GE 188: How Twenty20 Burned $10M and Still Emerged as a Successful Company (podcast) With Matt Munson

Matt Munson

Hey everyone, in today’s episode I share the mic with Matt Munson, founder and CEO of Twenty20, a company that provides a photography marketplace for some of the best-looking authentic stock photos and royalty-free images anywhere.

Listen as Matt shares how Twenty20 burned through $10M by trying to scale too quickly and the lessons he learned (including talking about his “failures”), how they built a massive photo catalog of 50M+ images from 300K photographers that Google, Apple & Pinterest use (without advertising for a single photographer!), and how Twenty20 got 1,000 subscribers, 170K in MRR and 10x growth in 1 year.

Download podcast transcript [PDF] here: How Twenty20 Burned $10M and Still Emerged as a Successful Company TRANSCRIPT

Time-Stamped Show Notes:

  • 00:54 – Eric introduces Matt Munson
  • 01:16 – Matt is one of the co-founders of Twenty20
  • 01:46 – Twenty20 sources their photos from a global community of about 300K photographers
    • 02:11 – Twenty20 wasn’t the original business model
    • 02:45 – They started with InstaCanvas before they moved to digital licensing
    • 03:08 – They have built a massive photo catalog with more than 50M images
    • 03:47 – Early market testing allowed them to license their content
    • 04:20 – Twenty20 never advertised for a single photographer — all acquisition was done through viral sharing
    • 05:05 – They were able to bring on some dominant mobile photographers and build a community of influential people
  • 05:38 – Photographers get revenue share per photo sold
  • 05:53 – Big companies are willing to pay more for photos with nontraditional content
  • 06:09 – Time savings for companies allow Twenty20 to charge a premium
  • 06:59 – Twenty20 is subscription based with 1,000 subscribers
  • 07:29 – Revenue is about $170K MRR which was 10x more than last year
    • 07:45 – “It’s been a crazy year from a growth perspective”
    • 07:49 – The company is 4 years old and has been in the digital licensing market for just 2 years
  • 08:57 – Paid advertising, Facebook, Google, Twitter Ads, and SEO have helped Twenty20 in terms of customer acquisition
    • 09:33 – Matt says they already found their company’s voice for content marketing
    • 10:01 – Twenty20 started producing more content around the real human experience
    • 10:23 – Cold emails are also working for them
      • 11:16 – The challenge in sending emails is the list
      • 11:37 – Twenty20’s team did something creative to cleanse out bad emails from the good ones which resulted in them being able to send direct cold emails
      • 12:06 – The type of content used is also a factor
    • 12:30 – Once they get leads, they do inside sales and leverage marketing
    • 12:59 – They have started testing a self service approach in August 2016, and are currently now on that platform
    • 13:19 – A decent amount of conversion comes from first-time visitors from paid and organic channels
    • 13:30 – Email efforts are also being used to provide education and support to convert leads who’ve shown interest
  • 14:15 – Matt’s blog post: How I Burned 10 Million Dollars So You Don’t Have To
    • 14:36 – Matt describes Twenty20 2.5 years ago – 8 people in the team, on seed stage, just built a photographer community with a large image catalog
    • 14:46 – They have a handful of customers and they were running out of money so they raised venture capital to start their digital licensing business; they raised $8M
    • 17:06 – They started to market in February 2014 while figuring out who their customers were
    • 17:23 – They used matching advertising with the inside sales team
    • 18:33 – The started to burn more capital when they scaled up the team
    • 18:47 – Matt’s blog post came from the internal pressure he was feeling as CEO
    • 19:32 – By the end of the year, the sales team had grown from 4 to 20 people
    • 19:56 – In 2016, they’ve been growing about 20-30% monthly on the revenue perspective
    • 20:23 – The sales team became 3-4x more profitable
    • 20:46 – In January, they attempted to raise more capital
    • 21:09 – What they didn’t see coming—the financial markets fell apart in Q1 of 2016 and their entire sales engine fell apart
    • 21:46 – They went from $180K to $40K
    • 22:04 – They shifted the plan from raising money to making the company profitable again
  • 23:09 – One factor from their sales engine fall is they made two mistakes:
    • 23:36 – They took the risk of going with just 1 primary acquisition channel
    • 24:24 – Second, they deeply under invested in sales leadership
  • 25:09 – Significant gaps were present when they promoted their top deal closer as director
  • 25:31 – Twenty20 is open about the mistakes they’ve made
  • 25:56 – Matt says they could have slowed down earlier, but didn’t—which ended up being the biggest mistake
    • 26:38 – In June-July, they still hadn’t had the company turn around
    • 27:03 – They were at risk of losing the whole business
  • 28:41 – Micah’s blogpost for Twenty20
  • 29:13 – The last 6 months has been a huge learning experience for Matt and his team
  • 29:59 – “The real risks in a business are not the ones that most people talk about”
  • 31:28 – Twenty20 became team and culture centered
  • 31:47 – They already thinking about how to build a scalable engine
  • 32:23 – They are now a team of 10 people serving a thousand amazing customers
  • 32:38 – They are doing $200K revenue per head today
  • 34:03 – Matt believes they have internalized all the lessons from the struggle they faced as a business and as a team
  • 35:02 – What’s one must-read book you recommend? Shoe Dog and Sapiens
  • 36:16 – Connect with Matt on Twitter

3 Key Points:

  1. Your plans will not always take you to where you thought you’d be—sometimes, they take you somewhere better.
  2. Don’t put all your eggs in one basket—entrepreneurs should calculate their risk taking.
  3. Prevention will always be better than the cure, start acknowledging those gaps when you see them.

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Full Transcript of The Episode

Show transcript
Matt Munson: Macy's, MTV, Vice, Pandora, Eventbrite, Pinterest. They all use our product. Probably none of them know that we're 10 people.

Speaker 2: Do you want to impact the world and still turn a profit? Then, you're in the right place. Welcome to Growth Everywhere. This is the show where you'll find real conversations with real entrepreneurs. They'll share everything from their biggest struggle to the exact strategies they use on a daily basis, so if you're ready for a value-packed interview, listen on. Here's your host, Eric Siu.

Eric Siu: Before we jump into today's interview, if you guys could leave a review and a rating, and also, subscribe as well, that would be a huge help to the podcast. If you actually enjoy the content and you'd like to hear more of it, please support us by leaving us a review and subscribe to the podcast as well. Thanks so much.

All right, everybody. Welcome to today's episode. We have a special guest. We have Matt Munson who is the co-founder and CEO of Twenty20, which provides some of the best-looking authentic stock photos and royalty-free images anywhere. Matt, how is it going?

Matt Munson: Great, Eric. Excited to be here. Thank you for the kind introduction.

Eric Siu: Yeah. Thanks for being here. Why don't you tell us a little bit about who you are and what you do exactly?

Matt Munson: As you said, I'm one of the co-founders and CEO of Twenty20. We are a 10-person start-up based here in Los Angeles, and we provide a photography marketplace. We source real-world authentic stock photography that companies like Google, Uber, Birchbox, and a lot of leading design and advertising agencies use as they prefer alternative to some of the traditional stock photo providers like Shutterstock or Getty, and we source from a global community of about 300,000 photographers that are capturing real-world content out in life primarily on mobile and adding content via our app.

Eric Siu: Great. Why did you decide to start a stock photo company when you have big players like Shutterstock in the place? What was the impetus?

Matt Munson: The inception story is a long one. To me, frankly, it wasn't our original business model. We actually started way back when as an education company, and we spent about six months building products there, didn't find any traction, observed the early rapid growth of Instagram and really the proliferation of mobile and mobile photography, and we were looking at business models where we could leverage a large fast-growing trend where we could build viral growth into the product and also where we could drive monetization quickly because, frankly, we were running out of cash, and so we did some early testing on an idea that a lot of people to sign up via Instagram and sell their photos to their friends and followers as canvas art prints which took off overnight as a product called "Instacanvas."

That's where we started, and we built that product for about two years before dipping our toe in the water of digital licensing, and this is about two years ago now. Quickly realized we had built this massive photo catalog. We're now at about 50 million images, so a similar ... Although we're fairly early stage, we're similar size to someone like Shutterstock or iStock, and had a built a catalog because of our incredible contributor base of really beautiful, powerful, authentic imagery.

The kind of content that we're used to see in somewhere like Instagram, people that were traditional buyers of stock photography were really looking for a different alternative, so they were pretty fed up and frustrated with the traditional players. They thought the content was shitty, and staged, and stocky. These are the words that we heard. We did a little early market testing with actually allowing these big brands, and start-ups, and small businesses to license our content and found a huge appetite for something that really stood for a departure from traditional stock photography and actually provided vibrant authentic content. We found the market to be really receptive to a very different approach to content.

Eric Siu: Forgive me for being naïve, but how do you get all these people to agree to let you use their photos?

Matt Munson: It's been a really interesting case and viral acquisition. We've never advertised for a single photographer. Like I said, we're up to 300,000 photographers in over 120 countries. We've built the largest image catalog of its kind globally, so it's pretty unheard of to have an early-stage company with such a massive catalog, and all the acquisition has been done through viral sharing. In essence, we've got a three-person growth team here that specializes in traditional growth stuff, understanding, sharing funnels, viral acquisition, looking at optimizing news reflows in and out of the system, and we, in essence, give our photographers ways to share out achievements that they have inside of our system to their follower base.

Particularly early on, we are able to bring on some really dominant mobile photographers, people that had massive social followings across Instagram and Twitter, Facebook. We're able to build a community of really excited influential people that also wanted to spread the word, and that's been enough to keep us growing really quickly ever since, so we continue to scale really aggressively on the photographer's side. It's all done through viral sharing across social.

Eric Siu: Got it, so they're sharing, but let's say I'm a big influencer. I have a ton of images. What if I want to ask for some kind of compensation? Like how does that work?

Matt Munson: We provide a revenue share on all photos sold. We pay $2 per photo licensed to every photographer which is about eight times the market standard. Shutterstock pays about 35 cents per photo licensed, and what we've seen, working with some of these big companies that are looking for an alternative traditional players, there's a willingness to pay more because the content is very unique. We're the only place to get it. It's fresh, authentic. It stands apart from their experience in these big providers.

Also, it provides a lot of time savings because their creative teams and their digital marketers aren't spending hours and hours each week looking for photos that don't suck or that don't look so stocky. They can just come to us and they're all ready to go, and so we're able to charge a premium. We earn about five times more on a per license basis than someone like Shutterstock, and we're able to pass that through to our photographers and pay $2 per photo that's used.

Eric Siu: Awesome. As a customer of Twenty20, I can vouch for that. They're basically Shutterstock or Bigstock photo, but better. It just makes life a lot easier, so when you come on something like what you're doing or use like an app like Canva and you push two together, it makes things ... You don't need to have like a designer, [inaudible 00:06:52] designer all the time, and it just make things a lot faster. In terms of revenues and the number of customers now, what does it look like for you guys?

Matt Munson: We are just under a thousand subscribers on the system, and so everything is subscription-based, and we've got pretty incredible reach across a lot of the who's who of Fortune 1000 start-ups, and creative and ad agencies. People like Apple, Snapchat, Google, a lot of the leading design and advertising agencies in the country are subscribers on the system as well as a lot of the who's who of tech start-ups.

From a revenue standpoint, we are at about $170,000 at MRR right now, so just under a $2 million run rate, and that is about 10X in the last year, so it's been ... and we've shared a lot of this story publicly. It's been a crazy year from a growth perspective. The company itself is about four years old, but we've only been in the market, this digital licensing market for about two years. We signed our first customer about, I think, two years ago this month.

This time last year, I think we had about probably 30 or 40 customers throughout about a thousand customers now. This time last year, we were doing 15 or 16K in MRR, we're at about 170 now, so we've seen about a 10X increase in revenue this second year that we've been in the market.

Eric Siu: Congratulations on your growth.

Matt Munson: Thanks. It's been crazy, and hard, and exciting, and painful, and terrifying all at the same time like most start-ups [inaudible 00:08:31] and most of the stuff that you don't talk about, but yeah. Tongue and cheek. We're killing it.

Eric Siu: We're going to chat more about that in a second because the blog post is the whole reason I reached out to you in the first place. You guys are doing the growth ... No, the typical kind of growth stuff, and I know my company, we're also helping you guys with some paid acquisition at the moment. What's the most effective thing that's been working for you guys in terms of customer acquisition today?

Matt Munson: I'll go through the whole funnel. On the front end, some great returns from paid advertising. Facebook has done fairly well for us. Google. A lot of traditional stuff, Twitter Ads. We've done okay there. SEO has started to show some interesting traction for us. We're a lot earlier there than we would like to be. It is a pretty competitive space particularly in our market, but we're starting to crack ways to leverage the size of our contributor base, the size of the catalog in the traffic that we see in order to start to accelerate that, so that. We started to see some efficacy there.

Content marketing is another one that is early, but shows a lot of promise. It's a personal passion of mine. I think we've started to find our own voice in the content that we create, which was a challenge for us because we didn't want to be out there just doing webinars on how to build your Instagram and Twitter following count like I totally get it and that's ... It's probably smart to do that stuff, but there are some people doing it, and it just didn't feel like us, and so we've started to obviously do a lot more content production around the real human experience behind building a company and a product. The interest there has been awesome, so it really spoken to that idea of creating content and products that are true to your heart and who you are, and that's been really powerful for us.

This one is a little more boring, but cold email strangely has always been a big driver for us. It was when we were drilling more through inside sales, and it was really effective there, and it continues to be an interesting place to play, which is weird. A lot of people I think don't know that spam is illegal for business to consumer, but B2B ... Maybe call that "cold email," I guess. It's not spam per se, but it's an unrequested email, but we've been able to do ... We've found some creative ways to actually get really targeted so that we know for a fact that we're reaching out to people that have a core need for authentic real-world photography.

Eric Siu: When you say creative, what does that mean exactly? Can you give me an example of that?

Matt Munson: Yeah. You need to remind me. Even though I just said it, I can't remember ...

Eric Siu: Yeah. You said you guys are figuring out some creative ways to send out cold emails.

Matt Munson: Creative? The challenge with emailing is you need a list, right? There is a lot of places to buy bad lists. There aren't a lot of places to buy good lists, and there is a lot of bad data out there, and there's strangely not a lot of knowledge even in the start-up community for how to cleanse that data. Our growth team has done some pretty interesting things there to make direct cold email, something that is far less spammy and far more effective, and that allowed us. We do it off our own domain. Our scores there are great. It made an effective channel for us. It's a lot, but like anything, it's not really a signal. It took a lot of experimentation. A lot of stuff broke early on, and we had to iterate on how to separate ...

Eric Siu: How do you may less spammy though? Is there like an example template?

Matt Munson: Yeah. There are some best practices for sure and the type of content that we use. Frankly, our growth team would probably be better positioned to share some of those tips and tricks than I am, but it's really come down to making sure that we're reaching out to the right people and not just blasting blindly, and we've been able to, I think, get pretty smart about that over time.

That's the top of the funnel, and then once we've got a lead in the system, we ... You keep hinting that we'll talk about this, but a big part of our experience in the last year. We started growing early on of inside sales, and we basically were leveraging marketing to drive sales leads, and then using humans to do the initial outrage, the traditional SDR to AE specialized sales team with account managers in the backend.

We started there, and then in August of this year, really out of necessity, we moved ... We started testing a move to a self-service approach, and today, everything is driven entirely through self-service in the system, so we leveraged a lot of these marketing channels in order to drive awareness. We see about a decent amount of our conversion come in through first-time visitors that are coming in through paid and organic channels.

Then, we also have a pretty robust email effort that we've used to provide education and outreach to people that have showed interest, but not yet converted, and so one thing that we found need to do is to become pretty proficient emailers when it comes to campaign and follow-up emails as we move to this self-service system.

Eric Siu: Got it. Okay, so I do want to talk about that now. The blog post that you penned here says ... It's basically how you burned $10 million, so the audience doesn't have to, so let's talk about that. Let's go into more detail around the inside sales teams. You have a line here where it talks about how you had to reduce staff, but revenue is growing twice as fast, so I guess I'll let you take it away there.

Matt Munson: Yeah, let's do it. I'm trying to think how to talk about it without just repeating what's in the blog post.

Eric Siu: No. I think many people probably haven't checked it out here, so maybe the key takeaways. Whatever comes to mind. It's cool.

Matt Munson: Let me give you the high level first, and then we can drive in wherever you see is most interesting, but at a macro level, so if we rewind to two and a half years ago, we were eight people. We were seed stage. We had built out this photographer community and this large image catalog. We had a handful of customers where we had tested out this idea of digital licensing and we had seen some interest, and that's where we were.

We were running out of money. We didn't have the cash on hand to even think about building a proper stock photo service, and so we went out and tried to raise some venture capital in order to support what really was this pivot of the company from the consumer-to-consumer business to the B2B licensing service, and we're surprised to find at that time, so this is early to mid 2014, surprised to find a very strong appetite in the venture market for supporting our market and this kind of business, and found ourselves in a pretty frothy situation where we raised an $8 million series A on a pretty substantial evaluation about a 38 or 40 million post.

We had zero revenue to speak of on this business. We had a million or so revenue on the legacy business, but we would ultimately shut that down, so I won't even count that. We were months away from even thinking about building a stock photo service, so raised this money. We're eight people. It took us the latter half of 2014 to build really the piping and the ability to ... the ecommerce space and all the infrastructure to support the launch of this service, and then we went to market in February of 2015 with our first public launch of the licensing service, which was a big undertaking.

This may not be obvious to listeners who haven't spent much time around stock photography, but Shutterstock is a two and a half billion dollar publicly traded company. Thousands of employees, offices around the world. They've got probably a 20 to 30-person team focusing on their search algorithm alone, and here we are, at the time, 8, 12, 15 people building a service of a similar size, so they at the time I think had 40 million images. We had 40 million images. We had all the same search discovery and construction challenges that they did, and we're building it from scratch, so it was a big undertaking.

We went to market in February of 2014, and it took us a few months to figure out who our customers were going to be, what acquisition channels would work to drive awareness, and how the heck we were going to close deals in a predictable basis, but we started to figure it out, so we ... or we figured it out one way, and the way that we figured it out was matching advertising and some of the marketing channels I've talked about already with the inside sales team.

We found that stock photography ... It tends to be a service that people have pain points around, and they want a solution. It can take some kind of follow-up and reminders to get them to test and convert over to a new solution. It's not necessarily the number one fire in their inbox in a given day, and so inside sales showed some interesting early efficacy.

We started to understand how to drive leads. We started to figure out a predictable cadence for following up and doing those initial qualifying calls, how to hire and train SDRs and AEs, and really building that engine out. We launched in February 2014. By July, we had our first four sales people to SDR to AEs. We had two AEs closing 30 to 40K a month in bookings, which allowed them to be really nicely profitable, and it made the whole engine nicely profitable.

From there, and this is what we talked about a lot in that post that you mentioned, the Medium post. At the time, we're probably 20 people. We're sitting on this big evaluation. We're starting to burn more capital as we have built the team out a little bit, and we're feeling quite a bit a pressure to scale the business. I shared this in the post, but a lot of that I think was internal pressure that I brought and do it as a founder and CEO that I see a lot in peer founders and CEOs as well.

We had this urgency around scaling, and we had something that shown some initial signal around this marketing inside sales stack, and we started to build it out. I'm going to pause for a minute because I feel like I've been talking a lot [crosstalk 00:19:07].

Eric Siu: No, no, no. No, just keep going. I'm literally staring at this blog post right now, and your cash flow, this cash flow graph right here, it plummets to negative 600K.

Matt Munson: That's a year later. To give you the high level bullets, we found this early signal around May, June of 2015. Started to really invest or building out that team, so by the end of the year, the sales team had grown to probably ... I want to say 20, so we had gone from four to 20 in six months prepping for a ... and attempted a series B financing round in January, and we had incredible numbers.

From that, July through the end of the year, and through the first quarter of this past year of 2016, we were growing 20% to 30% month over month from a revenue perspective. We were able to bring in and scale our sales team. My view like we're doing all this from scratch, so we were ... We had the front end steady and everything we could find on how to scale SaaS business, and how to scale SaaS teams, and how to build an efficient infrastructure, and it was working.

January of last year, we did 140K in new booking, something ... I don't know, top of my head, something like that. It was something like 120, 140, 160, January, February, March, and the thing just kept growing. Our sales team was about three to four X profitable, so we were growing the sales team like crazy, but returning cash to the business.

We went out in January to attempt to raise additional capital feeling pretty good. We were sitting at a lofty evaluation, and we knew that could be an issue. The markets had started to turn in Q4 of 2015 and evaluations were lower, but we had incredible growth numbers. We had incredible close rates and payback numbers.

Two things that we didn't see coming totally happened. One was the financial markets obviously fell apart in Q1 of last year. I think the drop in venture capital deals between Q4 of 2015 and Q1 2016 dropped something like 90%, 95%, so we got a ton of interest. We had firms flying down from SF, and nobody was writing checks.

That happened, and then just as it became clear in February, March that nobody was going to give us any money, in April, the entire sales engine fell apart. It wasn't immediately clear what went wrong, but we went from booking 180 or something like that in March to booking like 40K in April while adding another probably eight or 10 people to the team, so the wheels very seriously fell off.

We were in the midst of ... We had shifted our plan to saying, "Okay. We're not going to be able to raise outside capital this year. Let's get the company profitable. That's going to mean continuing the scaling, the scale of sales some even more aggressively. We have shifted the plan from, "Let's get the company size to 60 people with 30 sales people," to, "Now, we're going to go to 80 people with 50 sales people." Just as we put that in hindsight, once I ... crazy plan in place, all the close rates fell apart.

This sounds public in the Medium post, but the cash burn as you mentioned ... Talk about a nightmare of an operating team. The cash burn went from something like 200K in March to like 600K in April and May. All of a sudden, your runway is disappearing before your eyes and I'm not sleeping. That's where we landed April, May of last year.

Eric Siu: Why do you think the sales engine fell apart? Like why do the close rates dropped so much? Why did everything just get destroyed all of a sudden?

Matt Munson: I don't think there's ever a totally black and white answer to these things. There are some things that are clear. One is as we were going through this rapid growth, we made two very substantial mistakes. We had seen promise in four or five different marketing channels in the six months prior, but in order to support the really rapid growth plan with a limited kind of marketing and development team, we took a bet on going down to only one primary acquisition channel, and that channel broke.

This is growth 101, but also, like these are things that you're going a hundred miles an hour. You're trying to finance. You don't have time to like stop and rebuild. These are tradeoffs I think that are made in start-ups all the time, and we made it, and it was a bad one.

One was when that one channel broke, all of a sudden, the leads dried up, and we didn't have ... We had a bunch of data on other channels on the wings, but nothing that was ready to be teed up the next week, so that hit sales morale really hard and company morale, but that I would say is recoverable. It took us probably six or eight weeks to repair that channel and also spend up a couple others as we learned from that mistake, but that was a big one.

Then, the second big one was we deeply under-invested in sales leadership and processes. I don't want to take any away from our sales team or the people that led it. Like we had some incredible people. I would argue one of the better sales organizations out there as far as people on the phones. We had brought on a sales director at one point. He was based on the East Coast and having the location split really didn't work, so we let her ... We parted ways with her.

We promoted up our best closer. It's an interim solution to lead the team because we were right in the middle of going through fundraising and this crazy scaling. He was great. He had a lot of strengths, but just hadn't ... There was a lot of the job he hadn't done before, and that left some significant gaps in how we're thinking about the processes, and then we were scaling on I think some tools that were great early on, but needed more work in order to scale, which means you set yourself up for this perfect storm where when one thing goes wrong, all of a sudden, there's a domino effect, and I think we saw that kind of a domino effect, and all of a sudden ... We're pretty open about the mistakes now because they're real and they happened, but also like ... We're a smart team, so like we're pretty thoughtful about these things.

It's just it's easy to miss these things when the pressure is there to go fast. Things are working. Like all start-ups, you're in an environment of limited resources, limited time. There's a big lesson there like even though we were thoughtful about it, we knew some of these risks. We could have slowed down earlier and addressed them, and we did not, and that I think was our biggest mistake was just this overall focus on speed and urgency.

There's a reason I think in hindsight why you don't see a lot of companies scale faster than 10X a year or build sales teams. You don't see a lot of sales teams go from 10 to 50 in a year even when the company is working, and usually, the ones that do, one way or another, they turn into top stories. We certainly saw some of that and ended up in a position in June, June, July. We hadn't been able to turn our burn around.

Our plan to get the company profitable driven through that existence like sales structure were showing really significant cracks. We knew that we weren't going to have an easy time raising initial outside capital, so it felt very much like ... Although we had this really interesting product market fit, great revenue growth, great customer base, we're really at risk of losing the entire business.

Eric Siu: Yeah. Just for everyone to know, we're going to drop ... In the show notes, you're going to get the link to the Medium post. I definitely recommend reading it in its entirety because then, you'd get all the graphs, all the other stuff that's in there. It's going to give you more insight for sure. I don't think like an interview can do it its justice. How long did you spend on that post by the way?

Matt Munson: Strangely, not very long. We have just lived it, and so I just put my headphones on and wrote down the entire year, and I don't even know if I knew when I started writing it whether I was just journaling for my own sanity or we were actually going to share it out. I certainly didn't think more than a couple hundred people would read it. In the end, I think we're at ... I don't know, 10,000 or 20,000 reads now, so it's been both really gratifying to I think have, and the feedback has been amazing.

It's been gratifying to have other people hopefully learn from some of our mistakes and find some inspiration in normalization in the struggles that we all faced building stuff even when we looked like we're killing it from the outside, but also, it's been a little terrifying. It's been our first foray into really opening up some of the company's story and my own personal foray into sharing some of my own experiences and struggles more transparently, and you don't experience ... You don't expect in advance that everyone that you know and everyone you don't know is going to read it the first time. It's been an emotionally interesting journey.

Eric Siu: No, this is why we do this. It's good to pull out these lessons so other people can sidestep them. I know Micah from your team also put together a post. I think it went live this week too that we'll also put in the show notes, Micah from Twenty20, around the growth lessons learned too, so we'll definitely put that in there, and then what I'm hearing from this interview so far, one, don't put all your eggs in one basket, and two, you don't need to just grow for the sake of growing all the time because the wheels can fall off, right? Those are the two key things that I'm hearing in addition to all the mini lessons too.

Matt Munson: Yeah. I think that's right. For us, there's been a huge learning experience the last six months as we've really re-engineered the way that we work and the way that we approach scaling the company, and we've just come to think about it very differently. I've come to believe that the things that create risk in companies are not the thing ... I'm a first-time venture founder. I've started a couple of companies, but nothing like this where you've got venture investors. You've got large capital. You've got a big market with interesting product market fit. These are all new experiences for me and for much of our team.

I think what I would say as I look back and as I look forward is that I've come to believe that the real risks in a business are not the ones that most people talk about. It's not that you're not going to work fast enough, or ship enough, or grow revenue fast enough all the time, and this is I think why you hear this stuff. You hear things talked about like really deeply investing in culture and really deeply exploring how to create a sustainable environment for your team.

You hear experienced repeat founders talk about being always prepared for the downturns whether it's a macro financial downturn which we've seen or whether it's a shift in your own market or your acquisition strategies, which we've also seen. These are things that don't get talked about a lot, but you do hear the repeat experienced kind of gray-haired founders talk about them, and I totally get it. At least I like to think I totally get it now with a lot of humility like because we've made all those mistakes. Thank God that we have a very resilient team and an incredibly supportive group of investors, and also, a great position of leadership in a market that's very forgiving and also very ... where there's a tremendous need, and so the market is hung with us as we've gone through some of these learning curves.

Yeah. I think the things that people think are the risks were I think most important, just our ... We totally changed it up, so we become very team and culture centric at a very different level, so starting to think about, "How do we build a place that people want to work for next five to 10 years?" instead of a place where we get as much done as possible in the next 30 days, which I think is talked about a lot, but rarely done.

We've also started to think about, "How do we build an ultra-scalable revenue engine?" Right? Like forget raising shit tons of capital and hiring hundreds of people. Like maybe we'll do that, but that's not really the point, right? All of that, anything that's done to provide resources to a business really is done just to create a profit-generating engine and a value-generating engine, right? Profit to shareholders and value to customers and to employees.

That question does not come first in most venture-backed start-ups today, but it very much comes first now here. Now, we're 10 people that serve a thousand amazing customers. Macy's, MTV, Vice, Pandora, Eventbrite, Pinterest. They all use our product. Probably none of them know that we're 10 people. We're 10 people. We've been in the market two years, and we're doing 200K in revenue per head today.

Eric Siu: That's good. Yeah.

Matt Munson: That's probably 4X where we were six months ago. From the head count perspective, it's like 30X, but these are metrics. Our revenue per engineer is 800K or something like people don't talk about these metrics, but they're like these are metrics that actually make businesses work.

Eric Siu: Right.

Matt Munson: We've slowed down a lot, and it's funny. It's ironic because even our legal company name is "Fast Labs," and you can tell like all the way back into our founding DNA, the emphasis that we put on speed, but we've actually talked about even changing the name to "Slow Labs" as a tip of the hit to the learning curve, but we've just talked about, "How do we actually slow down and build ...?" A question of like, "How do we take ...?" We've got one human now that in essence provides all of our human support to both sides of our marketplace.

We do that with hundreds of thousands of photographers and thousands of subscribers thinking about how to do that at scale without throwing humans at the problem so that we're able to build a much more efficient business and also build for the future. It just takes longer, and it's a more interesting challenge. We've come to take a very different approach. We talk about this a lot in the Medium post, but I believe and hope that we've internalized a lot of these lessons from the last year of our own experience and our experience being first-time venture operators.

I think these are lessons that are ... The reason we wrote the post, I think these are lessons that a lot of people ... One, I think it's the experiences we're all having in different ways. The pressure, the loneliness, the fear, the failure. Nobody is killing it, and nobody is succeeding overnight, and we're all going through like such incredible hardship, and nobody talks about it.

That's one reason we wrote it, and the other reason is I think that these are lessons that are just really broadly applicable and should be talked about more because the way that we're building companies in the venture-backed world, there's a lot to improve on that will lead to both more sustainable companies, healthier operating teams, better investor returns, and I think there's a lot to be talked about there as well.

Eric Siu: All right. What's one must read book you'd recommend to the audience? Just one.

Matt Munson: Can I recommend two?

Eric Siu: Go for it.

Matt Munson: I read two books over the break that just have completely normalized my entrepreneurial experience for this for 2017 in totally different ways. One was "Shoe Dog," Phil Knight's book about the founding of Nike. This is like incredible success story that defines what it is to build the brand and the global entity. Man, that company should've died like 800 times, so I really enjoyed that.

The second is "Sapiens" which is a story about the entire evolution of our species, and that has just normalized my experience of what it is to be human and given some really broad perspective on the problems and challenges that we face on a day-to-day basis as 21st century American capitalists. I found reading those two books back to back to be a really profound way to start 2017.

Eric Siu: I love it. All right. Matt, what's the best way for people to find you online? We're going to leave that blog post in the show notes. The other one that Micah wrote, we're going to put that in the show notes too, but where else can people find you?

Matt Munson: Great. I'm on Twitter, @mattmuns, M-A-T-T-M-U-N-S.

Eric Siu: All right. Perfect. Matt, thanks so much for doing this. Thanks so much for being so vulnerable.

Matt Munson: Appreciate it. Thanks, Eric.

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