Sam Yagan is currently the CEO of ShopRunner which has raised over $100M from the likes of Alibaba Group or August Capital. Previously, he served as CEO of The Match Group and led it through a period of growth culminating in its initial $400M public offering. Yagan cofounded OkCupid in 2003 and it was acquired by Match Inc. for $90 million in 2011. Earlier, he founded SparkNotes, which he sold to Barnes & Noble Inc. SparkNotes transaction was reported to be $30M. Yagan cofounded Excelerate Labs (now TechStars Chicago), a startup accelerator, and founded Corazon Capital, an early stage fund.

In this episode you will learn:

  • How to deal with lawsuits and other threats to the business
  • Building marketplaces and the important KPIs tha make things work
  • Lobbying with government and establishing a thought leadership positon
  • Using content marketing as a secret weapon
  • Working at the company that acquires your business and scaling through the ranks
  • Becoming an investor to pay it forward with other founders
  • Difference between managing small teams and bigger teams

Plus you can also sign up for a free year-long membership to ShopRunner here.


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About Sam Yagan:

Sam Yagan is currently the CEO of ShopRunner which has raised over $100M from the likes of Alibaba Group or August Capital. Previously, he served as CEO of The Match Group and led it through a period of growth culminating in its initial $400M public offering.

Yagan co-founded OkCupid in 2003 and it was acquired by Match Inc. for $90 million in 2011. Earlier, he founded SparkNotes, which he sold to Barnes & Noble Inc., where he served as vice president and publisher.

Yagan co-founded Excelerate Labs (now TechStars Chicago), a startup accelerator, and founded Corazon Capital, an angel fund.

He sits on the board of several startups, including ShiftGig, SpotHero and Roniin, and advises several venture capital funds, including Hyde Park Venture Partners and the FireStarter Fund. He serves on Target Corp.’s digital advisory council and the Stanford Graduate School of Business Management board.

Yagan has been named to Time’s list of 100 Most Influential People in the World, Fortune’s 40 Under 40 and Billboard’s 30 Under 30.

He has a B.A. from Harvard and an M.B.A. from the Stanford Graduate School of Business.

Connect with Sam Yagan:

 

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FULL TRANSCRIPTION OF THE INTERVIEW:

 

Alejandro: Alrighty. Hello, everyone, and welcome to the Dealmakers Show. Today, I’m very excited about a guest that we have, and he is someone that has really reshaped I would say the online dating sphere. But then also, I think he has done a lot for the entrepreneurial ecosystem. So, without further ado, Sam Yagan, welcome aboard today. Sam, you’ve built multiple companies from nothing, all the way to the finish line. Right now, if I ask you how many of those companies were actually acquired, how many are those?

Sam Yagan: I’ve been a part of two companies that I co-founded and sold. Those are SparkNotes and OkCupid.

Alejandro: Wonderful. The first company, and you were just alluding to that, SparkNotes. I think this was right out of college. I think you were studying at Harvard, and that’s the time when you came up with this initiative. Is that right?

Sam Yagan: I had the great fortune of getting to know two of the best entrepreneurs I’ve ever met: Max and Chris. In fact, my very first day of college, I was Max’s roommate, and Chris lived across the hall. We built just a wonderful friendship throughout college. Then Chris had the initial idea to build a startup. Max and I joined. Yeah, we started the company literally in our dorm room at Harvard our senior year.

Alejandro: That’s amazing. What was the incubation process like? You mentioned that one of them had the idea, and then you come into the mix. How did all this come about?

Sam Yagan: This was back in 1999 when the world was a very different place in terms of everything from what it took to start a company. We didn’t have the Cloud. We didn’t have the ability to just fire—spin up some services, and have a product in market. Simultaneously, this was a time when universities weren’t as supportive of their students starting companies. There were a lot of concerns about using school resources or distracting from school, those kinds of things. You have to go back to 1999, Chris, who’s just incredibly creative had put up a website and had just started dabbling with it on his own, keeping Max and I up-to-speed on what he was doing just socially. I certainly didn’t think it was a business. It was more of a project for him. It wasn’t until the spring of our senior year when he said, “Hey, guys. I really think we should make a business out of this, and start a company.” He’d been dabbling sort of on the side, but it wasn’t until March that we actually incorporated, almost 20 years ago, actually, in a couple of months.

Alejandro: Nice. What was the business model of SparkNotes so that all the listeners get to understand that first initiative; what it was?

Sam Yagan: Again, I think we would do it very differently if we were starting the business now. But at the time, in the late ’90s, all of these content media companies were all ad-supported. That was the primary driver of the business. It was all eyeballs if you remember; that was the term. At the time, the idea was—nobody had really put study guides online. CliffsNotes was obviously the market leader. They had the physical books they were selling in bookstores. They didn’t want to disrupt themselves with a different business model that was ad-supported. They had put some of their books online. They require you to pay to access it. So, we believed that study guides were the classic example, the textbook example for a business that should be ad-supported because you only have to write each SparkNote once, and then you can continue to publish it over and over and over again. Now, if we were starting that business today, I think we would be much more interested in direct consumer businesses because payments have gotten so much easier now than they were in the ’90s. But collecting payments online, especially from students was pretty much unthinkable in 1999. So, we pursued an advertising model, and that was the business model we launched.

Alejandro: Got it. So, I believe you guys finally ended up getting acquired, and there were like multiple, I would guess, steps or phases.

Sam Yagan: Yeah.

Alejandro: There was first an acquisition, and then when kind of like the dot-com bust, and then there was another transaction that happened there. So, before we actually get into that, how was the business doing, let’s say from a revenue perspective before you decided to head that direction?

Sam Yagan: Tiny. When we first started getting acquisition interest. But then again, you’ve always got to go back to the moments in time in history. Like in the late ’90s, this was really the peak of the internet bubble. Any brand, any website that was getting a lot of traffic was considered valuable by strategic acquirers. When the companies started approaching us about an acquisition, they didn’t care about our revenue. They didn’t even ask. Really, they were saying, how many eyeballs do you have? How many—they weren’t even called monthly active users. They were called unique visitors at the time. So, how many unique visitors are you getting every month? We showed this graph of our month-over-month user growth was so strong that that was the basis on which we were acquired. Our revenue was really, really tiny at the time we sold.

Alejandro: How did you guys finance the operation?

Sam Yagan: Another good question. When we first started, I had actually gone through on-campus recruiting in college. I got a job offer from a consulting firm which I took the job offer but deferred for a year because I was pursuing this startup. So, I actually took a $7,000 signing bonus that I got and deposited it directly into our bank account. The first $7,000 came from a signing bonus that I got, but that didn’t last very long. Throughout the school year, we were all living on campus. So, we didn’t really have any bills to pay until we graduated. That’s when we raised a $250,000 angel round from some family friends of my partner Max.

Alejandro: I mean, $250,000 back then was probably like 3 million today.

Sam Yagan: Yeah, exactly, which is ironic because it was actually much more expensive to build a company, I would argue in 1999. You would think that you would need less now and need more then. But obviously, the availability of capital has changed so much that it’s so much easier to raise a ton of money now than it was then.

Alejandro: Of course. Then you guys went into the M&A process. What happened there?

Sam Yagan: We started getting phone calls and emails from acquirers. We certainly didn’t go out to try to sell the company, but as you know, as I said earlier if you were demonstrating growth and the third-party analytics companies and market research companies were singling you out and tracking how much growth you were getting, then it was pretty easy to attract inbound acquisition offers. We got probably four or five companies that were really interested in acquiring us. We talked to a bunch of people, but we ended up getting the most interest, and the most serious interest from a company called [ITER 9:36] which was the internet spinoff of a catalog company called dELiA*s. dELiA*s was this clothing company for teen girls and young women. They had spun off delias.com into its own standalone public company. They had acquired some other internet properties, and their idea was to combine contents, community, and commerce. That was the big idea back in the late ’90s. They spun that company off into a public company called [ITER 10:08], and they made us an offer we couldn’t refuse.

Alejandro: I believe that offer is also public. It was 30 million. Is that right?

Sam Yagan: Yes. In less than a year of work—we started the company in March of ’99. We sold the company in February of 2000 just eight weeks before the market crashed, which is not because we were that smart, but we were a bunch of 22, 23-year-old kids, and we had the opportunity to make 30 million dollars per year of work. So, we were just lucky that we chose to sell rather than just raise more money like a lot of other companies in that time period.

Alejandro: Then what happened with Barnes & Noble?

Sam Yagan: We were acquired, actually for a year. Of course, eight weeks after we were hired, the bubble burst and the rest of 2000 was just a terrible time for internet companies. Our parent company lost 95% of its value—actually lost about 90% of its value the rest of that year. As they figured out what their strategic options were, one of the things they tried to do was to sell some of their assets to get cash and sustain their operations longer. So, they approached us, and they said, “Hey, we’d love to try to sell SparkNotes.” In order to incentivize us to participate, they actually gave us 50% of the proceeds of any sale that we were able to do. So, we then took the company back into market. Unlike a year ago when we had a lot of interest at a pretty high price, we actually had very little interest at very low prices. We ended up selling the company to Barnes & Noble for about 3.5 million dollars just the year after we sold it for 30 million.

Alejandro: Wow! That’s incredible. I guess from this experience, Sam, what did you learn?

Sam Yagan: I learned so much. I’m a big believer that you learn more from your failures than your successes. I think the single biggest mistake I’ve made in my career, and I’ve made many—I just said that Barnes & Noble offered us 50% of the proceeds in this transaction. So, if we had been willing to pay just half of that 3.5 million, if we’d been willing to pay 1.75 million dollars, we could have bought back SparkNotes. As I look back on that now, it was so obvious that we should have done that. SparkNotes today is a thriving brand that probably 90% of all students in American know about. With millions of visitors and a great business and a great brand. We were just too short-sighted and probably too scared if I’m being honest to make that decision. That was just a big mistake, and then at Barnes & Noble, we all stayed a year as we agreed to when we made the deal.  It was a great learning experience to go from being at a .com to being at one of the oldest, biggest retailers at Barnes & Noble, and just seeing how they viewed the coming technology revolution, the internet, and the threats and opportunities it posed for our business. I learned a ton there, but as a 24-year-old entrepreneur inside of a large company, I definitely wasn’t going to last very long there.

Alejandro: It said they’re finally already at 24. What you had gone through, it’s remarkable from a learning experience and opportunity. Like you were saying, you did this then like a couple of years doing just the best thing or just sticking around. Then after this, you really go for your next initiative. This is eDonkey. How did you incubate eDonkey?

Sam Yagan: eDonkey was a very interesting story on two fronts. 1) I learned the hard way that entrepreneurs can have a very hard time getting a regular job. After I left Barnes & Noble, I actually applied for jobs on Monster.com. What I found was that even though I thought I had these great experiences, I was a CEO, I had done all these things, the market for my services was very limited. No big company wanted a CEO because what job were they going to give me? Nobody’s going to give me an executive-level job with two years of experience. I found that I didn’t have a lot of choices. I had met Jed McCaleb who is one of the, I think the greatest entrepreneur, and certainly one of the greatest tech visionaries of our generation. I had met him through a friend, and he had already started incubating eDonkey. He had already built the technology, but hadn’t really commercialized the product yet; hadn’t really been generating any revenue. When we met, it was a great match because he was the technology visionary, but didn’t have a business partner. I knew how to commercialize and monetize an internet product, but was looking for an opportunity. We joined forces in the summer of 2002 and partnered in taking eDonkey from what was really a [15:57] technology to being one of the leading peer-to-peer fostering networks in the world.

Alejandro: That’s amazing. Just for those that are listening, it’s also the person behind the cryptocurrency is Stellar. Is that right?

Sam Yagan: Yeah, and before that, Ripple as well.

Alejandro: That’s amazing. During this time, you guys got your experience or your learning on the not-so-much-fun aspects of building and scaling a successful business which is really the legalities; not a [16:31] as a result of it. What happened here with all the action around lawyers and stuff like that?

Sam Yagan: Again, it’s always important to put these stories back in the history of the internet. Prior to eDonkey and our peer companies—of course, Napster was the first of the peer-to-peer fostering networks to get scale. They faced a legal flaw, a legal challenge in that they had centralized servers. The courts ruled that having centralized servers was itself illegal. So, a whole bunch of technologies emerged: LimeWire, BearShare, Kazaa, Grokster, eDonkey, etc. all emerged, host Napster, with this idea of a super decentralized network that didn’t have any central servers. It was that environment in which we operated. We all believed that we were building technology that allowed people to share files through decentralized servers. We didn’t have any intent of facilitating copyright infringement, and we thought that we had stayed clear of the legal guidance from Napster in terms of how to build these networks. The problem was while we didn’t think we were doing anything wrong, the courts had not ruled on the legality or illegality of these types of products. We were constantly in the grey area. I think for entrepreneurs, actually, the grey area is probably worse than knowing for sure something is legal or illegal. Because that uncertainty puts a cloud over any fundraising that you try to do. It puts a cloud over any business development you try to do, it puts a cloud over any marketing you try to do because your existence is fundamentally uncertain, and not just uncertain like most startups, but uncertain specifically around this exogenous force that you can’t control, which is the [18:50]. Finally, the recording industry sued Grokster and a few other parties in a case that’s known as the Grokster Case. We weren’t part of that case, but of course, because the technologies we used were somewhat similar, we knew that we would be affected by any ruling that the court issued with respect to that case.

Alejandro: Got it. For eDonkey, did you guys raise any money?

Sam Yagan: No. It was entirely bootstrapped, and I don’t think we could have raised money even if we had tried.

Alejandro: Basically, the whole idea of what happened ended up happening with eDonkey? There was a settlement. I believe that is reported for about 30 million, but basically after that settlement, what happened with eDonkey?

Sam Yagan: We sat down. When the Supreme Court ruled against Grokster, even though it didn’t directly affect us because the specifics of the case—of our case was different from theirs. The time and the cost that it would have taken us to litigate a case was just too high. So, we just settled with the recording industry. We agreed to cease operations, and we effectively just went away.

Alejandro: You know, one thing I know is for sure is that things are always meant to be. I think, in this case, one door closed, but then one of the most important doors probably in your life as an entrepreneur opened, and that was the door of OkCupid. Actually, this allowed you as well to be on the list of Time Magazine, one of the most influential people in the world. I have to say that, Sam. I’m sorry, but I have to say that.

Sam Yagan: Thank you, Alejandro.

Alejandro: How did you come up with this concept, Sam?

Sam Yagan: Again, look, I’ve just been so lucky to get to work with some of the most brilliant entrepreneurs that I’ve ever met. But this was again, I partnered up with Max and Chris from OkCupid and also Christian Rudder who was our first employee at SparkNotes. We all came together, and we all believed—we had previously thought about online dating ideas in the past, but we were all very interested in the idea of using math to predict compatibility. If you look back at 2003, 2004 in the online-dating history—again, I’m a big believer you’ve got to go back in time and understand what the environment was. At the time, the leaders in online dating were really psychologists. eHarmony was founded by Dr. Neil Clark Warren. Match.com had a partnership with Dr. Phil. What was being put out in market were these psychologist-driven online dating sites. To us as math majors, we believe that the real power of the internet wasn’t necessarily in helping you understand who, what you were looking for. On the contrary, we believe that people knew what they wanted. For hundreds of thousands of years, humans have dated, and gotten married, and procreated. So, we believe humans know what they want. These other sites like eHarmony were trying to tell you “Here’s what you’re looking for. Here’s who will be the best match for you.” What we said is, “No. You know what you want. The problem you need to solve, and the problem the internet can help you solve is you don’t have access to enough people. You’re top of the funnel is your challenge.” That’s what the internet brings available. The internet puts at your fingertips, tens of thousands, hundreds of thousands, millions of people. What we created, and it was really Chris’ visionary product, was an algorithm based on your own preferences, you would tell us what you were looking for, how important any question was to you, and you would tell us about your own personality. Then we would do the math, then we would take all of our users, our millions of members, and we would sort them for you. We would rank-order them for you. In the same way that Google, Google’s approach to search. If you go to Google, nobody uses the “I’m feeling lucky” button. Everybody says “I’ve asked Google a question. Google has sorted through millions and billions of pages, and they have rank-ordered all of the results based on what Google thinks I will like.” So, we did the same thing. You would tell us about yourself. You would tell us what you’re looking for. Then based on that we would take our millions of members and we would sort them for you. That was our big innovation was this ability to use math to bring compatibility.

Alejandro: How were some of the early days of OkCupid, Sam?

Sam Yagan: One of our other biggest innovations was—with any network, anytime you’re building a network or a marketplace, there’s always the challenge of how do you bootstrap the early participants? How do you solve the cold-start problem? Again, this is kudos to Chris and Christian on the editorial side and the virality side. They came up with a personality test. Think of the Myers Briggs Personality Test, but with a dating skew. Just like Myers Briggs, there were four axes, and you could get one of two outcomes on each of the four axes. So, there were 32 different personality types. You would take this test, and you would then get a personality. That personality came with four letters just like Myers Briggs, but also with a personality type, a name. This was back in the Myspace days when people would put different badges or widgets on their Myspace pages. Once you took the test, we would then give you some code that you would paste onto your Myspace page. We ended up getting millions of people to take this test and promote their own personality and promote the OkCupid test on their Myspace pages. So, we would get millions and millions of clicks and traffic from Myspace to OkCupid. In the early days, before we even put up our matching engine, we had all these people taking our personality test and giving us all this data about themselves, and building the OkCupid awareness in all of these people’s minds that OkCupid is a place to get really, really good insights on your personality which, of course, sets up the launch of an actual matching algorithm and an actual dating site.

Alejandro: That’s amazing. Was there a tipping point or somewhere where you guys were like “Okay. Things are working. Those network effects are going in the right direction.” Was there a moment where you guys were like, “We got it.”?

Sam Yagan: Yeah. As we saw the virality of the personality test take off, I think as we got more and more members, we eventually said, “Okay, we’ve now bootstrapped the network. We’ve now gotten enough people to give us enough data that we can really—instead of focusing on our personality quiz. We can focus on our matching algorithm. We made that shift in about a year after we launched with the personality quiz. We had seeded the network sufficiently that we then flipped over to being primarily a dating site, and the rest is history.

Alejandro: Got it. Then, I guess from that point on, how did you see, like especially on the retention side or on the acquisition side of those different wheels which really make the networking effects go in the right direction? Were there certain sources that you felt during those days were more effective, maybe like organic from profiles, or maybe from another type? How did you see that?

Sam Yagan: At the time, we were one of the only dating sites that allowed its pages to be scraped by Google. Most of the other sites were behind the paywall or behind the membership wall. We actually got a ton of benefit from organic search at the time. We had, I’m pretty sure, we had the most indexed pages of any dating site. Of course, all of those sites were inherently localized. They all had the person’s place of—the city that they lived in, and they all had interesting topics. We naturally ranked very high for “online dating Chicago” or “singles Boston” or whatever the case may be. We were fortunate in that—and I think this is true up until the launch of Tinder. I think we were the only dating business to successfully get to scale without spending any money on customer acquisition. Even the other free site, PlentyOfFish, which was our biggest rival throughout our growth, they were a free site as well, but they spent a lot of money on direct customer acquisitions. For us, it was all the organic search, and it was viral word-of-mouth. Those were the two channels that were the most successful for us in the early days.

Alejandro: Interesting.

Sam Yagan: A little later, we were one of the first companies—and again, the credit here goes to Christian. We were one of the first companies to really successfully leverage content marketing in the form of a blog. Before big data was even a term, we were blogging about our data. Our blog was called OkTrends. Every month, we published a new post about dating insights that we got from our data. That became, very quickly—as our Myspace traffic and some of our viral traffic went down, we supplemented that with a lot of our content marketing and big data traffic that replaced it.

Alejandro: How much money did you guys raise during the life of the OkCupid if this is public?

Sam Yagan: We did a million-and-a-half-dollar seed round when we launched—when we founded the company. Then we did a six-million-dollar round in 2006. So, we raised about 7.5 million.

Alejandro: When investors were looking at you guys, what were some of the metrics or KPIs that they were really looking closely at?

Sam Yagan: Again, this is 2005, so this is different, but after the dot-com crash, but before Facebook really—Facebook had just launched when we were in market. People were mostly looking at us as a—they mostly were looking at the engagement metrics. They wanted to know how long were people members? How much data did they provide? What was the retention? What was the turn? All that kind of stuff. It was very much a standard-membership type of model. Nobody was really interested in our revenue at the time because we were largely pre-revenue. We had early revenue, but people were interested in “What is the revenue potential of this business?” What we didn’t really understand then that we learned over time was that ultimately, we would be able to really find a freemium model. We thought we could, but investors didn’t really believe in freemium for dating at the time. So, nobody really gave us credit for that. Ultimately, that became the primary revenue model of OkCupid, and then, of course, the primary revenue model for Tender. But at the time, nobody had really proven that online data would support a freemium model, so we didn’t get a lot of credit for that from investors.

Alejandro: IAC comes into the picture. They end up acquiring the company but walk us through the M&A process here.

Sam Yagan: I think one mistake I made—again, I made a ton of mistakes. I think entrepreneurs, myself included, make two mistakes when they start companies. I think the first is entrepreneurs tend to overstate the number of potential acquirers. When we started OkCupid, I thought, “Of course the online dating companies will want to buy us, but also the lifestyle companies would want to buy us, even magazine companies would want to buy us. Maybe the big tech companies would want to buy us. If Google is all about search, shouldn’t they be interested in people search, for example? If I look back in my early fundraising decks, the list of potential acquirers was very, very long in my mind, but it turns out that really, the only companies that wanted to buy us were online dating businesses. So, I was very wrong about that. I would encourage entrepreneurs as they think about possible exit when they start a company to really be sober about who would buy this company? The second mistake entrepreneurs make, myself included, was the belief that I could always sell my company to the market leader. Like we’re a dating business, Match will always want to buy us. What I learned both throughout my own process trying to sell OkCupid, but also when I became the CEO of Match, is it’s actually very hard to get a deal done. Market leaders, in particular, rarely want to buy small companies in their category because if you’re the CEO of a market-leading company, you only want to focus on deals that can move the needle for you, that are material. Right? So, we were in a situation where we were a relatively small player in the category from a revenue perspective. The only acquirers really were the market leaders Match and eHarmony. So, our process was much more driven by when the acquirers were ready to buy than when we were ready to sell. In the summer of 2010, we were becoming more and more well-known, mostly because of our blog. We started getting some inbound interests from the market leaders. That’s what really drove us to get serious about an M&A process.

Alejandro: That’s amazing. How many users did you have at this point?

Sam Yagan: We had probably a couple million monthly users at the time, but still, very little revenue.

Alejandro: Did you get together with the board and say, “Let’s pull the trigger on really considering this seriously, going through this process.”?

Sam Yagan: Yeah. I started having conversations before we really took it to the board seriously. Mostly because my belief on these things is like they’re not real until somebody’s real. I believe every CEO should be spending 5-10% of her time, maybe 5% of her time should be spent out in market talking to strategics. Not trying to sell your company, but building relationships with the strategic players in your ecosystem. In my view, that’s what I was spending my time doing. I wasn’t selling the company. I was building relationships with potential acquirers.

Alejandro: Got it, and I think that that’s a really great approach. We’ve heard it from other guests where they were like three years building relationships with potential acquirers. What were the terms of the transactions here, Sam?

Sam Yagan: We ended up selling the company to Match, which was the subsidiary of IAC. The structure was a 50-million-dollar payment upfront, and then the opportunity to earn 40 million dollars in an earnout.

Alejandro: Then, it’s interesting because you went on and you were mentioning it earlier that you went on to really lead the Match group which, for the people that are listening, operates platforms like Tender, Match.com, and obviously OkCupid after the transaction. It’s really interesting the fact that you were really leading this, but from like a 30,000-foot view, not just one like you were doing before, OkCupid, but now seeing what everyone else was doing also with all these different properties. The question that comes to mind is from leading and building also the leaders in this space. What did you learn from what makes marketplaces work?

Sam Yagan: I think, and just to be clear, when Match bought OkCupid, there was no idea or no discussion about me being the CEO. They acquired us. I was just—I spent my first year with my head down just trying to build OkCupid, just trying to hit our earnout numbers, and really just focused on OkCupid. It was after that first year that I was thinking about leaving and doing something else. That was when the conversation came up about potentially becoming the CEO of Match. I think from the Match hat it really gave me exposure to how to think about business at a much greater scale. I went from running a team of 30 people at OkCupid to a team of a 1,000 people at Match to running a very small PnL to running a billion dollars of revenue. From running a company that was really U.S. only to a company that had international operations all over the world. Most of my learning was on how does leadership change from a founder, a co-founder’s leadership style, which is largely personality-driven, to a big company leadership style which requires a totally different type of communication, a totally different type of leadership. That’s really, I think, what was most eye-opening for me from when I switched to running Match.

Alejandro: Interesting. One of the things that I’ve seen as well is that after this experience and this transaction as well, you also start to be part of the movement of entrepreneurship. Right? So, you also co-founded Excelerate Labs. You also were part of establishing Techstars there in Chicago. Then you go on to even launch your own venture firm, Corazon Capital. Corazón is “a heart” in Spanish. So, I really like the name obviously, being Spanish myself. I guess the question that I wanted to ask you here is: you’ve seen a lot of founders, either as co-founders or founders that you ended up investing or that were part of those programs. So, what kind of patterns have you been able to recognize on those founders that go out and make something really big?

Sam Yagan: I think for an attribute of—well, there are so many attributes of a founder, but I think one is to be able to attract a team, a great team. So, co-founders, early employees. I’m always looking to who are the people that the founder has been able to surround herself with? That’s important. Number two is a constant openness to new and better ideas even if they didn’t come from her. So, I don’t want a founder who has like a pride of authorship who says, “I have all the best ideas, and I’m unwavering in my vision.” We need a founder who has a very strong vision who is focused on solving a real problem, but whether the input comes from the market, comes from a customer, comes from an investor, comes from an employee, I really need her to be able to be open-minded to new ideas. Then, I think the third thing is really a get-shit-done mentality. There is a time and a place for, obviously, research and for testing and for everything else. But ultimately, what I’m looking for is in the period of time between, as I’m getting to know an entrepreneur, you know, talking every couple of weeks, every month. I want to see how much she’s getting done in-between our meetings. I want to see that she’s gone out, she has built a new feature, she’s opened up new marketing channels, she’s acquired new customers, whatever the case may be. Early on in a company’s lifecycle, you have to be iterating on such a fast clock-speed that things are always, always happening. If I’m meeting an entrepreneur and the company hasn’t changed and made real progress between meetings, that’s a red flag for me.

Alejandro: Got it. So, shifting gears here a little bit, you did the IPO for the Match group. It was raised, reportedly it was 460 million, but then you go on to become the CEO of ShopRunner. What is ShopRunner, and what led you to take this initiative on?

Sam Yagan: ShopRunner—the easiest way to think about it is Amazon Prime for everyone else. So, the idea of being able to get a great shopping experience that includes free two-day shipping, free returns, easy checkout. A lot of the things that people love about Amazon are actually very hard to replicate by individual retailers. It’s hard for any other individual retailer to offer their own Prime Membership. So, what ShopRunner does, ShopRunner has aggregated over 140 retailers, and we’ve aggregated millions of members, and we basically give our members that great experience at our 140 retailers. So, if you’re a ShopRunner member, and you can either pay our membership fee or if you have an American Express card, or another qualifying partnership, which you can find on our website, you can get a free membership. Then anytime you shop at one of our participating retailers, you get free two-day shipping, free returns, and seamless checkout. We try to make shopping as easy and delightful at our retailers as it is on Amazon.

Alejandro: Here, how many people are you managing now?

Sam Yagan: Our team is about 200 people. We have just announced—actually, just this morning we announced that we acquired a company to expand our set of offerings to our retail partners. Along with this free two-day shipping membership, we also offer our retailers a whole suite of technologies solutions, and products that help them build better shopping experiences. The company we bought today is a fraud-prevention company that’s going to allow our retailers to fight fraud better than they could on their own.

Alejandro: Really cool. Congratulations on that, Sam. That’s fantastic. My question here then is, you’ve dealt with different types of companies. You’ve gone from managing the four or five people-type of startup to now, before 4,000 some employees now in the 100s. How would you say that you have evolved as a leader over time?

Sam Yagan: I think one of the biggest things that I’ve learned is—one of my most formative experiences growing up was in college when I was a teaching assistant in the Computer Science Department at Harvard. One of the things that we would do is each of the teaching assistants would have a little section of 15 or 20 students that we would be responsible for meeting with once a week and making sure that they understood the material. What I learned as a teacher in front of those 15 students was whenever there was a complicated concept to explain, what I learned was I had to explain it two or three different ways because people in the class had different learning styles. Some people might be visual learners. Some people might be book learners. Some people might want to see an analogy or a technical definition. If you only had one teaching style, you were inevitably going to leave most people behind, and you were going to be a bad teacher. If I fast-forward, what I learned when I became the CEO of Match was just as people have different learning styles, people have different followership styles. People want to be led in different ways. You have some people who all they care about is what is the north star of this company? Where are we going long-term? What is our mission? What is our vision? That’s what they get excited about. Some people don’t care about that. Some people care only about or primarily about what are we getting done in the next 30, 60, 90 days? Because that feels real to them. They want to know very tactically what is the roadmap? What are we going to get done tangibly? Then some people don’t care about any of that. Some people say what do we as a company stand for? What are our values? What gets me up in the morning isn’t building technology, it’s knowing that I work for a company that has values that are aligned with mine. So, what I learned more than anything is you had to have different ways of leading and different ways of communicating in order to really reach everybody. That was the biggest thing that I learned and something that I continue to this day even in a smaller company like ShopRunner that only has 200 people is not everybody wants to be led the same way, and that you’ve got to be really attentive to have a diversity of leadership styles to try to connect and resonate with everyone in the company.

Alejandro: I love it. I think that just adjusting yourself to whatever you’re dealing with, and again, just like you were saying like it’s different types of animals, different types of cultures, different types of companies.

Sam Yagan: And by the way, if you look at the best politicians, they’re able to go talk to—the speech they give in a factory is different from a speech they give to farmers, is different from a speech they give at a university. They’re different, and they’re not disingenuous. They’re not different. They’re just different ways of communicating the same ideas. I think that agility, that dexterity is super important for leaders whether it’s a startup leader, a civic leader, or any other kind of leader.

Alejandro: So, Sam, when I’m nearing the end of interviews here, I always like to ask this question. And I want to see what is your answer. If you had the opportunity, and I know that this is impossible, but I think that this could serve as perhaps some guidance or some advice to your own children. If you could go back to the past and give your younger self-advice before launching a business, what would that be and why?

Sam Yagan: I would say that founders is the most important decision you’ll make in the success of your business, and on your own happiness and fulfillments in your journey.

Alejandro: I love it. I love it. Sam, you’ve been so, so generous. Just before we wrap things up, what is the best way for folks that are listening to reach out and say hi?

Sam Yagan: The easiest? I’m @samyagan, and I’m happy to engage with you there.

Alejandro: Amazing. Thank you so much, Sam, for being part of the Dealmakers Show.

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