🎧🍌 Sophia Amoruso | Building Nasty Gal, Turning Down $400M, and Losing it All
Lessons bootstrapping to $28M revenue, downsides to raising at stretched valuations, reflecting on failing publicly, how to build a brand in 2026, and why being a CEO is fun
Last week I caught up with my friend Sophia. We spent two hours talking through the journey of bootstrapping her vintage Ebay store Nasty Gal to $28m in revenue, raising $50m, turning down a $400m acquisition offer, growing it to $120m+ in revenue, and then ultimately declaring bankruptcy a few years later.
She shares what it was like failing so publicly, what she’d do differently next time around, lessons on building a brand founders can learn from today, what it was like writing a book and having a Netflix show made about her life, and why she started Trust Fund to back the next generation of founders building consequential companies.
When I surveyed all of you back in January, the #1 request was more stories from founders who had failed. Sophia was extremely candid and authentic about her journey, and I think there’s a lot to takeaway and learn from.
Please let me know what you think after tuning in!
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Timestamps to jump in:
0:59 Selling vintage on Ebay while working at an art school
04:31 Lessons in marketing and perceived value
12:38 Knowing when to make your first hire
18:31 Borrowing from others to build a unique brand
25:17 Growing to $120m revenue in seven years
27:24 Sharing the pitch deck that raised $50m
30:17 Mistakes scaling to 100’s of employees too fast
34:48 Downsides of raising at too high of a valuation
39:56 Why being a CEO is fun
42:57 Declaring bankruptcy
50:38 How it feels to fail publicly
54:41 Writing a book, Netflix series, starting the Girlboss movement
59:13 How to create a new brand in 2026
1:05:34 Starting Trust Fund to invest and help founders
1:13:45 Raising $5m from a poker game
1:18:47 Sophia asks for Turner’s LP pitch
1:26:53 Traits of the best founders
Referenced:
Find Sophia on Instagram, LinkedIn, X / Twitter, and her website
👉 Stream on YouTube, Spotify, and Apple
Transcript
Find transcripts of all prior episodes here.
Turner Novak:
Sophia, welcome to the show.
Sophia Amoruso:
Hi, Turner.
Turner Novak:
Excited to have you.
Sophia Amoruso:
Yeah, finally, we made it happen.
Turner Novak:
I know. I was going to say it’s been two years. I don’t know. We’ve been trying to figure this out.
Sophia Amoruso:
I guess you had invited me and then I forgot you invited me and then I was like, “When’s he going to have me on his podcast? Am I not good enough?” And then I was like, “Hey, I want to be at your podcast.” And you’re like, “Dude, I asked you a long time ago.”
Turner Novak:
I feel like I asked you multiple times too. I feel like this was just a broken communication. We just ...
Sophia Amoruso:
It’s probably my memory and ADD and cognitive load and all that-
Turner Novak:
All that stuff.
Sophia Amoruso:
Yeah.
Turner Novak:
So I think we’re going to talk about you started pretty big company, a movement, you built a lot of brands, you sold some companies, started a fund, doing a lot of investing. I think probably one of the most interesting ways to start it, you initially wanted to go to art school way back in the day. So how did you try to do that? How did that get started?
Sophia Amoruso:
I mean, I still kind of want to, but I really wanted to be a photographer. And I shopped this amazing portfolio and applied to California College of the Arts, which is in Oakland and San Francisco Art Institute, North Beach, which is unfortunately no longer there, beautiful campus. And I got into both and I was nominated for a scholarship, but I didn’t get one. And it was 50 grand a year and nobody had 50 grand a year to get me to go to art school. And nobody told me about debt and I’m glad I didn’t know about it. And I decided to ... I was just working a bunch of shitty jobs and was ... Yeah. So I kind of gave up on that, but I wound up working at an art school, which is the last job I had before Nasty Gal. It wasn’t because I wanted to be close to art students.
It was because I had a hernia and I needed health insurance and I had a preexisting condition, which now you can have applying for individual health insurance. But at the time, you had to have an employer sponsored insurance plan to get something fixed. It was crazy that I just didn’t have health insurance at all before that. I don’t know. My parents, they’re like pretty decent parents. I just fell off. I fell off.
Turner Novak:
Somehow.
Sophia Amoruso:
Yeah. I don’t know, but I got back on.
Turner Novak:
So you were working at the art school. I think you were working in the lobby and you had some free time.
Sophia Amoruso:
Had some free time. At that time, my idea of working was, how can I do as little as possible for as much as possible? And as much as possible was like, I don’t know, what, $13 an hour, which seemed like a lot of money at the time. This is 2006. And so I sat in the lobby and my job was to check students in, to go up to the second floor to admissions or whatever. And I had to ask for their student ID and if they didn’t have one, I had to ask for somebody to sign in. And I had some time to kill on the internet. I was on MySpace like everybody else and was getting friend requests from eBay sellers who were selling vintage clothing. And I only wore vintage clothing at the time. I loved it. I knew where to find it.
And I was like, “Oh my gosh.” I clicked through and saw that these sellers were selling stuff for way more than ... I thought Haight Street was expensive, but their auctions were going crazy because there was a girl in Australia and a girl in Copenhagen all bidding on the same thing. And the US dollar was really weak at the time. So it was kind of cheap for them, but it was like a lot of money to someone in the US at the time. And I was like, “Okay.” I got my health insurance. I got my hernia fixed. I quit the job and was like, “I’m going to try selling some stuff on eBay. I’m going to try selling some clothing.”
And I went and found vintage clothing and not all of it worked, but it was my effort to not work for anybody else. It wasn’t because I was ambitious. Technically it was entrepreneurial, but it was not some kind of long-term plan where I thought I was going to build a startup in San Francisco. I was subsisting on mission district burritos and dive bar happy hours at 22 years old. So it wasn’t the beginning of something I thought would ever put me in a podcast like yours, Turner.
Turner Novak:
You are the first vintage seller on the podcast, I think. What’s the appeal of vintage clothing? Why are people so into it?
Sophia Amoruso:
I mean, a lot of the time the quality is higher than what you can get today, especially for the price. I mean, everything’s like mass made, cheap, plastic, garbage. I mean, you find like a vintage wool coat. It’s real. It’s like nice. The cut of the stuff was often really flattering. I liked high-waisted pants and I liked shrunken t-shirts. And it was hard to find things that fit well or look cool. I listened to a lot of old music at the time and I might have well-worn a costume. I mean, it was like high-waisted pants and like platform shoes and like a wool pea coat and sometimes like a big belt or whatever. But I looked like I was a Black Sabbath groupie in 1970 something. So I just really, yeah, I just really loved it. It’s also often cheaper. It’s more sustainable and the hunt is really fun. I think people just love finding unique things and I absolutely did. It was like the biggest thrill to find vintage Chanel in a thrift store for $8.
Turner Novak:
And then you realized, wait a second, I can sell this for hundreds or even maybe more than that online.
Sophia Amoruso:
Yeah. It taught me a lot about perceived value because Chanel jacket could be $8 a thrift store and somebody says that’s what it’s worth or it could be worth a thousand dollars on my eBay store. And I wasn’t the person that determined those prices. It was pure auction. I don’t even think there was a buy it now at that point. I think everything was auctioned on eBay and I started the bidding at 9.99. So anything could have sold for 9.99.
Turner Novak:
This is $10.
Sophia Amoruso:
Yeah, $10. Everything I sold started at $10 and it was just, there was no reserve and some of it did sell for $10, some of it didn’t sell. Some of it I paid a lot more than $10 for, thinking that I could sell it for more than I paid for it. But you take the risk because the psychology is, for the bidder, it’s like, “Oh wow, I might be able to get this for $10.” And then they get attached to it and bid more on it. It’s just an easy entry price, but ultimately the customer set the value of the product and something could sell for 10 or 50 or 100 based on how I styled it or what the model looked like or how I described it and what the title was, what the description was. And like there were all these things that I had to do to make this old thing look cool and something that someone today might want to wear. And so it was just an interesting experiment in turning something that literally had no inherent value to some people into something that other people were fighting over.
Turner Novak:
Yeah. It was almost like you were so close to it that you could like almost perceive that, or you could like discover that perceived value maybe more than somebody who wasn’t as like close to it. That’s why, because you were wearing it all, you understood how people would like up scale, upcycle, upwear. I don’t know if that’s the right word I’m looking for, but like how people would dress things and maybe what they might want. It’s an interesting psychological trick, which I guess I didn’t even realize where you started everything in 9.99. So someone might see something that’s like a $200 piece and they’re like, “Oh my God.” It’s almost like thrifting and treasure hunting for them too on eBay where like, “I think I found this good deal. I got to bid on it.”
Sophia Amoruso:
Yeah. And it just taught me what people wanted and what they were willing to pay for it. So when I, yes, continued selling vintage, but launched the website and started curating from trade shows, I knew what they wanted. It was like the ultimate, I guess, beta test to just see item by item what it is that people wanted and be able to refine my product or thesis or offering or pricing structure, whatever it was when I introduced things that were priced on a website, just like anything else that you buy and weren’t at auction because I really knew what people wanted and I really knew how to present it and I really knew how to describe it. I understood who my customer was really well and yeah, it was just great training ground. eBay was amazing training ground.
Turner Novak:
I remember you were telling me when we talked a couple of weeks ago that you would go into each thumbnail and like tweaking everything about it, like making them catchier, brighter, more contrast. So like literally each item, I mean, you’d have hundreds of listings at some points, right? Did you ...
Sophia Amoruso:
I mean, it was usually like maybe 20 at a time. I would start the auctions on like a Sunday when people were sitting at home and then they were 10-day auctions. So I think they closed on like Wednesdays when people were ... It was kind of like a lull in the week, but the auctions went for 10 days and that was it. But I didn’t put new things up. I just had those 10 days to go find and photograph and kind of list or schedule the next week’s items.
Turner Novak:
Well, you were like in the weeds tweaking ...
Sophia Amoruso:
Yeah. Totally. If there was something I thought was really great and it wasn’t getting any traction, I was like, “Okay, there’s something wrong here.” And before a single bit is placed on eBay, again, I don’t know what it’s like now, this is literally 20 years ago ... It’s crazy. You could still edit the photo and the description, but once a bid was placed, you couldn’t. So if something was sitting there for 30 minutes or an hour or six hours, I would go back in and I would tweak stuff and I’d wait a little bit longer and then I would tweak stuff until I saw it taking off. Yeah. No, it was dynamic, but I was the dynamic engine.
Turner Novak:
And I think I heard you say once that you made your first hire off of Craigslist. I mean, in 2026, that sounds pretty crazy to hear someone say that, but how did you know it was time to make the first hire? How did you hire someone? Because had you ever hired anyone before?
Sophia Amoruso:
I mean, I hired an assistant off of Craigslist like a year ago to help me move.
Turner Novak:
Oh, you’re still using Craigslist. Wow.
Sophia Amoruso:
I mean, I did like a year ago and he helped me for a few months, moved to London and packed my stuff up and whatever, deal with dogs, vet appointments to get them here. But yeah, I mean, where else was I going to find someone? Yeah, I put the job description on Craigslist and it was just like, “I need an assistant for a vintage eBay store,” and listed it. And she came to the job interview, which was just me in a messy warehouse and a shipyard in Benicia, way out in the East Bay in Northern California. And when she came and she was like, “I thought this website was owned by Urban Outfitters or something.” It was just like me with like trash bags and like dirty clothes and like shipping packages and one computer and a little photo set up and a steamer. And she was working at a store on Haight Street that went to trade shows and did the whole thing that I eventually ended up doing.
She kind of introduced me to that and she was like, “Well, I need a full-time job if I leave.” And I was like, “Oh my God, I didn’t even really pay myself at the time.” And she was like, “I want $16 an hour.” And I was like, “That’s more money than I’ve ever made. How am I going to pay somebody more money than I’ve ever made?” And I was like, “That’s not fair.” And I still wasn’t really ... I didn’t want anything. I had like an old Volvo, my rent was $500 a month and I was too busy building this business to want anything. I didn’t even have expensive taste. I did, but it was like in old things. It was still in quality, but it didn’t cost money. It doesn’t cost money to have expensive taste if you’re resourceful.
But I was like, “Okay.” And I took a really big flyer on, well, one, her, but also on having someone full-time because I didn’t know if I needed somebody full-time and then it just kept exploding and her job became very full-time and way more than full-time, not long after that. And I think it’s one of those moments in building a company where you kind of have to believe that the growth will come. You don’t want to obviously overhire, but if you have inclinations and you know that things could really, really break if you don’t bring help on board, sometimes it’s worth taking that risk so that you’ve got someone there to catch the demand when it does come. And that’s exactly what happened.
Turner Novak:
What were things that were breaking at the time where you kind of knew you needed help?
Sophia Amoruso:
Yeah. I mean, I was sourcing everything, shooting everything, writing all the product descriptions, I mean, uploading images to an FTP server, weighing them for shipping, measuring them because there’s a small and a medium and vintage sizing depending on the era and the brand is like all over the place. Then I was shipping them, printing out shipping labels, answering customer questions, editing photos, casting models, feeding them in hamburgers, or trade so that they could have like cool MySpace photos. I mean, you could do that at the time.
Turner Novak:
So you were recruiting models to come in and be like, “Hey, we have these cool clothes. We’ll do this photo shoot. I’ll maybe get you some McDonald’s, but also you can use the pictures on your MySpace.”
Sophia Amoruso:
Yeah. Except it was a place called Burger Road.
Turner Novak:
Burger Road.
Sophia Amoruso:
Burger Road. Yeah.
Turner Novak:
That sounds like the most side of the road, like mom and pop.
Sophia Amoruso:
It almost sounds like road kill. Yeah.
Turner Novak:
Yeah. I mean, I’m sure there were good burgers though.
Sophia Amoruso:
They were good. They were good. I remember one time I went into Burger Road, I threw on a sweater from the racks of clothing and it had like a 499 tag hanging off the front of it and the model was like, “Hey, I’m walking around wearing clothes that are like 499.” I just was like, yeah, I was in full founder mode, I guess, before that was the term. And so she took on all the things that I didn’t have to do that didn’t have to do with taste. She eventually learned my taste and learned what the customer wanted and became the head buyer for the company, but she was answering customer questions. She was shipping stuff. She eventually wrote descriptions, but I trained her how to do that. And even the voice on customer service, it’s like using exclamation point. If you’re describing something, don’t call it sparkly, call it glitter.
I don’t know why I cared about that, but things that I knew made a difference, that made it feel like a human was talking to a customer or someone cool was writing a description or how careful to be when you’re putting a package together. So it looks like, I don’t know, somebody cared. There’s a difference between slapping a label on a package or making it look like somebody kind of lined it up and didn’t just crumple it and sit on it and whatever trash it. And then eventually she hired someone to do customer service and she hired someone to do copywriting and I kept buying and shooting and doing the things that I needed to do, going down to LA and bringing car loads of vintage back. So that’s how it began.
Turner Novak:
And I think when I just think about the space at the time, there was probably a lot of people that were kind of maybe doing similar things. They started eBay store. What do you think you did right in terms of like the branding around it and ... Because it feels like you kind of really had a strong connection with the customers and they really resonated with it. What do you think you did right?
Sophia Amoruso:
I was looking at fashion magazines and following Nylon magazines and these cool Australian fashion magazines like Preen and Russh. I don’t even know if they’re around anymore. I don’t follow fashion.
Turner Novak:
Never heard any of those. I’m not a fashionable guy.
Sophia Amoruso:
Yeah. And I looked at the styling and I looked at the voice and ID magazine with like the wink and there was just kind of like a sense of irreverence and like also joy and levity in fashion at the time that I then kind of borrowed and turned into a retail fashion e-com brand for the first time when people were just dumping a t-shirt on a model, cutting their head off. And it was like, that’s what you got when you were shopping for clothing. Nobody had sunglasses on a model. Why would you put sunglasses on a model when you’re selling a shirt, a model with a handbag that looks like she’s going somewhere? That was like for editorial photography, like advertising photography, but e-com catalog photography did not have that at all. Nasty Gal was pioneering in that. And eBay, that did happen. So I brought that from eBay.
I wasn’t the first eBay seller to like style a model in like a hat and look cute and make it look very like hippie dippy or boho like so many of them were. At the time, the eBay stores were like Spanish moss and Mama Stone and these like very hippie dippy granola-y vintage brands. And I had worked in a record store and I had listened to some more ... like old music, but also kind of like more hard hitting like funk and stuff that was like riskier and edgier. And music has always kind of influenced, I don’t know what I do in the names of things. I always borrow them from disparate and often obscure sources like Girl Boss I’ll talk about. But Nasty Gal’s the name of an album and a song by a woman Betty Davis who’s this incredible funk singer who was married to Miles Davis and who was allegedly like too wild for him and her lyrics are like crazy.
She was just like such a punk and I almost named it iHeartVintage, but I decided to name it Nasty Gal Vintage and it just kind of cut through the noise because I brought this irreverent and edgy style and styling and voice to it. And while I was just an eBay seller, I made sure everything was coherent like a brand is. And the voice was always we, always made it sound much bigger than it was. Not, “Hi, I’m shipping the package to you or I measured it and it was we.” And it always looked much, much bigger than it was because everything was really consistent.
The photography was the consistent, the copywriting was, and I didn’t know I was like a good writer or a copywriter, but everything was imbued with like a sense of humor or it was punny or it was like a funny portmanteau or there was like a way of describing something that was memorable and the name was memorable and everything was very cohesive and I never got like a lesson in branding, but it was kind of like, what would I want and what do I see out there in the zeitgeist and how can I borrow from that without ripping from it?
Turner Novak:
Yeah. So it’s basically just understand what people want and then maybe it’s not like any single thing you did was that unique or like you didn’t really come up with anything specifically that was new, but it was just the ability to borrow from different things and kind of tie them together. I mean, what’s that one phrase that’s like good artists create, great artists steal or something like that? You just took a bunch of stuff and combined it into this new experience for people.
Sophia Amoruso:
Yeah, like an entirely new channel. I mean, it was shopping that hadn’t happened with online shopping in e-commerce. It was like totally pioneering and ultimately it created something that people were obsessed with. It was, “I’m a nasty gal, I am a nasty gal.” And the peak branding is when someone says, “I am a ...” and then puts your brand in the sentence and identifies as the name of the brand. And that’s what Nasty Gal did. And it was much, much bigger than buying clothes. It was an emotional experience and a big part of the customer’s identity at the time and it was really, really, really cool what it became.
Turner Novak:
And it got really big, right? What was the peak of success for? How big were you at that point?
Sophia Amoruso:
Yeah, we did over a hundred million in revenue. It might’ve been 110, 120. I have financials hanging around. I found the original deck that I raised 50 million from Index on. It’s crazy. I mean, I’ve never shared it. I thought the growth went from one to six and a half to 12 to 28, but it went from one to six and a half to 28, something like that, or to 30. I thought there was a stop somewhere along the way and every podcast I’ve ever been on, and everyone’s like, “Wow,” when there’s a 12 in there, but it was like six and a half to 28, and that was just purely bootstrap. That was before I fundraised. But yeah, it was explosive. Year one was 75K, and it was just me in my step aunt’s pool house with a hot plate and like ...
Turner Novak:
What were you cooking on the hot plate? Ramen or something?
Sophia Amoruso:
I had a toaster oven and I would get Trader Joe’s cornmeal pizzas that were so good.
Turner Novak:
Okay. And you just cook them in the toaster oven?
Sophia Amoruso:
I’d just go to Boston Market or it was like in a suburb. I moved out of San Francis, started in San Francisco, but then I was like, “I need to be able to have a car, put stuff in a car, take it to the post office.” I couldn’t even walk all this shit to the post office in San Francisco.
Turner Novak:
Yeah, that’d be rough. Those hills too.
Sophia Amoruso:
Yeah. So I went an hour outside of San Francisco and lived really far from all my friends when I was 22 because I was like, “This is fun. I can flip clothes. I made $2,000 this week. That’s actually insane.” So yeah, first year was 75K, second was 250, and then left eBay about halfway through the second year, brought on my first employee, and then it was 1.1, then it was six and a half, and then 30, something like that. I need to get my story straight, because I know it matters and it’s lore and it’s like, I fucking talk about this, but it’s also like it’s my story.
Turner Novak:
Okay. So you said you found the deck. Do you have it? Can you pull it up? Will you share the screen? Is that possible right now?
Sophia Amoruso:
No one has ever seen this.
Turner Novak:
No one’s ever seen this. This is amazing.
Sophia Amoruso:
I started in ‘06. Yeah. Then it looks like we hit a million in 2010 and by the end of November 2011, five million, and then here we are. I had done a survey of customers. I felt like I had stumbled upon all of the cool girls from NYC and LA’s little online shopping community. I’ve been addicted ever since.
Turner Novak:
This almost feels like you see a lot of people talking about UGC today of people posting content of the product. It kind of seems like you tapped into that just based on just ... Were these customers that were posting pictures about it or was that all the models that you brought in?
Sophia Amoruso:
It was word of mouth. I mean, it wasn’t social media. I mean, Instagram was emerging in 2012, but this is all happening before 2012. I mean, I had like 60,000 friends on MySpace, but you can’t really attribute that either. But I mean, what? 25% of our users came back over 26 times per month.
Turner Novak:
Oh, this is per month. So you had people, half of people came at least once a week and almost 75% came back more than once.
Sophia Amoruso:
Yeah. Yeah.
Turner Novak:
Wow.
Sophia Amoruso:
Competition. So then it was like, this is visits, revenue.
Turner Novak:
This is the Nasty Gal numbers?
Sophia Amoruso:
Seven million, 25 million, and this was Feb through April of 2012 when we raised 50.
Turner Novak:
So you did, you basically did half of last year’s revenue in one quarter?
Sophia Amoruso:
Yeah. Yeah.
Turner Novak:
That’s crazy.
Sophia Amoruso:
Yeah. And then we raised 50 million and rounded up by a hundred million and we were like, “Let’s go from 28 to 128.” And it was just kind of like waving a finger in the air and hiring a hundred people and signing a 40,000 square foot office lease and a hundred thousand square foot fulfillment center lease in Louisville, Kentucky. And yeah, so all this kind of stuff, but that like really happened.
Turner Novak:
And I know there ... I mean, there’s been like a lot that happened after that. How would you describe ... So you closed the round, and you said you’re going to hire hundreds of people open this facility. Did you end up signing a lease, moving in? It looked like I saw 40% international revenue in the next year or something. I saw one of those charts. So it was like, “We’re going to expand to Europe and Asia.”
Sophia Amoruso:
I mean, the business was international by nature of me having shipped worldwide when I was on eBay, and so that’s how the customer base grew. We never really had to open a UK store or ... We just shipped from the US, so there was no like ... I mean, yeah, I guess at a certain point we were running programmatic ads internationally, but it scaled with the original customer base. We hired a hundred people across buying, design, production, planning, project management, a CTO, a whole team of engineers, UX design, a chief people officer, chief financial officer, a controller, a whole finance team, performance marketing, a creative director.
Turner Novak:
A full company, like you had everything.
Sophia Amoruso:
Yeah. And it was like some companies are able to inject that many people into an organization in a year and integrate them and everybody understands what to do when they’re not stepping on each other’s toes or duplicating efforts or ... I wasn’t really very good at that. I don’t think I even knew I was supposed to do that. I just thought all these people with more experience than me would show up and work together and solve the problems and like, I don’t know, have fun or something. And the company would just, I don’t know, just keep growing. The job of CEO is kind of like drive all of that through an organization, drive it through the leadership team and for the leadership team to drive it through the people that report to them all the way to the bottom.
And in a lot of companies that gets lost somewhere at the top or somewhere in the middle. And depending on what team you’re on, there’s an entirely different company culture over in finance than there is on the creative team where those guys are having a blast, but some boss over here is like awful. So, and it became very expensive. It was like, “Okay, who cares?” It’s extremely profitable before I raise money. And that just became as soon as investors came on board, they were like, “Who cares? Whatever. Let’s just plow all this money into growth and build a billion-dollar business.”
And it wasn’t a company that was set up to scale. It was like a mom and pop business that they injected 50 million into with an eBay seller at the helm. So it was kind of naive on my behalf. It was, I think, kind of irresponsible on their behalf and there was no number of executives around me that could, I don’t know, solve the problem of me not knowing how to lead them, but also there’s a lot of other people who could have done a better job along the way with Nasty Gal including my investors.
Turner Novak:
So it sounds like maybe the mistake was you shouldn’t have raised money. Did you not have to? Because it looked like you were making three and a half million a year.
Sophia Amoruso:
We didn’t have to.
Turner Novak:
In EBITDA, it’s just sitting in the bank, right? You were printing money.
Sophia Amoruso:
I can own 80% of a company that’s worth $350 million. I control it. What’s the downside?
Turner Novak:
So in your head it seemed like a great idea.
Sophia Amoruso:
Fundamentally changed the business in ways I never could have anticipated and got really complex, really fast. And financial statements went from a few tabs to 50 tabs. I still can’t build a pivot table.
Turner Novak:
Maybe that’s something you don’t want to say publicly. No, I’m just kidding.
Sophia Amoruso:
It just happened so fast. There’s things that I can do that no one else can’t. And for everything else, you can rent as long as you go.
Turner Novak:
Yeah. So I guess, couldn’t you have just decided like, “Okay, we did raise money, the valuation’s really high, but I don’t have to spend it all.” Or like why was it such a big deal that the valuation of the company was so big from someone who, just kind of hearing this for the first time, was like, “Man, this sounds awesome. It sounds like this sounds like a great outcome.”
Sophia Amoruso:
I didn’t really negotiate the valuation. I met Jeff Jordan from Andreessen who flew down, Jeremy Lou from Lightspeed flew down in 2012. I met with Kleiner. I met with a ton of firms, Alfred Lynn from Sequoia. And some of these guys are LPs. Two of those are Jeremy and Jeff are LPs in the fund now. But I didn’t have like ... I actually found a term sheet from Benchmark, which is crazy because I don’t even remember talking to Benchmark, but I found one recently. But I didn’t know how to play them off of one another. I wasn’t trying to be like, “Oh, I want to ...” I don’t think I cared that much. The valuation was just crazy. And I was like, “Okay.” I mean, they were just like, “Please let us invest.” That was it. It was just like, “Will you let us please?” So yeah, that wasn’t why I did it.
But in terms of how we deployed the capital, I was really deferring to the people I brought on. I had an investor, I had a chief operating officer, these people, she had built startups. He had been alongside founders and taken them public and invested in incredible companies and amazing founders. And so I hired people that were smarter than me and I listened to them. And I don’t think that’s a mistake, but I don’t think I completely grasped what it meant and how fast we were blowing through capital.
Turner Novak:
Do you think if you could go back, would you have maybe sought out more mentors to just spend a little more time talking through things with you?
Sophia Amoruso:
Yeah, I didn’t have any advisors. I didn’t really know any founders. There were no glossiers and away luggages and I didn’t have peers. It was like Neta Porte and Tony Shea and Beachment. So Diego Berdakin in LA who’s now done Cloud Kitchens and is an awesome, awesome guy and a really good poker player. But I did not have ... I had one advisor who had been the CTO at Tumblr and my board was me and my empty seat and Danny from Index. And I kept my empty seat empty. I kept my second board seat empty the whole time.
I didn’t build out a board because I had heard they’re a nightmare. We never voted on anything until we had to vote to send the company into chapter 11, so it never really came down to that. It was mostly me probably not disagreeing enough and trusting the people around me who had so much more experience and were telling me like, “No, no, no, turn down the 400 plus million dollar offer from Urban Outfitters. That’s child’s play. We’re going to build a billion-dollar business.” I would have made, I don’t know, $300 million, $280 million on that sale.
Turner Novak:
So Urban Outfitters said, “We love what you’re doing. We want to acquire the company.” Did they actually give you a term sheet or did you go through any process?
Sophia Amoruso:
I have it. Yes, I have it.
Turner Novak:
You don’t have to bring that one up, because that one might be a little bit confidential.
Sophia Amoruso:
Yeah, yeah, yeah. I think the whole thing is confidential, but no one cares.
Turner Novak:
So you turned down an offer to acquire the company, so why’d you turn it down? It’s just that you thought this could be worth billions, you thought you could build something like 10X bigger?
Sophia Amoruso:
Yeah, because I had signed up to build a billion-dollar business and 400 something million was not much of a markup to what Index had invested in. They’d underwritten a minimum billion dollar exit and I bought into the fact that we were building a billion-dollar business and wouldn’t take that long to get there. And yeah, because I took advice, it wasn’t because I was greedy. It was just more like, “Oh no, we can keep going.” It wasn’t really ever about money. It was about, I was having fun and also trying to do my best on behalf of the company and the team and my investors.
Turner Novak:
Yeah. I feel like there’s that one saying where Zuck turned down a billion-dollar offer for Facebook from Yahoo in the early days and someone asked, “Why’d you turn it down? It’s a lot of money.” And he’s just like, “Well, if I sold it, I would just start a new social network. I’d just start Facebook again. This is what I want to do.” So maybe money went to the equation, but he’s also just like, “Why would I sell if I’m just going to restart it? This is what I want to do. I want to keep working on this.” So it’s like if you’re having fun ...
Sophia Amoruso:
It was so fun. It was like the best ride. It was the most fun.
Turner Novak:
So what was the biggest thrill for you? What was the most exciting about doing this? Because some people might think that it sounds miserable running a company, like being CEO. Some people might think, “Oh, being CEO, building my own company sounds awesome.” What made it so fun for you?
Sophia Amoruso:
I mean, it wasn’t miserable until growth stalled and then I was like, “What? We have to lay people off? What?”
Turner Novak:
Yeah, that’s hard.
Sophia Amoruso:
But it was exploding for a long time. I think it was getting to work with really great people, especially creatives and execute on amazing marketing campaigns, work with great photographers, make fashion that I really loved, just work with some of the most talented creatives and marketers in the world, and to be able to see that out in the world, see it on a billboard or ... We ran a couple magazine ads, but not much. And then see people obsessed with Nasty Gal, run into a girl who was like, “Oh yeah, I’m wearing Nasty Gal.” Oh my God. It’s just like what Nasty Yell did for someone’s confidence, and I’m not making this up and it’s like you can be like, “Oh, clothes shouldn’t make you feel ... You should intrinsically feel good about yourself.”
But it’s like we feel different putting on, I don’t know what, earrings versus not, or it’s human nature to decorate ourselves and how we do that and how we imbue our taste and our hope for our future and how confident we look and feel and what we’re wearing really does make a difference in how we move throughout our days and Nasty Gal did that for women in a really big way. So it was just kind of the thrill of seeing the level of obsession that our customers had with the brand and that it really did make them feel good.
Turner Novak:
It’s like you just made something that people loved and people used and identified with your product.
Sophia Amoruso:
Yeah, it was it. It was just like, “Okay, what do people want?” It was less, much less about what I thought was cool. What do people want? Okay, give them that, show it to them in a different way. Yeah, we were following trends, but it wasn’t like everything Nasty Gal did was it done in its own way until everyone started copying us and Forever 21 was like hiring the same models and Sachs was going into showrooms asking like, “What did Nasty Gal order from a brand’s collection?”
Turner Novak:
Really?
Sophia Amoruso:
Oh yeah, yeah. All that happened.
Turner Novak:
So you mentioned that you said we only made one decision as a board and it was to declare bankruptcy basically. So you mentioned that growth stalled. Did everyone just kind of copy you and it was just harder to stand out or something or like what happened?
Sophia Amoruso:
It’s such a good question. It’s like how in retrospect with all of the things that happened in the business attribute what led to that. I mean, ultimately we ran out of money and couldn’t pay vendors. That’s kind of how it works, but the valuation was really high. I think even at 100 million in revenue, 350 for a private equity to come in and invest or buy the company, they would have valued the company at maybe 2X revenue, which is like not the worst. In the world of venture capital, that’s not the kind of ... You don’t want to lose, Index would have lost money on the deal.
Venture can be fickle. So what someone’s investing in now may not be what VCs think is interesting a year from now. And if you go to fundraise a year from now in this thing that everyone thought was the next big thing, your Chrome extension or your whatever live-streaming, I don’t know what, is no longer seen as like the future, then it can be really hard to raise money. And it was ultimately like a fashion e-commerce business. It wasn’t a technology business. I could have raised capital, but I raised capital at a very high stake. And yeah, so there were opportunities to sell the business. There were opportunities to have someone come in like a strategic and invest and help us get to the next level, but those were things that kind of quietly ... There were opportunities that kind of quietly disappeared, even though I was getting those guys like excited and on board and it seemed like they were like going to like be my partner for the next phase of Nasty Gal, even at like a 200 or $250 million valuation.
There were kind of side conversations happening that I found out about later where, yeah, my investor was like, “If you can’t pay 350, don’t bother showing up.” But like that decision was really up to me. I just never got to make it because they ultimately didn’t show up. I was talking to someone yesterday founder yesterday who was like, “Yeah, I’ve heard that so many times.” He sold his company for like a billion dollars, but he’s like, “Yeah.” But yeah, so I guess I didn’t connect the PE thing and the venture thing, but like when venture is no longer interested, there might be a different kind of allocator who would invest, but it’s not a venture profile that they’re going to ... It’s not a venture valuation.
Turner Novak:
Yeah. So it sounds like what happened was you can either confirm or not confirm, but it sounds like you ... There was still like a pretty good business that was there. It was just the valuation going to be lower than what you raised at, and you were at a point where you were burning capital because you’re trying to grow and you hit a point where a deal was not going to close because the investors that you had disagreed with the decision and so you had to shut the company down, even though it was still a business that was working.
Sophia Amoruso:
Just kick the can over. Then it became Hail Mary after Hail Mary, you know, fire sale. At one point, someone did come in and invest after those much better strategic apparel retail opportunities had dried up and I think they invested at like a hundred posts, but the only way I could get them to invest was if Index invested. I mean, Index must hate this. I mean, I’ve said this on like a bunch of podcasts, but this is my story and this is a story that I want to pass on to other founders and when I invest, I want to make sure that they don’t make the same mistake or raise too high of a valuation or don’t raise enough money or blow through capital too quickly. So the impact of bumming out a firm, the impact of telling the story I think is much bigger than the fallout. I don’t even know.
So the only way I could get those guys to invest was if my investor, my existing investors put in some capital. It just looks really bad if your investors don’t want to keep investing, like even a dollar just like, “Okay, yeah, we’re invested in the company’s future.” And they were like, “We own 20%, we’re good.” And I was like, “You have to put like a dollar in or something. These guys are just not going to because it’s just such a bad look.” And what my investors said was, “We will double what of your own money you put into the company.”
Turner Novak:
Of you personally?
Sophia Amoruso:
Mm-hmm. And so the only way I could get the new investors on board at the much worse valuation than the ones that had come prior to that was to dump my own money back into the business. And this was after I’d hired a CEO, like I was on the board, I wasn’t operating the business, I did not like being a CEO at a certain phase. And by 2015, I had hired a CEO and now I think it’s like early 2016, but so I think the idea was that it was going to incentivize me to like turn things around and like double down on the business, but I wouldn’t have known what to do. I’m not like a turnaround CEO. I’m like an eBay seller. I’m like a great marketer and a great brand person and like a great merchant and like a great amplifier and a writer and like a whole bunch of other things, a great recruiter and a really good investor, but ...
Turner Novak:
But not a turnaround.
Sophia Amoruso:
The idea was that I was like showing conviction, but it’s like, I didn’t know ... So I did, and they did, and it just kicked the can further down the road. And then there was like a series of Hail Mary’s and exclusivity periods where we couldn’t shop the business because someone was in diligence and then time was passing. And then it became like people kind of circle and they’re like, “Okay, we see what’s happening here, we’ll do some diligence, but like we’ll just wait.” And I hate to say that’s what like smart people do because it’s so fucked up, but ...
Turner Novak:
Well, because they’re trying to get leverage and they’re trying to get a good deal.
Sophia Amoruso:
Yeah. I mean, there was ... The company that owns Nasty Gal now had ... We’d spent a bunch of time with them before we filed for Chapter 11 and they were interested in buying the company. And they just waited it out and then they bought it in bankruptcy for 20 million.
Turner Novak:
Man. How do you feel reflecting on it all today?
Sophia Amoruso:
I mean, I’ve just talked about it so many times. I think like I’ll always have a bit of a ... It’s like it sucks. It sucked and the headlines were like awful. I mean, it was like, “Does the failure of Nasty Gal mean millennials aren’t ready to lead?” Like, “What? I’m responsible. I’m the example of a whole generation because I couldn’t pull it off. I built a hundred million dollar business.” Yeah, the level of scrutiny really sucked. And then all the while I had written this book called Girl Boss and I was the Girl Boss and I was supposed to be the example of female millennial leadership. And there was a Netflix series being made about my life that was due to drop four months after we announced that we had filed for bankruptcy and then it came out and then it was like, “This is really bad timing.”
Turner Novak:
Geez.
Sophia Amoruso:
So it almost got worse. It was exciting, like a TV show was made about my life, but it was telling a story of who I was when I was 22, starting an eBay store four months after I, for the first time really in my adult life, was no longer involved with that thing and like trying to like figure out what my next move was or my next identity was and not have everything hinging on this thing called Nasty Gal, which I was incredibly proud of, but also was like ... So then there’s Sophia the CEO, there’s Sophia the girl boss who’s like on the cover of a book like she knows what’s up. And then there’s this relatively abrasive kind of bratty character playing me on a Netflix series that I thought was like really cute, but people were like, “Is she really like that?” It was just this conflation of who I was and chatter and headlines. The worst thing about Netflix’s girl boss is it’s source material.
That’s me. Yeah, it’s the book, but like that’s me. So I think it was like the Netflix series that was the hardest part because it was like this crescendo and then there are people whose jobs are literally titled critic in entertainment. There’s like reporters in business, which I had experienced that, but then there’s like TV critics and that’s a whole nother thing and that’s being amplified into a ... This show’s amplified into it. At the time, it was 130 million homes in 195 countries in like almost every language. That was loud. That was really, really loud. But also like so entertaining to talk about. It’s like, yeah, it was really serious, but it’s also, I don’t take it that seriously. And it’s like so funny to think that that happened in my life. It’s still like very surreal and like, it was all very real, but it was also really fun and just really weird in retrospect.
Turner Novak:
Yeah. Were you like involved in the Netflix series and I’m assuming involved in writing the book?
Sophia Amoruso:
Oh, I mean, I wrote the book. Yeah.
Turner Novak:
Yeah. Okay.
Sophia Amoruso:
What’s this? Is that a hair? Oh, yeah, that’s a hair.
Turner Novak:
That’s a hair. I’ve just noticed it too.
Sophia Amoruso:
What the fuck is that?
Turner Novak:
I noticed that-
Sophia Amoruso:
Ever had a guy do this on your podcast? Please leave that in there so everybody knows that it wasn’t intentional.
Turner Novak:
This is real. This is authentic. I actually do notice sometimes part of my beard, I think this side is just a little longer than this side right now and it just throws me off. I’m like-
Sophia Amoruso:
Do people think my face is shaped like this?
Turner Novak:
Yeah.
Sophia Amoruso:
We know it is.
Turner Novak:
Yeah.
Sophia Amoruso:
I’m kidding. But yeah, the book, I mean, I kind of left out the book part, which is what led to the Netflix series, but the book came out in 2014, so two years, two and a half years before Nasty Gal ended and it published at number two on the New York Times bestseller list. It spent 18 weeks on the New York Times bestseller list, sold half a million copies, and it became like a bigger ... Girl Boss became noisier than Nasty Gal was. Yeah, it was insane.
Turner Novak:
So what was the Girl Boss movement? I sort of remember this, but I don’t really remember, what was it?
Sophia Amoruso:
I mean, it was a year after Lean In and I didn’t intend for it to be a counterpoint to Cheryl Sandberg’s book. It was kind of the first story at scale that women had seen of someone who didn’t go to school, someone who was kind of cool, someone who didn’t have a pedigree, wasn’t like a square who had all the tools that they have at their disposal, eBay, an internet login, a digital camera, access to thrift stores and built something of consequence. And this was a time when the freelance economy was like the gig economy was kind of happening and creative economy and people were leaving companies and freelancing more. And we used to describe our customer as ambitious at Nasty Gal. I knew this generation, I knew them.
And it just really struck a chord because it was kind of a mirror for what could be possible for a generation who had, just like I had thought that people who ran businesses had to have a pedigree and had to carry a briefcase or something. And it was like, no, it can actually be fun and cool and you can learn things about yourself and be creative and be yourself and be weird and look at me. I have choppy bangs, I’ve got like a weird spiky necklace and I still pulled it off and I made it cool and you can too. You can work for yourself.
And that was really different at the time. It struck a chord and a lot of women quit their jobs and started businesses and they still walk up to me in coffee shops at least once a month and they’re like, “Hey, I read your book a really long time ago and I started a business. I quit my job. I got laid off and the next thing I read your book,” and like blah, blah, blah. “I was so lost and read your book,” and blah, blah, blah, 10 years ago or, “I was in high school and blah, blah, blah.” I was like, “Oh my gosh, it’s been so long.”
Turner Novak:
Well, I mean, talking about starting a movement, not even just with Nasty Gal, people buying and identifying with the product and the clothing, but just the idea of even starting a company, you can own your own destiny, you can control it and you can make things happen. You almost spurred the millennial generation to do it.
Sophia Amoruso:
Yeah. I mean, I was definitely part of it. I mean, I think we need examples of people who can show the rest of us what’s possible because it’s when the whole world feels gatekept, why bother? And with social media now, and of course everybody’s a finance expert and everybody’s an expert, but it’s like access to information is a lot more democratized and Robinhood didn’t exist at one point. Investing, retail investing was hard. Logging into Fidelity was really different and ...
Turner Novak:
You had to call your broker, place an order.
Sophia Amoruso:
Yeah. Yeah. We have access to so many tools now and so much information to educate ourselves. And that’s not saying it’s all correct, but we’re able to make decisions and have agency over our lives and careers in ways that we weren’t able to 15 years ago.
Turner Novak:
Yeah. And how would you think about, if you were starting a brand or a movement of some kind today, what do you think is most important to sort of tap into or unlock or are there things you feel like people maybe skip on or don’t put enough emphasis on, like the underrated aspects of it?
Sophia Amoruso:
I mean, I think the whole, every touchpoint of your brand, like from the moment somebody hears about it to the time they open a package, to the time they make a return should be cohesive and should all feel like the same thing. And what people are murmuring about the brand or talking about over breakfast and what you see in a press release and what you see ... or in the news and what you see in an ad on Instagram should all map to exactly what it is that you want it to. And you have to be really clear on what that is.
And then yeah, like visually, materially, everything needs to feel like the same thing. And ultimately, people want to buy into a world. Red Bull’s a world, Liquid Death is a world, Glossier made a world, Nasty Gal’s a world. For someone to have affinity for a brand that’s greater than the product itself, you need to create that feeling. And I think that really comes down to two things, which is a feeling of belonging and I guess for lack of a better word, community and aspiration. So how can I, Red Bull, like, “Oh, it gives me wings,” like Glossier, I can do minimal makeup and still feel good about myself or Nasty Gal, I can put on a leather jacket for the first time in my life and feel like I can take on the world. This motorcycle jacket transforms how I move through my life.”
And that’s not an easy thing to do, but that should be the North Star. Liquid Death is like, “Ugh, murder your thirst.” But I invested in Liquid Death, but they’ve done a really good job. I don’t know if anyone said ... I’m sure there’s Liquid Death tattoos. There’s Nasty Gal tattoos, there’s Girl Boss tattoos. I don’t know if there’s Glossier tattoos. And then, yeah, I mean, it’s noisy. I mean, it feels like every brand has like a Nepo baby celebutant attached to it now.
Turner Novak:
What? What is the celebutant? I’ve never heard that word before.
Sophia Amoruso:
It’s like a debutante who’s like a celebrity. I don’t know. I haven’t heard it in a long time. It’s probably actually a dated word. The creator economy is real. Distribution’s important, right? So there’s all of the brand stuff, and then there’s you talking about it, people talking about you, and then people talking about the product, right? And that goes back to like, and then people want to admire you. They have to see you as an expert, whether you’re an expert in style or an expert in venture capital, or it’s like people are looking for proof or the science behind a skincare brand, like who’s the doctor behind it? Do they have an Instagram following? It’s like there’s all these points of proof that people look for to triangulate influence and trust that now spans so many channels and it’s much more challenging to ... I mean, there were less places to market a brand when I started Nasty Gal, but there’s ... So it’s easier than ever to start, but there’s more noise than ever.
Turner Novak:
Yeah. And I think one thing you’ve done pretty well just over your life is getting press and getting this institutional kind of stamp of approval as well. How do you go about getting press? And maybe press is also like podcasters or creators. How do you actually get them to care?
Sophia Amoruso:
I don’t know. I think I’ll be riding on the coattails of Nasty Gal for a long time, and I have been for a long time and Girl Boss. I did something of consequence and there’s all this lore that was built around me when that happened. I had the best publicist in the world and was on the cover of Forbes and Inc. and Entrepreneur and whatever, features in all those. That stuff built me over time, but it’s been a long time. It’s been a long time since I’ve had frequent press. And I haven’t had a publicist in as long as I can remember, but I’ll get invited. I get invited to guest on stuff because people think of me and they’re like, “Oh wow, that’s a ...” Steven Bartlett, Diary of a CEO, they just reached out. Phoebe Gates and her co-founders, Sophia, who do The Burnouts, which has gotten to be a pretty big podcast, they DM’d me. And I’m an angel investor now, which is cool. Too expensive for the fund.
Turner Novak:
Yeah, that’s fair. One thing I love is that you did have all this press and I just met you at a hackathon. The one hackathon that we went to a couple of years ago when we first met. I didn’t even know-
Sophia Amoruso:
Launch house.
Turner Novak:
Yeah, Launch House. Yep. What a time.
Sophia Amoruso:
That was where we met.
Turner Novak:
Yeah. And I didn’t know that this was all a thing. And then I think when I looked you up at some point, I was like, “Oh yeah, I remember hearing about this. Girlboss. Yeah, I think I remember this.” Yeah. And just you never know how you’re going to meet people. And one thing you mentioned before is that you like being a founder, you thought you were good at that kind of zero to one founding stage. You’re not that good at the turnaround, really mature company type CEO, but you feel like you’re really good at investing. And then you’re doing that full-time now. How did that transition kind of happen?
Sophia Amoruso:
Well, I did a bunch of Angel Investing. First Angel Investment was in 2013. I invested in First Dibs and I invested in Eight Sleep and Liquid Death and Public ... Eight Sleep was I think 200 posts. Liquid Death was 50. The public.com I think was like 100 and I’m an advisor there as well. Invested in Kindbody, invested in Chill House that sold and Passport, which has done extremely well, Passport Shipping. And just really loved working with founders, realized that I had a lot of relationships that could benefit them. I have a platform that I can use to amplify what it is that they’re doing often to an audience who are interested in the kinds of things that I’m investing in would be users of those products that I can get into deals, founders want to work with me. I can make a material impact, both through making introductions that are relevant, through amplifying and evangelizing them.
Even if it’s on a podcast like that, I can list out in my portfolio if you would like me to. And then even though I invest in B2B software with TrustFund, my fund, I bring a consumer lens to the way they present their products and their brand and their marketing, because they’re often highly technical founders that I’m investing in now who are so in the weeds with what they’re doing, that being able to articulate that in a way that even a business user who’s choosing between Squarespace and Wix or Shopify versus an alternative, they’re still looking at the products as consumers. And the psychologies of like a business user is much more similar to a consumer than it was 15 years ago when we were putting out an RFP for an email service provider, right?
Turner Novak:
Oh my God, that sounds brutal.
Sophia Amoruso:
Yeah, you push a button, but it was like someone who would come and do sales and they were like, okay, it was called Bronto, the email service provider that we upgraded from Constant Contact from.
Turner Novak:
So this is the ability to email your email list?
Sophia Amoruso:
Yeah. Yeah. Just MailChimp before MailChimp, but like some guy came in ... Or like Gusto. We had to choose benefits. Some insurance broker came to the office with like Xerox’s ...
Turner Novak:
He’s got like a binder. He’s like opening it up.
Sophia Amoruso:
It was like, they had been Xeroxed so many times they basically had like black and white acne. It was like really bad. And now you have Gusto and Justworks and Deal and you push buttons and you can run a business, but you’re going to choose Justworks or Gusto based on the kind of stuff that made Nasty Gal successful and that’s copywriting, it’s design, it’s brand, it’s how you articulate what it is that your product is, how simple it is to understand for your users and selling the aspiration. If I use Gusto, it’s going to make it so much easier to build a team. If I use QuickBooks over Xero, like, “Oh my gosh, I’m going to have this whole suite of whatever it is,” that like login should be an unlock in the same way that wearing a motorcycle jacket at Nasty Gal, buying a motorcycle jacket made someone feel.
And that’s like, again, and I think software can do that. And I’ll log into Airtable and be like, “Oh my God.” And then I’ll churn and then I’ll be like, “Airtable, hit Airtable again.” And fuck, and I’ll churn. I’m like, “I don’t want to pay all these subscriptions.” But still, software can give a user that kind of exhilarating feeling. And so after Angel Investing and realizing I couldn’t just eternally deploy my personal capital into startups and that I had good taste and access and all this stuff I just talked about that I could do it for a job and knew a lot of GPs, knew a lot of investors at big firms and began to learn about what running fund entailed and listened to a lot of podcasts and read books and studied and talked to a lot of people who helped me along the way.
It’s just like so many ... That’s I think one thing about venture is that, and I think more than ... VCs do this more than founders, which is like, “Okay, how did you structure your blah, blah, blah?” Or, “What’s your minimum check size?” Or it’s like, you and I have talked about the mechanics of fundraising and deploying capital and I don’t think founders get into the weeds as much with that stuff, but it’s such a virtuous ecosystem of people sharing like how they’ve done things. And then also like companies that they’re investing in, not as much LPs, anybody who wants to share LPs with me, like you know where to find me.
And then decided, launched Trust Fund and announced at the beginning of 2023, raised a $5 million fund and have made 15 investments into some amazing companies and just like love working with founders, love the zero to one, one to ish. I know I want to play there over and over and over again. I have ADD, so I get to use like my taste and my access and my platform and my chops and look at a lot of interesting things, talk to interesting people, see where the future’s going, place bets, and make an impact and do it over and over again so that when these companies are ... They get to be successful, they get to do the really hard work and they get to inherit the growth stage that I really don’t like. So I feel like it very much plays to all of my strengths and a stack of things that I didn’t know I had accumulated until I started doing this job.
Turner Novak:
And then the name Trust Fund is like probably talking about like branding and marketing, like one of the greatest venture firm names ever.
Sophia Amoruso:
Thank you.
Turner Novak:
So how’d you come up with the name?
Sophia Amoruso:
I don’t know. I don’t know. I think I was talking to Abe Burns. Do you know Abe?
Turner Novak:
Yes, he was at Sound Ventures.
Sophia Amoruso:
He was at Sound. Yeah, he’s a funny guy, but I think at some point I was like, “Ha ha ha, if I ever started fund, I’m going to call it Trust Fund.” I don’t know. We just used stupid stuff around over text and I think that ... Yeah, it was just like, that’s such a great ... I don’t know. I like naming things.
Turner Novak:
And then you’ve got, I think you have something on your desk right there, the Trust Fund, the bucket hats that you made.
Sophia Amoruso:
Yeah. So rich kids think they’re funny and ironic and people who didn’t grow up with trust funds think they’re funny and ironic, right? So whether you’re an Amagansett or, I don’t know, I’m not going to give an example, but like Silver Lake, whatever, like this is funny.
Turner Novak:
This is going to be the thumbnail for the episode on YouTube, by the way. Just you with a bunch of trust fund bucket hats.
Sophia Amoruso:
Here it is. Yeah. Yeah.
Turner Novak:
And so you mentioned you had to go raise money from LPs. What is that like for someone who’s never done that before?
Sophia Amoruso:
Yeah.
Turner Novak:
Is that easy? Is it hard? What are the things that you feel like you got to nail to get that done?
Sophia Amoruso:
I mean, I talked to a lot of different people. I got a fair amount of introductions to institutional LPs, went to some of the GPLP matching events and conferences that are supposed to like help you fundraise as an emerging manager. And it’s like I’m talking to B of A Ventures and it’s like, “They’re not going to invest in my $5 million fund, but I’m like trying to get meetings with them.” And eventually it was like, “Okay, I’m just going to raise a $5 million fund from people,” because it’s too small of a fund for anybody who’s trying to write checks out of a multi-billion dollar fund because they’re not going to write a million dollar checks. They don’t want that many, they don’t want to invest in that many venture firms. I don’t want to deal with all of the whatever year long diligence that an endowment fund’s going to put me through.
I want to work with stakeholders that I like and enjoy and sometimes know who are like real people who are investing because they believe in me and have conviction and aren’t necessarily running me through like a spreadsheet to decide if I’m a good idea. And so ended up raising from like a lot of GPs at bigger firms and founders. So I mean like Ev Williams from Twitter and Medium and then Anthony Noto who’s the CEO at SoFi, but then it’s like Mark Andreessen and Chris Dixon and Jeff Jordan and Andrew Chen and Jason Calichanis and David Sachs and Rob Hayes and Jeremy Lou are all ... It’s like all these like Midas listers came in, which was really cool and like super validating. Jesse Draper, Paris Helton. So it just ended up people that ... And I met like a lot of these guys, like I said, like in 2012, what was that, 14 years ago. So people were like, “How’d you do that?” And it’s like, “I’ve been around for a long time.”
Turner Novak:
Well, it wasn’t like you showed up and said, “Hey, just give me some money.” It’s like you knew these people for a decade.
Sophia Amoruso:
Yeah. And that’s one thing about venture is like, even if you don’t get it right, if someone’s seen you try to build something and watched you build, and even if it didn’t work out, people still have respect and will often continue possibly funding your startup or invest in a fund. And it’s like Nasty Gal Stories, like an age old venture capital story.
Turner Novak:
You raised a bunch of money playing poker. I think that was like a trick that you used.
Sophia Amoruso:
I mean, it wasn’t a trick, but I mean, I played poker with Jason at CES 10 years prior or something, but definitely I met ... Jason hosted and Brooke Hammerling hosted a poker game after the code conference every year for a very long time. And I would play in that every year. And it would be like Jeffrey Katzenberg and, I don’t know, like big executives and founders and stuff at the big boy table. And I’d play at the baby stakes table, but there were always like interesting people around and that’s where I met Anthony Noto from SoFi who became an LP, but like a friend, really kind of a friend and mentor first. And then yeah, like playing with Jason, Sunny Madra, who founded Grok that sold to Nvidia is an LP, met him playing poker, but it’s like Jason stands up and he’s like, “Who’s going to invest in Sophia’s fund?” And like somebody raises their hand and that was pretty cool.
Turner Novak:
Yeah. Well, because I feel like everyone, you need to figure out some kind of advantage when it comes to raising capital, whether it’s like you’re really good at a certain thing and you lean into it or you find like a channel, like a certain type of investor that you vibe with, whether you’re a fund or you’re a founder, like you need to figure out ... There’s more than just like, “Here’s a pitch deck and here’s a spreadsheet and we’ll give you money.” There’s always some reason, like some kind of emotional connection, a thesis, something like that. There’s always something else that you got to figure out. I don’t know if it’s like a trick or like a hack is the best word for it, but you need to figure out like how to almost like crack something more than just ... People don’t just give you money for no reason.
Sophia Amoruso:
What’s your shtick?
Turner Novak:
I think I’m still trying to figure that out, but it’s usually people that are familiar with my body of work. I mean, maybe it’s same with you, where they followed along for a while. My pitch is usually, I just have a pretty big platform I can use to help founders. It’s pretty similar to yours. I’ve leaned a lot into the podcast where I’ve had multiple portfolio companies that have hired over 10 people from their podcast episodes, which is pretty crazy when you just think about there’s all these funds that they have these big teams that are adding all this value and like, “Oh, we’ll help you recruit. We’ll help you do all this stuff.” And meanwhile, I just put out a podcast episode, I’m sleeping and people are getting jobs. It’s kind of, I don’t know, it’s kind of insane. I’ve had founders just tell me how impactful it is.
So I think I don’t even appreciate it as much at times because I don’t know, for me, it’s just kind of fun. It’s just fun to talk about this stuff and put it out there and like thousands of people listen. I mean, I’ve had some podcast episodes get hundreds of, or if you count the shorter clips, like some of them have cleared a million views on the episode. So it’s like kind of crazy just to think that you helped someone get whatever word out that they were trying to get out and I create all the content just as I would want to see it. I just kind of try to put stuff out there that I’d want anyway. So yeah, it’s kind of this like flywheel that’s just kind of kept building to the point where you need to think about what’s your advantage as an investor.
For me, it’s just founders want to meet, they want me to help them, they think that they can get value from tapping into kind of the distribution. They feel like they can maybe trust you, like they followed you for a long time. And for me, I do a lot of like humorous, funny stuff aside, the podcast is like the most serious thing I do, but a lot of founders are like, “I feel like I just kind of know you, you just kind of feel like it’d be fun to hang out with. Maybe brainstorm some stuff, we’ll work on ... I’m trying to do the launch, like help me plan this out or like I’m trying to get some press coverage for the series A, or we’re thinking about our series B. Who do you think would be worth talking to?” You’re just brainstorming things that you’ve seen that have maybe worked in the past. Yeah, I don’t know. There’s just so many different things to go into it, but similar to you, I have ADD, like there’s no way I could actually build a company. There’s no way I could spend 80 hours a week for 10 years on the same thing.
Sophia Amoruso:
Yeah. Yeah, I did that. And that’s what you tell LPs, that’s what’s in your deck or is it like, “I have special access because of this and I can choose good founders because of this,” because that’s the value prop to founders, but like what do LPs see that differentiates you? Is it like access, obviously impact, like that’s one slide, but you can pick, you get in earlier, like what do you think it is?
Turner Novak:
Yeah, I think there’s a couple different reasons like you want deal flow for later stage stuff. So I’m usually investing in the first or second round, usually at pretty attractive entry prices. I think the average cost basis on my fund two that I finished investing a little over a year ago was 14.8 million. So there’s some companies that are eight million post money, some are 20 million post money, but they’re usually kind of right around that mid teens. And that’s just ... you can go to someone with a straight face and say, “I’m going to deploy this capital into 20, 25 companies and there’s a chance that this fund is going to be a 10X returning fund.” And there’s also like a chance we need to get really lucky, but like this could be a 20, 30, 40, 50X. That’s kind of the point of venture capital.
I don’t think the point of it is like, “Hey, we’re going to get a 3X or a 5X return.” That’s actually not that good in venture, in my opinion. So my pitch is generally like, “You need to get lucky with some of this stuff, but I’ve kind of set up the constraints where the fund could get 10X return on the fund. If you like following onto the breakout portfolio companies, and I will have some, I’ve had some in the past and they’ll be more in the future, and you’re looking for companies that you want to follow onto, either doing SPVs or leading the rounds of, we can do that.” I think a lot of the pitch too, I think a lot about how can I expand the fund over time. So I think a lot of people, the pitch is all get into super hot rounds and like we’ll get the logos on the deck, we’ll get like 100K check into this company, 250K maybe, maybe it’s in a later round too.
My pitch is I’m trying to invest as early as possible and I’m trying to be one of the first investors so that then over time, instead of writing a 250K check, I could have given them a million, I could have given them five. I could buy like 30% of the company over the course of those first couple rounds falling on over time. I honestly don’t know how it’ll all evolve over the next couple of decades, but I just think about it as, am I investing as early as possible, giving them money, could I have invested more? Did the founders trust me? Would they have me invest again in their next company? And that’s usually a stamp of like, “Hey, he did something, he didn’t fuck it up, he was responsive at the very least. Maybe he helped in a couple ways.” So yeah, that’s generally the pitch.
And then generally you think you buy into the media driven strategy, you buy that the internet matters, you buy that that can move the needle for founders. My pitch is usually not, “Hey, AI is the thing I’m trying to invest in AI. I’m an AI investor or deep tech or Web3 is the thing I’m like an expert.” I feel like one of the things I personally do not want to do is, you kind of saw the swing to like American dynamism where everyone’s like, “Oh, we’re experts on defense and like American manufacturing.” And meanwhile, two years ago, you were like talking about how every purchase was going to be on the blockchain and like you’d get an NFT every time you ordered a coffee and then now you’re talking about how like self-defending missile drone things. I just think there’s a little bit of a disconnect there when you think about these, like people try to kind of brand themselves as being these experts in all these different categories.
Sophia Amoruso:
It’s really intimidating. It’s intimidating, honestly, because overnight everyone else became an expert and I still know I can do a very good job at this, but it’s not going to be because I know everything about foundational models and like security. That’s not going to be it, but I have a good feel for what’s defensible and why one of the LLMs would not touch a certain area because it’s like too hairy or too specific or that the general knowledge is not going to benefit, it’s just not going to work pulling from data or just having a customer’s data in a silo. There are a lot of things that I do know enough about to know to a certain extent what’s defensible in AI, durable or whatever D word you want to use, but it’s an intimidating time because it seems like everybody else has like a spiel for it and I don’t have that spiel.
And maybe that’s the kind of honesty that people want or, because I am investing in AI, but it’s not the only thing I’m investing in, but I obviously also don’t want to invest in something that can be vibe coded in five minutes now. And then it goes back to speed and distribution and ability to ... And then it’s like ... Anyway, we can have that conversation offline, but it sounds like we relate.
Turner Novak:
And then what are you looking for then in the founders that you back? It sounds like ... Are there certain traits you feel like you really gravitate more to and do you think lead to building a company of consequence, I guess, if we’re using the same language?
Sophia Amoruso:
I think it’s a founder that I can see using every resource at their disposal to build their product, build their company, and it isn’t just looking at the obvious channels for doing it or the obvious channels for recruiting who are going to ask me for things. I want people who are ... There’s a healthy kind of entitlement that founders have to have. And honestly, I think everybody has to have to say, even if it’s just like they feel entitled enough to ask for advice or an introduction, even if I say, “No, you’re not ready for that,” I’ll introduce you when you’ve got another logo on board because it’s too early to talk to Delta, and I made that introduction.
And then founders I think can build with real product velocity. So the founders that have gone on to raise subsequent rounds and begun to build critical mass and get buy-in from their customers and build sophisticated products have done it quickly. So speed, I think, is important because Nectar Social, for example, it’s like I invested in their pre-seed when they had a deck and a year later, Misbah came over my house, co-founder and showed me their product and I was like, “How did you do this? This is like witchcraft. This is like a very mature product. I have no idea how you ...” Agree.com is another example of that. Founders who are just like, “I’m going to go build this,” and then they just go build it.
Turner Novak:
They’re like the DocuSign with 10 employees instead of 10,000?
Sophia Amoruso:
Yeah. Yeah. It’s free e-signatures. I use it every day.
Turner Novak:
Really?
Sophia Amoruso:
Yeah. Yeah. Yeah. So unless you’re running payments through it, because what they are is the contract is the invoice and so you can connect your Stripe and do one-off payments and recurring payments. So it’s great for SaaS companies. That’s something you pay for, but you get paid immediately because when your customer signs the contract, it takes them through a payment flow and does dunning and payment recovery and all kinds of stuff for you. But if you do free e-signatures, it’s unlimited. DocuSign gives you like one or two a month, I think. It’s insane.
Turner Novak:
I do do some contracts because usually we’re sponsors in the podcast. We just sign a contract because I got burned once, someone didn’t pay me. So I always sign them. Well, this has been a lot of fun. Thanks for taking the time to do it.
Sophia Amoruso:
Yeah. Thanks for having me. It’s like always, I mean, it’s like, cool. I just got to talk to you for an hour and a half. That’s great. If anybody else benefits, that’s just icing on the cake.
Turner Novak:
Yeah. Where can people find you? If they did benefit, if they’re like, “Oh, I love this. Sophia, I want to send you a message. Reach out.”
Sophia Amoruso:
Instagram.com/sophiaamoruso, linkedin.com/in/sophiaamoruso, trustfund.vc, trustfund.vc/pitches. And then if you want to see my website, it just has everything you already know, if you’ve listened to this podcast about me, SophiaAmoruso.com.
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