THE STARTUP CHAT

[0:00:01]

Steli Efti: Hey everybody, this is Steli Efti.

[0:00:03]

Hiten Shah: And this is Hiten Shah. And I think in true Steli and, I guess, Hiten form, Steli and me form, we’re going to talk about something positive today and something that Steli came up with. I don’t know when he came up with it, but I heard about it right now. And what it is is, I think, something much needed right now, which is a discussion about what we’re seeing that’s actually working in business right now, considering shelter in place, COVID out of control, I think somebody called this Armageddon or something like that to me five minutes ago, before I got on this.

[0:00:40]

Steli Efti: Oh, really?

[0:00:41]

Hiten Shah: Yeah. They called it Armageddon. They’re like, “Yeah, how are you doing with the current Armageddon, blah, blah, blah?” I’m like, “I’m doing as fine as I can. And definitely better than a lot of people.” So I can’t can’t really complain about anything. And so, yeah, let’s talk about it. I think the big thing was, what approaches are working right now for people that we can kind of talk about, right?

[0:01:03]

Steli Efti: Yeah. I felt that it would be a good idea to just share some examples in our network, or within our friends, or anywhere that we’ve observed, that we’ve seen, over the last couple of months that we thought, “Wow, this is inspiring,” or, “This is cool,” that somebody is creating, or innovating, or adapting and changing, and succeeding in some way, finding opportunity, even in these difficult times, just to give people inspiration, to simulate them, and just because we have enough of the critical things that we read and hear about every single day. So how do we want to do this? You can go first, I can go first, with examples, and we’ll go back and forth, and I’m sure we’ll come up with and be able to share a bunch of good stuff with people.

[0:01:47]

Hiten Shah: Yeah, that’s fine. Yeah. Yeah, go ahead. Yeah.

[0:01:48]

Steli Efti: So the first thing that I’ll bring up is… Actually I want to go outside of tech, alright? So, at the very beginning of COVID being a bigger thing in Europe, I remember that, in the first few weeks, there was this shortage of masks. It’s not a problem anymore. This is a past problem. But while it was a big surging demand and problem, I remember that people were trying to research and figure out where locally can I buy some masks, because nobody could order anything online and get it. And I remember that I heard from a friend about a little store that was… I don’t even know the English word for that, you know those stores that do leather work, they fix your shoes, or if your-

[0:02:37]

Hiten Shah: Tailor. A tailor. Equivalent to that. Something like that.

[0:02:39]

Steli Efti: Yeah. There’s a small tailor in this town that’s 20 minutes from where I live that has and does masks, just go to him. But you have to have time because there’s a huge line outside of his little store. And so, I go there and the whole shop window is full of all kinds of designed masks, all kinds of flavors for kids for this, for that, and there’s a huge line outside the… It’s a tiny store, really. So I wait in line, eventually I get inside, and I wanted to buy some masks for my family, for kids, for relatives. And I start chatting up the guy that was running that tailor store, and the first thing that I noticed that, as I entered, there were all these, thank you letters that he had hung up from local hospitals and doctor’s offices. And I was like, “Oh, that’s cool. Did you just supply all these people?” And he’s like, “Yeah, all these hospitals and medical professionals in the area had a difficult time obtaining masks. Now, some of the masks that I do hit the medical grade, but I am not sure getting certification for it. That would be too difficult. But they still wanted them, so I’ve been just donating them.” And he’s like, “And the other reason I have this, to be honest, is it’s just good marketing. People just feel good when they see this. And so, I thought it’d be a good idea.” I’m like, “Oh, cool.” And then I asked them, I’m like, “How many other tailors are doing this?” And he started laughing, and he was like, “Nobody does this except me.” And I was like, “Why is that?” He’s like, “Well, the thing is, tailors are not very entrepreneurial. They’re very risk averse. And honestly, what I’m doing, sort of may be questionably legal.” So he’s like, there was twice that police had shown up to talk to him, to see if he’s allowed to turn this into a mask shop or whatever. And once they saw all the thank you letters from the medical community, and they talked to him, they just left again. They’re like, “This is fine. He’s just providing a service. He’s helping the community. It’s cool.” And he had, basically, a bunch of women that would build these masks in his tailor store, and he’s like, “I’ve never been busier in my life. I’m making a ton of money right now, and I don’t feel like I’m taking advantage of people. I’m providing a service, giving people something. I’ve priced my mask. I could price them three times the amount, and people would still buy them, but I priced them at a margin where I feel like I’m making good money, but I’m also fair, they’re still affordable to people, and I’m just raking in it.” But the reason why other tailors wouldn’t be doing this is because they’d be too afraid if they allowed or not, if they’d get in trouble, and they’re just not flexible enough to be like, “You know what? Nobody’s going to come into the store to fix their leather shoes right now, but there is a huge demand for an item that nobody has and we could easily provide.” And that was one of my favorite examples of just somebody being creative, being positive, adapting, changing what he’s doing, and crushing it. For weeks, there were lines out of that person’s shop. And the other benefit of that is I’m never going to forget that guy. And I don’t go to the tailor that often, but if I need to, I’m going to him. I’m just going to that store. So that’s one of my small local stories that I really loved and that was inspiring for me to see.

[0:06:20]

Hiten Shah: Yeah, I’m going to continue the trend. And that’s amazing. I mean, there’s so many levels of that that are amazing. Part of it is he just didn’t let things that he knew would get in the way of other people get in the way of him from doing it. And I think that’s super powerful. I mean, legal or not, he was providing a service and people needed it, or a product and people needed it. And it was their choice whether they took it from him or not. And by donating it, I think he’s definitely skirting a lot of things in a good enough way. And at a time like this, I think it’s difficult for people to get in trouble on some small things like that, and what matters more is that people are taken care of. So on that note, I’ve been most impressed by the amount of restaurants that I’m seeing really iterate, and ones that I was most impressed by are the ones that iterated super early, their whole model, and they started doing take-home meal kits, where you could make that spaghetti that you love from that Italian place at home, and they gave you all the ingredients to do it. So that was what happened really early on, when even food pickup was not acceptable. And that was really crazy to see, even watching them iterate through a few different platforms to help them sell. It was kind of fun to see, just being in tech and all that. And then lately, just the amount of creativity to be able to provide people with food that’s of restaurant quality that you can pick up from restaurants that didn’t do takeout and just watching the menus iterate. You could just tell they were really focused on optimizing their business so that they could survive during this time, and they were iterating it, and kept changing things until they found things that worked, and also used Instagram heavily to do this. And it’s just been impressive to me to watch this. I even saw something else that was interesting, which is, if one restaurant figured it out, what you’d have is, you even had these things where if it was, let’s say, a sweet shop that mostly sold sweets, vegan sweets or something like that, this is the one that comes to mind, they’d go partner with a savory shop, somebody who made sandwiches, for example, and then they’d started bundling them together. And it’s because one of them had an audience and they were already buying from them, and so they decided to basically partner up. And you started seeing all these collaborations, so to speak, starting happening, and combinations of things you could buy. And these were just restaurants doing it. So you saw this almost call to arms, and folks partnering up, and then using Instagram for the marketing, and creating the equivalent of bundling multiple products together and selling it to the audience. Really, really cool. Another thing I’m seeing is just more focus on, “Oh, these are items we use in our kitchen to cook with.” Whether it’s these special canned tomatoes or what have you. And outside of even the meal kits and making your own meals, a bunch of these folks were just selling that stuff. Just for a long time, and I think this is a pretty funny one, but people were selling their excess toilet paper because the commercial category had an oversupply and the consumer one had an under supply. And so they started doing that and necessities, even though they’re a restaurant, but they have these items. That was really cool. Some of them started bundling it with the food. So, “Hey, buy some food, get some toilet paper. Wow.” I think that was really cool. And one other example I’ve had is, there’s a company that I know that that sort of is a pretty popular tea shop in the Bay Area, and they tried some of the iterations around meal kits and stuff like that. They even gave away a certain item every day, whether you bought or not. So they were really community focused. They shut down all that stuff recently, but the reason they shut it down is they’re going to a full on tea box, sell it online from their website model, and they call it going into hibernation. So they’re going into hibernation with their stores and really focusing all their efforts on e-commerce. And I know they’ve been setting that up for the last one or two months, because that takes a little bit of time, but they’ve been doing it really fast. Normally it would be a six month thing for them to figure out how to sell something like a tea box or something like that for people, or tea subscription and stuff like that, just because of branding and things like that. They’re not necessarily the fastest because they really think about a lot of these things and are doing them well. And then, I was actually speaking to them and I just told them, “Do you really need to change the branding? Why don’t you just slap your own current logos on it, and ship it, and just figure out what the actual package is? Or figure out what you put in the package and what people really want, what kind of tea they want on a subscription that they drink regularly.” And they caught on to that, and latched on to that, and basically were able to ship this in a month or two, the whole thing, versus something that I know they would have taken six months to do otherwise. So it’s that hustle, so to speak, that I find important right now. And the ones that seem to be succeeding are the ones that are able to iterate, and figure it out, and think about it that way.

[0:12:24]

Steli Efti: Yeah. I love that. All right. So I think the last example from my end, and then we’ll wrap up the episode for today. So in a similar vein, basically, a startup that was building and selling mostly stuff that you would wear going to the gym, so their flagship item would be a gym bag that you can also use to go to the office with, so it has all these cool hacks, you have your laptop in there, and phones, and everything, but also the perfect bag for an active professional, somebody that wants to go to the gym and to the office with one bag. That was the main seller, and then they had a bunch of other little items, but it’s all around the idea of going to the gym and going to work. And then COVID hits, and nobody’s going to the gym or to work, so their sales basically went to zero, nobody buying any of these items. And so, what they did then was think, “Okay. We have a customer base. We know these people. These are young professionals. We know that they’re really athletically active. They want to do sports and now they’re stuck home. And we know that they are always self optimizing and trying to improve themselves. What can we do? What can we offer these people to keep generating revenue, to offer a service, or product, or something of that sort?” And I think at first, they tried to figure out if it could come up with some home gym equipment thing, but they quickly realized that all their R&D and development was in such a different direction, there was nothing quickly that they thought they could both come up with and then successfully sell during that time. So they came up with a totally different approach. They sent a survey to the customers, asking them a bunch of questions on what their current struggles and challenges are, what they’re currently interested in, and then they came up with this idea to sell, basically, a, I don’t know what you want to call it, almost like a virtual fitness boot camp of sorts, where what you would do is you would say, “I’m interested in keep improving my body and mind even during these times.” And what I’m going to get is basically a six month coaching program where once a week, I’m on a Zoom call and I’m sharing some of my results and some of the data, and I’m getting coached in these improvements, and there’s going to be different themes. The first month is about sleep and recovery, so they would ship you a sleeping tracker band, and then they would review the data with you, and they’ll give you suggestions on how to improve your sleep. And they’ll check in with you. And then the second month is all about, whatever, nutrition. And then they would have a nutritionist do calls with you and set up a nutrition plan for you, and a shopping plan, and cooking plan and check that. And then the third month was about body workouts, and they’d have this famous body workout guy that gives classes, and does this and that. And there’s all these different… They had products from other vendors that they would ship you and sell you. They had these other experts they would bring in to do coaching sessions, or do webinars of sorts, or something. And then they would have these one-on-one check ins. And it was basically like, “Hey, during the next six months, you can’t go to the gym, you can’t do a lot of things, but maybe this is the time to change your life. And we’re going to go and take a note of everything, from your sleep, to your nutrition, to your workout, to your whatever. There are all kinds of other things.” And they packaged it really nicely. It was just a PDF, but it looked really awesome. And they sent this as a rough idea to a number of people based on the survey results and had a ton of people that wanted to buy it so much that they wouldn’t be able to supply that, because it was much more of a manual service. But it ended up being so successful that it basically is floating the company, it’s paying for everybody’s salaries. It has been super successful, so they have all these great case studies that people are going through the program apparently love it. And it’s kept the company alive and vibrant. And through this process, they’re also now developing all kinds of other ideas for products and other things, because they are doing much closer interaction with their customers than they usually would, where they would just ship them the product, basically, a gym bag. And so, I love that they just creatively went from selling a bag to selling a whole change your life in six months, and using other companies products, other experts, and just packaging this in a way that seemed super appealing to their customers, and that generates so much money that nobody had to get fired, they didn’t have to close shop because they’ve had many months of basically no sales.

[0:17:39]

Hiten Shah: That’s awesome. That’s a great story. I don’t know a better way to end this.

[0:17:45]

Steli Efti: Yeah. I think the common theme is really, you said it with hustle. It’s just, there’s people out there that are harder to discourage, that are more creative in their thinking on solutions, that are less inhibited by fears of, is this going to be the wrong step, or is this allowed, or how will people think about this? But they’re just like, “This is a time to get creative, and to get shit done, and to figure out how we’re going to provide value to the world, how we’re going to make money. What do we need to change to survive and thrive in this environment?” And there is a ton of these people out there, and they’re a huge inspiration to all of us. And whenever any of us… And we’re all going to hit a wall here and there during these times. It’s good to remember that with that type of thinking, you can actually create some amazing things, even during difficult times.

[0:18:38]

Hiten Shah: You said it there.

[0:18:39]

Steli Efti: There you go. I think that’s it from us for this episode. By the way, if you have a super inspiring example that you’d like to share with us, we love to hear from you, and we can’t hear enough good news these days. So if you want to email us hnshah@gmail.com, steli@close.com. Share your positive stories, your good stories, your awesome stories. We want to hear all of them. Until next time, that’s it from us,

[0:19:02]

Hiten Shah: See ya.

[0:19:03]