[The following is the full raw transcript of a LEADx Podcast interview, which has been very lightly edited for clarity.]
Kevin Kruse: What's it like to be on Shark Tank and even to work with Mr. Wonderful, Kevin O'Leary? Hello, everyone. I'm Kevin Kruse. Welcome to The LEADx Show. Please send a Facebook status out there for me and let your friends know that the LEADx podcast helps you stand out and get ahead. It's the best way to spend your commute. Check out leadx.org, where we're offering a new free online course every single day. We've been doing courses on authentic leadership, delegation, and growth. Today you're going to hear from a tech entrepreneur who appeared on Shark Tank. We talked about how to stay true to your dream, what's it like working with Mr. Wonderful and how you can fund your dream honeymoon.
Our guest today is an entrepreneur who's an expert in wedding and crowdfunding industries. She and her husband started the company Honeyfund after their own wedding when guests contributed more than $5,000 towards their dream honeymoon. They went to Fiji. Honeyfund is now the number one online wedding registry. After appearing on the TV show Shark Tank, they landed an investment from Kevin O'Leary and they launched a new site Plumfund, which is an online crowd gifting site for all of life's occasions. Our guest is Sara Margulis. Sara, welcome to the show.
Sara Margulis: Thanks so much, Kevin. I'm glad to be here.
Kruse: Sara, it's sort of a tradition. I always start out asking our guests the same first question. I'm hoping you're going to tell us a time like when did you fail at something and what did you learn from it? Because I, my listeners, we all want to learn from your failure.
Margulis: Absolutely. There's so many times that I failed but it's hard to just pick one. I think one that would really resonate with your users has to do with when we first started Honeyfund, my husband Josh and I were living together. We had everything we needed for our wedding and for our home but we didn't really have a lot left over for the honeymoon so we started Honeyfund to make our dream honeymoon happen. Really once the site got up and running, we had this idea of how we were going to monetize it. We were going to monetize basically like a local vendor directory of wedding vendors, travel agents, people who wanted to reach our wedding couples.
We built it all out and we launched the site and we started getting users. What we realized pretty quickly was that the ad directory wasn't going to be viable for quite some time, especially given the small user base that we had starting out. It was funny. In hindsight, we were first time entrepreneurs. We made our little makeshift Honeyfund for our own wedding and it worked so well. We never even considered that anything about this could fail. The vendor directory totally failed. What we ended up doing was pivoting to a freemium model. We took feedback from users over a couple of years.
We had the luxury of running the site as a hobby for the first couple of years and building a user base before we had to worry too much about monetizing it. We pivoted to a freemium model based on features that our customers were asking for. Do you think your listeners are familiar with the freemium model or do you want me to explain that a little bit more?
Kruse: I think it's okay. I think most understand that.
Margulis: Great. We packaged up the most sought after features into a one-time upgrade that we called Honeyfund Premium and that's what actually turned the Honeyfund website into a business.
Kruse: There's so much good stuff in here and on different levels. I will explain a few things, I think, for our audience. The first thing is it's amazing. It's a true entrepreneur. The thought of failure never crossed your mind even though you'd never done it before, right?
Kruse: I've had some wins and exits and I've had some failures. For myself, actually, the failures were always when I just knew it was going to work and I didn't need to talk to my customers because I knew what they wanted. Those are the ones that didn't work out well.
Another great takeaway here, Sara, is you've remained true to the ultimate vision, the ultimate goal, but you've remained flexible in how you're going to get there. Really early on, as you said, you did this pivot, career goals, life goals. If something is not working out, the sooner we can see that data and give ourselves that hard truth, the better. It doesn't mean we've failed in the big scheme of things. It just means we found one way we're not going to get there. We're going to start trying another path. I think that's really great advice.
Building on that, Sara, now that you've been an entrepreneur for a while, what's some generic advice you would give a first time entrepreneur or someone who's thinking about making that leap into being an entrepreneur? What would you tell them?
Margulis: I'm really glad you asked me that. I had the pleasure of speaking at the Inc. Women's Summit last Monday and Sara Blakely, the founder of Spanx, was our keynote speaker. She shared something that really resonated with me. She talks a lot about the pre-work that she did on herself before she jumped into her business. By the pre-work, she meant, for her it was a lot of learning through tapes that her father had given her from Wayne Dyer. She was learning about really fortifying her own inner strength, her own belief in herself, her belief that opportunities are limitless, her belief that failure is part of the path of success.
I would say that if there's one thing someone who's thinking about going into entrepreneurship should do is really do that inner work, do that daily practice of reminding yourself that failure is important on the path to success. Because you're going to get beat up. Entrepreneurs get beat up every single day. We get beat up by external forces. We get beat up by our failures. We get beat up by the things that our parents and our friends tell us and we get beat up mostly by our own selves. That feeling of, God, why didn't I talk to my customers before I launched this product? That was stupid. In hindsight, it's so obvious. I would say that fortitude is just absolutely vital.
Kruse: Sara, I've asked literally hundreds of guests now and other folks this kind of question and this is a very original unique answer and I love it. Most people will talk about some other common wisdom but to really do that inner work first and it never really stops because, as you've said–
Kruse: –You could be Jeff Bezos of Amazon and you're still going to have failures. You've got more problems when you're running a billion-dollar company than when you're running a thousand-dollar company so it never really ends.
Margulis: Absolutely. I would say as you grow, as your company grows, as you take on more responsibility, of course, there becomes more problems. As you go from being an entrepreneur that runs a little side project to being someone who runs a company with employees and policies and partnerships and contracts and legal, you got to have more of that internal fortitude and you've got to have a daily practice. That keeps you grounded or you really can risk losing everything to the pressure.
Kruse: That's right. Now, I mentioned of course at the beginning of this show Honeyfund and you've gave a quick intro in your failure story, but tell us more. It came out of you and your, well, at the time, fiance's dream to have this amazing honeymoon that you didn't have the funds for at the time, right?
Margulis: Yup. Josh and I were in our late 20s living in San Francisco in a one-bedroom flat. He was a software engineer at Macromedia which got bought by Adobe, and I was working in marketing and getting my MBA. We had this dream of being financially free and being able to raise a family without two working parents. We had everything we needed for our home, like I said, and we were paying for our own wedding of course because nobody's parents forked up the money anymore.
We really wanted to take a memorable honeymoon. It's going to cost us probably a solid five grand to get halfway across the world to go to Fiji where we dreamed of going. We've heard of the idea. All we did was just put a simple wishlist out to our friends and family on our own website and they absolutely shocked us with more than $5,000 and contributions and a huge enthusiasm for the idea. That was really what drove us to start honeyfund.com.
Kruse: This is brilliant. I hadn't thought about this until I came across your story. As people are getting married later and later these days, they don't need all that basic home building, nesting stuff that maybe they needed back in the 1950s or whatever. This idea of, hey, but help us to pay for a great honeymoon was a great idea. One of the ways your company really took off or got a lot of attention is you ended up on the TV show, the reality show Shark Tank. How did you end up on Shark Tank and what was that like?
Margulis: Well, we had the great fortune of being sought after by Shark Tank. A casting director emailed us in late December of '13 and she said, “We are interested in talking to you about coming on the show.” I had never seen Shark Tank. I'm not a huge fan of reality television and my gut response was, “No way. I don't want to appear on a reality TV show.” Once of course we saw the show and saw the potential for the marketing of our company, we absolutely applied with no hesitation and we were fortunate to get cast. We went in the Tank in June of '14.
Kruse: June of '14. As the viewer, we see what is it? A 10-15 minute clip of the pitch and the questions but it's actually very long. I hear you're being filmed and interacting on stage there for quite a long time.
Margulis: Yeah, I would say ours was probably pretty average. I've heard of pitches going up to two, three hours. We were in there less than an hour. It is every bit as grueling as it looks on television. Definitely, the most nerve-wracking thing I've ever done.
Kruse: See, I was always wondering about that. It seems pretty nerve-wracking and intimidating. I'm thinking like, wait a minute, before all this are you hanging out with Mark Cuban eating celery and carrots and just chitchatting and then everybody has got to act like you guys are walking all scary? You're saying it is pretty scary.
Margulis: It is. No, you don't meet the Sharks at all before you go in. They've never heard of you unless they've used the site which, in our case, a couple of the Sharks had actually given gifts on Honeyfund before. You walk in and you give your two-minute rehearsed pitch and then the questions start flying. Oh, boy. Do they really fly.
Kruse: Wow, wow. You ended up getting the deal.
Margulis: That's right. Yup, we got a deal with Kevin O'Leary.
Kevin Kruse: Now, on the show, if any of my listeners–and we have listeners in 148 countries–I know not all of them will be familiar with the show. Kevin O'Leary has the reputation of being a little blunt, a little abrasive. They teasingly call him “Mr. Wonderful.” How was he on the show and then what he's been like to work with afterwards?
Margulis: Kevin was really great on the show. I walked into the tank, my strategy, my pre-work before I went in was I'm going to pick a Shark that I feel comfortable talking to, and if I get overwhelmed at all, I'll just focus on that person and that person for me was Barbara Corcoran.
We got an offer from Robert first. It was a terrible offer. I think I rolled my eyes on public television. Then we had Barbara who countered which was great because I felt like my person is here and she's supporting us. She complimented us. Meanwhile, Mark Cuban was rolling his eyes at some of the things were saying. Then Kevin comes out with this really incredible offer. It was no equity and it was basically a loan for the amount that we were looking for with three times payback and then he goes away. We thought, “Wow.” We'd watched several episodes of the show at that point.
Even Mark Cuban said on the episode, “I can't believe Kevin offered that good of a deal. I've never heard of that before.” My husband was incredulous. We had to actually step away for us to really talk through the offer but in the end it was the right one and we happily accepted. Kevin has been totally available to us, totally free with his brutal honesty and advice. He doesn't sugarcoat anything which I really appreciate. Like I said, you get beat up a lot as an entrepreneur but when it's coming from someone you respect and someone you know has your best interest at heart, it's easier to take. He's still there for us to today. Really a great partner.
Kruse: That's great to hear. I'm really happy that has worked out for you. Again, you just said something that is so valuable whether you're an entrepreneur or not about welcoming that brutal feedback, that honest feedback and you said, “Because you know it's coming from the right place.” He's on your team so he's not saying it to hurt you, to derail you. As long as you know it's coming from the right place, you want that honest feedback.
Margulis: Absolutely. If you can't take criticism from anyone, much less someone who has your best interest at heart, you really should second guess becoming an entrepreneur at all.
Kevin Kruse: Right. Right. You've now launched a new site. Tell me about that.
Margulis: Yeah. Right before we went into the Tank, we launched a sister site called Plumfund. Plum like the fruit. This site is there to allow Honeyfund couples and other people to crowd gift for other life events. For example, baby showers was a natural follow on to Honeyfund and so we power baby funds through Plumfund. We also see people funding anniversary trips for their parent's 50th or milestone birthdays. More recently, we're really seeing the site used for lots of general crowdfunding applications like hardships, tragedies. We're seeing a lot more people using it for divorce now actually which is very interesting because that grew organically from our user base on Plumfund.
Kevin Kruse: Tell me more about that. How does that work? I'm a divorced guy for probably 10 years ago so I'm a little late. How would that have worked for me?
Margulis: Obviously when you get married, you go through a lot that changes your life in terms of joining households and finances and things. Then when you get divorced, all that becomes outdone and there's costs associated with that. A lot of times you just simply need a new couch or you need someone to watch your kids certain days of the week. People are getting really creative with Plumfund and they're putting together wish lists of things that they need and asking their friends and family to support them through a really important time in their lives.
Kruse: Wow. That's amazing. I'm laughing about it but 10 years ago when my wife and I split up, I moved out and I didn't even take a spoon. It was worse than when I left my parents because they gave me an old couch and an old set of dishes or something, right?
Margulis: Right, exactly.
Kruse: I could see how even later in life you could be in a tough position and need some support from friends and family members.
Kruse: What's the best way our listeners can find out more about you and your companies and whether they want to use the platforms or just stay in touch and keep an eye on what you're doing as an entrepreneur?
Margulis: Absolutely. I always welcome emails or reach out to me on Twitter. I'm @saramarg. My email is [email protected] and you could always go on our sites honeyfund.com and Plumfund.com or download the Honeyfund app and get started making your dream honeymoon happen.
Kruse: Make your dream honeymoon happen, I love that and it's very generous of you, Sara, to give your personal email address. I always really appreciate it when you do that.
LEADx family, I always say get at least 1% better every single day. Let's learn from our guests. Sara was telling us how important it is to have that daily practice of getting a little bit stronger, that inner fortitude. Today, I'm just going to pick our challenge of the day to be …Remember to give more honest feedback as long as it's coming from the right place. Your employees need that honest feedback. Your spouse needs that honest feedback. They say the opposite of love isn't hate. The opposite of love is silence. For anybody you care about, don't reserve all that stuff and carry it around and have it weigh you down. Get it out. As long as it's coming from the right place, it's the right thing to do. Sara, best of luck to you and thanks for coming onto The LEADx Show.
Kevin Kruse is a New York Times bestselling author, host of the popular LEADx Leadership Podcast, and the CEO/Founder of LEADx.org, which provides free world-class leadership training, professional development and career advice for anyone, anywhere.