Josh Abramson is the cofounder of Connected Ventures which was the parent company under which he cofounded CollegeHumor, Vimeo, and BustedTees. IAC purchased a majority stake in Connected Ventures for over $20 million. Josh Abramson is also the cofounder of the crowdsourced T-shirt design company TeePublic. TeePublic was acquired by RedBubble for over $41million cash.
In this episode you will learn:
- Strategies to kickstart growth
- Evaluating the potential of acquisition offers
- The importance of the city where you are based
- Timing of engaging with potential buyers
- Dealing with vesting after your company is acquired
- Self-funding from start to finish
About Josh Abramson:
Josh Abramson founded CollegeHumor in 1999 and led it to become one of the most popular comedy sites on the internet.
From there, Abramson went on to lead the Connected Ventures network, which is the parent company of Vimeo, BustedTees and others.
Along with CollegeHumor, Abramson also co-founded these subsidiary brands and companies, which were purchased by Barry Diller’s IAC.
Most recently, Josh Abramson cofounded the crowdsourced T-shirt design company, TeePublic.
Josh has also been an advisor at betaworks.
Connect with Josh Abramson:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello, everyone, and welcome to the Dealmakers Show. Today, we have someone that I have a lot of respect for. In fact, one of the founders that I would say that has helped in redeveloping the ecosystem of entrepreneurship here in New York. So, without further ado, Josh Abramson. Welcome aboard today.
Josh Abramson: Thank you.
Alejandro: So, you’ve been around the block quite a few times, so let me ask you this. How many companies have you built and exited by now?
Josh Abramson: Well, it depends how you quantify that, I suppose, but we’ve had a couple of very small exits, and then some larger ones. But the two primary businesses that I’ve sold, the first was Connected Ventures which was the parent company that started CollegeHumor.com, BustedTees.com, and Vimeo. Then most recently, I sold my business TeePublic. Those are the major ones. Then we started some businesses when we were in college that we sold for very small amounts of money, but material at the time. Yeah, those are the big ones.
Alejandro: Got it. So, I guess going back in time a little bit here, Josh, how did you get the entrepreneurial bug?
Josh Abramson: It really started—I went to college, and I was in my first couple of months of school. I had a job. I actually played the piano in a restaurant and a country club. I was in high school, and I made pretty good money doing that. When I moved away to college, I didn’t have that job anymore. So, that was the place where I needed to make money if I wanted to go out and have drinks with my friends or do anything really. It was really out of necessity. I didn’t want to go get a traditional job working at the campus bookstore or whatever else other friends of mine were doing. I started thinking about ways to use the internet to make money. That was really as simple as that. My best friend from growing up went to Lake Forest, and I went to the University of Richmond, so we were a couple of hours apart by car. We started going through a list of ideas of how could we make money on the internet? We were super young. We really didn’t know what we were doing. There weren’t nearly as many sorts of people to look up to in this space role models because it just hadn’t been around for that long. So, the idea we ultimately settled on was CollegeHumor.com in the early—at that point, it was late ’90s. There were no places online that you would—there were a couple, but there was no YouTube. There was no Facebook. There was no place where people just sort of congregated to share comedy or funny pictures, and videos. The original idea was simply to aggregate all of that. Put it on a website and sell ads. So, that was how CollegeHumor was born.
Alejandro: This was with Ricky Van Veen?
Josh Abramson: That’s correct.
Alejandro: How did you guys meet again?
Josh Abramson: We were friends. We met, actually, in 6th grade. He lent me a video, a VHS cassette tape of SNL episode via tape because I didn’t have cable or something at the time. That was how we met.
Alejandro: Really cool. With CollegeHumor, the business model was really with that. Is that how you guys were monetizing?
Josh Abramson: Correct. In the early days before the first .coms that are crashed, it was very easy to make money on advertising because there were so many venture-funders that had networks out there that all you needed to do was just drop a line of code into your website and then a banner ad would pop up, and you would get paid a couple of dollars CPM for every paid tribute you could generate. We would optimize our site to just in a way to make it more difficult to use, just to optimize for more paid views. Then somewhere around 2001, that changed and that money all dried up. As a result, we had to think about how do we actually generate revenue with this audience that we have? We were still a couple of years away from figuring out how to sell branded-ad campaigns to companies like Toyota and Coca Cola. So, we were focused on more ROI-generating affiliate revenue-type of model, testing out selling things on Amazon, selling posters, selling tee-shirts for other tee-shirt companies. That was what led us to ultimately start our first tee-shirt company which was BustedTees, in part because we were making so much money selling other people’s tee-shirts that we thought why don’t we just start our own tee-shirt website, and we’ll make more money. Then we can also get other websites to promote us. At that point and time, we were making more money from selling tee-shirts than we were from ads. That eventually shifted as we figured out the ad business. But it wasn’t super obvious to us how that worked as college kids. So, it took a bit of time.
Alejandro: And we’ll get there. We’ll get into BustedTees and Vimeo in just a little bit. What were initially some of the—because at this time, how old were you when you guys started with Ricky and CollegeHumor?
Josh Abramson: I was 18.
Alejandro: You were 18. So, what were some of the strategies that you guys did to really kickstart the growth initially?
Josh Abramson: It was super scrappy. The first bit of traffic that we got for CollegeHumor, I literally printed up a couple of funny pictures on flyers and just put the web address, CollegeHumor.com underneath them and hung them over urinals in the boy’s dorm at the University of Richmond. Then I would watch our traffic logs and saw over the next couple of days that more and more people were going to CollegeHumor. Also, keep in mind that it was a bit more novel in 1999 to see a funny picture with a website address than it might seem today. That was really how we got started. That worked well, and I drove to some of the other schools in Virginia and just plastered the campus with flyers. Next thing you know, we’re getting a lot of traffic from all the Virginia schools. Then I started sending and literally FedExing envelopes of flyers with funny pictures on them to friends at other schools, and then we started a Campus Rep program and would send people tee-shirts if they would put flyers up. Again, in 1999, that worked, believe it or not. Then, the next thing you know, we’re sort of growing virally, and it happened pretty quickly. Again, it was at a point and time where in 1999 if you started college that year, there’s a good chance that your senior year in high school you didn’t have high-speed internet. Then all the sudden, you’re put into a dorm room where you’re sitting in front of a computer all day with high-speed internet. People’s behavior around that was really interesting and just seeing it for the first time. So, everybody was kind of sitting at their computer like bored, like trying to find ways to waste time. So, I think we were at the right moment and time for that to take off the way it did.
Alejandro: Got it. It’s interesting that you mentioned going viral, and just obviously now, what we understand as going viral is going through all these different social media platforms. But at the time, they were not there or not as much as we see them today. So, what did going viral back then in the late ’90s look like?
Josh Abramson: When I first got to college, and really where the idea for CollegeHumor.com came from is everybody would have like a folder on their desktop with funny pictures of videos. All of my friends, my freshman year of college we would literally go from one room to the next and, “You’ve got to check out what John’s got on his computer. He’s got all of these funny pictures of this thing. He’s got this funny video that he just downloaded.” It was very much like you would just go and look at other people’s computers. Really the primary way that people were sharing things at that moment was email. People were just emailing and Instant Messenger back when everybody had AOL Messenger on their desktops. Just people sharing links.
Alejandro: Really cool. It’s interesting now that we see this like so far away, even though it was like not so long ago. But anyhow, before you turned 18, you actually turned down 9 million dollars. What happened here?
Josh Abramson: We started CollegeHumor. Very quickly we started to generate real revenue, certainly by college student standards. That summer, we had an offer to buy the business for 9 million dollars. It sounds better than it was. It was a lot of stock. There was a decent amount of cash, but as we did the math, and we looked at how that company was thinking about the acquisition, they were trying to aggregate a lot of what we call now digital media businesses, but I’d never heard the term digital media business until many years later, honestly. So, content websites I think is what we called them back then. The idea was that they would aggregate them and then sell ads across all of them. Not a completely new idea or something that people can understand today, but the way that they were modeling it and valuing these businesses was completely unreasonable. If you fast-forward to today, they were basing it off of those early 2000, late ’90s ad rates. So, we just looked at it, and fortunately, I had a father who had been a mentor, and was a mentor, and has continued to be. I had some more sophisticated people that understood business to look at it with me. We ultimately came to the conclusion that if those rates were real, and we were going to continue to make that kind of money on our ad rates, then we would make that same amount of money in cash flow in the coming years regardless. And if it was wrong, then that company was going to go out of business because they wouldn’t be able to sustain having bought all these businesses at these evaluations. Sure enough, the latter is what actually happened, and they went out of business a couple of years later. So, we wouldn’t have seen a big chunk of that money. Of course, we didn’t end up making those ad rates ourselves either, so we sort of had to recalibrate how we were thinking about the business.
Alejandro: Got it. It’s really amazing because 18 years old and turning down 9 million. It’s unbelievable. You look towards the future and as things unfolded the way and really telling that you made the right decision, but wow!
Josh Abramson: What’s funny is actually, I was just cleaning out my desk the other day because I just sold my business, and I left the company. I have a couple of relics from those old days. One of the few things that has stayed with me in my file cabinet is the original offer from that company. I just remember getting it. I literally went and showed my mom. You know, I was 18, still living at home. I can remember very vividly just that feeling of getting that.
Alejandro: Wow! That’s amazing. Then after this, you added J. Cobb and then also Sachs, and you moved to San Francisco before settling in New York City. Why did you change your mind and ended up coming here to New York?
Josh Abramson: We actually moved to San Diego, not San Francisco. San Francisco maybe would have been different.
Alejandro: Yes, San Diego. Sorry.
Josh Abramson: So, San Diego at that point and time, I didn’t have any idea of what it took to build a business. I didn’t realize the benefit of being in a place like New York in terms of the other people that you’d meet and be able to collaborate with and hire. So, we moved to San Diego not thinking we’re going to hire all these people and build out this big company. We just figured we’re running this thing. It’s four of us at this point, and we can do it from anywhere. So, why not go to the most—near the time we thought what’s a better place to live than San Diego. The weather’s perfect every day. We can live on the beach. Then we got there, and about a month after we were there, we realized it wasn’t the right environment for us. Maybe I would like to go to San Diego to retire one day, but as a young person trying to build a business, I think there are probably better places to do that, certainly for the type of business we were trying to build. Shortly after, within the first year, we decided we were going to move to New York. Then I think the good thing about being in a place like San Diego for us was that we were just living and working together, 100-hour weeks, non-stop. It didn’t feel like work in a way because we were just like hanging out. We were best friends. It was like every meal, breakfast, lunch, and dinner we’re sitting together, we’re talking about the business. It was fun because it was growing and it was working. But then we moved to New York, and it was like everything just sort of took off like a rocket ship almost immediately. Just the level of people that we met almost right away and just the relationships that we made. I think we were in New York for like six months before we had a New Yorker article written about our business, which then led to us meeting all kinds of people, and ultimately, the people who introduced us to Barry Diller who then bought our company. Moving to New York was like a huge inflection point for us.
Alejandro: Got it. You were talking about perhaps San Diego not being the right place to really build a business at the point. Was the trigger that you guys were looking at expanding the team and perhaps on the recruiting you found challenges? Or what would you say was the trigger that started to incubate the thought of perhaps moving to New York?
Josh Abramson: I think something about the type of people that are drawn to New York for better or for worse are people who are highly ambitious, hard-working people who are trying to do something interesting with their lives. Not to say that people in San Diego aren’t trying to do something interesting too, it’s just a different pace. I think coming to New York and sort of getting—just the level of conversations that we found ourselves having every night that we went out to a bar or we were having dinner with people. I guess I was craving interaction with other entrepreneurs and people who were trying to solve similar problems to myself. I think certainly throughout my career, I’ve learned so much from other people who have done it before. And trying to understand how to build out an ad sales team when you’ve never done that before. You can try and feel your way through it, or you can talk to one person who had done it before and like in an hour probably learn what would have otherwise taken you years maybe if you hadn’t talked to somebody that had more experience there. I think there were a lot of those types of moments where just meeting the right person at the right time, and those sorts of serendipitous interactions happen all the time in New York. It was just harder to find those in San Diego.
Alejandro: Yeah. I can imagine. One thing that I’m very jealous of you from an experience perspective is that when you guys moved to New York, you guys were all living and working in the same apartment in Tribeca and perhaps partying too. Is that right?
Josh Abramson: Yeah. That’s exactly right. I’m often nostalgic for those days even though I love having my own apartment with my wife and kids now. Those were pretty fun moments. We would go out, and people would just assume we were a band because I think we all kind of dressed the same and looked the same and would just have a lot of energy in those days. Also, because we were four guys living together, and we were able to write off the cost of our apartment because it was our office, we got a 5,000 sq. ft. apartment which on a per-person basis, after tax, or however you want to look at it, it was not that expensive, but people would come over, and they would think that we were already these like multi-millionaires because we were living in this beautiful apartment. I think it’s funny how the whole “you fake it till you make it” phrase is a cliché, but I think that there’s something to it. People would just come over, and I can remember us having meetings with everyone from movie executives to agents, to you name it. They would come over. It’s funny how when you’re 23, people don’t necessarily want to take you seriously. Certainly, back then. I think maybe today maybe people are a little more used to it. But you bring someone into your Tribeca loft, and all the sudden, the conversation’s a bit more serious. So, there are a lot of funny benefits that we were to take advantage of just being in the city and being together and having that apartment.
Alejandro: Yeah, and it was an almost 5,000 sq. ft. apartment. Is that right?
Josh Abramson: Yeah, exactly.
Alejandro: Wow! That’s amazing. So, I can imagine they probably saw the beer pong going on, but then the size of the space and they’re, “Okay, let’s get serious with these guys.”
Josh Abramson: Exactly.
Alejandro: So, during this time, Vimeo was born. Is that right?
Josh Abramson: Yeah, that’s right.
Alejandro: What was the incubation process of Vimeo?
Josh Abramson: We really had this approach in those days of—I was never sold on CollegeHumor being the business that was going to define me and define us as a company. We were always trying to get involved in new things. When someone would have an idea for something or a side project, we would frequently give it a little more gas. Vimeo was my business partner’s, Jake Lodwick’s invention. He would lock himself in a room for like a weekend and just came out and showed me the first version of Vimeo, which actually was quite different than the Vimeo that you see today. The original version of Vimeo was—the idea was flip cameras and inexpensive cameras that you could fit in your pocket were becoming a thing. This was before smartphones, but it was clear that we were moving in this direction where everybody was going to be carrying a camera that could take video. My partner, Jake, was one of the first people who was making video blogs and putting them online. At that point and time, the only way you could upload a video to the internet, you basically had to be an engineer or a very tech-savvy person to be able to do that. Obviously, this was before YouTube. The idea was originally, let’s create something that allows for anybody to upload a video and then share it with their friends and family. The first iteration of that was really—we thought that people were going to be taking very short video clips because that was sort of what the flip cams were encouraging you to do. Just sort of the way that we thought people were going to do it is maybe take these 10, 15-second videos, and then Vimeo would automatically stream them together and kind of make a movie. Very similar to what Snap did or what Instagram stories looks like. Then shortly after that, it shifted a bit into what Vimeo looks like today, which is individual videos that are uploaded and still shared. But I think part of what makes Vimeo today feel a little bit more premium than maybe YouTube and a little more focused around actual creators is really derivative of those early days because Jake was a creator. We were all making videos in our office and in our lives. A lot of our friends in New York were making films. The first community of people that were on Vimeo were all just enthusiasts for web video and people who were trying to make cool stuff. I think that over the years, the community that is built around that is really in many ways a function of those early days. But it was very much a side project.
Alejandro: This was before YouTube?
Josh Abramson: Correct. We launched Vimeo, I believe it was December 2004, and YouTube, I think, was January of 2005. So, it was very close. I can remember in the early days when we used to use Alexa to track the web traffic of our different businesses. I can remember when Vimeo and YouTube were neck-and-neck. I made the decision—we started seeing people upload clips from the Daily Show or things that they didn’t make. We put a lot of things in place to try to avoid that. So, eliminating—making it so that the clips had to be a certain—they couldn’t be over a certain length because people were just uploading like half-hour TV shows and all sorts of stuff to make it so that people were just uploading videos that they made themselves. In doing that, I certainly didn’t see the opportunity that YouTube guys saw in creating what YouTube would ultimately become because I think we were really focused on the personal sharing aspects of it. As a result, YouTube became YouTube very quickly. I can remember the moment when it was clear to me that we had maybe missed something, was when the Lazy Sunday SNL video went viral. That was really what brought YouTube up with it. That was like the biggest internet video of all time at that moment. I think it just became clear, “Okay, now people are going to be uploading this. We’re not going to be able to compete with a business like CollegeHumor because we’re doing this ourselves. It’s a couple of people in a room, whereas YouTube’s just going to get all of this content much faster because of the network of people that are contributing. So, that was late 2005, I guess.
Josh Abramson: I think my enthusiasm for the Vimeo business for the next couple of years was always sort of I think tainted a bit just because I felt like maybe we just lost that war, and we had sort of missed an opportunity and didn’t quite see Vimeo coming out on the other side the way that it ultimately did.
Alejandro: Got it. I mean, look, at the end of the day, you can’t win them all. Right?
Josh Abramson: That’s right.
Alejandro: So, I have to ask you this. What was this thing called a Big Shocker?
Josh Abramson: The Big Shocker was the first thing that we ever sold online. My business partner, Ricky, had the idea for it. It was just meant to be a funny gag. It was a drum finger like people take to sporting events, but it was in the shape of the shocker which is an obscene hand gesture, which was popular with college kids at the time. We literally got a design patent on it, and we started selling them. It was pretty crazy. We were selling thousands and thousands of them. They cost us like a dollar to make. We sold them for, I think 12 bucks. I had like a full garage full of them. Just seeing how that worked and understanding customer acquisition for the first time, and just seeing how quickly sales could be generated if you had a hit product is what got me really excited to build BustedTees. It led to us getting into the tee-shirt business. We continued selling those for years. They don’t exist anymore, but it was a pretty important moment for us actually.
Alejandro: Got it, because BustedTees was the latest business that you launched with these guys. Is that the last initiative?
Josh Abramson: Yes. The BustedTees went live some time I think in the spring of 2004. Then we continued to launch some other things, but those are the three main ones.
Alejandro: You did not raise outside financing like the traditional path of “Hey, let’s get some VCs. Let’s scale this up.” Walk me through that process of—I mean, you guys were financing these yourselves.
Josh Abramson: That’s right. I mean, there are two things that I think are worth noting. First of all, we didn’t have any employees in the early days, so we were paying ourselves based on what the business was earning. But there was no office overhead. We didn’t have anything really that we were spending money on. So, the need for capital didn’t seem super obvious to us. Then the other part of it is I think Venture Capital is just in the sort of cultural fabric of our country now. I think people know the names of famous Venture Capitalist in a way that I certainly didn’t when I was in college. You’ve got VCs that are blogging, and you’ve got TechCrunch, and all these different publications that are talking about raising money, and companies like Uber that are in the news every day and people talking about how much money they raise. None of that was happening in those days. I’m sure that if you were in Silicon Valley or you worked in tech, maybe you were aware of it, but as a college kid, none of that was on our radar at all. The idea of raising money was like as foreign to me as if you had told me like—raising money seemed as crazy as having an IPO or something. You know, it was just such a foreign, distant idea that we never even pursued it. Then by the time we moved to New York and started to meet people like Fred Wilson or other Venture Capitalists. We were already at a point where the business was quite profitable and didn’t see the need to raise additional capital. I think in many ways, I think we were right to do that. You could make an argument that we probably should have raised money for Vimeo earlier, and that would have led to a better outcome for us as founders. Of course, hind sight is 20/20. Frankly, when we did first start meeting with VCs around Vimeo, call it 2005, 2006 before we sold the business, there wasn’t any interest. I think the hurdle to get over to get a deal in those days I think was much higher. You didn’t have the seed funds and the smaller guys. There’s one as many options where I think if you looked at where Vimeo was in 2005 and our team that we had, and I think if we were going out to try and raise money in New York City today, it would probably take near seven hours to pull a decent round together, but it’s just a very different time.
Alejandro: Yeah. Understood. What happened with MTV, Josh?
Josh Abramson: With MTV?
Josh Abramson: As far as which part? Us almost getting acquired, but not?
Alejandro: Well, I guess so because, at one point, you guys decide that it makes sense to start exploring what’s possible. I guess those conversations started with MTV and obviously, we’ll get into IAC in a little bit, but what happened there with MTV?
Josh Abramson: I think I mentioned earlier that we had this New Yorker article that came out. Shortly after that, we had everybody calling it seemed. Every literary agent, we had movie studios, television studios, media companies. It felt like every week we were meeting somebody that we only read about before, and it was crazy to us that we were even in the same room as them. Some of those people from MTV started calling. The next thing you know, we’re getting flown down to the VMAs in Miami, and we were meeting with all the senior people at MTV. It was a very heavy experience for all of us. They said that they were interested in buying the company. So, we went down that path. We did several months of due diligence, which I’d never done before, and it was a huge distraction, a huge amount of time spent on the deal. Then we sort of got left at the altar. We thought that we had a deal. We thought it was going to be a done deal, and I told my friends and family we were selling the business to MTV, which knowing what I know now, it was premature for me to be doing that. I just didn’t know any better. They ultimately decided they didn’t want to buy the business. I was extremely disappointed. Then we started pursuing other options. Fortunately, the business was—I think we were operating at like a 50% net margin at that time. So, we were doing very well as a business, and there was no urgency or shortage of people that were interested in working with us. But MTV was not the partner for us in the end. Shortly after that is when we met Barry Diller, and he had just launched a programming division of IAC to go out and attempt to buy and build media properties, digital media. Nine months later, we had a deal to sell 51% of the business to IAC.
Alejandro: Nice. Walk us through like what was the process of the deal with IAC? What was that process?
Josh Abramson: We met a couple of over there. They gave us a term sheet. We sort of agreed to the major terms. It took us a while to get a long-form document together. It literally took nine months between when we first started the conversation and had a deal, which seemed like a lifetime to me back then. It was actually, also very stressful just because that first deal for any entrepreneur is so emotional and so impactful in terms of sort of changing your life trajectory in many ways. So, in all of those moments when I thought it was going to fall apart, and there were many of those moments, I can just remember just feeling so anxious and forgetting to eat dinner or whatever. Just so focused on trying to get it done. Then one day, it was done.
Alejandro: How big was your company at that point?
Josh Abramson: It was still pretty small. I think we did 6 or 7 million dollars in revenue that year and had about 15 employees. But we were on a pretty steep growth trajectory, but it was pretty early. At the time, that seemed huge to me. We probably could have waited a little longer to do a deal and it would have been to our benefit. Part of the reason the IAC deal seemed compelling to me at the time was this idea that they’re not buying the entire company. We’re still going to have a lot of skin in the game. If things go really well, then we’ll make a lot of money on the other half. If things don’t go well, then at least we sold half. I think as an entrepreneur, I’ve always had this sort of imposter syndrome of feeling like I just got really lucky. This thing’s not going to last forever. I need to move quickly because the world’s changing so fast. Just always feeling very anxious about the success of the thing. I think for me the deal at that time just sort of was in part just feeling like a risk mitigation because I was just so nervous that this amazing thing that we built was just going to go away one day.
Alejandro: Yeah. I believe the terms of the transaction are public. Is that right?
Josh Abramson: I don’t know if they’re technically public, but yeah, it’s been reported.
Alejandro: It was around 41 million? Something like that?
Josh Abramson: That was actually the—both of the deals were pretty similar, my first deal and my second deal. But 41 is the number on the nose for the company that I just sold, TeePublic, which is public. That was announced.
Alejandro: Got it. So, they were similar. What were your biggest learnings from this transaction with IAC?
Josh Abramson: I have a lot of respect for the people at IAC, and I think there are certain people who work really well in that type of corporate environment. I don’t think I’m necessarily one of them. I think doing a transaction where you are selling half of your business, and you still own the other half, but you no longer control it. You know, we sold 51%. So, I still own 49% with my co-founders. It’s hugely meaningful. It’s half of your net worth assuming it’s your first deal, which it was for us. But you no longer control it. When things get a little rough—it wasn’t smooth sailing for the entirety of the five years that I was there. When there are disagreements, it’s very emotional, and you don’t have the final say. I think, I certainly wouldn’t want to be in a situation like that again, or I won’t be in a situation like that where I’m sort of stuck somewhere having to work for many years in a framework that maybe isn’t like most well-suited to me. But I didn’t really have a choice. I don’t regret that deal at all. I think it was a really good deal for us, and I learned a lot from those guys. And like I said, I have a lot of respect for them. But it was difficult. I was ill-equipped to deal with the operating requirements of an entity of a public company from the FPNA and financial perspective. I can remember going into some of our early update meetings with the office of the chairman, and getting asked financial questions, and people using terms I didn’t even know what they meant because we had never even really had built out a model before. We were just kind of running it off the cuff. That changed really quickly. Like I said, it was painful at times.
Alejandro: Then you basically decided it was time to move on. You buy BustedTees, and eventually, this leads to TeePublic. Is that right?
Josh Abramson: That’s right. Again, the three businesses that we sold were CollegeHumor, BustedTees, and Vimeo. When I was leaving IAC, it had been five years. They were not interested in retaining ownership of the BustedTees business. I was able to buy it as I was leaving, and I think everybody was pleased with the way that that ended. I wasn’t necessarily so eager to jump back into the BustedTees business and turn that into something, but I liked the idea of being an entrepreneur again, being my own boss, and not having to answer to anyone else, and hoping that in doing that I would over time figure something else out. After the first year or two of just owning that business and growing it quite a bit, I had brought on a general manager to help me with the business. I had the idea for what also became TeePublic as we were thinking about the BustedTees business and sort of how that could grow. At a certain point, if you’re just a straightforward sort of web 1.0 e-commerce website where you’re just selling a product in a pretty straightforward retail type of way, especially when it’s a low price point item, you reach a brick wall with a lot of your customer acquisition channels. You just can’t spend another dollar profitably. We got to that point at BustedTees and just realized it was never going to be a huge business. Maybe we could stay at 10 million dollars a year in revenue, but we were never going to get to 20 or 50 or 100. The idea for TeePublic was instead of us just coming up with the ideas for these tee-shirts on our own, what if we tried to tap into the global design community and gave them a platform that they could upload their original designs. We would handle all the production and printing and customer service. They would help with marketing, and we would pay them a huge portion of 20% of revenue. That turned out to be a much better business, and ultimately, proved to be the primary focus of what I’ve worked on for the past eight years.
Alejandro: With TeePublic, you didn’t raise any money?
Josh Abramson: That’s correct. I bought the TeePublic business from IAC for a nominal amount of money. I had some implement agreement that it basically a way for me to extract some of my unvested stock and that sort of thing. So, it was a good deal for me. They got the price they wanted, but it wasn’t a lot of cash out of pocket. What I bought was a profitable business. The day I left IAC, I was making more money from the tee-shirt business that I now own than I had been making from my salary and bonus and everything. I now had this profitable business, and as we wanted to start other ideas and other businesses, the plan was just to fund it out of cash flow. So, we did that. Then the first couple $100,000 that we needed to spend just came out of cash flow. Then the business started to generate revenue on its own. We sort of just continued to grow organically. I think, for me personally, not to say that I’m opposed to taking venture with future businesses, but for businesses like the TeePublic business, which I was never 100% sure how big of a business it was going to be. I think once you take venture, your sort of signing up for either a huge business or a zero because I think it’s really hard to navigate the waters with the business that’s sort of in the middle, murky area where you’ve raised money, and there’s sort of this expectation from your investors to have a higher return on their capital. My feeling was if I can grow maybe a little bit slower, and organically, and with our own cash flow, then I’m preserving the largest number of potential positive outcomes for the business. If it doesn’t grow and scale the way we hope it will, and it’s a cash flow-generating business that supports my lifestyle, and I enjoy running it, that’s a good outcome. Or if it does what it ultimately did do and it grows to 40 million dollars in revenue and with a very high-profit margin, then we can sell it, that’s a great outcome too. But also, selling a business for 41 million dollars when you haven’t taken Venture Capital is an awesome outcome. For me, it certainly was. If we had taken on a Venture, it would have maybe been a disappointing outcome for investors. I think the bar that one needs to get over for a successful Venture-funded exit is obviously much higher. I think it’s a lot easier to build a company worth 40 million dollars than it is to build a company worth 400 million dollars.
Alejandro: Yeah, absolutely. It’s really interesting that you took this route especially because at the same time you were a Venture partner with FirstMark.
Josh Abramson: That’s right. Yeah.
Alejandro: A very big VC firm. A VC firm that has invested in the likes of like Pinterest and a bunch of other really successful companies.
Josh Abramson: Yeah, and I’ve learned a lot from those guys as well. I started hanging out with them really before it was clear to me that TeePublic was going to be my focus. I had started working on it, but I was really just interested in looking at other businesses with them and trying to find out what my next project was going to be. It was during that time when I was going to their Monday meetings and spending more time meeting with companies that the TeePublic business started to take off, and I turned my attention back to that and less on investing.
Alejandro: So, TeePublic was acquired by Redbubble, and this was announced a few months ago. Is that right?
Josh Abramson: That’s correct. Yep.
Alejandro: Really cool. Now, are you going to be moving on, or are you going to be staying for a while?
Josh Abramson: I stayed with the company through the end of the year. We closed our transaction in the first week of November, and it was always agreed that I would just stay for the holiday season and then my CLO and co-founder in the TeePublic business who I’d hired to be my GM when I bought back BustedTees. He became the CEO the day that we closed the transaction. Just given the way that the company was structured in my equity position. The idea that I was going to continue to be excited to work anywhere after going from owning a very large piece of the business to owning none of it. It just wasn’t ever going to work for me, and I think I’ve also had the experience of doing this once before where I really enjoy being an entrepreneur, and working for myself, and sort of setting my own ambition level on a project. I don’t work as well in a different paradigm where it’s sort of coming from someone else. So, knowing all of that and it was clear that was the right decision for me. So, yes, as of a couple of weeks ago, I’m officially unemployed.
Alejandro: Officially, and I’m sure happily because it’s remarkable what you have done. You, obviously have the other projects going on. You co-founded this company called The Loyalist as well. You’re not active, but obviously still a lot of projects going on. Do you have an idea of what the future is going to hold for Josh?
Josh Abramson: Not exactly. I mean, I think I’m trying to wrap my head around what the framework will look like for future projects. I think the truth is that the only time I started something from absolute zero with nothing was CollegeHumor. Everything I’ve built since then is really a derivative of that. I’ve always had a team of people that I can lean on to help me accomplish things. From Vimeo, and BustedTees, and then TeePublic. We had the BustedTees team to help us get that off the ground. So, going and stepping outside of that and then just sitting in an office by myself with nobody to work with is—the idea of starting a company from scratch is daunting. Trying to just wrap my head around that and what areas are of interest. I have interests across a wide spectrum of businesses. In some ways that makes it more challenging because I feel like I have this giant white sheet of paper in front of me with—I’m not even sure where to put my pencil down to start. It’s a little intimidating. It’s also exciting. I think The Loyalist business is an example of something that I helped incubate. I was the first investor in the business and continue to work closely with them day to day, but I don’t work out of their office. I’m not the CEO of that business by any means. Having opportunities like that or being able to be a major investor in something while also having some operational responsibility or some operational role, but without actually being the CEO is interesting. Maybe one day I’ll have an idea for something that I’m excited to build. It could be years before that happened. I realize these things are typically a lot of serendipitous moments is what ultimately turns into a business or deciding to go down the path or something. I’m just keeping my eyes open and going to take my time.
Alejandro: Well, that’s good. I wanted to ask you here, and this is a question I always ask when we’re getting towards the end of our time here with guests. If you had the chance, and I know that this is not possible, Josh, but if you had the chance to go back in time and to speak with that Josh that was 18 years old before getting started with this journey of building and scaling companies, what would be that one piece of advice that you would give yourself about business?
Josh Abramson: About my specific business or just business in general?
Alejandro: Business in general.
Josh Abramson: Yeah, that’s a tough one. I guess the thing that I learned over time that wasn’t clear to me initially, and I probably would have had more success faster had I thought about it this way was really this idea of trying to make your job not boring as a CEO. As soon as you have an opportunity to delegate something to someone else so that you can focus on the next thing, I think that’s a good thing to do. I was very reluctant to hire people in the beginning because I was so cheap and I didn’t want to spend the money. I was thinking about it all wrong. I wasn’t thinking about it as an investment and being able to scale my own productivity by having great people on my team which ultimately is what created all the success that I’ve had. I think it’s just having great people on our team. Obviously, I think we hired pretty well from the beginning so that fortunately came intuitively to me, but the pace at which I hired was probably a little slower than it should have been.
Alejandro: So, what is the best way for folks that are listening to reach out and say hi, Josh?
Josh Abramson: That’s a great question because my email address is about to change. I guess on Twitter or Instagram.
Alejandro: Great, and what are your handles?
Josh Abramson: Just joshabramson.
Alejandro: Amazing. Well, thank you so much, Josh. It has been an honor to have you on the show today.
Josh Abramson: Thank you.