Passes founder Lucy Guo joins to discuss new NIL venture with Michigan athletics

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Welcome on in to the wolverine.com podcast. Clayton Safey here with Anthony Broome. We have a special edition with a very, very special guest today. We're going to dive into all things Michigan's partnership with Passes. Everybody saw it last week, uh, you know, started last Friday. It was the official launch But we will dive into it with the CEO and founder, Lucy Guo, who is a superstar in business, an entrepreneur. She founded Passes in 2022, also Backend Capital, went to Carnegie Mellon, but is a Michigan fan, as evidenced by the shirt she's wearing right now. I love her. Amazing blue. She's been recognized on the Forbes 30 Under 30 list. Uh, so just all over the place. Many people have heard of her, obviously, but now she's entering our world, Michigan Athletics. Uh, Lucy, so great to have you here.

Thank you for having me. I'm super excited to be here.

I just wanted to start here too, because I mentioned some of the things you've done, but obviously there's way more than that. Um, take us through your background in business and entrepreneurship and how all of that led you to Passes, which is now kind of blowing up here and bursting out of the scene?

Yeah, definitely. It's actually a very long story, so I'm going to try to make this short. I've been interested in entrepreneurship since I was younger. I actually got sent to the principal's office multiple times in kindergarten for trying to start my own mini businesses and selling Pokémon cards, Yu-Gi-Oh cards, colored pencils, et cetera. Move on forward to high school, I was building internet marketing tools. I was selling these hacked Game Boy games on eBay, et cetera, et cetera. And then ended up dropping out of college. I received $100,000 from the founder of PayPal to attempt to go start a company. And then the first successful company I started was called Scale AI. We work on providing the best training data to other AI companies so they can improve on their models. So think like self-driving cars. We help tell them what's a car, what's a pedestrian, what's a stop sign on the road. We work on a lot of government contracts, et cetera, et cetera. Did that and then started my own venture fund where I got to learn about all sorts of different industries from fintech to crypto, etc., did early stage investing. And then during that, I was incubating companies through an accelerator program. And I really wanted someone to create passes because I had become friends with a lot of creators during the pandemic. And I basically decided that creators are small businesses and we can make them very large businesses. I wanted to help creators, a.k.a. my friends, turn into entrepreneurs. Couldn't get anyone to do it. So I ended up deciding to do it myself. And here we are today with Michigan. I view athletes as entrepreneurs. I think they are creators. Every athlete is building their own brand. Like, that is the future right now, especially with like NIL now being allowed with student athletes. So I'm really excited to help Michigan and help their athletes develop their brand and help monetize it.

Awesome. And so let's dive more into what exactly Passes is. So I'll start by saying that the partnership with Michigan, a lot of student athletes will be joining the Passes website, the app.

Mm-hmm.

Um, and then fans can kind of connect with them, uh, pay different tiers to get behind-the-scenes access, to get exclusive merchandise, things like that. Um, and that will obviously go help support the Michigan student athletes and kind of, you know, as we all know, very competitive world right now of NIL. Michigan doing its best to, to compete in that area, but also to build their brands. Tons of high-profile athletes, which we'll ask about here shortly are already on Passes. Michigan already has some athletes up there, as you can see on the screen if you're watching on YouTube, uh, or any in the video platforms. But in the most, uh, simple question ever, what is Passes? And, uh, you know, a little more in-depth on how exactly creators are connecting with their fans on, on the platform.

Yeah, so Passes is a creator-to-fan experience. Um, we're working with Michigan to help build these athletes from signing day to draft day, um, on their brand with Passes. Um, they'll be able to monetize their brand now that NIL is allowed. And there's different ways to monetize from subscriptions to DMs to selling merchandise to being able to offer meet and greets. We're even working with Michigan on being able to provide like special experiences during games, for example. So I'm really, really excited to see like how these athletes do monetize. We are working closely with them to determine like how much time they have and how they think they'll best monetize. For example, some athletes are probably going to be doing better off of merchandise. Others are going to be doing postgame livestreams. It is really up to them, but we're here to help support them in any way possible. We're essentially trying to bring structure to what I would call the Wild West of NIL at the moment.

Yeah, I think a lot of Michigan fans would also probably want to know, like, how is this platform different than, you know, we've seen similar ventures like this with some other sorts of apps and companies. So how does Passus sort of differentiate itself From the rest of the pack?

Yeah, I mean, I would say like number one is just we have more ways to monetize than any other platform, which allows more flexibility of what creators can do. For example, there is Patreon, but on Patreon the only way you can monetize is subscription. Um, we have tips, we have live streaming, we have one-on-one calls. You can sell merchandise without having to actually own any product, which is probably one of the biggest, uh, blockers of being able to sell merchandise. Like, no one wants to spend buy 1,000 units to not sell any units. We're constantly building new tools for these athletes to monetize. We have an entire success team that helps these athletes really set up their profile, set up like how to monetize. We have designers that'll help them create merchandise. So I would say we provide more support as well. And our success team also helps them grow on other platforms. We have a network of creators these athletes can collab with and really learn tips and tricks on what's trending so they know what Instagram Reels to make to really go viral. Um, so I would say it's like the set of platform features that we offer and the network and support we offer on the team.

And we were tipped off that you and the Passes team visited the University of Michigan campus recently, obviously meeting with all sorts of people. I assume some of them being, uh, the creators that will be on the app that are going to be kind of the lifeblood of this when it comes to connecting with the Michigan fans. Who or what stood out from that visit and what kind of energy and vibe were you feeling from everybody involved in this?

Yeah, I think what stood out is everyone's excitement and like we're excited to become a pillar of the Michigan community. We got a lot of great responses and energy from the student athletes. And I would say like the highlight of the trip was meeting Dusty May. We entered conversations with people on like doing a Passes NIL pop-up on Main Street, creating a content studio on South U, etc., etc., to further support athletes. I think that like, and I've said this before, but one thing that I noticed that's different about Michigan is just the student pride from the current students to the alumni. I've had tech bros reach out to me like student alumni, old coworkers, etc., investors of Passes talking about how they are huge Michigan fans. I was so confused when one of our angel investors sent us a picture of like her entire family and her like newborn baby in Michigan swag because she didn't even go to Michigan. And like, that just shows you the level of like pride in the school.

I think people find this interesting. So you're meeting with Dusty May, right? What it— you know, people have noticed just how involved he's been with NIL, how he goes out of his way to find opportunities for his athletes. Um, it's a big reason why he was able to, um, you know, just bring in such a good roster in his first year here. What is he like? You're meeting with him about— you know, we all know he's involved X's and O's and all that on the court, but But when he's in this setting, it's just as important. What is he like? I guess how engaged was he?

I mean, I would say super engaged. He's obviously really incredible. He has a lot of enthusiasm for Michigan. People are saying, you know, Michigan's basketball team is crushing right now, right? And like, I think that there is a very serious need and want to retain the best athletes and like recruit the best athletes at the moment, which it has been like all hands on deck.

And we've seen that with everyone we've talked to related Yeah, Lucy, I'm curious, like when you, you know, you talk with coaches, you were on campus, I'm curious what the feedback has been from the athletes themselves and what are some of the questions that maybe they've had for you about it?

Yeah, I think with athletes themselves, they just like NIL again is the Wild West. They don't really know how to monetize. Like they've never been able to monetize their name, image, likeness before. So it really is just helping them set up everything. It's like, okay, like, you know, we have people on campus helping support and take content. I think it's really understanding that they don't know how to monetize it. Understanding, like, hey, when someone's in season, they're going to be practicing all the time. Like, they're not going to have time to create content. So maybe their time is better spent being able to promote merchandise of theirs that directly supports them or doing these post-game livestreams where it's not as much of a commitment versus offseason saying, okay, now is the time where we're going to send photographers over and have someone following you around to get behind the scenes. So they're just really trying to understand, how do I make money on this thing? And That's what we're there to help answer. And like, we're always learning along the way as well. Like, maybe we think something will work and it doesn't, but we very quickly course correct and we help them course correct.

So you, you guys have obviously been involved with a ton of other schools as well. I mean, who are some of the biggest success stories on this platform so far, and how do they kind of serve as the template for what Passes wants to be?

Yeah, definitely. I mean, I think that like obvious is Libby Dunn. Um, she's been super successful. Her fans like love chatting with her. Though I will say it is very interesting to me because I would say like half her subscribers are subscribed there for her boyfriend. Like they get very excited, excited seeing like her boyfriend practice, for example, or like a behind the scenes shoot of like her boyfriend playing at a game, which I have found very, very fascinating. Honestly, we should probably recruit him for passes. But she's also been able to do like signed memorabilia and like make money off of it, etc. So she's a really, really great example. And I think that like one thing that's good about Livvy is that like She is a content creator, so she knows the value of just quantity of content. And I think that quality obviously does matter, but I do think that fans care more about quantity than quality. They want it to feel real. This is the reason why Snapchat is so popular, for example, where a cell phone snap feels a lot more like you're connected to the creator versus a polished photoshoot.

That makes sense. Lucy, you're wearing the Michigan shirt. you know, you're a big Michigan fan. Um, you know, we did a Q&A last week when I talked to you on the phone, and, and you kind of went through that story. But, uh, tell the people here that are listening how you became a Michigan fan, and also what kind of Michigan fan are you? Are you wearing that gear everywhere, giving people Go Blues when you see other Michigan fans? What's it like, uh, you know, out there in the, in the wild there?

Yeah, definitely. I mean, like, I would definitely say I'm a Go Blue person. Um, I, I, I became a Michigan fan kind of Through a nerdier situation, Michigan has these things called hackathons. So for those that don't know, it's like a little coding competition. A bunch of students from all different, like all over the country, come and compete. And I just thought that like when I got there, the energy was absolutely insane. I made a lot of friends at Michigan. I thought that like Michigan had a lot of pride. It was super energetic. It was the most well organized like hackathon I have been to, which is really cool to see. And then I just. Those people are my friends for life. One of them became my business partners. So there's a guy named Dave. He was a Michigan alum and he ended up being my venture fund partner. And we lived a lot of years together. We still talk constantly every single day. I told him today I was doing this. And then I started meeting other tech bros, alumni, friends. I swear it feels like everyone went to Michigan, to be quite honest. But I've never seen a school with so much pride. And I guess I didn't really get that at my own university just because we don't really have sports, to be quite honest. So it was like, it was great to like feel. It was very contagious.

It's definitely contagious. Now I want to talk about, you guys are obviously helping Michigan build out its future. And for people that watch our podcast, largely football fans, That means helping with recruiting, helping with the transfer portal. There's already the— you know, take us through this Team 146 tier on passes, if you can explain that for us. And also, uh, I have it in our notes that, uh, you guys are also sort of involved in the push with, uh, Bryce Underwood. So if you want to run through that for us as well.

Yeah, definitely. The Team 146 tier is just going to give you more exclusive access, but also the proceeds are going toward— directly towards the transfer portal for the football team. So it's used to help retain current athletes and to recruit the best athletes possible. Obviously, Bryce Underwood is on the list of athletes that Michigan wants to recruit. So we're really working on like creating this like custom package, I would say, for him that will hopefully convince him to come join Michigan. Fingers crossed. We'll see.

No doubt. I guess take us through the mechanics of that. You know, Michigan, you guys made an upfront, you know, certain amount of money that you gave. I mean, how do they convince student athletes? Like, how is passes an incentive to come to Michigan and build their brand that way?

Yeah, definitely. So in exchange for the upfront money, athletes, for example, are promising us a certain amount of signed memorabilia. Michigan is promising us the ability to be able to have certain game experiences. And then also we are becoming we're an official partner, we have the opportunity to use like the actual Michigan looking logo to create our own merchandise, which, um, no offense to all universities, but I think that, um, you know, by putting in a very good designer, we can make some pretty cool swag that you can't get currently, uh, that people want to wear. And all this money is going to be going towards directly supporting the Michigan athletics program.

AB, finish us off here.

All right, well, uh, I guess tell the people where they can find more information about Passes and maybe where they can find, uh, if you're on social media as well.

Yeah, just go to passes.com/michigan and you'll be able to see a list of athletes, find some cool merch drops. You'll see our first merch drop. Some of them are limited edition, so if you see something you like, get it right now. And, uh, we're going to be constantly adding new athletes and new merchandise. We're listening to feedback, so if you have an idea for what you want to to create, we can make that come to life as well.

Well, Lucy is a superstar. There'll be more superstars on Passes from the University of Michigan, but like she mentioned, a lot of them already on there from other schools, other walks of life as well, content creators. So big things coming there for Passes in Michigan. Thank you so much for providing that insight. I think our fans will really appreciate kind of learning more of, hey, here's this announcement, well, what exactly is it? And, and I think you laid it out really well there. So So thanks so much for joining us, and, uh, I'm sure you'll be watching and supporting Michigan here and working with everybody super closely.

Yep, sounds great. I'm really excited.

Thank you, Lucy.

Sounds good.

Thanks.

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