When it comes to building SaaS products, all founders dream of having killer Product Market Fit (PMF). It’s the idea that your product is so good, and solves such a pain, that it basically flies off the shelves.
To do this, founders and product managers think about ways to increase the value of the product. One way to do this is to make the product valuable to a larger set of users across a company. As Clark Valberg, CEO and Founder of InVision once told me about Troops, “your product is so good because it is like tentacles into the entire organization.” The idea is if more people at a company find value, then obviously, the more valuable the product will be and the more likely it will be to sell that product.
However, the paradox of creating more value for more people, is that more people may feel like they need to weigh in on the purchasing decision. And more people, means more meetings, more friction, more decision-makers, more gatekeepers, and a longer period of time to sell the deal, if ever.
So what to do? Well, one approach is to focus on creating a valuable product for just one individual persona, thus limiting how many other people need to weigh in on the decision. Less friction! If you do this, you can get better bottoms-up adoption for that group of people. And perhaps after you’ve done your job here, you can move on and create value for other people in the company. But, making this transition from a single-use, single-persona product, to many personas is not that easy either.
This is the paradox of adding more value, to more people, in SaaS products.
Many of us have ideas for things we’d like to create and invent.
They could be projects or businesses. They could be projects that turn into businesses.
Whatever the case, it’s easy to get stuck in the idea phase but never evolve that idea into reality.
This is true for a lot of people looking to start companies.
I have an idea, but how do I start a company around it?
This is a question I’ve heard a lot over the years.
One trick that’s worked for me is to make that idea tangible by giving it a name.
When you give it a name, it becomes something you can almost touch and feel.
And then it’s easier to talk about and point to.
And the easier it is to talk about and point to, the easier it is for consistency theory to kick in. And this idea of consistency theory, where you must be consistent with what you’ve said or intended to do, will make it more likely that you’ll want to see that idea come to fruition.
So if you have an idea you’ve been thinking about, just try giving it a name to make it more tangible.
What a time to be alive. I asked a machine to provide me with a template to reflect on the year, and now, I’ll do just that.
Personal Reflections: Our family grew to four with the addition of our son, Brayden. Our daughter Michaela is now three and a half years old, and the “time flies” cliche becomes emblazed in my skull a little more each day. I became an uncle, we moved to a new town, and the silver lining with Covid-19 became apparent: I could spend more time with my family and experience a work-life balance I never experienced before. And speaking of family, I was able to make another small dent in the universe by rededicating my childhood school, and renaming it in honor of my grandparents who were Holocaust survivors.
Professional Highlights: I achieved some of my financial childhood dreams with the sale of two of my companies, TULA and Troops, to incredibly iconic companies with Proctor & Gamble and Salesforce (and Slack). But the best part? The people that helped me build those businesses also had life-changing events. There is something incredibly rewarding about building a platform that lets other people do their best work, and seeing it come to fruition is one of the greatest gifts there is. This is one of the reasons I’m so drawn to entprenuership. And if that wasn’t enough, I went on a wild goose chase trying to free some crypto coins from a hard wallet, backed a bunch of amazing founders, and doubled down on beauty with another business I’m excited about called DIBS Beauty.
Challenges and things that keep me up at night: One of my grandfather’s best friends past away. He too was a Holocaust survivor, having survived Auschwitz. I used to think, “one day they won’t be here, and they won’t be able to tell their story.” That day is here. And as their voices diminish, the drum beat of anti-Semitism gets louder and louder with incidents and hate crimes being at an all-time high. Against this backdrop, we have a recession, a population with insufficient education and understanding of history, an economic environment that provides incredibly ripe conditions for scapegoating, and people with pulpits willing to use these conditions to their benefit at the expense of humanity, decency and democracy. We’ve seen this movie before. I’ve been warned about this movie before. Only now, I wonder to what degree my kids will experience this movie.
Looking ahead: I mix these things and more together and I’m still the most optimistic I’ve ever been. We have rockets launching into space and landing on floating barges, artificial intelligence driving cars for us and creating generative images on the fly, gene editing being commercialized, energy being created using nuclear fusion, and the list goes on. I believe that our political institutions will continue to erode, but I’m also confident that founders and innovation will outpace our self inflicted wounds. As one example, while politicians debate things like climate change for political theater, entrepreneurs will develop products and services that people will love (e.g. Tesla) and also produce benefits needed to combat climate change. In short, the spirit of American entrepreneurship will continue to win out.
Conclusion: Despite the hardships and global conflicts that exist, and yes, there are a lot, it’s never been a better time to bet on yourself and try to be a change agent for good. It’s easy to get hung up with the million and one broken things going on, but we each have an opportunity to make a difference in our own lives and the lives of others. The question we should all ask is, how do we do that? And with the year coming to a close, what will our New Years’ resolution be?
For me, I’ll continue to invest in myself, invest in my family, and be a change agent for good. Seems like an appropriate and simple list.
The recent controversy surrounding Twitter’s decision to permanently ban several high-profile accounts has sparked a renewed debate about free speech and the role of social media companies in upholding it. This issue is complex and multifaceted, with no easy answers.
On one hand, companies like Twitter are expected to act as guardians of free speech and uphold the principle of free expression. In this view, Twitter should be a “global town hall” where all voices can be heard and where people can engage in meaningful dialogue with one another. However, as companies operating in the private sector, they are also entitled to their own moderation policies and the right to decide who can participate in their community.
One way to think about this issue is to consider a local bar and restaurant. Everyone is welcome to come in, eat, drink, and talk among themselves. But what if someone stands up at the bar and starts yelling at other patrons? They might start screaming about how Fauci is a crook, how Jews are Satan, or how inflation is ruining our country. People start to yell back, dinner is ruined for some, and a fight might break out. As the bar owner, you have the right to free speech too. You also have the right to decide who can participate in your community and whether or not someone’s behavior is acceptable.
The challenge we face with social media companies is that they are more powerful than most countries. When the people who use these platforms, like scientists, journalists, or even presidents, cause a ruckus and spark a debate, and then get banned, the implications and consequences can be dramatic. We are seeing this play out in real-time and how these decisions impact the most important issues of our time.
Furthermore, our elected officials are often unable to keep up with the times and technology. This leaves us with a group of people, just like us, trying to do their best and make difficult decisions. However, these people also have their own biases and ideas of what is right and wrong.
Ultimately, the debate about free speech on social media is likely to continue for some time. While some may believe that these platforms should be bastions of free expression, others may argue that it is more important to protect users from harmful content.
The echo chamber of social media turns nuanced issues into black-and-white issues, and this is one issue, that has a lot of nuance to it.
Qualified Small Business Stock (QSBS) is a critical topic that most founders are unaware of.
Instead of writing my own blog post about what it is and why it is important, I asked ChatGPT:
describe what qualified small business stock and why it is financially beneficial to people that have equity that qualifies as qsbs
And the answer:
Qualified small business stock (QSBS) is a type of investment in the equity of a small business that offers certain tax benefits to the investor. QSBS is generally defined as stock in a domestic C corporation that is acquired at its original issue, directly or through an underwriter, and that satisfies certain requirements regarding the corporation’s active business, gross assets, and length of time the stock is held.
One of the main financial benefits of QSBS is that it allows investors to exclude a portion of the gain from the sale of the stock from their taxable income. For example, if an investor buys QSBS at a cost of $100,000 and sells it later for $200,000, they may be able to exclude up to $100,000 of the gain from their taxable income. This can result in significant savings on taxes and make the investment more financially attractive.
Another potential benefit of QSBS is that it may qualify for a lower capital gains tax rate. Under certain circumstances, the gain from the sale of QSBS may be taxed at a maximum rate of 28% rather than the higher rates that apply to other types of capital gains. This can further reduce the tax burden on the investment and increase the potential return on the investment.
Overall, QSBS can be a financially beneficial investment for people who have equity that qualifies as QSBS, as it offers potential tax savings and may be eligible for a lower capital gains tax rate.
It missed an important point about how much tax exclusion you can benefit from so I followed up with:
What is the total amount of money an investor can exclude from the gain of the sale if the equity is treated as qualified small business stock?
And the answer:
The total amount of gain that an investor can exclude from the sale of qualified small business stock (QSBS) depends on several factors, including the amount of the gain, the length of time the stock was held, and the amount of the exclusion that was previously claimed on the stock.
Generally, an investor can exclude up to 50% of the gain from the sale of QSBS if the stock was held for more than five years. This means that if an investor buys QSBS at a cost of $100,000 and sells it later for $200,000, they may be able to exclude up to $100,000 of the gain from their taxable income.
However, the amount of the exclusion may be limited if the investor has previously claimed an exclusion on the same QSBS. In this case, the exclusion is limited to the greater of 10% of the stock’s adjusted basis (i.e., the cost of the stock plus any improvements made to it) or $10 million. For example, if an investor previously claimed an exclusion of $5 million on the same QSBS and the stock’s adjusted basis is $100,000, the exclusion would be limited to $10,000 (10% of the adjusted basis).
In summary, the amount of gain that can be excluded from the sale of QSBS depends on several factors and can vary depending on the specific circumstances of the investment.
Lastly, I needed an image for this post. So I asked Dall-e-2:
create an expressive oil painting of a dog in a suit, smiling, depicted as an explosion of a money flying all around them
The results:
So there are two really important and unrelated points here:
If you are a founder or early-stage employee, you should internalize QSBS and speak with your accountant about it.
It’s worth spending some time with OpenAI and ChatGPT. It’s wild and only took me 5 minutes to create this post.
When we started Troops, we wanted to reimagine how work gets done. We wanted to make work easier, more intelligent, and more collaborative. In 2016 we launched our first product making that vision a reality by injecting mission-critical, actionable workflows into a new medium people were gravitating towards.
Troops is a Slackbot for sales teams. It makes it easy to use CRM data to do your job — no more trudging through Salesforce. Troops lets you instantly push and pull CRM data in and out of Slack, turning it into the sales hub for both you and your team.
Since that time, we’ve been a leader in the industry, working with some of the fastest-growing companies in the world, including Salesforce and Slack. We’ve done this by delivering real-time insights from systems of record like Salesforce to systems of engagement like Slack, bringing together information and actions that customer-facing teams need to close new deals and support existing customers.
Today, we are pleased to announce that in furtherance of that vision, we have signed a definitive agreement to be acquired by Salesforce. The acquisition is expected to close in the second quarter of Salesforce’s fiscal year 2023 (ending July 31, 2022), subject to customary closing conditions. Upon closing, Troops will become part of Slack, a Salesforce company.
This announcement marks an incredible milestone in the Troops journey and we’d like to thank our community, our valued customers, our partners, our investors, and our team for all your support and partnership.
We’re excited about the future and the best is yet to come!
This week, my family and I were honored by my childhood school for the work we’ve done over the years to give back to the school and to the community.
I gave a speech and made another commitment.
Both are below…
**** The speech ****
Next week is Passover.
It’s a time in the Jewish tradition when we talk about how we escaped bondage, oppression, and persecution and were freed from slavery in Egypt.
Growing up every year, when my grandparents were around, we would go to their house for this holiday. I would sit next to my grandfather at the head of the table, watching him tell the story about how, we, as Jews, were freed from slavery.
As some of you may know, my grandparents were Holocaust survivors. And like the Jews from Egypt, my grandparents managed to survive their own Pharoah and discover freedom on a small farm in Toms River, New Jersey.
To sit next to my grandfather, and listen to him talk about Jews being persecuted and freed, thousands of years ago, was quite surreal to me.
Even in my eulogy about him, I remember remarking about how these moments felt like a window into the past, through his eyes and his narration of the Sedar, with his Yiddish accent.
At a young age, I could appreciate this relationship between Passover and the Holocaust. The Hebrew Academy certainly had a role to play in helping me understand these chapters of our past.
But I remember one year in particular.
I was sitting at the head of the table and my grandfather had a few more cups of wine than usual.
Out of nowhere, for the very first time in my life, he began to tell me stories about his experiences during the Holocaust.
These weren’t stories about the six million Jews.
These were stories about Sam. About his friends. About his siblings. About his parents. About his family.
About my family.
One story he told me was about the time when he was a prisoner of war, he went without eating his bread rations for a week, so he could sell those rations to enemy soldiers and bribe his way out of the camp to work as a carpenter, which he was not.
You could imagine the irony of listening to him tell me about the importance of bread and how it saved his life while starting at a matzah plate in the middle of the Sedar table.
These stories, and others like it that night were the first time that I really internalized the fact that he lost everything, yet, we were here.
We were free.
With everything.
We had opportunities he never had.
We have opportunities 6 million people, and their children and their grandchildren and their great-grandchildren never had.
This is something I think about every single day of my life.
“In every generation, every individual must feel as if he personally had come out of Egypt”
This visceral understanding gives me perspective and encourages me to make the most of this gift that each one of us has.
The gift of life.
Back at the Passover table, and after he shared his war stories, he then proceeded to give his young grandson some life lessons.
They were simple.
Work hard and go to school. Get a good education.
I think he understood that our kids are our future and that his kids and grandkids were his future.
I think he also understood how education played a central role in it all, especially when he himself was not able to pursue it due to the war.
This is something, as a parent myself, I now really understand but more importantly, it’s something I feel and connect with every time I look at my own kids, Michaela and Brayden.
It’s something my parents understood too when they sent me to school at The Hebrew Academy.
My grandparents and parents knew that if that little boy at the Sedar table worked hard in life and got a good education, he might be ok. And maybe, just maybe, he could help pay it forward and do the same for his family and for others.
And here we are.
I’ve worked hard, had a great upbringing thanks to my parents and The Hebrew Academy, had a little success and a lot of luck, and now recognize that it’s my turn to help ensure our Jewish family carries on for future generations.
That is why, tonight, I am excited to honor the memory of my grandparents, Sam and Betty, by rededicating my childhood school, formerly the Solomon Schechter Day School and currently The Hebrew Academy.
Moving forward, it will forever be known as “The Reich Hebrew Academy”.
I can truly think of no better way to express my love and appreciation for my grandparents and their legacy.
Today more than ever, this is especially important with the backdrop of what’s happening in Ukraine. Once again, people are fleeing Europe to save their lives as my grandparents did from their small towns in Poland years ago, which are now part of Ukraine.
This commitment ensures that my generation and future generations will be afforded the same opportunities that were afforded to me. Opportunities that were not afforded to my grandparents and millions of others.
So here’s my ask to all of you…
Please consider joining me and my family, Joe and Maxine Macnow, and recent others like David and Vanessa Wise, Randy and Laurie Pearlman, in stepping up in a big way and helping ensure this school gets built.
Joe, Maxine, and Yoti told me they had a dream about this project. As an entrepreneur, I too love to live in the clouds and try to invent the future.
And their dream is an amazing one where the past present and future exist concurrently. It’s an exciting vision and we would not be here without them.
Joe, Maxine, Yoti, thank you.
So please, help us make it a reality and help us ensure the path to the future is secured for our kids and future generations.
And now, I’d like to introduce you to the funnier, better-looking Reich, my brother Jeremy.
As a first responder myself, I’ve been donating to organizations sending in first responders and medical relief. One of them is “Uber for first responders”, United Hatzalah.
I’ve been donating in memory of my grandparents, who fled, just as the Ukrainians are doing now.
I had no idea where the first responders were establishing their field hospitals.
But now I know…
My donations are sending medics to save lives on the very soil where my grandmother was raised, and where her family and friends wer killed.
Time and space are connected. Even a small act can leave an impact on generations.
Like all startup beginnings, the earliest days of TULA were filled with a lot of emotions. For me personally, some words that come to mind are things like “depressed” “anxious” and “lost”. After all, I spent about a year and a half wandering the desert trying to figure out what I wanted to work on for my next business.
During this time, I started to do a little angel investing, trading notes, and deal flow with people. In particular, I found myself most engaged with Great Oaks Capital. Just a year or so earlier, they were one of the VC firms that had issued us a term sheet for my last company Spinback and the founder, like me, went to UW-Madison.
After a while, they suggested that I work out of their office and look at companies together. We talked about how I could leverage their balance sheet and they could leverage my network and operating background to incubate or invest in great startups.
That sounded like a great idea to me.
So all of a sudden, I started ‘going to work’ as a VC of sorts. I wasn’t formally employed but at least I was more formally collaborating with other like-minded people that wanted to win and do so at the intersection of startups and technology. For a while, I debated if I should be a full-time VC, but I knew I wasn’t quite ready for that path, if at all.
We ended up getting involved in a few companies together, Olapic being one of them. It reminded me how much I missed operating.
I needed to get back to it.
So off the heels of working with the Olapic team, I started to think about the world I had just come from: e-commerce.
For context, my last software company Spinback helped online brands and retailers measure how much money they were making from Facebook and social media. This was around 2010 when Direct-to-Consumer (D2C) was just coming to life. We saw firsthand what that world looked like because some of the original D2C companies like Bonobos were our customers, and this was certainly accelerated when we merged with Buddy Media (we later sold to Salesforce). But other well-known brands and retailers were our customers too. Companies like L’Occitane, Under Armour, QVC, and more worked with us to figure out their social media monetization strategy.
And then at Olapic, the team took a similar approach but instead of leveraging Facebook, they leaned into Instagram as the primary medium to promote, sell and measure e-commerce sales.
It was clear that despite both companies exiting for good outcomes, it was still super early days for e-commerce, D2C, influencer marketing, and more.
Why not revisit this idea?
So that’s what I did.
I reconnected with all of my old customers and we discussed new ideas to help them continue to innovate and navigate their digital transformation not just as brick and mortar retailers, but as digitally native brands.
One of those customers was QVC. (thanks Chris Fralic for the intro!)
We met a few times to talk about how we can pick up where we left off, but rethink strategy around things like personalization, influencer marketing, and video. I started to get a line of sight into the product I was going to build for them as a beta customer. And then in one of my meetings, the conversation shifted.
Something along these lines emerged from QVC…
“We know the world is changing. Things are moving away from traditional media like print, radio, and TV to digital media. At QVC, we have finite shelf space with TV. Our shelf space is limited to 364 days per year, 24/7 with the exception of Christmas as our only day off. We think we can unlock new shelf space by launching brands digitally. And, we also know beauty is the hottest and fastest-growing category for us. What do you think of launching brands digitally on QVC?”
As I was listening to this, I had a flashback to a day at Buddy Media. There had been a huge spike in traffic and sales in QVC’s analytics, but it was for a brand and product that wasn’t on air. This was highly unusual since they only saw spikes in sales when brands were on TV.
So I dug in and looked at our analytics. As a reminder, we helped brands facilitate and measure how much money they were making from social media and influencers. And low and behold, there was some blogger that posted on the QVC blog about how much she loved some product. Buried at the bottom of the page amidst hundreds of comments, this one blogger ended up driving more sales than most brands saw from their TV appearances. I thought then, that if I could ever build my own omnichannel brand, and partner with a retailer like QVC, with some of these new strategies and tactics I learned over the past few years, I would do it. This stuff was just getting started. We were still so early with D2C and influencer marketing and I had a front-row seat over the past few years for what worked, what didn’t and where the puck was going across all of these brands and ecosystems.
Back to the QVC meeting…
“Dan, so what do you think? Is this something you might be interested in helping with?”
I said, “It’s a great idea. After all, I know your business well and digital pretty well, but I know nothing about beauty. However, I know someone that does. Let me run this by him to get his take. Maybe we all get lunch to talk about it.”
I went back to the office on 60th and Madison.
Now, during that time working out of the Great Oaks office, I had the chance to meet other people in the office.
There was another person that was doing his own private equity investing. He’s been able to do this because of a previous success he had as one of the founding partners of Bobbi Brown Cosmetics which later sold to Estee Lauder. By that time, Ken Landis and I had gotten to know each other pretty well. I was literally working out of his office and at his desk while he was out of the city. I also got to hear his story first hand and hear how he was CEO of the cosmetic division of a publicly-traded fashion house and then later, a co-founder of Bobbi Brown Cosmetics.
I debriefed him on the meetings I had and a lot of what we discussed resembled the earliest days of Bobbi Brown. Similarly, a lot of what we discussed also resembled the best-in-class customers of mine that were the most successful with digital marketing.
We believed that for a digitally-native brand to work in the environment we were in, and actually break through all the noise and get to $100mm+ in sales, a few things needed to be true:
We needed to be digitally native. As I mentioned, I lived and breathed this world for years working with some of the best brands and retailers in the world helping them invent their social media strategies at a time when “Facebook likes” were all the rage. Moreover, my first company in high school was a D2C e-commerce site selling urban clothing wholesale. I knew how to do this part. I could also build our first website and save us some money. Check
We needed to understand beauty. I heard countless stories from Ken about the beauty and fashion industry. There were so many nuances that people just overlooked. Basic and obvious things that, if not accounted for early, could kill a business. Ken had this part covered through and through. Check.
We needed to plan for retail. I saw the early days of brands trying to be D2C only and quickly understood that it doesn’t really work. At least not all of the time. For this type of product and category, we always knew we needed to work with third-party retailers. Not just QVC, but brick and mortar too. We would need to develop our product assortment, margin profile, and cost structure to let us work with retailers like Ulta and Sephora. We knew what was important to them and what it took to work with them. We believed that, just like the streaming services all vying for their own unique content, retailers would also be evolving their business to curate special, semi-exclusive brands. So we figured we could start with QVC as our first motivated retail partner, but parallel process plans with brick and mortar, while also standing up our own D2C channel. Check.
We needed to be smart about our capitalization strategy. This was not a tech company. This was going to be a brand, turbocharged by technology. There is a difference. And that difference matters a lot especially when we thought about financing and valuations. We always anticipated a forever home for TULA to be a company like P&G and we understood how they thought about multiples in the space. We did not ever want to get ahead of our skis. So we self-financed the business to start with some friends and family coming on board too as investors.
As we worked through the must-have list, it was clear we had enough of the pieces in place to give this a real shot and keep digging in.
I shelved my tech startup.
I was now building a skincare company.
Only problem…
There were a few more things on our list of ‘must-haves’ that we did not have yet.
We needed the idea! We had no idea what the concept would be and even if we did, it wouldn’t be authentic. We needed help there. We weren’t going to spend our time building a new company if we didn’t think it had a real shot of positively impacting people’s lives.
We needed a credible, experienced partner that could help us develop the concept and business in a way that was set up for long-term success, with real science behind it. In short, we thought we needed someone with a medical and scientific background who could bring insights and perspectives we felt we were missing. In addition, we wanted someone that could relate to our targeted customer base. Ideally, someone that was a young mom, with one or two kids, running around multi-tasking and operating as a modern-day superwoman. And lastly, for icing on the cake, we wanted someone that had some commercial savviness or better yet, had some media background. We knew at some point, if we did our jobs well, that we would quickly evolve from our digital-only channel to an omnichannel brand that appeared on TV too.
Where the hell were we going to find this unicorn?
I asked my wife, Amy, for her thoughts.
While she is a modern-day superwoman, unfortunately, she was not a mom at the time nor did she have a medical background. So we’d have to go elsewhere.
A few weeks later she sends me a link.
It’s a video of the Bethany Frankel show.
I watch it and sure enough, I see this well-spoken, highly knowledgeable gastroenterologist talking about gut health.
I think to myself, she is the missing piece. We need to meet with her.
I quickly shared the link with Ken and after maybe a 30-second conversation we both agreed we should try to meet her and see if she might be interested and willing to help us determine if there is an opportunity here.
I sent her an email.
She responds almost immediately and we set up a time to speak on the phone. A few days later, standing outside the New York Times building, I gave her a ring. We hit it off almost immediately. When we spoke, she mentioned that she had already been working on her own beverage line that was focused on digestive health using probiotics and superfoods. She already had a prepared mind, and work in progress, for her own consumer packaged goods company. I thought this was perfect!
Next step… we had to meet in person.
A few days later she came by the office to meet with me and Ken. We talked about how we might be able to apply some of her thinking and work but for a skincare line instead of beverages. She shared stories about how some of her healthiest and most radiant or glowing patients, all took probiotics. There indeed was something here but we needed to investigate further. And sure enough, as we’re deep in thought contemplating this wacky idea, she takes out a few pieces of paper from her bag. She pulled out a recent article that was written by the American Academy of Dermatology that claimed “Dermatologists encouraged by early research showing link between probiotic use and clearer skin in acne and rosacea patients.” From there, we did a bit more homework and diligence in the area and we were sold.
We were going to create a health and beauty company using probiotics and superfoods in skincare products.
We started to meet more regularly.
In one of those meetings, we needed to figure out what the hell we were going to call this thing.
Roshini showed up with a list of names.
Blue Lotus
Lotus
Roshini
Nalini
and…
Sure enough, on the list was TULA, the Sanskrit word for balance. Healthy and beautiful on the inside and out! It seemed fitting since we’d be the first to repurpose probiotics for the largest organ in and on our body. Our skin.
In another meeting, we picked out some packaging concepts and the color. There was a certain blue that Roshini liked. Ken didn’t have a strong preference because he is color blind. This has been an ongoing joke in every creative meeting we’ve ever had.
So there we were, with the name, the concept, the first SKUs, a launch strategy, and a diverse but highly complementary founding team.
There’s a whole lot more to the story and perhaps one day I’ll tell it. Like one time I had to work at the factory for two days straight inspecting, hand by hand, 10,000 cleansers otherwise we would have been out of business before we launched. Or the time we thought we completely bombed on our first on-air QVC appearance, only to have sold out. Or the time we beat a patent and copyright troll at their own game. Or the time I fired myself as CEO because I realized there are other people out there better suited than me to run a women’s beauty company day to day, plus, I really missed building software. See Troops.ai.
The list goes on.
People often ask me, “what’s the best piece of career advice you have ever received?”
My answer is almost always the same..
Surround yourself with people better than you, that you look up to and want to learn from. If you are the smartest person in the room, you are in the wrong room.
I think Tula is a perfect example of me heeding my own advice. From the beginning, I tried to find people better than me, to help make this crazy idea a reality. And you know what? It worked.
None of this would have been possible without the team that made it all a reality that did the hard work, day in and day out. To each and every one of you, whether you are at TULA now or were a part of our journey in the past…thank you. You are the reason we are here.
To Ken and Roshini, we’ve come a long way!
And now, TULA will be able to continue to thrive and grow with P&G as a partner and continue the mission we started just seven years ago.
Yes, I had $2 million dollars locked away on a crypto-hard wallet that I couldn’t access because of a forgotten password.
But let’s start from the beginning…
In 2013 I started to learn everything I could about the world of Bitcoin and cryptocurrency. It was clear that a new “internet of money” was being born.
I started reading, writing, buying, and experimenting with the world of Bitcoin and everything around it. I almost started a company with the premise of letting people more easily buy and sell Bitcoin. I’ll add that one to the woulda, coulda, shouda list.
As we now all know, a few years later the ecosystem started to pick up. More people were getting involved, including some of my friends.
One of those friends had been making a living as a professional poker player. Instead of only trading cards and chips on digital poker tables, he now also started to trade various cryptocurrencies on a number of exchanges.
I was however busy with my day job building startups and didn’t have time anymore to focus on the crypto world. But, I still wanted to get in early on some of the emerging, off-the-beaten-path technologies that most people hadn’t heard about yet.
So in 2018, my friend Jesse and I were chatting and decided we should make a larger, more concentrated bet on an alternative coin. I would transfer him the money and he would buy and hold the coins for us.
And that’s exactly what we did.
On January 18, 2018, I sent my friend 2 BTC, which at the time was about $12,500/BTC. And with my 2 BTC, and his 2 BTC, together, we bought about $50,000 of a different coin called Theta at about $0.21 per token. This seemed a bit crazy at the time since the logical, sensible part of our brains told us we were basically lighting money on fire.
This is what lighting money on fire looks like.
“Someone’s sitting in the shade today because someone planted a tree a long time ago” – Warren Buffet
That was my plan.
To buy and hold, and not look at it for a very long time.
A few weeks go by…
We get a notice from the exchange where we had purchased and been storing our Theta coins. The exchange was about to shut down because the Chinese government was putting them out of business. Apparently, the Chinese government was working to ensure they had much more control over Bitcoin and the ecosystem. If we didn’t pull our coins and tokens out of the exchange by a certain date, we’d lose it all. I guess that’s China for you.
So we had to move the coins. We asked…
“Should we keep them?”
“Sell them?”
We decided to keep them. HODL!
Jesse bought a Trezor One hardware wallet and moved the coins onto the device for safekeeping. A hardware wallet is sort of like a digital lockbox for cryptocurrency, where the private information is stored within a physical electronic device. It looks a bit like a USB stick. We managed to move our coins mere minutes before the exchange disappeared.
Life went on.
I forgot about the coins and really the rest of my crypto holdings for that matter and just got back to work on my business.
And then…
Prices crashed. It was a nuclear winter in crypto land.
My $25k was now probably worth a few pennies on the dollar and at that point in my life, I just didn’t want to deal with the emotional roller coaster of big swings in the crypto markets. I had enough on my mind with work and didn’t want to be distracted and stressed with these insane markets. I wanted to sell off all of my positions and just ignore the crypto world for a bit.
So I asked Jesse to transfer me my coins so I can sell them and be done with it.
“I can’t do that.”
I asked, “What do you mean you can’t do that? Just send them or sell them.”
And then he said something that would set us off on a wild adventure:
“I forgot the password!”
You see, this is remarkable for two reasons. First, Jesse remembers everything. He remembers all of our friend’s license plate numbers from high school. After all, he plays poker for a living playing 8 tables at a time, knowing the odds, and remembers how probably dozens of different players play the game. In fact, one of the first places we heard about Theta was from another poker player!
Secondly, if you guessed the password incorrectly too many times, the device self-destructs. I mean, it doesn’t actually blow up, but the entire contents erase and our coins would be lost forever! The good news however is if you forget the password, you can always restore the device using a recovery seed which is basically a 24-word passphrase. Jesse wrote this down on a piece of paper while originally setting up the Trezor, but it got thrown away by accident along the way.
We were screwed!
At this point, I was almost relieved. After all, the investment basically went to zero and in many ways, it made living with that shitty investment decision a little bit easier to stomach.
I forgot about the coins and went on with my life again.
Until…
The nuclear winter in crypto land was over. Prices started to go up again.
Our $50k was back to about half.
Prices went up again….back to $50k.
Now we figured we should really try to get this wallet open.
“Dan, you’re an electrical engineer. You can figure it out!” I should have paid more attention in class because there was no way I would figure this out. And even if I did, I had absolutely no time to even try.
At this point, I had convinced myself I would never see the money again so I ignored it.
Prices went up again!
$75k.. $100k…$200k!
At this point, we decided to get a bit more active to figure this out. Jesse started googling the earth to find people that could help.
We found engineers that allegedly hacked this wallet before, but they weren’t interested in helping.
$400k!
We found a few engineers who seemed like they could pull it off but they either flaked, weren’t interested or ran into obstacles quickly. Some of those engineers were even engineering professors from my school.
$800k!
Finally, we found some guys in Switzerland who claimed they had done this before. They seemed like they could actually pull it off. The problem now was that I needed to meet them in Paris at their secret lab and Europe was shut down due to COVID. For a few weeks, we went back and forth trying to figure out how we could rendezvous in Europe to pass off the wallet but the combination of the shutdown and not being able to physically go to the lab to watch them hack the wallet made the prospects of this working a bit grim.
Group chats with our friends were becoming ridiculous. I told Jesse if we couldn’t find a technical way to free the coins, we’d find a chemical way to free the coins. As in, we’d go away for a weekend and I’d feed him hallucinogens until he remembered the password.
We found another engineer in Portland. He was a part of a famous hacker group back in the day and testified on the Senate floor saying, “Yes, we can take down the internet in 30 minutes.” We had been exchanging emails to see if he could be our guy to figure this out and free the coins.
He bought some hardware and special devices, made a few calls to some friends in the hacking world, and off he went, trying to hack an exact make and model of our Trezor to prove he could do this.
This is the solution Joe came up with to hack the Trezor wallet.
Over the next few weeks, he went to work and would update us on his progress.
$2.0mm!
I said as soon as he could prove success, I’d book a ticket out the next day to come to meet him in person with the wallet. We also talked about the fact that if he could actually pull this off, he could offer these services to many more people like us that are locked out of their wallets. In addition, we agreed that we’d have to film this hack because one way or the other we would have to tell this story.
It would either be a triumphant story or a miserable and expensive story, but either way, we were going to document the whole thing.
And sure enough, I eventually get an email with something to the effect of…
“I did it!”
The next day, I drove to Jesse’s apartment, picked up the wallet, and booked my flight to Portland to meet the hacker, Joe Grand.
The rest they say is history…
After two days in Portland, spending a few hours in his lab performing the attack on the wallet, he freed the coins!
At the time the wallet was officially hacked and unlocked, the total value of the wallet was about $2.5 million dollars.
At the lowest point, it was about $20k. At the highest, it was just over $3 million.
Joe is now making his services available to anyone that is locked out of their wallets with a new company called offspec.io.
Did we sell the coins? Yes, we sold some.
The rest? We put on another Trezor and locked it away.
And that’s my story about how I had $2mm locked on a crypto wallet.
And you can see the whole thing go down in this video.
