In this episode of "20 Minutes VC," host Harry Stebbings interviews Amir Elaguizi, the founder and CEO of Cratejoy, a YC-backed platform that provides website building and backend services for subscription ecommerce stores. Elaguizi shares his journey from a professional poker player to a tech entrepreneur, detailing the sale of his first company, Market Zero, to Zynga and the pivot to Cratejoy after participating in Y Combinator. He discusses the importance of team dynamics, the distinction between foundational team members and mercenaries, and the necessity of direct feedback and transparency in leadership. Elaguizi also highlights the two major forces driving the subscription commerce space: ecommerce fundamentals and the formation of niche communities through social media. Lastly, he outlines Cratejoy's mission to enhance the consumer experience in subscription shopping and to simplify the process for merchants.
"And joining us today, I'm delighted to welcome. And I'm going to get this wrong, so I'm sorry, Amir. Amir Elaguizi, founder and CEO at YC, backed Cratejoy, the website builder and backend for subscription ecommerce stores."
This quote introduces Amir Elaguizy and his company Cratejoy, highlighting its backing by Y Combinator and its role in the subscription e-commerce space.
"And then I left with one of my co founders to start what ultimately become Cratejoy. We did that in late 2012. Then we did Y combinator in the summer of 2013. And after demo day at YC, we pivoted to Cratejoy in 2014."
This quote explains the journey of Amir from leaving Zynga to starting Cratejoy with his co-founder, participating in Y Combinator, and the eventual pivot to what Cratejoy is today.
"We were really excited because we didn't see any other way for us to keep expanding the business, and we just wanted a new challenge."
This quote captures the rationale behind the sale to Zynga: the desire for a new challenge and the lack of expansion opportunities for Market Zero at that time.
"Crayjoy is a subscription commerce marketplace. So consumers come to crayjoy.com and they browse the thousands of subscription boxes that our founders, our merchants have curated."
This quote succinctly describes what Cratejoy is: a marketplace for consumers to find subscription boxes and a platform for merchants to manage their subscription businesses.
"But there's this other side that I don't think anybody really is paying attention to. So this is what's happening with groups largely on social media."
This quote points out that while many understand the commerce-driven reasons for the rise of subscription models, the social aspect and its influence on niche markets are often not considered.## Evolution of Niche Communities and Subscription Commerce
"And these niche communities are growing in leaps and bounds and they're spitting out these mega consumers, the voice of the group, which we are calling influencers and subscription boxes and subscription commerce in general are starting to be these curated offerings by these experts in these niches."
This quote highlights the growth of niche communities and how influencers and subscription services are emerging as curated solutions within these specific interest groups.
"Amazon's actually really bad for that, especially for discovering new products because Amazon services the best hairbrush, not the best hairbrush for Shetland ponies."
The quote points out the limitation of generalist platforms like Amazon in catering to the specific needs of niche communities, emphasizing the advantages of niche subscription services.
"So the value proposition is twofold. Like, one, you just get more books because you need more books, right? And two, you discover new stuff curated by the people who know what you want."
This quote explains the dual benefits of subscription services, which provide both a steady supply of desired products and the discovery of new items curated by knowledgeable experts.
"Owning recruiting is the single most important thing you can do."
This quote emphasizes the significance of recruitment in a startup's success, suggesting that it should be a priority and not outsourced.
"The first ten hires you make for your company, their strengths will be what the next ten hires emulate, and that just keeps on propagating."
The quote highlights the long-term impact of the initial hires on a company's culture and performance, underlining the importance of the founder's role in early recruitment.
"I'm going to do it for as long as I possibly can."
Amir's commitment to recruitment underscores its importance and his belief in the value of a founder's direct involvement in building the team.
"Especially as the CEO or as the founders, you can only have so many people reporting to you."
This quote addresses the limitations of a founder's capacity to manage employees, necessitating the introduction of specialists as the company grows.
"I think founders make a big mistake of not recognizing when the company is outgrowing a person's skill set, and that can really hold the company back."
The quote points to a common oversight by founders, which can hinder company progress if not addressed by adapting the team structure to the company's evolving needs.
"I try to have a very candid and transparent relationship with everybody at my company, and I've spoken to them about what's happening."
Amir's approach to employee transition from generalist to specialist roles is based on open communication, which helps in managing expectations and facilitating role adjustments.## Investing in People
And basically what it is, is you have to understand, as your company grows, who are your foundational members, the ones that really you're counting on for being there forever. Right. They're motivated by the company. They feel deep ownership of what they've helped build and a sense of mission.
This quote explains the concept of foundational members who are integral to the company's long-term success and are deeply connected to its mission and growth.
And then you need to understand who's really just a mercenary. I mean, that doesn't necessarily mean they're bad people, but they're there for a short period of time, whether it's a career move or to make hope in hopes of making money, you can't really count on them to be there in four or five years as you're growing the business as a founder, just knowing that distinction, you can make much better decisions.
Here, Amir defines mercenaries as those who are part of the company for short-term benefits and are not expected to stay committed in the long run.
So with your foundational people, you can invest heavily in them, both from a compensation standpoint, equity especially, but also just from investing your time and giving them ownership over things that you need to be working well for very long periods of time.
The investment in foundational members is outlined here, highlighting the importance of compensation, equity, and ownership in their long-term engagement and success within the company.
And then with the mercenary people, you know what motivates them and you know how to get the best use out of them. And you also know to not put them in charge of something that you're going to need to be working still in four or five years, because it's likely that they aren't looking to make those sort of long term time commitments.
This quote addresses how to manage mercenaries effectively by aligning their roles with their motivations and avoiding reliance on them for critical, long-term projects.
They independently seek to improve their knowledge, right. Everybody talks about how they're going to learn some new skill, but they actually do it. They read the books, they watch the videos, whatever it is. They make mistakes because they're trying new things, but they don't make the same mistake twice.
Amir describes the qualities he looks for in individuals to invest in, emphasizing the importance of self-improvement, learning from mistakes, and not repeating them.
And as far as ego goes, they need to be humble. And what that really means to me is if you think you're an expert, you've implicitly decided that you're done learning. And when somebody talks to me about how they're an expert at something, I really don't want to work with them because it means that they're not going to be flexible going forward.
The importance of humility and a growth mindset is highlighted, with a focus on the dangers of considering oneself an expert and becoming inflexible.
We share everything with the team because the right people are motivated by the challenge and take the struggle as their own. And then when we ultimately win, which we always do, they gain that much more pride of authorship, whereas the wrong people, they weren't going to stick around anyway.
Amir explains the value of transparency in motivating the right team members and how it contributes to a sense of ownership and pride in the company's achievements.
The leader will think that they said, you aren't performing satisfactorily relative to your peers. And the team member will think that they said, you're doing really good given that you're so new.
This quote illustrates the common disconnect between what leaders think they are communicating and what team members perceive, highlighting the need for clear and direct feedback.
I call that skill set candor. It's being truthful with people without being hurtful. And most people, the first time they experience that, when they realize that a performance review at my company is actually, first of all, we do them quarterly, not annually, but they're actually meaningful that we've put a long time, a lot of time into it.
Amir defines candor as the ability to provide honest feedback in a constructive manner and emphasizes the importance of regular, thoughtful performance reviews.## Effective Communication in Management
"If somebody is surprised by the fact that you're letting them go for performance reasons, that means that you as a leader have really failed at communicating expectations."
This quote highlights the importance of transparent communication between a leader and their team members regarding performance expectations. A lack of such communication can lead to unexpected terminations, reflecting poorly on management practices.
"If you have any level of traction, they will be that much more forgiving of the sacrifices, and they'll support you if they feel like they're a part of the win."
This quote emphasizes the positive impact of involving one's family in work-related activities, which can foster a supportive environment and mitigate the strain that a startup's demands may place on personal relationships.
"It's uncertainty the whole way, and that's a hard place to live in."
The quote captures the essence of entrepreneurship, which is characterized by continuous uncertainty and the need to make critical decisions without full information, often with significant consequences.
"The reason they do that is because they need us. They need us that badly. They're dependent upon us."
This quote suggests that customer pressure and demands are signs of their dependence on a business's offerings, and while challenging, this is preferable to customer disengagement.
"I seriously love Ben Horowitz for writing this book. I want to hug him because somebody finally captured the essence of the struggle and really wrote it down."
This quote reflects Amir's appreciation for Ben Horowitz's book, which resonates with him due to its accurate portrayal of the challenges faced by entrepreneurs.
"We want to make it so that our merchants really only have to worry about assembling high quality products, and then we're just handling the rest."
The quote outlines Cratejoy's goal to simplify the operational aspects of running a subscription business, allowing merchants to focus on product quality while Cratejoy manages logistics and other burdensome tasks.