How I Built Nasty Gal to a $100M Business

Mindy:
Welcome my dear listeners to the BiggerPockets Money Podcast, where we interview Sophia Amoruso and talk about how she built her first business, Nasty Gal, to astronomical success, how that business ended, and how she was able to reinvent herself in her new businesses. Hello, hello, hello. My name is Mindy Jensen, and joining me today is my senior producer, Kailyn Hope Bennett.

Kailyn:
Hi, Mindy. It’s so good to be here. Well, I’m here every day, but just on camera this time.

Mindy:
It’s so good to have you in front of the camera this time. So, Kailyn, we have an awesome show today. Sophia Amoruso is the founder of Nasty Gal, and we are going to talk to her about the rise and ultimate bankruptcy of that business and how she pivoted to the new companies that she’s running today. We’re also going to talk about her groundbreaking book, Girlboss, and we’re going to cover a lot of other topics too.

Kailyn:
Yes, a lot of other topics in between. I think that this is a really special show for us. Sophia was definitely an inspiration for a lot of young women in my age group. So, I think it’s really powerful that we have her on the show today, where she’s actually going to tell her story about how this business functioned, what went wrong, what went right. I think it’s going to be a really great show and some great learning moments for our audience today.

Mindy:
Yup, selling on eBay, venture capital. We’ve got so many things to discuss on the meteoric rise of her company, Nasty Gal, and it is a really, really fun episode. Without further ado, let’s bring in Sophia Amoruso. Sophia made her mark in 2006 as the founder of the fashion e-commerce phenomenon, Nasty Gal, which she built to over $100 million in revenue. Sophia is also the bestselling author of Girlboss. She now runs an entrepreneur mentorship program called Business Class and has her own venture capital fund called Trust Fund. Sophia, welcome to the BiggerPockets Money Podcast. I’m so excited to talk to you today.

Sophia:
I’m so excited to be here.

Mindy:
Let’s jump right into it. It’s the BiggerPockets Money Podcast. Let’s talk about money. What was your relationship with money like growing up?

Sophia:
We didn’t really talk about money a lot. I remember it being a bit of a struggle. We grew up solidly middle class. Nobody taught me about money. I remember my dad telling me things like “Cash is king.” When I got my first job at Subway, it was like hustle and clean the floors and even when they’re clean, just keep working, keep finding things to do, and that’s how you keep your job thing. I ended up being that an employer in the beginning, and that’s not how it works, especially with millennials.
That’s a whole another story, but I watched my parents file for Chapter 11 actually when I was like, I don’t know what age, 10. I distinctly remember being in this credit counselor’s office and watching them cut their credit cards in half and put them in a clear glass fishbowl on top of a whole bunch of other people’s credit cards that they had cut in half and put in the bowl. That’s a really weird memory for a kid.

Kailyn:
That must have been really hard. Did that create any negative connotations with money or make money a really emotional topic for you and through your adolescence?

Sophia:
Not really. I don’t think it really registered to me what was going on, but money wasn’t important to me. I didn’t really want a lot of stuff. I remember wanting JNCO Jeans and they were like $80 and my mom was like, “I’m not buying you $80 jeans. That’s insane. You’re in middle school”, which is pretty fair. I think $40 sunglasses were a big deal. I just remember we were going to Mervyn’s, which is basically Kohl’s. We were in Sacramento. It was very solidly middle class, but I don’t remember it really messing with my concept of money. It was always nice to have a little, but I never really cared about having much more than a little.

Kailyn:
Which is so interesting, because you grew such a big business, which we’ll get to, but I think the thing that’s always struck me about you is you have this innate ability to pivot if it’s ending of one business, moving to another. Was there anything in your childhood that made you such a nimble entrepreneur that influenced that way of thinking?

Sophia:
Yeah, I mean, both of my parents, you could say they were entrepreneurs. My mom sold houses and my dad did home loans. So, they really only made money when they were getting work, when he was closing deals, when she was closing deals. My grandfather owned a piano shop. My dad’s dad owned a motel. He grew up on a motel with seven kids. So, I think it was immigrant mentality from the grandparents’ side, and then my parents just ended up, they ate what they killed. There were good times and bad times. So, I was watching them think on their toes a lot. In terms of my ability to pivot, I think it’s somewhere between ADD and survival and also just the fact that if you lose your job for whatever reason, God forbid, you’re going to do something else. It’s called pivot, right?
I mean, it’s not that unique. I’m just doing it in front of other people and I get a lot of credit for it because it’s out in public, but I think it’s important for people to remember that that’s just what you do. That’s what life does to you. A relationship ends, you pivot, but I’ve done it on a grand scale and I’ve pivoted really different things. I think being an only child and going to a lot of schools and sometimes playing referee for my parents, not having another kid, sibling to bounce things off of forced me to operate independently and process things independently. Really beyond that, it’s I think been somewhere between ADD and survival.

Kailyn:
Yeah, that makes total sense. I think I’m not an only child, but I have a lot of friends who were. I think that gives you lone wolf syndrome where it’s really on you to make everything happen. You really have to become your own counsel. I think from following you over the years and reading your book and so on and so forth, I really see that in your journey is that you’ve become the master of having your own counsel whatever business you’ve decided to pursue.

Sophia:
Yeah, I mean there’s no backstop for me. My parents split up when I was 17. There was no home to go home to. My mom was running a really small place, didn’t want to live with my dad. I moved out when I was 17 and I just wanted to go throw myself at life. Little did I know that being inambitious and hating working for other people would somehow become this massive business that I built and becoming some representative for ambitious millennials. That’s the last thing I would’ve expected.

Mindy:
Well, let’s jump into Nasty Gal. I know you’ve told this story before, but can you give us a quick overview of how you founded it?

Sophia:
Yeah, I mean, I didn’t consider it founding a company. I didn’t even consider a business. I thought businesspeople carried briefcases around and went to business school. My last job was in the lobby of an art school. I was sitting on eBay, clicking through listings, and getting Myspace requests, friend requests from eBay sellers who were promoting their eBay stores to other girls who look like they might be customers and click through. I was like, “Oh, my gosh. This stuff is so expensive.” I pretty much wore only vintage at the time. I wanted to be a photographer. I wasn’t a photographer, I wasn’t a stylist, I wasn’t a buyer, I wasn’t a businessperson, but I thought, “Okay, I am going to go give this a shot. Let me see if I can just scrape together a little bit of money.”
It was fun. It was exhilarating even when things didn’t work. I learned and building Nasty Gal was a series of micro pivots, right? We’re pivoting every day when we’re learning. Something doesn’t sell. Your product description doesn’t land. A customer’s not happy. You’re iterating. You’re pivoting every single day based on what you’re learning, at least if you’re paying attention and listening. So, I did that over and over and over again.
The first year, we did, we being me, and this is just selling vintage clothing on eBay, 72,000 in revenue, which was insane, but again, I was paying 500 bucks a month rent. I had nothing to spend money on, so it was all in the business. It was profitable, but I didn’t know there was any other way to build businesses. I didn’t know you could run a money-losing business. I thought you-

Kailyn:
All businesses make money, right?

Sophia:
Yeah. You bought things and then you sold them for more than you paid for them and you didn’t spend all. That’s the only way I could have built a business. I had no credit, and then year two was 250 grand. Year three was 1.1 million. Year four was 6.5. Year five was 12, and we were on our way to 28 when investors came knocking. This was just me and some kids in a warehouse. I’d hired a CEO for a portion of that year where we were on our way to $28 million, but it was a rocket ship.

Kailyn:
Sophia, before we get to that massive success, I’d like to take just a step back and really hit the roots of Nasty Gal. Out of any other business you could have started, why were you so attracted to vintage clothing and selling on eBay out of anything else?

Sophia:
I think we all start with what we have, access, understanding, money, experience. So, what I’ve learned is that it’s not about what you have because there’s people who have a lot more than me, who have better educations. There’s always going to be someone who has more than you, and it’s not about what you have. It’s about what you do with what you have. What I had was a digital camera and access to thrift stores. I didn’t know what trade shows were.
There was no Shopify or Squarespace or Etsy or Stripe or Cloud or Slack or any of these tools. eBay was the place I could do that. So, it was the only option and I didn’t sit there and think, “Wow, should I start an eBay store or should I open a physical vintage?” I didn’t have money, like startup capital to open a physical retail space. It was just by the sheer constraint of what I had, what I understood, and what I was inspired by. I loved vintage clothing and I loved style, never cared about fashion, but I loved style.

Kailyn:
The rocket ship that started to carry Nasty Gal was no one was styling clothes on eBay and making it look so cool and attractive and exciting at the time. I think that that was really the game-changing thing that set your business apart from other businesses.

Sophia:
Thanks. Yeah, I mean it seems logical that you would put clothing on a person who looks like a person and style. You can’t touch the clothing, so you dump a T-shirt on a model, cut their head off with no context of who they are culturally, their style. THROUGH Nasty Gal, I was able to imbue in the photography and in the styling, this aspirational woman that I wanted to be, my customers wanted to be, who was still relatable and approachable, but just one step ahead or maybe a little bit more confident. The models were pretty, but they weren’t alien runway models. They were normal cool girls that I paid with hamburgers and that was a big part of it. Now, everything looks like that, but Nasty Gal was the first to do that with e-commerce photography.

Mindy:
So what made you stop selling on eBay and open up your own website?

Sophia:
I’m an angsty person. I don’t like rules and eBay gave me a great platform to start, but once I realized I had built a customer base who at that point was obsessed and I had built this pretty large Myspace following, I mean Facebook was hardly emerging at this time. I was getting slapped on the wrist for linking out to my Myspace page from my eBay listing templates and stuff that was just like, “You know what? I’m driving more traffic to my listings on eBay than eBay is driving to my listings at this point.”
It was an amazing marketplace for me to start where there were built-in customers and discovery, which is what these platforms like Etsy and Fivver do for us. But I realized I was building a brand and to really control that brand, I needed to put it on its own website and to give my customers the entire Nasty Gal experience.
I wanted it to live off of eBay and just overnight switched to eBay off and turned on NastyGalVintage.com. Everything sold out. It was a website with zero traffic, but I announced it. I had just editors, fashion editors, I didn’t even know what that meant, who had been shopping with me. Wear sent out a dedicated email and Daily Candy at the time sent out dedicated email, which was like people pay a lot of money for that. They were making money from advertisers. So, I don’t want to say I was lucky because I didn’t have connections.
I was in the East Bay deep in Venetia in a weird little warehouse by myself, but what I had done, it attracted some people that had a platform. That was a big part of how Nasty Gal found its early success off of eBay, and in addition to that, it was building an audience, which is now what everyone is doing and what everyone has to do. I did it on Myspace, but now we have every other platform to do that with, but it’s also much more crowded.

Mindy:
When did you first learn about venture capital?

Sophia:
I didn’t know about venture capital until investors came knocking. They came inbound and I was getting emails from them. This was in probably 2011. I was still in the East Bay. We were in Henryville, Bay Area, San Francisco area, just across the bay from the city and had a warehouse with 12 kids. It was like OSHA violations all over the place. There was a returns person and a couple shipping people. We had a little place where we shot in the corner and my Ikea desk felt really… Going to Ikea and spending $500 was so fun at that time. I made the office pink. I don’t know how they heard about Nasty Gal. Usually, it’s their wives are shopping and they hear from some lady in their life like, “Oh, my God. I’m obsessed with this.”
It’s how a lot of venture folks find these companies that are focused on women, and I didn’t really need anything from them. I didn’t know what to do with them. The company didn’t need money. It was profitable. Around that time, I had saved $1 million cash in the bank, in the Wells Fargo account. I actually was a screenshot of over $900,000 in the business bank account, and my personal account was also in Wells Fargo. It had $8,500 and I had a credit limit of $2,500. Eventually, when I bought a nice car, I had to pay cash because I was invisible to the credit companies.

Mindy:
So you said investors came knocking. It doesn’t sound like you were seeking them out. They came to you. What were you hoping to get out of the relationship with the investors if you weren’t seeking them out in the first place?

Sophia:
I was curious. It was a whole new world. I mean, I lived in the Bay Area forever and I didn’t know what everybody in that city did. I was working on Haight Street or at a photo lab and dancing at dive bars and subsisting on burritos. So, I was curious, and at that point, I was like, “Okay, you want to invest? Tell me what that’s about. What are we going to do? What would your expectations be?” Oh, wow, I can sell 20% of my company for $50 million and still control it. That sounds like no sweat. What’s the downside here? So eventually, decided to do that, and even though you’d think nothing changed, a lot changed.

Kailyn:
You decided to take the investor. You signed the documents. They infuse quite a bit of capital. It’s like $60 million, is that correct?

Sophia:
Yeah, it was somewhere between $50 and $60 over two rounds in 2012.

Kailyn:
So what happens next in the business? Were the investors helpful?

Sophia:
They were helpful, but also, it was a different time when e-commerce was like there was no playbook for it. We had to have a huge team of engineers to have an e-commerce website or a shopping app. It was so much work. Like I said, there was no Shopify. So, it was very expensive to build a business like that. So, we were doing $28 million in revenue in 2012 and these experts came in and was like, “Oh, my God, amazing. We’ve done this a bunch of times.” I hired a chief operating officer and head of finance and chief people officer and said, “Okay, diagnose the business. Tell us what needs to happen next.”
We went from being a very profitable business in 2012 to a business that eventually was no longer profitable, because we rounded up. I remember the board sat at a table and said, “What do we think we’ll do next year based on this trajectory?” Okay, we’re at 28. Let’s shoot for 128.

Kailyn:
What? That’s crazy talk. For our audience, just to give you some context, reasonable business expectations are maybe a 20% lift year-over-year and that can be pretty aggressive. I don’t even know what X that is.

Sophia:
I didn’t know what I was signing up for. I mean that’s like 10X, I think. Still not good at math, but I think it’s 10X. We hired 100 people in a year and it was like the Tower of Babel where everyone was speaking different languages to one another and duplicating tasks. There weren’t any operations for people to step into and processes for people. Culture hadn’t really been built intentionally. So, that was a mess. It was the most fun, but the foundation of Nasty Gal wasn’t built on hiring a huge business or being a proper startup. It was like a bunch of kids in a warehouse and money in the bank and cool, let’s buy some clothes.

Kailyn:
I’m sure when you grow a business that exponentially, it’s hard to manage your employees at that point. It’s hard to manage investor expectations. I think there’s so many wheels turning, and I’m sure you as a very young CEO who’s seeing all this success at this point is maybe internally freaking out. What was going on internally at that point in time for you?

Sophia:
It was really challenging, because I hired a bunch of C-level executives who had experienced longer than my entire life span at that point, and I said, “Okay, all right, step in, build this thing with me. Tell me what needs to happen. Hold yourself accountable”, because I thought that was what grownups did. Because I never had to be told what to do in my business and realized that even grownups need to be held accountable and even executives need to be held accountable. I thought they would go and do what they said they were going to do and have all of the solutions, because at this point, I’m paying them hundreds of thousands of dollars and it wasn’t that simple.
I was definitely in over my head. I didn’t know what I didn’t know. As cute of a story as it is that I bootstrapped this business to that big and started on eBay and wow, anybody can do something like that, I don’t recommend doing it as quickly as I did. If possible, I don’t recommend doing it with the lack of experience that I had. I was very much at a disadvantage not having had any experience literally working in an office or managing anybody or even experiencing leadership in a proper organization. Every office I’ve worked in, my name has been on the lease and I was not qualified to be signing leases for maybe ever. I don’t know, but we were growing so fast that I remember leaving a wake of leases behind us that we were still paying for because the company was exploding.

Kailyn:
Sophia, walk us through what happened next at Nasty Gal. So, you’re experiencing this colossal success and then the company ends up going bankrupt. What did that look like?

Sophia:
Yeah, so that was four years later at the end of 2016. When you raise on a $350 million valuation and even when your company is doing $100 million in revenue and venture capitalists who are the people that set crazy valuations like that decide that fashion e-commerce isn’t as cool as it was in 2012 or maybe they just want to stay away from it for now or that $100 million even wasn’t enough for us to get to the next round where they could mark up their valuations and we were worth more, which looked good on paper to them, the expectation was that the next time we raised money, it would be at $1 billion valuation. Even at $100 million in revenue, that was a wild multiple.
So I began to talk to more strategic investors who had built apparel businesses or private equity firms who would come in and maybe value the company at 2.5 times revenue, which is still pretty great for any company, and my investors didn’t like that. Even though I controlled the board, I took a lot of advice. The story was basically, if you can’t pay $350 million, if that’s not the valuation you’re going to give the company, then it’s not going to work and something that you sell is only worth what someone’s willing to pay for it. If it has to go on sale, it has to go on sale, and that is not what my investors were interested in.
Our ability to continue fundraising, even when we were doing over $100 million in revenue, was almost impossible. I think in 2012, I didn’t know what I was signing up for, but that was the first nail in the coffin. It was a series of Hail Mary’s at that point, because those options went away and then it was like, “Okay, well, we have to take a lower valuation. We have to.” My investors didn’t want to invest more money. They owned their 20%. They were happy with that. When you have a business, it’s not a good signal when your existing investors don’t want to continue investing. Even just anything, just something nice that signals that, okay, they believe that even though things aren’t going great right now, they still support you.
Mine didn’t want to do that, and it was very, very hard for me to find investors because of that. Eventually, my investors said, “Okay, well, the only way we’ll do this is I’ll double whatever of your money you put into the company.” So it was either that in 2015 that the company who knows what possibly fall apart or I double down and put a lot of my money, $2 million back into Nasty Gal to try to save it, to turn that back into whatever it was, a multiple of two. At that point, I was so far over my head. I had hired a CEO, so I was the chairman of the board again. I was like, “Okay, I’ve got a CFO, a CEO, a CTO, a CMO, a chief creative officer. There’s got to be a way to figure this out.”
My investors were finance guys. They had never operated businesses. That wasn’t where they were helpful. As an investor, I’m a big value add, because I’ve operated businesses and I’ve been through the hardship. Those are the investors that I really value and as a founder learned that I wanted to work with when I went on and built my second company, Girlboss. So, ultimately, it was a series of Hail Mary’s, fucking [inaudible 00:26:57], me being like, “Holy (beep), I just put a ton of my money into this business.” I don’t know what to do with it. At that point, Girlboss, the book was this insane success and it became what other people called a movement.
I think it’s really weird to say that you started a movement and whatever, but it inspired a lot of women who had never seen someone start an eBay store, build anything as big as I had. It was a year after Lean In. There was so much interest in me personally and I didn’t know what to do with Nasty Gal. So, I started spending more time on Girlboss. I started a podcast called Girlboss Radio. I wrote two more books, Nasty Galaxy and the Girlboss Workbook and left the company in the hands of grownups. At that point, I’m 30 years old. I’m a grownup, but at that point, I knew what I didn’t know and it was everything I needed to turn a company around.
Let’s see. I remember distinctly, it was in 2016, in November of 2016 that we had a board call. We were out of options and said, “Okay, we have to file for Chapter 11. We haven’t paid vendors in a month. We can’t keep doing that. We are fiduciaries of this company. We have to do what’s most responsible for it. It was an incredibly hard decision.” But after that much strife and layoffs and at that point, even though Girlboss was this massive success, there was bad press, toxic workplace culture. I had no idea what I was doing and it was heartbreaking, but it was also like, “Wow, I put in 10 years and I did my best and I’m out of this.” That’s insane and also a relief as (beep) up as that sounds.

Kailyn:
No, I don’t think it does at all. That’s the first thing that came to my mind is that must’ve been a weight of stress just completely off of you. So, for our audience, you sold your company to boohoo.com, correct, for $20 million and then you really turned all of your attention to what turned out to be a book and a media company called Girlboss. Like you were saying, this book just caught wildfire.
I remember being in the middle of the Chicago, all my friends and I were big thrifters and everyone was passing around this book. Everyone was like, “You have to read this book about this girl.” It became a Netflix show. I just feel like everyone at that time was reading your book and that became the true story here.

Sophia:
I mean, it wasn’t a huge relief off my shoulders when Nasty Gal ended, because there was a lot of bad press. There was headlines like, “Does the failure of Nasty Gal mean Millennials aren’t ready to lead?” It’s like, “Oh, my God. Am I responsible for a generation? That’s insane.” In the comments, it’s like maybe she is a nasty gal, whatever. It was endless. So, there was some relief and I mean I’d been through divorce six months prior. It was a lot at once, and it had been two years since the book was written. There was a Netflix series being written about my life, about the book that Charlize Theron was producing, and that came out in 2017 in April. So, four months, five months after, Nasty Gal basically fell apart.

Mindy:
If you could go back and do it again, what would you change?

Sophia:
I think I would have given the people who worked for me more feedback before I gave up on them. I wasn’t in a position to coach them, which is what you want your leaders to do, even the executives. I wasn’t capable of doing that, but when things didn’t go right, I wish I had given them more of an opportunity to do better, because it’s very disruptive to an organization to just remove people, which I did a few times and it was at the expense of the greater business.

Kailyn:
I think the big thing here is, like I said, you’re the queen of the pivot. You went from Nasty Gal to Girlboss and you pivoted again into other businesses.

Sophia:
So Business Class is now what I’m doing, Trust Fund, which is my venture fund, and after all of this hardship and incredible fun and so much learning, I just want to pass it on. That’s the best and highest thing you can do is when you’ve extracted so much value and knowledge and a network is be able to pass it along and it’d be no sweat, whether it’s educating people about entrepreneurship in Business Class or investing in startup founders or building companies actually for other founders. That’s what I’m investing in. It’s the best feeling, because I don’t really like building companies, but I know what it looks like and I can totally help. I love supporting founders.
So, it’s interesting being in this different phase in my life after being an entrepreneur for so long, no longer I am, but Business Class is a tiny bootstrap business that’s hosted on Kajabi. We didn’t build technology and Trust Fund is a business. It’s a venture fund, but we’re not building huge organization and chasing revenue in the way that we had to at Nasty Gal.

Mindy:
From your experience owning a venture capital funded business, are you doing anything differently now that you have your own venture capital fund called Trust Fund?

Sophia:
Yeah. So, when I invest, I make sure that neither I am investing in a valuation that is going to put the founder in some valuation purgatory that is way, way, way too high and that I’m not investing in something that is too expensive. There was a while where that was happening. There’s been a big correction and the founders starting companies in this time in a downturn are here for the right reasons. They know that it’s going to be tough and they know that finding funding is going to be tough and their expectations are much more in line with what the market should look like and is.
With Trust Fund, my inventory is my relationships and my experience and my talent with building brands and my ability to access deals and make a material impact on these companies and work with these founders on everything from getting them a piece in TechCrunch, which I’ve done twice in the last month, just cold emailing editors to referring the CEO of a huge fashion brand to one of my companies who’s still in beta and now his creative team is in the beta of Plot, which is the first check I wrote out of the fund.
So it’s so fun just to see what I can harvest for other people, instead of say, okay, well we’re going to do brand partnerships and we’re going to do a conference, and that is the different inventory. When you’re working with brands, you’re selling something different. The value exchange between the people who invest in me and the portfolio founders that I work with is just the pure channeling of what I’ve built over 15 years. That’s not something I intend to build. It costs me plenty of trauma and money and all kinds of stuff. So, I’m using it for other people and it’s what I really enjoy doing.

Kailyn:
I love to hear that. Are there certain businesses or business types that you’re looking to invest in? Are you looking for forward-thinking things? I think I saw something online that you invested in an AI company.

Sophia:
Yeah, I’ve invested in two AI companies. One’s called Browse AI, and they’re already profitable. They were profitable when I invested and they didn’t raise an absurd valuation, but they continue to explode. So, I’m investing in anything that helps founders start and build companies or helps people become entrepreneurs. So, Browse AI, you can basically scrape any page on the internet and it will update you when that changes.
So, it creates Google alerts for the entire internet, which as an entrepreneur, I’ve reversed engineered everything. I’ve had to go troll LinkedIn to see if someone quit or had layoffs or who used to work here, and now you can set up these automations with Browse AI super easily to do that. Another company I invest in is called Packsmith, which is a logistics platform for e-commerce retailers. It’s literally people called Packsmith in their homes, packing and shipping goods for the e-commerce retailer.
So they’re not doing it themselves, but also they’re able to have their products in different states so that it’s much cheaper and faster for those products to get to their customers, which is really cool. A project management platform for creatives, Plot, I invested in. A marketplace for dental workers to find shift-based work in dental offices and fill in shifts and for dentists to fill in shifts, they get to work for themselves. For me, that is the same as the framework that eBay gave me to work for myself and the flexibility it gave me.
So, I see that as a product that also helps people become entrepreneurs. So, it’s pretty broad, but I understand the psychology of the person using those products, which allows me to really help the founders that I’m investing in and have the headset on of the people that they’re building for.

Kailyn:
That’s so cool. I love it. I can’t wait to check all of those businesses out.

Mindy:
Sophia, what advice would you give someone starting today in the e-commerce space?

Sophia:
I think it’s important to have something differentiated. I think just creating other people’s products is tough. I did that at Nasty Gal and it became more competitive. Other people had access to the same products and trade shows. We started making our own products, which was very expensive. So, make sure that what you’re building is something that can be profitable or is profitable from the beginning. Unless you’re creating some newfangled product that requires development and prototyping and really capital-intensive stuff, you may need to raise money or invest your own money upfront to get to a place where you can sell that product.
Whether it’s something you are sewing at home or something you’re thinking about investing $5,000 and having a prototype made of, talk to customers, people who would be customers. So, whether it’s a deck or a drawing, you can put it in front of people and say, “What do you think about this? Would you use it?” and go through a lot of user interviews. People might say, “I’ve already seen something like that” or “What about this?” Make sure that what you’re doing addresses their questions. So, that when you put that product in front of them and when you message it, you’ve already filled those gaps for them and you’re making it really easy for them to show up and buy and use what it is that you have to offer.

Kailyn:
Sophia, I think that that’s really sound, excellent advice for our audience. We just really want to thank you for your time today. It’s been just really great getting to know you and I guess learning about all of the behind the scenes of what happened at Nasty Gal and really getting some valuable business information for our audience today. If people want to learn more about you or follow Business Class or Trust Fund, where can they do that?

Sophia:
Yeah, it’s trustfund.vc. The course I teach is businessclass.co, and then I’m just Sophia Amoruso, A-M-O-R-U-S-O, pretty much everywhere.

Kailyn:
Awesome.

Mindy:
Sophia, this was so much fun. Thank you so much for your time today and we’ll talk to you soon.

Sophia:
Okay, thank you.

Mindy:
All right, Kailyn. That was Sophia and that was awesome. I loved hearing the story of how this company just kept making money and just kept making money, and then all of a sudden, these guys with lots and lots of money knocked on her door and were like, “Hey, you want some more?” What a fun position to be in. I can totally see why she would take that money. When somebody gives you $60 million, what do you say? No, thanks. I’m good.

Kailyn:
I agree, and I think she was so young at that point. I think that she did a really good job sharing how stressful of a position that is to be so young, so successful, offered an infusion of cash. I doubt she ever thought she would see a check for $60 million in her life, but she took it with such grace. I think the thing about Sophia that really struck me is she made the best decisions with the tools she had at the time, and she kept learning along the way.

Mindy:
She’s doing the best that she can with the tools that she had at her disposal, and she said, “I was making money. I had money in the bank. So, I didn’t know how to read a P&L sheet.” I don’t know the CEO and the CFO and all of that, but it seems like that’s the position that she hired somebody to do that for her. She should have somebody backing her up, but again, I’m not privy to any of that information and any of what they were doing. It just seems like there was so much that was going right, it’s so easy to sweep under the rug the things, oh, maybe this isn’t quite going right this time.

Kailyn:
I think the thing that was really interesting about Sophia’s story and why she rose to so much fame and her business gained so much notoriety is because she really was the first entrepreneur that publicly admitted, “I don’t totally know what I’m doing.” She felt very accessible. She felt like anyone could do it. I still think that story really rings true to entrepreneurs today.

Mindy:
Yeah, when you are honest and vulnerable and your life is happening in the public, it can seem really like you’re the… What did she say? … leader of a movement, which sounds, like she said, this sounds silly to say, but it’s also so much pressure. Then anytime you make a mistake, it’s blown up way out of proportion because it’s so public. Like she said, when you lose a job and you go and get another job, that’s just what you do. But when you do it publicly, it’s this giant story.

Kailyn:
I think she’s taken it with clearly a lot of grace and she’s taken those lessons and pivoted into other very successful businesses that aren’t on the grand scale of Nasty Gal or Girlboss, but sound like they’re highly profitable and making a difference in founders’ lives. She’s really turning her entrepreneurship knowledge that she gained over that time and putting it to really good use.

Mindy:
Yeah, that is the best thing you can do is take what you’ve learned and then share it with others.

Kailyn:
Yeah, absolutely.

Mindy:
All right. Should we get out of here, Kailyn?

Kailyn:
Let’s do it, Mindy.

Mindy:
That wraps up this episode of the BiggerPockets Money Podcast. She’s Kailyn Hope Bennett, and I am Mindy Jensen saying, see you later, alligator.

Speaker 4:
If you enjoyed today’s episode, please give us a five-star review on Spotify or Apple. If you’re looking for even more money content, feel free to visit our YouTube channel at youtube.com/biggerpocketsmoney.

Mindy:
BiggerPockets Money was created by Mindy Jensen and Scott Trench, produced by Kaylin Bennett, editing by Exodus Media, copywriting by Nate Weintraub. Lastly, a big thank you to the BiggerPockets team for making this show possible.