Lavingia considers remote work video software the “next frontier of innovation”
20 Minute Read
Pinterest hired Sahil Lavingia to build its iPhone app in 2010. He was 19, a college dropout and a self-taught coder. His stock options would end up being valued around $40m.
In 2011, Lavingia, then 26, quit to start Gumroad, an ecommerce tool for selling creative products. He thought it was a billion-dollar idea, but the path to success has not been nearly as smooth as it was at Pinterest. Though Gumroad has helped over 40k creators make a total of $213m, Lavingia has lately been getting attention for getting specific about the difficulties of building a startup.
Every month, Lavingia publishes Gumroad’s financials on Twitter. Recently, he gained greater fame for a viral Medium story, publishing in February the Medium post Reflecting on My Failure to Build a Billion-Dollar Company. More than 700k people have read it.
We caught up with Lavingia to discuss his viral post, how regular people can make $200k on Gumroad, what Sahil would work on if Gumroad never existed, and an interesting idea for building on top of Zoom’s API. These are some of the main beliefs and predictions Lavingia shared in our conversation:
- Zoom and other remote work video software products are an underserved market and the next frontier of innovation.
- Identifying an audience for a creative product and building for them is better than building “something incredible,” he says. “If you’re willing to say the thing that people think but haven’t said, that’s a huge opportunity. The same thing with startups––[if] you’re willing to build a product that people want, but haven’t built.”
- There’s a $100B idea for a VR chat application.
- To write a story that gets over 100k claps on Medium: don’t use formulas. Instead, capture the cultural zeitgeist with your own personal narrative.
- Cryptocurrency is the most interesting trend to follow because of the way it interacts with global politics.
- Self-driving cars will still be a major technology upon which new products can be built.
- Contentment is found in learning, not wealth.
Where are you from, originally? What did you do before Pinterest?
I was born in New York, on Long Island. I grew up in Singapore. I went to school in LA for one semester before dropping out to join Pinterest. But I probably identify the most with growing up in Singapore. That’s when I started getting into technology, designing and building iPhone apps from a Stanford course on iTunes University.
Stanford was one of the first to put courses up on iTunes. It was called CS 193P that Evan Doll taught, who ended up becoming the co-founder of Flipboard. I downloaded the videos one summer in 2009, between junior and senior year of high school, and coded every day. I went through that course doing all the assignments and homework.
What did you learn from your time at Pinterest? What did you take away that really helped you with Gumroad?
The most helpful thing is the fact that I was an early employee at Pinterest, and then I was a founder trying to recruit early employees at Gumroad. I had a very clear idea of what those people would want.
The other thing is that at Pinterest, so much of it was serving the product. The product was the way Pinterest interfaces with the world. You see it today. It’s not a very visible company or a visible team. A lot of people can’t even name the CEO. That’s very intentional. I like that. That gave me a lot of context for building a company where the product is the number one thing, because that thing can scale at a level that no PR can. All of that stuff is short-lived and relatively artificial.
What are examples of products that have sold really well on Gumroad? How much revenue did they make?
It really depends and it’s hard to say. If you write a book about MySQL, it’s can make $300,000 or something, but so much of it is dependent on who you are, your audience, the relationship that you’ve built with them for a long period of time. I kind of liken it to my Medium post where 700,000 people have read it—I’m sure there have been things that have been read a lot more than that, but it wasn’t because I wrote something incredible. I had this story that an audience of people wanted to hear, and the market determined that number. I had built this relationship with thousands and thousands of people that knew who I was, so that when this thing came out, it was much larger than I was expecting.
To answer your question more specifically, I know of so many people that have made $200,000 – $400,000 writing a technical resource book that teaches you a skill that’s applicable. That’s not in a few months. That takes time to build up. But I would say, over the course of two or three years, you could make $200,000 – $300,000 selling a book.
If I wanted to, I could write a book on SQL for founders and designers and non-engineers, which is one of the ideas I’ve had in my head for a long time, and teach people SQL. I could probably make $20,000 – $30,000 in the first month and $10,000 – $15,000 in the second month. It would slow down. Then if that went well and I released another book that was a premium version with more value, I could probably make an extra $100,000 – $200,000.
That’s because I have an audience, domain expertise, and the Gumroad brand behind me. I know people that have made $800,000 in a single month because they have that at a level much higher than I do. I know someone who made $2 million dollars in two days because he was Eminem.
At the end of the day, what I tell people is, you need an audience first. So you should be building that audience as early as you can because the people that buy your product for 50 bucks are typically going to be the people that have followed you the longest, starting with your mom. That’s step one, and then focus on creating value. Then, finally, you can ask for something.
Could you tell the story of how Eminem ended up using Gumroad?
When we first started building Gumroad, we had no credibility. We were a few months old. So we made a list of every industry: music, film, publishing, animation, software, etc. Music was a big one. The strategy at the time was, how do we drive credibility in the music industry — we had to figure out who’s reputable in the music industry and get them to use Gumroad.
We flew down to LA and to have as many meetings as possible, starting with cold emails, mostly to agents, managers, labels, and over and over again, tell them what we’re building. Eventually, we got in front of this company called Shady Records. There are very few artists who actually own their own music rights. With Eminem, it was different. Because he owns the label, Shady Records, he actually owns the rights to his music, merchandise, brand, etc. He was able to do stuff that no one else was able to do. So we worked with them on a limited edition launch for his closest 40,000 fans. Literally, the whole marketing strategy behind it was he’s going to share it on Facebook. That’s it. A single status.
He has 40 million followers on Facebook. He’s a top-10 page. That was his entire thing. And he sold out very, very quickly. The first run we did with them, he sold $40,000 – $60,000 in 12 minutes.
In 2015, if you had sold Gumroad, what idea would you have chosen to start your next business?
Typically every five to 10 years, there’s a wave of technology of new platforms that enables all this new stuff to happen. And that happened around nine to 10 years ago with mobile, with the iPhone—the App Store, more explicitly.
We’re all waiting for the next one, like AI, VR, cryptocurrency, self-driving cars, audio interfaces, augmented reality. But none of them have hit. Nothing is innovative, really. We’re taking Uber and applying it to different problems, but who knows if that’s sustainable or not.
You need to think really big. One of the things you need to think really big is something new to build on top of. Otherwise, that large new thing would have been taken by somebody else already.
There needs to be some underlying current of change, like the iPhone, to enable a whole new set of behaviors that I can go build a software business. I looked at what that could be, and I couldn’t find anything compelling enough. I looked at crypto. I looked at the proliferation of all these audio always-on devices, Internet of Things. Self-driving vehicles I actually still think is one that’s going to be one of the largest ships.
One idea I thought about building was a VR chat experience so you could talk to other people when you’re commuting in an autonomous car. It was like an operating system built around social that was specifically meant for people in cars, which makes no sense today. You want to look in front of you when you’re driving, but in a self-driving world, it makes sense that you get into a car, put on a VR headset, and you interact. One of the issues with VR is that you can’t move in it. It’s very difficult. With cars, that’s not a problem, because you don’t move in cars. I’m not sure, but in five, 10, 15, 20 years, there will be $100 billion company that has done exactly that.
But that’s the easy part. The easy part is figuring that out. The hard part is building it at the right time so you hit that adoption curve right before it’s interesting to big companies. It’s interesting enough to VCs that you could raise money for it and hire a team.
I know I could build it and no one would use it today. Literally nobody. Because you see that with other companies. You see that with Magic Leap. They don’t know when the world is going to be ready for this piece of technology. It could be 30 years away from now. It’s really hard to know.
How long did it take you to write the viral Medium story on your “failures?” What kind of revenue uptick did you see from that post for Gumroad?
It’s really hard to measure it. Anecdotally, it feels like there is a shift. There are hundreds of thousands of people that are now aware of Gumroad and find it interesting but it could be years for them to sell a product on Gumroad.
The Medium post took weeks. I started December of 2018. I tweeted it out, “Hey, I had this journey. I’ve never really talked about it publicly. What would you want to know? And a bunch of people were like this, this, this, this, and this.”
I spent nine hours one Saturday writing the first draft. It was 6,000 words and then I sent it to my editor friend. I woke up the next morning, opened the draft, and revised it. I got rid of all the crap. I believe in vomiting on your first draft. I get everything out of the system, and you can always clean up afterwards. That’s the way that I write.
It took a lot of revisions. I sent it to my writing group first. They gave me a bunch of feedback. I re-architected it, addressed their concerns. I sent it to my mom. She would give me feedback. I sent it to my brother. I sent it to people on Twitter. I sent it to friends. I sent it to former employees. And every time, that feedback was less. It was getting better and more refined.
Once [your article] reaches a certain level of success, it becomes a part of the zeitgeist, a part of the pop culture of the industry. It comes up in conversation and podcasts and gets used as a touch point to discuss other things, until all the people that are listening that actually haven’t read it think they should probably read it.
It’s like when I read Alice in Wonderland. I don’t think Alice in Wonderland is necessarily the most profound book ever, but it’s referenced all the time, and I’m like, “I got to go read that thing.” I noticed that in my mentions on Twitter, where people mention me a lot. It’s like that article, or it’s like that line from that article. People don’t even say what it is.
If you’re in San Francisco or in tech, or an aspiring entrepreneur, and you’re maybe thinking about raising VC, or you already have, there’s a double digit percentage chance that you’ve heard about this article because it details parts of the experience and process that you can’t find in many other places, such as doing a round of layoffs or what happens when a startup raises eight million bucks from Kleiner Perkins but doesn’t raise a Series B.
People don’t typically tell those stories. But they certainly happen. I’ve met many founders since that article came out who said they had similar experiences. Some founders could have written the same story but they told me, “Why would you write about this? You’re basically admitting failure to the world. I said, “Yeah, that’s why I wrote about it.”
I’ve always been a relatively open person. It was a matter of when, not if, I would write about my experience. A lot of people get to that point, but they’re in the industry and you might alienate new investors for your next company. You might have employees that might not understand. It might be weird to write about this stuff online.
With me, I had enough distance geographically living in Provo to tell my story. The reputational risk had dissipated. If this is a stupid article, no one will care either, because I’m far enough away.
Do you think you could write another story like this and get the same results? How?
I honestly don’t know. I’ve written two articles on Medium. One was about moving to Provo, and that has been read about 120,000 times. I almost don’t want to write again because my average is pretty high. But I am working on a piece about raising money. It’s tough. I might not actually post on Medium. I might do it on my own blog.
It’s almost something you don’t want to think too much about because if you make it too formulaic, people can tell. They can tell that you’re trying to sell your startup or you’re trying to gain Twitter followers, or whatever. Formulas work to get you from 10,000 to 50,000 people, or from 50,000 to 100,000. But to get to a really viral piece that becomes part of this zeitgeist that people really want to share, and to do so consistently over the long term, you have to write a thing that people really appreciate.
In hindsight, one thing I did was I was really transparent with the numbers. People appreciated me releasing real numbers. It showed them that I’m not doing this to inflate my business, just that I’m being open about my story.
The second thing looking back is everybody [I thanked and tagged] at the bottom [of the article]. I tried to make it not about me. It was about this story and about all these people that participated in it. I was the messenger that played a little bit of a role, too. Also, the fact that I was a second employee at Pinterest probably helped a little bit because it gave me this credibility that a lot of other folks that start companies don’t have out of the gate.
Lastly, I told a story. A lot of people write 15 lessons I learned from firing my best friends, or whatever. That works and That works great. But for me, it was about a narrative. It was about putting people in my head and really showing people, not telling people, this is what happens when you do this.
That was the largest thing because it allowed people to connect with somebody at a level that was much deeper than “15 lessons…” People forget that stuff. Whereas, I still talk to people today that say, “That line in your article where you said creators first, employees second, investors last, that stuck in my head, because I know what that feels like.” Whereas, if I said, “Lesson one, prioritize your users,” it doesn’t have the same resonance.
People have wanted to read a story like this for a long time, and no one had written it. Like if you said, “Hey, I want to read a story about somebody raises venture capital, very common, a startup that fails, also very common. A founder that gave up some stock to go do this, very common. Layoffs, very common.” All of these things are very common, or common in Silicon Valley. None of these things are written about. Certainly, not all of them in one piece.
There wasn’t really a place that you could go to read a story like this. That’s the market need that it filled: people wanted to know what it’s like to go through the whole arc of a venture-backed startup. There wasn’t a piece that did that effectively.
At the end of the day, you have to write what you want to write, because if you don’t want to write it, it’s going to feel forced, and it’s not going to work. But then, you should also be mindful a little bit of what the market wants and what it doesn’t have. If you’re willing to say the thing that people think but haven’t said, that’s a huge opportunity. The same thing with startups. You’re willing to build a product that people want, but haven’t built.
It’s like building a product. The product might be a tweet, an essay, a startup, but they’re all the same thing. They’re objects that I’m introducing into the marketplace, because I believe the market wants them and will pay for them in terms of attention, social capital, and US dollars.
If you were to look for a business partner, or co-founder, what kind of characteristics would you look for?
I’m a pretty solo person. I don’t know if I could have a co-founder, to be honest. I like building products. I love doing that. I love design engineering. I’m getting better at marketing, kind of on accident from that Medium post. I’m leaning into it a little bit more, but in general, I would want to work with somebody who loves that stuff. Like Austin from Lambda School is a good example of that type of person who’s very aware and concerned about the macro stuff, the marketing, how to talk about it, getting people excited, the hype. I don’t care about that. I’m going to build the best educational curriculum.
The other thing I would look for in a co-founder is someone who has a very different set of life experiences, because that’s the other thing that you can always gain, is if I want to go solve a problem for a group of people that I’m not that familiar with, having somebody, a woman who has a totally different life experience than I do, by the nature of their gender would teach me a lot.
That’s selfish, but probably not a terrible way to think about things, which is like, be selfish about it. Who would make you a better person, or a better human, or a better engineer, designer, founder, CEO? If you become a better person, you’re going to be able to build better products for the world. Ultimately, that’s hopefully what you’re here to do, not to make a bunch of money—hopefully make some money and make enough money—but to really build something awesome that no one else could build.
Why do you not believe in giving employees equity?
This is a weird one. I’m still trying to figure it out, and I don’t know if it’s the right move. The way that I think about it now, is I have no idea where Gumroad is going and it’s in such a weird transitory phase that giving equity to somebody is a promise of a certain type of path, and I can’t honor that promise.
If I give someone even 1% of the company, which is a lie in startups—very few people ever have 1% of a company unless they started the thing, and we sold for $10 million, that’s 100 grand, which is not a lot of money. If you’re getting paid 150 bucks an hour, you’ll make that in six months. I’d rather pay people an amount of money that we can afford. It’s more expensive for us on a cash basis, but it means that they can focus on building stuff they don’t have to worry about whether it’s going to be a billion dollar company or not.
If you want equity in something, the best company to have equity in is your own company. Obviously, Pinterest would have been better for me financially, but in terms of benefits, I’m learning a lot, building the team that I wanted to build, solving the problems I want to solve, and enjoying being a founder. Most companies don’t work out, so you might as well work on a company that is yours.
It’s harder, but that means you’re going to learn more. That’s what I tell my employees. I say, “Hey, we’re sorry. We don’t offer stock. Don’t join because you think Gumroad is going to be a huge company. Join because you’re going to learn a lot, and then you can go start a company that is going to be worth a lot.” It doesn’t have to be worth that much if it’s your own company. You can make plenty of good money that way.
To most people, a million bucks in the bank account would be pretty great, even for me—I don’t have that much money in my bank account. If you build your own software company, it’s not that hard to get to that point. You can get there. And you can do it at a level of risk that you can bear and have a relatively decent chance for success. It’s not going to be easy, but a competent engineer with some product sensibilities can learn a lot of this stuff online. They could probably build those assessments that are generating $20,000 a month in a few years, and then sell the business for a few million bucks.
You don’t need to raise venture money to do that. You don’t need to hire people to do that. You have to learn how to do that. It’s certainly possible and many, many people have done it. They’ve done it at a rate that is much higher than a 50% success rate. And venture is much lower than a 50% success rate. Joining somebody else’s startup is going to be lower than a 50% success rate, too. High risk, high reward, right? If you’re okay with a reward that’s certainly good enough for most people, you can minimize your risk significantly.
What trends are you interested in right now?
I’m really interested in crypto, even though I don’t tweet about it. I have never tweeted about crypto. I checked. Mostly because I’m stupid about it. I feel like I’m relatively good at understanding why things happen and the technology behind certain things. But with crypto, I can certainly debate it with somebody, but if I went toe to toe with a friend of mine, they would destroy me on it. They would be much more competent at understanding why, what, and how, than I would.
I’m very interested in macro political trends that are happening in America and around the world. To me, the technology that’s going to intermingle with that the most, for better or worse, is cryptocurrency. The implications of crypto on a lot of these things could be pretty crazy. That’s the only one. AI, VR, all that stuff—is cool. But in terms of actual impact on countries and nation states, and taxes, tax revenues, etc., crypto seems to be unparalleled.
You mentioned Zoom as an underserved market. Can you elaborate on that opportunity?
Zoom is interesting because it kind of answers that question of what new technology can be used to create stuff. The remote model of work is only growing and becoming far more popular these days. It’s really expensive to live in a city and have office space, real estate, all that stuff.
I really like thinking about super macro trends that are much larger than any one piece of technology. If you look at housing prices, for example, which is the number one cause people leave cities—and the number one cause of remote work—is places like San Francisco, New York, and LA are more expensive and getting more expensive all the time.
One way to think about that is, how do you take advantage of that. All these people are going to stay home because their commutes are longer than three hours. At home, there is zero commute.
Work is something that 70-something-million Americans do for eight hours a day, five days a week. That’s a huge opportunity. Consumer behavior is already changing. How can you change it even more, potentially.
Lambda School is a great example of a Zoom-enabled company—they couldn’t do what they’re doing without Zoom, because they need teachers and students to be able to video conference, etc., without being in the same room as each other. There are likely other examples of that.
Also, there are a lot of meeting tools. People are shipping a lot of work process assistance. That’s a really interesting trend. It’s early days.
There are a huge set of tools, a lot of them built on top of things like Zoom, Slack, and remote work models, that will help people work together better. Inevitably, the Starbucks’, or the local coffee shops, small family businesses, grocery stores are all going to benefit from startup software.
For example, I had an idea for a bot that you invite into every Zoom call, and then it does intelligent transcriptions. Instead of having to listen to this meeting again, you have this bot that says this is the summary of the meeting. This is what was actually discussed. Things like that that would be massively valuable and quite necessary in a world in which people expect to have most of their meetings on a video screen instead of in-person, where you can have paper and pen.
The interesting thing about remote work is anything you build that’s compelling for remote work is going to be compelling for non-remote work, too, because at the end of the day, remote is a spectrum, not a binary. If you’re working from a desk next to someone, you’re still working at some distance. So a lot of these patterns and technologies will actually apply to people working in the same office. People don’t really realize it yet, because it has enough value.
Workplace without Slack was good enough, but when there was something that was so much better for necessary communication, you saw this massive adoption. If it were possible to have a work environment that was as good, where everybody was working from home as everybody in the same office, which to me is an inevitability, a similar thing will happen. Everyone will start working from home. It wouldn’t make any sense to come to a shared space. Unless it was for lunch, or for a once-a-week thing.
Would you have office spaces where every company books it one day of the week, and actually every office space now has 5X the capacity? Totally 100%. At current prices, that needs to happen with real estate because it’s so inefficient.
I thought about running board meetings again, and doing them via Zoom. I have no idea the logistics of it at all. I tweeted about it and that’s going to force me to figure it out, which is how I tackle many things in my life that I want to do. I’m going to need a room somewhere for two hours, but I don’t have an office. What’s the best way for me to do that? There are startups that are now getting into that more, like Breather. I assume I’ll use something like that. But I don’t know. It’s certainly interesting.
What would be your advice to budding entrepreneurs?
If you have an idea, but you haven’t built it, start building, because your idea is wrong. The way that you’re thinking about it is almost definitely incorrect and the only way you’re going to figure out in which ways it is incorrect is by building it. That’s the number one thing I tell people when I get DMs. They say, “Hey, check out this deck. What do you think of this idea?” I say, “It doesn’t matter.” None of this is super relevant until you start building the thing because you don’t even know what questions to ask right now. If you’re asking someone like what do you think of this idea, you’re not in the right place because it’s so open-ended. “Well, what do you mean? What aspect?” There’s no data, no context.
If you say, “Hey, I built this thing. We have 50 users, but a terrible churn.” I’d say, “Well, have you asked them?” Often, if you’re going to a random person on the Internet for advice, something is off. Honestly, what I tell people is “There’s a good chance that you’re lazy and you don’t want to build this thing, because it’s hard work. So, you’re trying to get a reason out of me that’s going to give you an excuse not to do it.”
Do you ever feel that your best life is behind you?
I used to but I don’t think about it like that anymore. It was a concern for me. In 2015, when we started talking to VCs, and we found out we weren’t going to be able to raise a Series B, at least not at the level that we were expecting, like $30-$40 million, which was what “successful” startups were doing at that point— that was the first time when I realized, “Oh, my arc is changing.” It’s getting flatter.
Then it went downwards from there. It was tough. I was evaluating my life on a very external basis, which is the arc. If there were a new movie made about me, my life is way less interesting today than it was. But in terms of what’s in my head and the thoughts that I’m thinking, that is more interesting today than they’ve ever been. So that’s what I’m trying to focus on.
At the end of the day, making sure I know that what I’m really here to do is have interesting experiences, learn a lot, say some cool stuff, and then die—that is really compelling to me. In terms of my net worth, the best is potentially behind me. Who knows? If I stayed at Pinterest, statistically, it would be true. If I made $40 million as an 18-year-old kid because I stuck around Pinterest, I’d be done. What would I do? I’d be 22 with $40 million in my bank account. Who knows what would happen to me then?
I know certain founders that have had tremendous success before the age of 30, and they don’t really do much after that, because it’s so difficult to be motivated to start a company, which is a pretty hard and time consuming thing to do. It’s probably not going to be as successful as the thing you already did. The people that figure that out, and a lot of them do, eventually pivot. They do something totally different so that they’re not competing with themselves anymore, because they know they’re going to lose that battle. They become writers or they do philanthropy or they get involved in politics.
It comes down to existentially knowing whether you’re done with an arc or not. There is nothing else I’m going to do that will be this interesting or compelling—that’s a tough place to be. It’s like the woman who did the TED talk about Eat, Pray, Love: “What do you do after you write Eat, Pray, Love?” It’s one of the most successful books of the decade. It’s kind of tough to write another book after that.
You see it with George RR Martin. He’s never finishing Game of Thrones. What’s the point? There’s only downside there. People are going to be disappointed. He’s already rich enough that he doesn’t need any more money. Why would he sit in a room on a typewriter to disappoint people? It doesn’t make sense. Unless he figures out his life and says, “No, what I really want to do is finish this story.” He has to figure out a different lens through which to look at it his life. There. That’s my therapy session.