How to Pivot & Profit With Viral Marketing - Twenty20’s Story (EP 8.1)

So today we're doing an interview with Matt Munson, who is the CEO of 2020. Matt, how's it going?

Good, nice to be here with you, Eric. Thanks for the invite.

Great office, man. So yeah, why don't you tell us a little bit about kind of who you are and what you do?

Sure, so I'm the founding CEO of 2020, and we run an online marketplace for authentic real-world stock photography. We source from a global community of about half a million photographers, Really, people like you and me who got into photography because they got their first iPhone and realized that they could create really incredible authentic imagery. We take content like the type of content that we all add to places like Instagram and Snapchat and create a marketplace for it. So it's a way to make money off your creative hobby. And then we have thousands of buyers that come and purchase subscriptions to license that content and have built a pretty robust business doing exactly that.

So, I mean, this series is called Leveling Up, so I'm curious, I mean, how did you even come across this idea first? And then we'll talk about some of the progressions you've made Yeah, sure.

So the first product that we launched that had any kind of traction behind it, we built in MuckerLab. It was a product called Instacanvas, and it allowed anyone that was an Instagram user to sign up, get an online gallery to sell their photos, and then we would print and ship them as canvas wall art.

Got it.

So that was where we started, and that was the— that product kind of took off pretty quickly. was one of the, one of the many times that we kind of ended up with our backs against the wall and saved the business. So our thesis was that people that are users of Instagram and other photography social networks had this really massive social reach, and that if we gave them kind of their own online business to sell their photos, that they would turn around and market that online gallery URL to their following on social media.

And there'll be a kind of viral effect.

Exactly. And that's, so that's where we tested, and that's where, you know, We only had 8 weeks to kind of show something, right? For every 10 people that came in and saw the site, they would then sign up, remarket, and bring in more than 10 the next time around. And so we went— I don't remember the exact numbers, but we went from something like 0 to 20,000 or 30,000 users on this service in the first 3 or 4 weeks.

Wow.

Pretty rare.

What happens next? I mean, you're constantly— you can call it pivoting or leveling up, but you're evolving.

Let's call it leveling up. Let's stay on brand.

Yeah.

Once we knew that there was interest amongst this kind of core user base, we went and spent a lot of time talking to those people, which I think is something that we hadn't done enough of during the time that we were looking at the education space. That was a big lesson learned. I can remember we went up and we did this conference up in Stanford. when we were working in the education space. And it was only like 6 months, and we were up there for a weekend for this conference. So when we started even seeing this early traction with Instacanvas, the first thing we did is we, we put a request into the signup flow for these people to talk to us. And we spent about a week doing almost nothing but just interviewing all these people to really shape our understanding of who are they, what do they care about, what are the demographics like, why are they signing up, what are they hoping will happen. And then we talked about the hypothetical solution that we were thinking about building. How would it work? How should we price it? How would they expect to be paid? So that before we actually wrote a single line of code on the actual solution, we had almost like soft tested the whole thing with all of these customers. And then after we did that, we started to build out the actual kind of first version of the product. And it was, it was very light. In essence, all it allowed you to do was Come and select a photo, and then put in your payment information.

Mm-hmm.

And we found our first printing partner down in San Diego who would actually print and ship and do all the fulfillment. And that was where we started. So we built the entire first iteration of the business, and we went from probably zero to about half a million in revenue. Very unusual, fortuitous early growth in that initial 4 or 5 months, all off of a pretty bare-bones product, but one where we had some key insights into these users, these people that were kind of very passionate about mobile photography and felt like this was an outlet that really allowed them to— can we say level up their hobby?

Yeah.

And begin to monetize something that was a passion to them.

I mean, massive key takeaway here: most people try to build something first and then try to go sell it, but What I'm hearing is you basically the second time around, you asked people first, got a better idea of what the customers wanted, and then you built it.

Yeah, I mean, you know, totally novel at the time and kind of obvious in hindsight. A lot of first-time entrepreneurs, you get so passionate about the idea that you have in your head that you just want to get people on board and go build it. And there's this myth, I think, that entrepreneurs are these like stubborn visionaries, and it's like the Steve Jobs myth of like he just walked in the room and he knew exactly the vision of the iPhone and he just Pounded on his engineers until they built it perfectly.

Mm-hmm.

The reality is, like, one, I'm no Steve Jobs, right? And most aren't. And two, like, even in his case, but certainly in the way that is a much higher percentage way of doing this, you can— the idea is so malleable in the early days because it doesn't exist, that why not get customers almost talking about and imagining what it would be like to use it? You get so much data back with so much texture, and it just, it saves you—

So much time.

So much time.

Yeah, so go talk to your customers or your prospective customers first before you waste hours, months, years, or hopefully you haven't raised a lot of money before you do something like that. Huge key takeaway. So it sounds like you have something going there. Why did you decide to then change your business model again? Like, what happened?

That business grew from $0 to $1 million in revenue. Very exciting. Like, very exciting. Like, for us, I mean, we'd been banging our heads against the wall for a year, and we ended up raising a little more money. We kind of thought we were going to have smooth sailing for a while, but we didn't. We had about another 6 months of steady growth, and then we went through about a year after that where the company was pretty flatlined. We got to about $1 million, which was enough to keep the burn rate pretty low because we only had a team of like 10 or 12.

So flatline means business is just kind of stuck.

Yeah. But at that time, we were printing physical products and shipping them, so the margins weren't incredible. So even at $1 million in revenue, we were burning $60,000 or $70,000 a month.

Mm-hmm.

So basically, we hit a point again where we are running out of money. This time we have a product that's working but not growing fast enough. We can't really figure out how to grow it. And I would say if the big lesson in the first life of the company in the education time was talk to your users and invalidate your assumptions early, The big lesson in the next iteration, you need to find and nurture predictable growth engines. Like, in essence, your job as an entrepreneur is, is not to build a product and hire people, which is what I've certainly thought early on, but it's really to build an engine that will, in a predictable way, grow and generate cash.

Mm-hmm.

Which, if you talk to someone that ran a business 50 years ago or 100 years ago, that is just so obvious, right? But in today's, like, kind of consumer internet mobile world has become a little, a little bit out of fashion, but it hasn't gone away. So it's a reality for every business. So what we realized is that we had built a product that people loved and they used it and it solved the problem in a real way, but there wasn't a way to predictably scale the business either through marketing because we weren't generating enough cash off the new users that were coming into the system, Right. or off viral growth Because in our model, the virality drove continued growth of the photographer base, but on the buyer side, it was pretty flat.

Mm-hmm.

And we had some honest conversations with our investors. There wasn't gonna be easy money to get, you know, to continue to fuel the company in that iteration. We started again kind of brainstorming, you know, now not from zero, now we have something. Back to the conversation of pivoting, at this point it being, okay, we've got some great core assets in the business. We've built a brand that photographers really trust. We've tapped into something that other people aren't aware of, which is that mobile has created this democratization of photography, this whole generation of people that are excited to sell their imagery. There's a marketing power behind those people because of their influence. Early on when we were first launching Instacanvas, we had brainstormed all kinds of different ways that we might leverage this photographer community. So much so that in our terms of service from day one was like, you know, we may sell your imagery to partners, we may sell your imagery digitally. I would love to say that we just were visionaries from the beginning and we just knew that one thing after another how we were going to build this thing. I think a lot of companies like to rewrite history in hindsight. The reality is that we didn't know.

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