As the CEO and Founder of Gumroad, Sahil Lavingia talks about the presumption of success and defying statistical odds, the fact that success and failure are contextual, and getting yourself to a place where you are able to do what you love confidently, openly and authentically.
Every few weeks as part of The Heartbeat, I ask one question to a founder, CEO, or business owner I respect about their biggest leadership lesson learned. This week, I interview Sahil Lavingia, the CEO and founder of Gumroad.
CLAIRE: Hi everyone, it’s Claire Lew and I’m the CEO of Know Your Team. And today, I am really excited for a very special guest that we have on The Heartbeat who we had actually been wanting to talk to for a really long time. We have Sahil Lavingia, who is the CEO and founder of Gumroad, an eCommerce platform that helps creators sell their work and make money and share their work, and it’s pretty amazing. Sahil has been building his company for almost seven or eight years.
SAHIL: Yeah, eight years.
CLAIRE: Eight years, yeah. Congratulations. Amazing.
SAHIL: Thank you.
CLAIRE: And has built this incredible company that’s helped millions of people all over the world. But what I would say Sahil might be most recently known for is publishing this incredible piece which we’ll get into maybe later or maybe not, depends on what we want to touch on today. But it was titled Reflecting on How I Failed to Build my Billion-Dollar Company. That was the title. I’m going to pause right there just to say thank you for writing it because it was tremendous. And the first thing that I want to dive into is the question that I ask every guest that I have on my show, which is as a leader, Sahil, what is one thing you wish you would have known earlier?
SAHIL: I don’t know. I mean honestly, it’s hard because even though the path I ended up on and I’m still on sort took a lot of weird turns and wasn’t necessarily fun the whole time, like it turned out to be pretty great. And I feel like if I gave myself more knowledge, if I was more aware of how hard it was going to be, I might not have done it. And I think there is sort of like a value to the naïveté of it, of like just saying I’m just going to solve this problem and things will work themselves out eventually hopefully. But I think on a more practical level, I think just knowing what happens when you raise venture and having a plan to sort of consistently make sure that you’re on the right path if you’re going down that path. Because I think when we realize our track was not lining up with this sort of venture back trajectory that you sort of need to kind of keep going, keep continue to raise money and turn all of those sorts of things, it was too late in a sense. I think if we had more insight, and this is I’m sure one of those things that you can read about, but you kind of have to almost make the mistake. I think life is full of those mistakes that you sort of need to make once. You can read about them all day long but you don’t really sort of understand it until you go through it yourself. “Oh OK, that was the road bump that book I read was talking about. Now, I understand.” You think you kind of get it and then there’s like this whole deeper level of understanding that you get afterwards.
So I would say it was sort of that on a more actionable level which is like no sort of what growth metrics you need to hit. Be open about those things and when you don’t hit them, consider sort of freezing hiring or whatever the solution might be. But I think I was almost too optimistic where I was like, “This is just going to work out. It’s fine.” And then when things started not working out, it was like hitting the brakes really hard, that sort of whiplash where you get hurt a lot more than I think it might have needed to.
CLAIRE: It’s interesting the duality that you describe because in one sense you’re saying had you known how much it was going to hurt, maybe you wouldn’t have gone down the path. At the same time, had you known more, maybe it wouldn’t have hurt as much. So, it’s interesting how those two are so related. And as you’re speaking, I can definitely reflect on moments where I’ve felt very similar where you encounter a mistake or something that you did wrong that you’re pretty sure you knew was wrong and you read it somewhere or someone told you, but then you’re doing it and you go, “Oh, that’s why it’s wrong.” And it’s totally different to internalize it in that really deeper way.
I want to rewind back for a little bit because for a lot of folks who might be listening, they may not know your story really in-depth or may not have read the piece yet that you wrote. You were 19 years old, I believe, when you started this company. You left your job as the second employee at Pinterest and you entered this company, I believe — and I’d love for you to sort of tell the story — with a lot of support, with a lot of backing. There were a lot of people. I think it’s different than sort of starting a company where you’re kind of stacked — I’m not saying you weren’t stacked against the odds but you don’t have — the consistent narrative is, “Oh, you’re going to fail.” “Oh, you’re not going to do a good job,” like it sounded like actually in the beginning, you had a lot of people telling you that that rosy picture that you had painted, that optimistic path that you saw was actually real. Can you take us back for a little bit and talk to me about what was your mindset then and how has that shifted to what it is now?
SAHIL: I think you’re spot on. I think I, at that point, I was 19, solo founder, second employee at Pinterest, I could design, I could code. I was the perfect candidate to go out and raise a bunch of money really quickly. And when I did, when I raised a million bucks in like five months or something like that from company inception, it was too perfect. And people always talk about how fundraising is really difficult and it’s a terrible process. For me, it really wasn’t. It was the easiest thing I’d ever done up until that point, not to brag or anything…
SAHIL: But just to sort of make sure that people understand it. I’ve definitely had my fair share of struggles but that was not one of them because I was so perfectly pattern matching against — I was wearing a hoodie, I was young, I was relatively cocky, I had all these things that venture capitalists. I was a dude. People look at me and they’re like, “This is the type of person that builds a company like Facebook or Microsoft or Apple.” These are all young, sort of naive, probably too cocky college dropouts and they’re 18, 19, 20 year old age range, are technical, et cetera. And so, I think it was definitely one of those things where I just felt like The Truman Show or something whereas it was clearly working and it was going to work because it was just working just by its nature. All the things that people say about startups and the journeys that you read about sort of in the mythos of it, I was just doing them all. It was like getting a letter to Hogwarts or something like that. It felt just so perfect. So that when things didn’t hit that stride, and there’s like a lag indicator because when you raise a bunch of money, you’re not sort of accountable immediately. You have a couple of years to figure things out, to build a team, to grow the product. And so you sort of assume to be a success. And then when those things don’t happen two years later, it’s because they just didn’t happen. And then all of a sudden, people are like, “Oh, what happened to you,” versus that narrative that a lot of people have especially when you’re not able to raise as much money as I was able to do or if you decide not to, you’re sort of default failure. And it feels good because I think you’re sort of able to escape that and if things don’t work, you were a failure. That’s how all of these companies start.
SAHIL: Whereas with me, it was different.
CLAIRE: What I’m hearing, I want to sort of debate this back and forth with you is like you’re essentially questioning the value of maybe a degree of optimism. To what extent does presumption of success actually hurt someone’s ability to be successful, what’s your take on that?
SAHIL: I think if you end up becoming successful, you need some amount of presumption of success together. You need some sort of self-fulfilling prophecy. The truth is maybe something like eight out of 10 or nine out of 10 people that have that presumption of success don’t actually get there but you still need all 10 of those people to have it for that one or two people that do get there to get there. And so, it’s kind of this weird thing where you sort of have to defy statistical odds.
And it’s kind of like you just need to. You just can’t, when people talk about Steve Jobs reality distortion field or founders being just super optimistic or drinking the Kool-Aid or all of these sort of pithy quotes, you kind of need to because you’re doing something that’s so difficult, so rare and sort of just probabilistically not going to happen and sort of on several points probabilistically not going to happen right. There’s multiple milestones you’re going to have to hit. And most people don’t hit. Even if they hit the first three, they don’t hit the fourth. If they hit all four, they don’t hit the fifth because you need to help build a team, you need to raise money. And if you don’t have that optimism, you’re not going to be able to do those things that you need to do to scale a company that quickly and to get to that level.
CLAIRE: Right. So you’re not discouraging that optimism. Rather, what it sounds like is it should be coupled with perhaps a deeper rigor.
CLAIRE: Do you feel like that optimism should have been coupled with — here’s another way to phrase the question for you, Sahil. And I don’t know that you would ever want to do this, but if you could rewind the clock and have some sage come visit you at 19 or 20 years old or Ghost of Christmas Past to sort of warn you of the foreboding future or just to be like, “Hey man, take a look at the numbers,” or, “Be less confident about this.” Whatever that advice would have been, what would have that have been. And then two, would you have listened to it or would that even matter in the end?
SAHIL: I don’t know because I think the way Gumroad ended up working is we found a market. We got product market fit to some degree. It just turned out that that market just wasn’t as large as we were expecting. And so, I think if we had done a ton of market research upfront — and that was the advice like, “Make sure you know how big the market is,” — there’s a good chance that we might have been like, “Look, in 10 years, the creative market is less than a billion dollars a year.” The independent creative market, if you include Marvel and Disney. A single Marvel movie is sort of equivalent to more than every single podcast in revenue. Its’ early days. I’m not saying it will always be like this but it’s going to take a lot of time. And I’m thinking when you think about the economy as a whole, it’s easy to forget how small certain opportunities are relative and how big these opportunities need to be in order to build a billion dollar company within one, in service of one of these sort of circles of whatever market.
I don’t know. I mean, I do think you need to be optimistic but there’s that quote from Ronald Reagan or Hillary or somebody that says, “Trust but verify,” which I think is a good way. You can be optimistic. You can assume good faith. You can be confident and ambitious but you should have some process to make sure that these assumptions, these sort of hypotheses that you had that you built your ambition upon, you had ambition. Like in Gumroad’s case, I really wanted to enable creators to do stuff, to sell content, share their work, earn a living, doing what they love. What assumptions go into that? What are the inputs that make a product like Gumroad interesting? Probably use a number of creators that sort of want something like this. Why do they want it? What are the inefficiencies in the market? Can you prove that those inefficiencies actually exist? Can you make those things more efficient via software like Gumroad or are there other regulatory burdens or these other things? I wish I had more of a framework around, like these are the set of assumptions. Kind of like writing a paper. These are the things that we believe. And if these things are true, then this is the result of this test, of this experiment. And if that result is not true, it’s not a billion dollar company. It’s a 100 million dollar company or a 5 million dollar company or a total failure no one uses ever, that roughly means that there’s a disconnect between some of these assumptions.
And so, I think that’s something that I wish I had a more statistical and sort of scientific bent about. But same thing, if it’s the whole faster horse versus build a car. You don’t know some of these things are so new, abstract, that sometimes you just have to kind of go out and do it. And I think that’s the beauty of venture capital is that you can say, “Hey, I’m going to raise the money.” And then for five years, I literally don’t have to do anything else. I can just think about this problem and that was the mentality. I can design and code. I literally don’t have to even hire anyone if I don’t want to. I can make this money last forever. I’m really interested in this problem. What happens if I spend five years thinking about it? That’s the bet that investors were making. What’s the value of this kid spending five years of his life working on this problem or this set of problems or this set of creators?
Clearly, a tremendous amount of value came out of that. Was it sort of successfully captured via Gumroad? Was it a good investment? Probably not, at least for the investors. But that’s just the way it goes.
It’s one of those things where you kind of understand it intellectually, like every NBA player or high school basketball player knows the chance of them becoming LeBron James is probably not super high, but you’re going to try to become LeBron because the person that became Lebron had to think that.
And there’s still value. There’s still, I think, value to not getting to that point. You’re still having fun. You’re still learning. You’re still building a network. So I think if those things aren’t happening, then definitely the sacrifices that you’re probably making may not be worth it. But that sort of thing that I try to remind people is that even though I “failed”, every day, I was learning, I was having fun. I was meeting people, I was working with awesome folks. And those things I sort of cheated. If I bootstrapped Gumroad, I couldn’t have done those things as easily. VCs basically subsidized that lifestyle for me for 7, 8 years because they thought maybe there’s a chance that this is going to give me 30x return or whatever.
CLAIRE: There’s so many different pieces here I want to unpack with you because your “failure” only depending on how the person defines success. So, I want to ask you about that in a second and how you define success, and how the 19-year old version of you define success versus how you define it now. But the other thing I wanted to touch on before we move on to that was this idea of holding two things that seem to be in tension with each other at the same time. So, you saying that having an optimism to be something that statistically most people will not be but to maintain that vision and that clarity of wanting to do that or create that. And then the second thing is to have a rigor and sort of scientific and methodical approach and how you tried to get there.
There’s a couple of things that I feel like and to sort of interject my own thought on that is first thing it made me think of was one of my favorite books of all time, was written by this academic on management, Peter Senge. He wrote the book called The Fifth Discipline. For folks listening on the podcast, I definitely mentioned his book before. He talks about this tension. He calls it creative tension, which is where you are right now and where you want to be which is your vision. And it’s a tension between the two places that helps you make that progress. However, what the best leaders do is they maintain that site on that vision that you’re talking about, that belief that, “OK, I’m going to be LeBron James,” even though statistically I most likely will not. But to have that vision, while at the same time remaining as committed as possible to seeing current reality for what it is. So what are the assumptions in my business? What are the metrics I should be tracking? What are the inputs that I can actually control?
And then the last thing I’ll sort of mention is, and this might play into when we talk a little bit about success here in a second, is I think a distancing of self-identification with what that vision is. A desire to not want divisions so badly that you sacrifice the clarity of seeing things as they are because so much is not in our control as leaders and as business owners. I think we sort of have this mythology about being a leader and, “Oh, I did A, B, and C and it was hard and it works and now we’re here.” And it’s like, yeah it worked but why did it work? Was it all you or was some of it the market or your competitors failing or timing. Anyhow, point being is I think there’s something also to be said of this distancing of wanting something so badly that it clouds our view to be as methodical and scientific in our approach. That was sort of my thought as you were speaking.
But success. You’re saying, “Maybe it was success in terms of investment, maybe not.” But I felt like it was you gained all these other wonderful life experiences and learning and you’re helping millions of people start with a company. So let’s talk about how do you define success or how do you think a leader should be defining success? Everything you know now and how does that maybe contrast to how you would have answered that question at age 19?
SAHIL: Definitely at 19 and one of the great things about Twitter was I tweeted in 2011, eight years ago. I just had the idea for my first billion dollar company. And sort of looking back, it’s like looking into someone’s brain eight years ago.
CLAIRE: With a time stamp.
SAHIL: Yeah, it was like a little time capsule. Failure in the context of the article, it’s titled Reflecting on my Failure to Build a Billion Dollar Company. And so very specifically, I had this goal to build a billion dollar company and I sort of failed up until this point, at least, I failed to do that.
Success and failure are contextual. There’s certain phrases that sometimes people say that don’t come with the context. Like for example, “I need to go to the gym.” You’re missing a second half to that statement. You need to require context. You need something to do something else. Nothing is necessary without that clause. So anyway, I think success is always relative, so is failure. I think there’s sort of relative absolutes like death or something like that. But even then, people will debate that too.
So I think for me, success as a 19-year old kid was building a billion dollar company. But even that is masking, I think, deeper things like having influence, building something of tremendous value for people, being known for doing those things, like the ego component of that. The idea of being a billionaire or having a billion dollar company and running it was probably honestly secondary. It’s a very surface level interpretation. And even back then, I was probably like, “Yeah, I want to build a billion dollar company,” because that’s what the industry respects. But the reason the industry respects it is because that’s the best way or one way, at least, to measure value creation, impact, influence, how smart someone is, just like how good they are at their job. Is that true? Not really. It’s basically impossible, I think, to measure out how smart someone is. What does that even mean? How do you measure something like that?
CLAIRE: And is that important?
SAHIL: Yeah. I don’t know.
CLAIRE: Why does it matter?
SAHIL: It’s complicated. Life is weird like that. I think now, I sort of just take a very simple approach to it which is like, “Am I happy? Am I learning? Am I growing?” And if those things are true, it’s a very experiential thing like life is a series of experiences for me. Am I having those? Am I having good ones? And as long as I am, I don’t think super hard about the financial aspect of things. But I do sort of acknowledge that it is from a place of privilege that I can do that. I have a profitable company that’s sustainable. I run it. I don’t have a board member anymore. I can work remotely. I don’t have to be in a specific geography anymore. And so it’s like, I have ultimate freedom. So, I have to define success in a way that makes that OK. But then also I don’t think there’s anything wrong necessarily with someone saying, “Success for me is a million dollars in my bank account,” or whatever. I think as long as people acknowledge that, is that something you can control or is that just sort of a North Star to make sure that you’re –sort of a filtering mechanism.
You were talking about the idea of the creative tension behind what I might be able to do one day and what I’m doing today and the actual reality of it. I kind of think of it like when you’re playing Mario Kart and there’s those shortcuts, and you don’t have to take those shortcuts. But being able to take them, being in a position that you would be able to take it if you had the chance, that’s kind of how I think about it. It’s like I’m not trying to build a billion dollar company but I want to be in a position to, that if I do have the chance, I’m going to be able to raise the money to go do that or build a team to go do that. And those things bound me because it bound me to raising money. It bound me to hire a new team because being flexible enough to go pursue that opportunity for Gumroad, I could not do that if I was in Provo, Utah like I am today.
So, I sort of have flipped in and I’m like, “OK. Those things that are bounding me, how do I get out of this? How can I actually be incredibly open to opportunity?” And to me, that’s what success is now is that I have freedom. If something appeared tomorrow that was just like a super compelling opportunity, would I be well-placed to respond to it and to attack it?
SAHIL: It’s not even the success of doing the attacking or taking advantage of the opportunity. It’s just being a place in which I can decide to do that, that I have the choice. And I think part of it was going through that period like I didn’t have a choice. When you raise money, you’re sort of saying, “I’ve taken the choice to raise money. Now, I have no choice otherwise.” This is what I’m doing for the next five years. You’re basically stuck with it, which can be great. I think being stuck with a problem is sometimes a great way to solve it. But having experienced that, having experienced having a team in which I couldn’t really walk away from, I’m sort of hyper-conscious of it now and I always want to have optionality.
We have a team that’s 10 people. Everyone’s remote, everyone’s distributed. And it’s nice to have a set of expectations that say, “Hey, if Sahil has this opportunity over here, he’s going to go spend 10 hours a week and go figure that out.” That’s fine because the company is built in a way to allow for that, to allow everyone in the company optionality.
CLAIRE: You designed for that freedom. Absolutely.
SAHIL: And you can. You just have to do it intentionally. Frankly, you cannot do that if you’re raising a bunch of money and you have a bunch of people. It’s very difficult to do both. You have to sort of pick. Are we focusing on the reality of improving the reality of things? Or are we sort of focused on that 10% chance that we might be something really crazy? Therefore, we’re going to sacrifice in these ways within our current reality so that we can be well-positioned to get there if that unfolds.
CLAIRE: Absolutely. I can relate so much to what you’re talking about where Know Your Team, I’ve been building and running business for five years. We’ve been bootstrapped from the beginning, profitable since month one. And ups, downs, everything in between, that serve thousands of managers worldwide. But the reason I got into this whole thing is freedom and choice and to say that, “After living in Chicago for 11 years, I can move to San Francisco because my family is out here,” or whatever it is. I can go work remotely in Asia for a few months, I did that last year. Whatever that might be. And to your point, I also think that that is different for everyone. I think what I’ve personally found, and again, just really resonating in your response is it took me a while to figure out what that answer was. And so, I started two other companies prior to running Know Your Team and it was those two experiences that were the reason that made me go, “Oh, I see why I actually want to start a company.” It’s not for ego or for other people to think that I’m doing something cool or whatever. It’s because I want freedom to be able to live and contribute to other people’s lives on the way that I would want. And yeah, what a privilege and with kind of so much luck and had so many people helping me along the way to do that.
But freedom. So I want to sort of take this now and transfer this concept of freedom as we talk about sort of CEOs, leaders, managers in general because I think the reason why a lot of people aspire to become a leader, whatever that means, is because they want freedom. They go, “Oh, if I’m the boss then I can call the shots.” Or, “If I can get promoted from being an engineer to VP of Engineering, then I can call the shots.” And what’s really interesting is I don’t know one, if you would agree with that, to what extent when you do get promoted through that company tracker as you become CEO, like how much more freedom. Maybe you just answer to different people, I think that can be debated. But I do think that that’s a driving factor. I guess, for you, as CEO today of Gumroad with all the experiences that you’ve had, what advice do you have for other leaders who are really gravitating towards your story, love this idea of success being a set of experiences that you feel good about that’s giving you freedom? I mean, what advice do you have for leaders whether it’s aspiring leaders who are individual contributors, whether it’s CEOs who are 10 years into their business, for them to be leading well?
SAHIL: I would say that being a boss or a leader does not give you a ton of freedom sometimes. I think there is this sort of idealistic vision of a boss that just sort of tells people what to do and everyone works for that person.
CLAIRE: Sure. That’s not how you run Gumroad then?
SAHIL: Yeah, no. Luckily, I do not enjoy it that much to do that. But in general, being a boss and being a CEO is allowing other people to tell you what to do. I think a leader is almost like a service job in which your job is to make sure that other people can do the work that they need to be able to do. And you can totally lead from the front when you do that but it’s really, so much of it is about picking great people and then empowering them to solve the problem and giving them the context that you might have with eight years of running the company and sort of being able to see all this stuff, you have more institutional knowledge than anybody else. That’s sort of the job of leaders to make sure that those people are equipped well to solve the problem. Imagine if you were fighting a war and you thought your job as leader was to be the best soldier and you could kill all the enemy or whatever. It probably wouldn’t work super well. Your job is to inspire, to motivate, to teach people. And I think if you are up for that, then being a leader is something that I would highly recommend. And definitely learning of it. You learn so much being a leader. But it’s not really about telling people what to do, I think, personally. There’s some amount of it, I think. But really, it’s about, “This is what we’re trying to build. This is why I think this is the right approach to building is. This is the history the company thus far. What do you think?”
At Gumroad, I would always tell folks Gumroad is a conversation not a speech. It’s about having a dialogue and bringing people into the company that are going to create sort of better discussions and better products because of it that needs being a product visionary and saying, “This is what the iPhone should look like. Now, go build it.” And I think that’s a preference and I think some people will disagree. I think some people think, “No, the job is in mentality.” Elon Musk saying, “This is what the master plan looks like, now just go execute on it.” I just don’t believe I’m that smart, frankly, to be able to do that.
CLAIRE: Or you could be very smart in the sense that you realize that in order to effectively make progress towards whatever that thing is, each person has to be bought into why making that progress matters, to begin with. Because your plan as Elon could be as beautiful and perfect and visionary as possible but if the reasons aren’t there, if people don’t see what’s in it for them sort of inherently selfish. I absolutely love that insight.
Sahil, here’s the thing. I can really talk to you for hours. I’ve got like a million questions written down here on the note. But for the sake of time and not wanting to drag this on forever, one thing I did want to talk about which I don’t think we’ve talked about a ton. I mean, I’ve interviewed tens and tens and tens of CEOs over the past few years is around confidence. That was something that when I was reading your piece, whether it’s the tweets that you write or other interviews that you’ve done that I thought was really interesting to have read, is how would you say your confidence as a leader has sort of ebbed and flowed over time with also the success of your business? Can you talk to me a little bit about that?
SAHIL: I honestly think my confidence has never been higher, though the way that I talk about it is probably a little bit different. I don’t seem hopefully as cocky or egotistic as I used to be. I think that’s mostly because my competence is tempered with reality and also with this idea of surrender. Before, I felt like I could make the world in my image, like I could just sort of will it to be, and you sort of need that attitude. So it’s not gone. I could totally maybe get back into that attitude if I have another billion dollar company idea or whatever. Who knows? Life is weird. But I think for me, confidence and humility are ideally two sides of the same coin. I don’t pretend that raising money was difficult just because I want to fit into the narrative of raising money is super hard and venture capitalists are annoying and whatever. It’s more just like, “Look, I know I’m really good at certain things. These are my assets that I have.” And I’m willing to say that I don’t know these things and I don’t understand these things. And writing that piece sort of really forced me to do that and it forced me to do so super publicly. Because basically what people could do is apply hindsight and say, “Hey, you failed to build a billion dollar company. This sentence here says you did this. If you did this thing instead, which I can tell you because six years later or five years later we know the answer, it would have been better.” It turns out very few people actually did that. It happens occasionally. But in general, most people are like, “Oh, cool. You have way more context on solving the problem than I do. You spent many years trying to solve it and you figured it out to some degree,” but maybe not to the level or the scale that you were intending to initially. A lot of confidence is just being open and being vulnerable — because what it means is that you have an anchor, that you have an ability to say, “Look, it doesn’t matter. These things that I wasn’t able to figure out in time,” or what have you, “I still know. I’m a really great writer,” for example. “I’m an OK painter.”
CLAIRE: You’re a pretty good painter. I’ve seen the ‘Grams. From one painter to another!
SAHIL: But it’s like having confidence in those things. It’s OK and it’s necessary, I think. It’s actually necessary if you want to be humble. It’s just like that essay, I was able to sort of say, “Look, this is where I failed. These are the things that I learned. This is the story. Take it or leave it.” But the reason or part of the reason that was interesting to people is because I was running a company, profitable, successful. We’ve helped creators make $180 million dollars at that point or something like that. And so it was like, “OK, I have something to learn from this person because they are competent, because they are relatively successful.” And so I can trust that on these things that they aren’t as successful on — there’s stuff to learn there. I think it’s important to sort of acknowledge. Someone called to me the other day the beautiful mess thing. It’s also called the Pratfall Effect in which someone making a mistake, if you’re attracted to someone, sort of broadly attracted to someone then making a mistake actually makes them more attractive. But if you’re not attracted to someone and then they make a mistake, you sort of become less attracted to them. It’s one of these things where it’s funny especially since that piece came out and sort of went viral or what have you. I can actually sort of be more humble just for free because I just have to say less because people just know more.
And so if I walk into a room and say, “Hey, I have this tech company. It’s this small tiny startup.” That’s all I have to say because someone else is going to say, “He’s the guy that wrote that thing,” or whatever. “He runs Gumroad.” It’s weird because the more successful you are, it’s actually almost easier to become more likable and more humble. If I walked into a room and no one knew who I was, I’d be like, “This is what I’ve done. This is what I’m good at. Check out my paintings on Instagram,” or whatever. And it would be weird, like no one cares. So, it’s kind of this weird thing.
It is similar to raising money. When people want to put money in your startup, you can sort of just say, “Hey, this is what I’m doing.” You don’t have to make a hard sell. And actually, I’ve noticed this tremendously. Speaking of confidence, Chris from Wistia. He calls it the “Profitable Confidence”: This ability that companies gain when they’re profitable to just sort of experiment, do what they want to do because they don’t have to necessarily grow at a certain rate or what have you. They can take a risk. If it doesn’t work, great. You’re still profitable. You can still continue. And that I felt in my personal life too as I’ve been able to run this sort of sustainable business and been like, “I can just try stuff. I can talk to creators all day. We can try out these features. We can take more time on them. We can make sure we’re doing it right.” These things that we never really did as a startup because we’re always trying to, month over month, it was such a short term focus thing that we were never able to really plan for the long term and do these weird ideas. And when people love companies and people, it’s because they start doing weird stuff, in my view. They’re weird. They’re doing things that you wouldn’t even do but you’re glad that they’re doing those things and telling you about them. That’s what makes people likeable. And I think why people gravitate towards so many people.
And so, I think confidence is a part of that. It’s like putting yourself in a place where you can do those risks. You can really do what you want to do and have confidence in those things. And it becomes like a flywheel because I just can do what I want. And people like that and then they like it more because I’m doing what I want. And so, they engage with me or whatever and that gives me more people. It’s this weird cyclical thing. And so, if you can get yourself to a place where you are able to do what you love confidently and openly and authentically, it starts paying back in spades because as a company, people see that. They want to use companies that do stuff like that. And you don’t have to pretend. You don’t have to put on a face or drink the Kool-Aid anymore. It’s just what it is.
SAHIL: I haven’t sold someone on using Gumroad in the last two years. I’m just like, “This is what I do. If you want to use Gumroad, let me know. I’m happy to help.” I had an interaction on Twitter the other day. Someone had mentioned Gumroad and all the competitors and said, “We have this use case. How would we do it with your platform or whatever. We haven’t been able to figure it out and we run this big business.” And all these other companies were like, “This is how you do it. We have this feature.” And I just went into the Gumroad account and I was like, “We do some of this. We don’t do most of this. Sorry. We just don’t.” I’m not going to pretend that we do.
CLAIRE: You’re just honest about it.
SAHIL: And people feel that. People love that. And frankly I can do that because we’re profitable, we don’t need that new customer. Who knows sort of the financial position of these other companies? And so, I guess my point being, you can learn about confidence, you can read about it. You can understand it but you can only get it by doing and by being in that place. It’s so much easier to be confident when you’re profitable. That’s the hard part.
CLAIRE: It’s usually [crosstalk] when you’re delivering on the truth.
CLAIRE: I think confidence is such an interestingly layered word and there’s so many associations with it. But I think a lot of times when we think of confidence, the one thing we don’t think about is belief and self-belief.
CLAIRE: And that can be obviously bad and good in a lot of different ways. But I think where it’s dangerous is if it’s tethered to either too much of external opinions or if it’s not tethered to anything real. So everyone should hopefully have inherent confidence and self-belief in the fact that they are a beautiful, awesome, rad human being. Whatever you’re doing, whoever you are, there’s sort of that baseline. But then sort of like whatever you’re building or creating or doing, that confidence should be based off of what is the real value you’re providing? Or are you honest about what you’re doing? Are you helping people in the way that you’re promising and delivering on that? That’s sort of the confidence to your point that people are attracted to in leaders and in companies. And when it’s too much based off of, “Oh, here are the things that we would like to do. Here’s who we pretend to be. Here’s what we posture about.” And the confidence comes from there, people see right through that to your point.
SAHIL: Totally. At the end of the day, openness and truth are just unbeatable. And if you can do it, then you don’t need advice because the advice is just keep doing what you love to do and people will love it. And if you don’t have that, it’s very difficult to pretend. It’s possible, certainly it must be. But at the end of the day, talking about painting just for a second like with painting, it’s like if someone is doing what they love to do versus commissions or something, you can tell. And you just need to get to a place and not everyone can be that sort of privileged, I think, a large degree is. You need to get to a place where you can do what you love to do. And when you are able to do that, that’s when things get really fun because then you can wake up, you can just do the thing, you can be open about doing the thing, you can talk about doing the thing and that’s what people are going to love because they get to sort of see your story and root for you and see you grow and change. That essay, I think one of the reasons it did as well as it did is because I had that time capsule. That, “Tomorrow I start building my first billion dollar company.” That was eight years ago. And now, they have me. They have the stuff that I’m saying now. And so, they can literally see a character arc like a journey over eight years and 3200 words or something like that. And so, that is really appealing to people. They love stuff like that because, I don’t know why — but they do. I mean, that’s just what humans love stories.
CLAIRE: Yeah. We gravitate towards stories, and I think going back to openness and truth like sort of Exhibit A. Last, last quick tidbit here. Your analogy about painting and that it’s different if you’re doing commission painting versus just painting for yourself. I’m like sort of giggling inside because I literally just this past weekend finished my first commissioned piece for a complete stranger. First time it’s been for just someone I’ve never met in person. And I was really struggling with it. I always struggle with painting always, as you know. But I was sort of laughing to myself. I was like, “Oh, this is what happens when people start to pay you for your art.” If you only have your head on straight or your heart really right, how it can very much mess with you. And so I actually really enjoyed the process. That painting appeared to be a lot longer for the size of it than it did the other ones. But I was like I have to really sort of calibrate and re-adjust what I’m really doing this for. It was funny to sort of discover that in the process, so I very much could relate to what you just shared there.
Like I said, Sahil, I could talk to you for a very long time. And so for the sake of our listeners though, we will end it here. Thank you so much for your openness, for your truth that you’ve shared. And yes, so appreciate having you on The Heartbeat.
SAHIL: You’re very welcome. Thanks for having me. I really enjoyed it.