How I Built This with Guy Raz: Minted - Mariam Naficy

How Miriam Nafisi Launched Minted

Initial Challenges and Launch

• In April 2008, Miriam Nafisi launched Minted with high hopes but faced immediate challenges as there were no sales or orders, leading her to contemplate shutting down the business.

• The launch was described as terrifying and horrible due to the lack of initial traction, prompting thoughts of failure and returning funds to investors.

Background and Inspiration

• Miriam's journey began in the late 1980s when she prepared for her bar mitzvah, contrasting it with modern online processes for creating personalized stationery.

• She recognized a significant shift in how people create and send invitations, highlighting the impact of the internet on personal communication.

Conceptualizing Minted

• Launched in 2007, Minted differentiated itself by not just selling stationery but also providing a platform for artists to showcase their work through crowdsourcing.

• Before Minted, Miriam co-founded Eve, a cosmetics website that was sold before the dot-com bust, showcasing her early entrepreneurial spirit despite not initially intending to be an entrepreneur.

Personal History and Cultural Background

• Growing up in Tehran with an artist mother and economist father, Miriam's family fled Iran during political instability. This experience shaped her perspective on belonging and identity.

• Arriving in the U.S. during the hostage crisis made integration challenging; she felt like an outsider both in Iran and America.

Academic Journey and Career Path

• Despite being academically inclined (a "nerdy girl"), Miriam did not initially consider entrepreneurship due to her family's values which prioritized careers like medicine or government service.

Early Career and Entrepreneurial Journey

Initial Work Experience

• The speaker describes their early career, working long hours in an office environment while selling bonds on the trading floor before reaching legal drinking age.

• They initially considered business school after experiences in investment banking and management consulting but were uncertain about their future direction.

Transition to Business School

• After not getting into Stanford on the first attempt, the speaker took a year off to enhance their resume by working with entrepreneur Maurice Wurtz Tagore in the restaurant industry.

• This experience ignited a passion for entrepreneurship, influenced by mentorship from Maurice, who encouraged them to consider starting their own company.

Publishing a Book

• While at Stanford, the speaker published "The Fast Track: The Insider's Guide to Winning Jobs," which sold around 50,000 copies.

• The motivation behind writing the book was recognizing a market need and wanting to demonstrate entrepreneurial capability as part of their business school application.

Starting an Online Cosmetics Company

Forming Partnerships

• During business school, they sought out a partner for entrepreneurial ventures and connected with Varsha Rao to pursue an online cosmetics idea.

• They decided on cosmetics over market research due to personal interest and the goal of convincing Varsha to join them in San Francisco.

Early Challenges

• The duo operated from a small apartment, making calls in pajamas to New York cosmetics companies while trying to convince them about online distribution.

• Their initial concept focused on creating a replenishment brand for skincare and haircare products despite skepticism that consumers would buy cosmetics online.

Overcoming Skepticism

• They faced widespread disbelief regarding women's willingness to shop online for cosmetics; however, this skepticism became a recurring theme throughout their entrepreneurial journey.

• The speaker emphasizes that many industries have faced similar doubts about online sales viability—highlighting how entrepreneurs must often disregard such negative predictions.

Market Dynamics

Starting an Online Cosmetic Store in 1998

Introduction to the Journey

• The speaker discusses their connection with a former Macy's manager who assisted them as a guide in the cosmetics business, providing valuable introductions and advice.

Conceptualizing the Business

• In 1998, the idea of starting an online cosmetic store was revolutionary; at that time, no one was selling cosmetics online.

• The speaker describes sketching out website ideas on paper and developing metrics for customer engagement, highlighting the need for innovation in e-commerce.

Fundraising Challenges

• Fundraising began immediately after graduation in 1998; while it was challenging initially, by 1999 it became easier due to the dot-com boom.

• Despite being inexperienced at age 27, they received positive feedback on their pitch from investors.

Collusion Among Venture Capitalists

• The speaker recounts experiencing collusion among VC firms that attempted to manipulate valuation by sharing information about competing offers.

• They signed a term sheet with one firm but faced pressure when another firm partnered with them to lower their valuation from $6 million to $4 million.

Navigating Investor Relations

• The non-binding nature of term sheets allowed investors to change terms without consequences during this period of low transparency.

• The speaker explains how they decided not to inform Bill Gross about declining his offer and instead accepted his terms after rejecting another deal.

Launching Eve.com

Timeline from Funding to Launch

• After securing funding in 1998, they launched Eve.com in July 1999.

Marketing Strategy and Initial Success

• They gained significant press coverage and had ample marketing funds during a competitive market landscape aimed at rapid market share acquisition.

• Upon launching, sales surged dramatically, achieving $10 million in sales within the first year despite working long hours.

Work Ethic and Commitment

Yves Comm's Sale and Market Timing

The Decision to Sell

• Yves Comm was sold for $110 million, a decision viewed as obvious due to the lucrative offer.

• The company was in the process of raising a Series D round when market skepticism about profitability began to rise.

• The sale occurred just before a significant market crash, highlighting the importance of timing in business decisions.

Industry Reactions

• Other industry players were envious and perceived the sale as luck rather than hard work or intuition.

• Despite working tirelessly to build the business, there was resentment from peers who continued pursuing public exits.

Personal Reflections Post-Sale

• After selling, Miriam took a year off but felt unfulfilled and missed being involved in business activities.

• She wanted to prove her capabilities beyond luck by successfully launching another venture.

Miriam's Return to Entrepreneurship

Transition Back into Business

• In 2002, after taking a break, Miriam was approached by The Body Shop to run their e-commerce division.

• She recognized emerging trends where consumers preferred bloggers over traditional journalism, indicating shifts in consumer behavior.

Innovative Ideas in Product Design

• Miriam saw potential for crowdsourcing design competitions within product design similar to changes seen in media consumption.

• She aimed to combine stationery sales with crowdsourced designs, creating an innovative retail model.

Business Model Considerations

• Her initial idea focused on online stationery sales with good profit margins but faced challenges due to outdated offline shopping experiences.

Funding and Launching Minted

Initial Funding Strategy

• The speaker successfully raised an angel round of $2.5 million, emphasizing the desire for control over the business without involving venture capitalists initially.

• Friends were supportive but cautious about crowdsourcing, as it was not a well-established model compared to traditional e-commerce.

Building the Foundation

• The speaker signed up various stationery brands and hired a college coder to develop a unique customization feature for their website.

• The initial team consisted of only five people, with funding primarily directed towards building an in-house engineering team.

Technical Challenges

• A significant portion of the funding was allocated to creating a system that allowed users to visualize customized text on stationery designs.

• The technology required for this feature was not available off-the-shelf, necessitating custom development by their engineers.

Launch Experience

• Minted launched in April 2008 with high hopes but faced immediate disappointment as there were no sales in the first month.

• Despite excitement during launch, the reality set in with zero orders leading to thoughts of shutting down the business due to perceived failure.

Market Reception and Adjustments

• Initial feedback included negative press from TechCrunch, which criticized the idea without understanding past successes (like Eve.com).

• Lack of traffic hindered sales; when visitors did arrive, they often chose from a limited selection rather than established products.

Design Competition Insights

• Minted's first design competition yielded few entries but showcased innovative ideas that challenged industry norms (e.g., using photos on save-the-date cards).

Challenges and Turning Points in E-commerce

Initial Struggles with Sales

• The speaker discusses the low sales volume, averaging one to three orders a day, indicating financial strain and a dwindling cash runway.

• A critical conversion rate of 0.1% is highlighted, emphasizing the challenge of converting visitors into buyers, which raises concerns about the business's viability.

Seeking Investment

• After consulting with a friend, the speaker decides to raise venture capital despite initial reluctance due to poor performance metrics.

• The investment was primarily based on personal reputation rather than current business success; only one investor showed interest due to past achievements.

Gender Dynamics in Venture Capital

• The speaker reflects on gender biases in funding decisions, suggesting that being male might have led to more favorable treatment from investors.

• There’s an assertion that Silicon Valley investors often lack understanding of design importance, impacting their willingness to invest in design-focused businesses.

Business Model Evolution

• The original model involved selling stationery from various brands while also incorporating crowd-sourced designs for additional revenue streams.

• Designers received feedback during submission phases and could earn upfront cash prizes along with a percentage of sales if their designs were successful.

Pivoting Towards Crowdsourcing

• Due to poor sales from traditional stationery products, the company shifted focus entirely towards crowd-sourced designs by Christmas of that year.

• Ignoring investor advice, they launched holiday cards and experienced significant sales growth, leading them to halt marketing efforts due to overwhelming demand.

Ethical Dilemmas and Tough Decisions

• The decision to drop partnerships with established stationery brands was difficult but necessary as crowd-sourced products gained traction.

Business Acquisition and Strategic Decisions

The Unexpected Offer

• A competitor announces they have acquired a printing company that the speaker uses, indicating a desire to discuss continued supply of services during the holiday season.

• The meeting is set for a week later, just before the busy holiday period, highlighting the urgency of the situation.

Realization of Intent

• During the meeting, it becomes clear that the competitor's intention was to pressure the speaker into selling their business by controlling essential resources.

• The speaker feels cornered but remains composed, suggesting they should discuss how a potential sale could work while planning an immediate response.

Quick Response and Adaptation

• After leaving the meeting, the speaker quickly mobilizes their team to find alternative printing solutions, demonstrating proactive leadership.

• They successfully secure partnerships with two new printers despite initial challenges and stress on their team.

Industry Landscape

• The discussion reveals that other companies were also providing custom stationery online; however, they lacked innovative design vision compared to what the speaker’s company offered.

• The emergence of a creative community around their product indicates a shift towards more personalized and high-quality offerings in stationery.

Company Growth and Personal Reflections

• The company has become profitable with sales in the low hundreds of millions; however, concerns about survival lingered for many years.

• Despite achieving stability now, past experiences instill a sense of caution in managing business risks.

Luck vs. Hard Work

• Reflecting on success, luck plays a significant role alongside hard work and passion; escaping difficult circumstances has shaped opportunities for growth.