category winners, I think it's so hard to be a category winner. But it's much easier for new entrants to become category creators. So that's a little bit of the thinking behind productivity drink was a conscious decision of I don't want this to be an energy drink. I don't want this to be better than other energy drinks. I'm going to create a new category of productivity drink, and try to make this distinction between energy and productivity. And it's going to be many, many months and many years of investment. But, but that is going to be that ultimately, five years down the road, that is what can lead to, you know, a 10 x type of outcome if you're creating a new category in people's minds. Again, harder to start but much more fruitful on the other side. And, but that's a little bit of side to what you're saying in the beginning. I think Luck is so much so much a part of the equation for products.
Question 4 1:05:04
I love that thanks. Alright guys,
1:05:06
I've got to jump to to my second My only other external mean tech but but Phil, thank you so much for having me on is really cool. This is a great way to do a digital q&a.
Phil 1:05:20
My pleasure and James, thank you right back for coming on especially now that I know how adverse you are to meetings. I feel extra honored. So thanks for dropping all that insight. I really appreciate your time and I know the community here does too. So have a great evening and thanks so much.
1:05:34
Of course and feel free to shoot me any notes on twitter at James Bashara and and i'm on there often so happy to answer any questions I didn't get to today. So thank you, Phil. Thank you everybody in the room.
Phil 1:05:46
Thanks everyone. Have a great night. Take it easy.
James 1:05:49
Have a great night.