Q1 2023 Public Board Meeting

Welcome everybody to the Q1 2023 Gumroad board meeting. Oh, you can even see this thing. That's weird. That is interesting. We'll see how this goes. It's a little, it's a little recursive. So I guess, yeah, first things off, thanks to everyone for, for coming. If you haven't, we have some people in person. Hello everybody. Hey, it's Sahil Lavingia for startups. Yeah. Anyway, we, I think it's good to do these things. I think as someone who runs like a remote business, like it's nice to have like a place to, it's an excuse to almost be be less lonely, like running a business. And I think like I've talked to a lot of like founders and CEOs who like don't really know, like until they've raised money or started, have a board, like what, what running a business even looks like. And so the purpose of this is twofold or threefold. One is this sort of social aspect of it. One is marketing for Gumroad. And then three is like really to try to show people that, well, like what, what building a business that looks like Gumroad actually looks like. And this is modeled off of the board meetings that we would do at Gumroad with Kleiner Perkins. I've had friends from many billion-dollar companies watch these things and say, wow, these are, this is better than the ones that we do, which makes sense because at the end of the day, if you're, you could be a multi-billion dollar company, a board meeting is like 4 people, right? So they're like, it's like screenshots. It's like not, they're not generally not as well done as you may think. So anyway, that's some context. The structure as we go is numbers, shipments, past, and then future, right? And so I always think it's super key if you're investing in a company or looking at one to start with the stuff that they can't make up, which is the numbers. And so start with the numbers and we'll get more abstract and like mission statement driven and all that kind of stuff. Nassim Taleb says it's easier to macro bullshit than micro bullshit. I think starting with the smallest numbers possible is, is generally good. So anyway, the, this is our growth since the, since we started. A lot of people wanted to check in with the Gumroad pricing change and get a sense of, actually what I'll do is I'll open the chat so I can actually see what people are saying and other people can too if they have to have it open. So yeah, if you have questions, just chime in in the chat and I'll answer them and raise your hand if you're in person too. Question?

All right.

Oh, I thought you were telling a story.

Oh, not yet.

Yeah. So I think the pricing change was a big, the big thing. A lot of folks were like, what happened? Did everyone like leave Gumroad? According to Twitter, Gumroad is dead. Also according to Twitter, Twitter is dead. Take it with a grain of salt. But this is like a chart that I often like point to as just like a reminder that like building a company, like you can certainly destroy a company in like a day, but generally like these, the network effects are super powerful. There's so much inertia and like Gumroad has just taken, I've been working on this thing now for 12 years, almost launched April April 4th, 2011. So it just has taken so long and you could even see like during the COVID bump, so you can see March, February, or I think March and April are these two months. And so you can see that's big, that's a huge jump, right? It's like 2,000 creators or something per day started selling content, right? And think about how long it took us to get to 2,000. But on the other hand, like that COVID bump is like not really that interesting, right? Like we've had more growth in the last three months than during that sort of COVID era. And we just crossed, I think this today will cross 30,000 unique creators who've made a sale on the platform. So I think this is just like a nice reminder that like these things take a lot of time. There's like, it's also like unlikely to change. Like my guess is if you're looking at this thing that it will roughly continue, right? It's more likely to continue than not, right? In my view. And this is one reason people don't like showing this chart for their companies is because of that truth, right? If you're trying to raise money for a startup and you're not, you're like, oh, we're going to 10x. Then obviously like you have to, that this chart is going to disprove that because if you're gonna 10x, like just do it. Like why would you wait 12 years to do it? So anyway, it keeps you, keeps me accountable. And so anyway, that's the, that's what happened with the pricing changes. Like the, we literally like increased the pricing. This is December. So this is December, January, February, and March. And we literally saw the most creators ever sign up for the product the same after we made the pricing more expensive. So it's just, yeah, anyway, numbers keep you honest. Twitter, Twitter may skew your sort of your reality tiny bit. However, there's lots of good feedback and critical feedback and stuff worth listening to on Twitter. So this is the numbers for February. We did $14.5 million in GMV. We did $1.8 almost million in revenue. Our gross profit margin went up to 69%, which is really good. It's roughly in line with, and one of the nice things about running like a legit profitable business now is you can actually do comps. So you can look at Salesforce or these long-term public companies. And if you look at the, the, if you go to Google Finance, like these are the metrics that they show you gross profit margin, net income. They don't show churn because that's not revealed in the 10-Ks. But generally, if you're valuing a business as an investor, these are the kinds of things that people will look at. So I like having these like very simple proxies. We did see churn. Stefan asks, can you show the historical graph for GMV? Yeah, I'll, I can try to show you what we look at internally after, if you just remind me. And then we did see some churn. So as this chart is number of creators, so what it doesn't show is like GMV and I'll show you what that looks like. But basically we did see some churn. They almost all came from like the top tiers of folks. We saw about 2.46 in GMV churn. So it's certainly non-zero. There were people that left the platform, but overall I think it was like definitely exceeded expectations how many people decided to stick with us. And hopefully over this, this year and next year, we'll will prove to people that it was a good decision to stick around. And it's free market capitalism. So if people just watch this board meeting and they're like, this wasn't interesting to me, they could leave, right? We'll see what happens. This is a chart of Gumroad's monthly P&L. You can see that it was roughly flat during COVID This is like pretty similar with a lot of the creator economy or not COVID, but 2022. And you can tell we were basically burning money every month. This is why you raise money, right? You raise money so you can spend the money. Otherwise there's no real point in diluting the company for no reason. So the case is that we raise this $5 million crowdfunding round. We're going to invest generally by hiring more people, we're going to ship product and like that contributes to growth in some sort of capacity. And then in January, the pricing changes started to go into effect and you can see in February, like the sort of what this kind of looks like. We do about $1.8 million in revenue. We'll do about $800K of that in net income, which is nice. So yeah, this is like basically the first month in 12 years that like this bar is, this is green basically. Well, Gumroad is interesting because obviously I preach sort of profitability quite a bit, but It's hard. It's hard. Engineers are expensive. Like, it's quite difficult to operate like a profitable company. It's not always a ton of fun. Yes. Yeah.

Ask questions. Is that profit purely from the pricing change? If so, that's amazing.

It's basically all from the pricing change.

Wow.

Yeah. There's, we shipped some features and other things which I'll get into, but in terms of like the unit economic basis, just purely basically like we were, we were, I would like to think that we were just too cheap. Like we, we had this tier structure where like basically once you made $100K on Gumroad, we would go to 3% plus $0.30, which basically meant that almost all of that gross margin, as you can see here, basically would go to Stripe. And I don't regret that because I think we were forced to operate in this super lean and mean way where Gumroad is just insanely scalable, which now is going to pay off now that we're profitable. But yeah, I think people don't really realize how thin the margins are. If you think about a payments company online, it's the base fee is gonna be 2.9% plus 30 cents, right? So if you're buying something for $5, that's basically 10% gone, right? That's how much we charge. Yeah. So it's just hard to, and then you have to think about refund rates. So the refund rates on online purchasing is probably 1 to 2%. You have chargeback charge. It's hard, like accepting payments on the internet as lots of people are finding out in crypto land and Coinbase and all these things like It's hard. SVB money is like this simple thing and you have a credit card and you just pay for stuff. And, but actually what underlies making that whole system work is crazy. Eduardo asks, is this, oh, you wanna ask? You, you get priority in person.

Okay.

You mentioned that there was some churn that was mostly from like your top creators. So it sounds like there was a thing you mentioned when you were with Craig, your example is 30 Cent. 90-some percent of that goes back to SoundCloud. Yeah. Was it like basically people that make the most money on the platform didn't make the most money for Gumroad? Is that what you were saying?

Yeah.

Yeah.

We did have this issue that I don't think we grokked ahead of time. Basically the more success, let's say after a certain point, we basically make no money on you, right? So let's say you're doing a million a year on Gumroad. We make basically no profit. And what we thought was basically we're going to combat churn because people will churn if it's too expensive. So that's why we're going to do it. But also like we can, once they make that money, we should, everything's so automated where like it doesn't actually cost us much money to keep them on the platform. And basically we realized like it's pretty linear. I think basically like there is a level of, if you sell a certain amount of quantity, you're going to have a certain percent of like refunds and that roughly scales linearly. It isn't like you figure it out and you use GPT-4 and everything's automated. Like we're not there yet, but yeah, we, I would, I remember like I would have conversations with creators and it was just like tough cuz wow, you're making us so much money. On paper, you think that you're making us a lot of money cuz you're paying us all this money. Yeah. And then we're not building the features you want because we're actually focused on a different smaller. And so it was just, I think it's, you ideally want the people you're generating the most amount of value for to be the ones paying you too. Otherwise you end up with this like weird, and it can work. You can get, there's a lot of interesting arbitrage, like I would say like first class airline tickets where you have a different group of people paying than the people using it. And there's a whole business in that sort of leverage, but I think it just just, yeah, it's like deeply complicated thing to pull off. But yeah, I just wanted to, and I like the idea. The other thing is imagine you make $100,000 on Gumroad with the tier structure. I couldn't tell you how much Gumroad cost, 'cause it was 9% up till 10 grand, but then it would go down to 7% from 10 to 100. And it's like you have to do all, and yeah, and obviously pricing isn't math. It's not that people will do more, but I just felt like I would love to meet someone and be like, this is what Gumroad does. This is what we charge. If you make 100 grand this year, we'll take 10. Is that worth it to you? No, then you strike or something else. So I think it just clarified things a lot for the business. Yeah. Awesome. Eduardo said, is that price sustainable? We'll see. And that's really up to, I do think it's sustainable in the sense that we are now unit economic profitable. So even if, you know, half the platform turned in terms of GMV, we would still be profitable, right? Because yeah, we like that. Let's say half this would go down to 1.4 and then this will go down to 400, but we would still be in a really good place, I think. So I do think it's sustainable. I don't think there may be other things we do pricing-wise, like like small things like Stripe takes, keeps their fee in, in for refunds. We might have to make that change. But in terms of, I think 10% is honestly, it's a great number. I love 10. We have 10 fingers. Like it's a, it's an easy thing. I don't imagine that this changes for a long time, if ever. Awesome. Awesome. Let's get to shipments. This is the part that creators who use the product, 'cause this is yeah, how the product gets better. So we shipped a bunch of stuff in Q1 that you probably got emails about, but we shipped team member support. We allow people now to connect their own Stripe accounts. So if you already have your own Stripe account with everything set up, you can now just connect it. We also allow you to sign up with Stripe. So if you've like never used Gumroad and you just want to like use a landing page but not have to deal with all the new payment stuff that Gumroad does, you can just connect your Stripe account, sign up with Stripe, and then all of a sudden you can like create a page and get started. We've actually seen some pretty good growth from this, which I'll share at the end. Already like hundreds of creators have signed up using— about half of new creators, I believe, sign up with Stripe, which is a pretty, pretty cool, pretty cool thing. It's now possible to increase price, the price of a membership, which, which is awesome. I know Louis said good old inflation. I think it's important to allow our creators to, to also participate in inflation and will allow people to increase the price of a membership for their existing customers. And it'll be opt, opt out and all these things. And Helen will show a demo of that. We have this new thing on the nav that says checkout for now. It might change, but basically discounts, custom fields, all of this stuff lived within product edit. Gumroad started out as basically really easy way to sell a product. And so we just kept adding stuff to like product edit and it got crazier and crazier. And so now we wanna move all that stuff out, simplify product creation and edit. And then there'll be a manage checkout sort of page where you can manage discount codes, upsells, which is coming soon, and all sorts of other sort of anything to do with checkout. Like the checkout page should be manageable in one place. It also means that let's say you have 5 products, you don't have to go change 5 products and 5 edit screens. You can just go to like your checkout page. You can create a discount code. You can, it'll be more easy to apply to certain things. Anyway, it's easy to talk. I would love to do some demos. Oh, and then, oh, one more thing. Font, fonts and colors. So people can guess what this looks like.

I won't, we won't do a demo of this, but you can guess.

That you can now change the background, the foreground color, text color, button color. I personally like Gumroad's branding, obviously, but some people hate it. Some people think they hate it, but I think they really don't hate it. They love it. But if you think you hate it, you can, you can now have some fun and change the fonts and the colors and all that stuff. Now let's do some demos of the stuff that we shipped. I think that's always a better way to get a sense of what's actually happening. So I will stop sharing and we will start with—

Okay.

I turn on my— there you go.

I think that should be good. I'm gonna share my screen here. Okay, so this is the settings team page. This is where you can all— one-stop place for managing your team. This allows you to invite your team members to help you run your account. We have 4 roles available: accountant, admin, Marketing and Support. Here we have a good article where it explains what each role does in details. What's really worth noting is that for the Library section, no team members have access to it. That's more for the buyer. It's private to the seller. And also the team members cannot do— cannot change any sensitive data on the account, like changing the password or payment information. For all other sections, access depends by the type of role is being granted. I'm going to try to do a live demo here by inviting a new team member in my team. So let's see if that works. Oh, so I'm gonna choose here an email, and all you need basically is an email address. Ideally, that should be a Gumroad account. If not, they can create one. I'm going to choose the marketing role and send an invitation. While that invite is being sent, I'm going to quickly show you kind of what options are available under the team members. So here you can see the team members that have already joined and also invitations sent. This is the one that we just sent out. Here we can see one that has expired. Invitations last about 7 days, and after that we can resend the invitation. Also very easy to remove a team member or invitation or kind of, and to bring it back. So let's see if we got the email. There it is. So it's an email to join, accept invitation. And here, to make it simple, we pre-populate the email address. It really has to match with the one used on the invitation, otherwise you cannot join the team. Since there's no account here, I'm just going to click sign up and just add a password, create account, and you are in. That's all you have to do as a team member to join an account. And I believe I choose the marketing role. So with this one, you can go and make changes and Edit product. What you cannot do with this account, for example, you cannot make changes to customers under audience. So everything has been grayed out for the, for the marketing role and similar with the other roles. And I think that's it. That's pretty much what how Teams feature works.

Awesome. Yeah, exactly. I think it's a great feature. I think it shows also like the level of quality and care, like the fact that you can undo the proper flash messages. As I mentioned in the last update, we've been moving to React from Flight and so that's also enabling like just a much more positive user experience. So yeah, accountant, you can add support, marketing, just generally I think people who have teams, multiple people working on a single Gumroad account, hopefully should find a lot of value in that. Awesome. Next demo, we got checkout settings. Awesome.

Share my screen.

All right.

We're good? Yeah. Awesome. Sahil Lavingia mentioned that we've introduced this new top-level checkout page. And like you said, the reason was that we just kept jamming these product settings into product edit. It was getting really busy. Another big issue, especially with discounts, was that it was limiting what kind of discounts we could support. There just wasn't room on the page to support more sophisticated discounts. So this is the new discounts tab on the checkout page. It was rolled out last week, I believe. And you may have, may have seen it already, but I'll go ahead and show you what it's like to edit a discount now. So this is the new discount edit page. The create page looks exactly the same. Something that you could not do before is that you can create a discount that applies to multiple products, but not all of your products. Before it was just, it was either one product or all of your products. It makes it a lot easier to manage these discounts that apply to multiple products. Before it was really weird because it's on the product page. So it seems like it's a product level discount, but if you have it set for all, it's like changing the discount on the product page changes it everywhere. It was pretty confusing, and I think it's a lot clearer now. And another great benefit of moving to this setup is that we're going to be able to support more features for discounts. So for instance, we're going to start supporting discounts that expire. You can set a range that the discount will be active during, a date range. You can create discounts that only work if there's a minimum amount of, a minimum quantity of products in the cart. So you have to have 3 of these products in the cart cart to get a discount or a minimum dollar value of the cart. So we're going to be able to support a lot of new cool discounts with this feature, but for now it just makes everything a lot easier to manage and we're really happy with it, I think. So quick thing I also wanted to show you is this new checkout form tab. We recently rolled out the ability to manage custom fields from here. It's very similar rationale behind this to discount codes. They were managed on the same tab of the product edit page. It makes it a lot easier to create custom fields that apply to multiple products. And a lot of people were using custom fields as global things. They wanted them on all their products, and now you don't have to go to every product and create the custom field on every product or manage it from every product if you change it. And then another thing, just a minor thing, you can control whether the discount code field is visible on the checkout form from this tab. And then the last thing is upsells. These aren't rolled out yet, but they will be rolled out very soon. It's been a super often requested feature. So I'm just gonna show you the two types of upsells we're supporting in this initial version. So the first is a cross-sell, and this is what the edit page looks like. The create page looks the same. You can give it a name. This is just for your internal use. Offer text, which is basically the heading on the modal that pops up in checkout, which I'll show you a demo of in a moment. And then you have the offer description where you can put your copy for why they might wanna take this offer. This particular upsell is a cross-sell. So when this product is in your cart, you'll get offered this product called version product, this version of that product. If the product doesn't have any versions or it's not a tiered membership, then this field wouldn't show up. And you also have the ability to add a discount to the offered product. So, you know, if you add this product to your cart, you'll get a 50% discount on it. And that's basically how cross-sells work. Upsells are a little bit simpler. These are specifically for products that have versions, and basically it allows you to set up an upsell that when a specific version of the product is in the cart, it'll try to upsell someone to another version. Everything else works the same. It's pretty simple. So I'll go ahead and do a quick demo. First, I'll start with an upsell. So it's just a simple membership product. Let's go on some dummy Details here, and you will see what it looks like. Okay, so you can see the upsell modal pops up. It gives them the option to upgrade to this second tier. I'm gonna go ahead and upgrade, and it changes it. It's right during the checkout process. The only time you can do it is when you hit pay, and once you hit pay, you either take it or you don't, and checkout ends. So this is your only chance to take it, so there's some urgency. And last thing I'll show you is a cross-sell. These are my favorite personally. Works the same. You go into checkout. I'm just gonna put in some dummy details again. And this one will actually recommend another product. You can see it's popping up with this product, this version of this product. You can see that there's a discount. It's discounted by 50%. I can either continue without adding or I can add it to the cart.

I'll go ahead and add it to the cart.

It gets added to the cart with the discount checkout resumes. And you end up with, this goes through both products. So that's upsells and the whole checkout settings page. We're really excited for some of the new functionality we'll be able to support with this additional real estate and upsells should be rolling out soon. I know a lot of people are excited about it and I am too. So thank you guys.

We're gonna get like one tweet where people will not reply that they want this feature. And then there's gonna be something else. So I'm excited to learn what that next thing is. It might be what Helen's gonna demo in a second. So Helen, feel free to share your screen and get started on that.

All right, let's share. Okay, first off, a little context on this feature. As you all probably know, memberships have been a thing for a number of years now at Gumroad. So we do have creators who have subscribers who have been with them for quite a while. And during that time, their product may have improved. They may offer a lot more than they initially did, and yet their long-term subscribers may be still paying $5 a month for a service that's now worth $20 with no real way to increase prices to reflect either that added value or inflation or what have you. So one common request we've been getting is, hey, can we raise prices for existing subscribers? And the answer now is yes. And we are enabling this at a tier level for tiered products. And you will see this new toggle that says apply price changes to existing customers. So let's say I want to do that for my basic subscribers, but not my premium members. Once you toggle that, you'll see that you can choose an effective date. So this is the date after which any new charges on older memberships will get your new pricing. It has to be at least 7 days from now, otherwise you'll get a little error message. And what will happen when we select that date, let's let's say that's May 1st, is that 7 days prior to any scheduled payment that's coming after May 1st, your subscribers will get an email saying, hey, the price of your membership is changing. You can modify or cancel your membership. So I will show you what that email looks like. This is our default text. You can see the new price as well as the previous price you were paying, your next payment date. And you can go manage your subscription if you like, or you can opt to, to set your own custom text here. So let's say we wanna do that and we wanna send a more tailored message. I avoid Zoom controls.

One sec.

Here we go. So that's what this would look like. It's just this little top section of the email here. Oh, sorry, that's the other one. Here we go. Here's my updated text if you want. And now you can see that there's a little flag here telling you that you've already scheduled a pricing update. If we wanted to change this though, we certainly could. And now the emails will be sent out for subscriptions that are gonna be charged after May 13th. That is how that works. Hopefully it'll allow our creators with memberships to maximize their value. This is not— I should just note this is on production, but it hasn't been rolled out to everyone yet, so we'll be rolling it out in the next couple days. Thanks.

Awesome. Hey, it's me. I'm Sahil from the future. We shipped so many things in Q1 that I forgot to talk about everything. So I just wanted to add a couple things from my Airbnb. The first thing is we shipped purchasing power parity. A lot of people saw this on Twitter, but basically you can apply automatically discount codes based on the region, the cost of living of the region of the buyer. Most of our creators are selling digital content. Audiences all over the world. And we've seen this feature get custom built by a few large creators. So we thought it would be cool to build this into Gumroad. This is what it looks like if you visit a page, a product that has it turned on. You hit, I want this, you get taken to the checkout page. You can remove the discount if you want. And then you can get the, you can see that if it fails, you'll get a, you'll get a, you'll get a notice that you can't apply it and you can remove it and go through. We make sure to reduce fraud. We check the card. Country. And if we see more fraud, we can do more things. But we haven't actually seen any issue with this. So highly recommend turning it on, seeing how it goes for you. The other thing we shipped that we didn't talk about is videos, embedding videos within Gumroad. So this hasn't really been possible before. People just download the files. Gumroad has this really great video infrastructure. We transcode, we do subtitles, we do all these things. And so it makes a lot of sense to bring that all within the content editor. So this is what it looks You upload a video using this button in the header. You can upload a thumbnail if you want. You can upload subtitles if you want. You can replace them. You can link out to YouTube or Vimeo. This is how it shows in the view and you can see what it looks like. What happens when you have subtitles, you know, all the state is persisted if you've started watching prior, et cetera. So that's, that's, yeah, some of the things we're up to. That was the demos. Q2 shipments. There's a lot. A couple of things I wanted to highlight as a focus, focus elements for this quarter. Discovery is probably the biggest thing. If you go to gumroad.com/discover, which soon you won't actually have to do that cuz you'll be able to go to gumroad.com for discovery. But you'll, you should see a lot of improvements and we plan to make a lot more, some AI power to just fit in a buzzword there. Some features coming. And then collabs. Collabs has been asked for similar to upsells. I think it'll be like an upsells-like feature until we have it where people will really want it. We've been talking about it for a couple years. Hopefully we can roll that out. Up next quarter. We have a lot of the infrastructure in place with Raz's team feature, actually React affiliate stuff that Helen's been working on. There's so many things that I think leads to these new features and why it can take a little while, but hopefully when you see the quality of the stuff, it feels worth it. This is everything we plan to ship in Q2 of 2023. Hold us to it. Take a screenshot. But yeah, it's, there's a lot. Collabs, we're gonna add a lot more stuff as Connor mentioned to the discount codes functionality. Now that we have the space for it, we're gonna do a similar thing with affiliates where affiliates has also been stuffed in a corner. We're gonna give that its own page, make that a lot better, build discovery into it, make discovery the homepage of Gumroad. We're gonna allow people to recommend products, especially with collabs and affiliates recommend their own product, other people's products on their own real estate. So if you can do more like this or upsells for your own products, imagine you should be able to do that for other people's products too and get a sort of an affiliate commission for those things. The content editor, someone mentioned, when is that no longer going to be in beta? Probably as like when customers adopt it. We have about 20% of GMV going through the new content editor. I think it's a lot better than the old content editor or the old file uploader. You can do a lot more. It's all, it's gonna take, as we build more features, the content editor is gonna get even better. For example, if you upload a video on the content editor, hopefully in a quarter or two, you'll be able to search all that content via the Gumroad library. You might even be able to ask ChatGPT questions about it. Just saying. Versus if you do file upload, you take a zip file and you just upload that, we don't have insight into that. We can't really offer a lot of that stuff. Right? And so we're gonna add pages to the content editor. We're gonna add file grouping. So if you do want to add 5 files as a group, you'll be able to do that with download all and all these sorts of things. And then eventually once it's Pareto superior, which basically means better in every single way, we'll not call it beta. We'll default to it. And then hopefully one day we'll migrate everyone over, but it shouldn't feel super forceful at all. And then Jack's been prototyping, what does this mean for search when you can actually open up the library app and have a librarian effectively that you can get help from, ask questions. I think that could be a pretty interesting way to add some sort of network effecty type stuff to Gumroad, I think we can do a lot better on support. GPT-4 has actually shown a lot of promise, so I've been packing on an internal project to scale this up and try to get just— I think our support's really good, honestly. I really think that it's hard to see it getting better. However, one, one sort of way to get better is to get the same response sooner, right? So instead of getting a response in 4 hours, you get it in 4 minutes. And I think that's possible. Gumroad, we do a lot of support tickets. We get about 6,000 support tickets a month, so it's a lot. But I'm pretty confident we can get to like sub-5, 15-minute response times with the existing team if we figure out how to incorporate AI workflows better. So we're gonna do a lot of that and then some smoother internal ops stuff that is probably not super relevant, but I also wanted to screenshot the, this is our actual roadmap. So we're working on some other things related to just our internal stuff. We can talk about Flexile now. So Flexile is now self-serve. Anyone can go to flexile.com. And sign up. You do need a Wise key, but you can sign up. We'll approve you pretty quickly. And then you can invite contractors, they can submit invoices, they can do time tracking. All of these things are now possible on Flexile. It's, it, we use it internally and we process hundreds of thousands of dollars a month with it. So it's pretty, pretty excited. This is the same chart for Gumroad, a number of customers every month since the beginning of the product's existence. We are the only people using it currently. And we hope that the chart looks a little bit more like Gumroad's over time, and that will happen one one by one, people, people using it, giving us feedback, and we're gonna keep shipping it. I think it, it is a pretty cool piece of software. We're profitable. It's not gonna go away. We're gonna keep using it. So it's gonna get better. And we did make it better. We made it self-serve this quarter. We added equity to it. So now you can, you can issue stock options through Flexile, which we just did for 2022 grants for everybody a couple weeks back or a week back. So we're kind of dogfooding all of this stuff as we go, and we're building like basically the perfect product for a company like Gumroad, hoping that over time there are many more companies like Gumroad. And then Raul's been working on reimbursable expenses. We're doing our first offsite as a team in Rome in August, and we needed this feature, so we built it or are building it. And then in Q2, we have a bunch of stuff come in. You're gonna be able to connect Stripe. I, my prediction is that sort of the Wise API key requirement may be too much for a lot of people. So we're gonna build, you know, you should be able to just connect Stripe and then fund your Flexcel account. That way you're gonna be able to mention third-party services. So So this is something I'm pretty excited about because I think it's like, it feels like work that is busy work, like standups and monthly check-ins and weekly check-ins. It feels like you're already, the work should be documented by the fact that it's on GitHub or it's on Notion or it's in Figma, right? And so I imagine that one day you'll just get a popup at the end of the month or the end of the week and it's, did you do these things? And you said yes. And you just, it's just everything just is done. So I'm super excited for that. And then QBO integration, QuickBooks Online is pretty necessary for Gumroad. So we're building that. And then dividends and dividends is the answer, at least in part, the answer to the question someone was asking about, how do I get my chat up about, yeah, what, like liquidity, what does that look like for investors? All of these sorts of things. So let's get into that. Why dividends? I guess this is, as I mentioned, this gets more into the macro bullshitting part. So put your skepticism hat on. I have my Flexile hat too, actually. Let me put on my Flexile hat.

You think you're going to have like a FIDO integration for other banks?

Probably over time. Yeah, we are very— my marketing I don't know, how do people wear hats? Like this?

Yeah.

Putting on my fucks-all hat. Yeah, I think so. I am like really, I like re— I don't reread my own book, but I think about my own book cuz it's easy to get caught up in all the stuff and it's nice to have a reminder that focus on solving your own problem. So that's what I keep going back to is just let's just keep solving our own problem. And it's weird, like what we're building is weird, but also cool and interesting. And so was Gumroad in 2011 and Gumroad had took a long time to get to like product market fit, quote unquote. I still don't know when did we find product market fit. There are times where looking back at that chart, it's like we always had it, but I know 5, 6 years into it, it did not feel like we had it. So yeah. And dividends, I think dividends, there was a quote from George Hotz where he said basically a stock without a dividend is a scam, which is basically saying at some point, the value of owning a piece of a company is the fact that company generates some amount of cash flow and then you have a right and entitlement to that. Cash flow. And that's been abstracted away with 0% interest rates and venture funding and secondaries and all IPOs and all these sorts of things. But at the end of the day, even IPOs, like if you look at Costco or Coke or Procter Gamble or Apple, even they generally are like, there's a bunch of reasons to own them. And one of those things is the fact that this company generates revenue because they have a great product that they can charge money for. Then they take some of that proceeds and they issue it as dividends. I also think it's like the least wasteful. I think it's really like when you have have $100 million that goes from one bank account to another and then back and then back. And it's just all this stuff that I'm like, what's the point? All this money is moving around for what purpose? Once you have a profitable business, just issue dividends back to your investors and money should just flow in one direction, which is customer to Gumroad to Gumroad investors. And the less money, like the less money movement, the better. Because every time you move money is expensive. You have to pay someone to do stuff. There's fraud review, like all sorts of stuff. People have talked a lot about anti-work, late-stage capitalism, all of these things. And software engineering and like startups has always been like, I find like this weird like edge case because you have the same people, the laborers, quote unquote, who become the owners of the businesses. And there's this nice like social mobility aspect to it, but not everyone wants to do that. Not everyone wants to move to San Francisco or start a company or raise venture capital or do any of these things that generally like equity doesn't exist outside of those things. And so I think it's really, and I don't think it will, because people don't want lottery tickets. I think, but if my hope is that if we can tie equity to dividends, then equity becomes much more valuable and sustainable. And there's a sort of a way to build a portfolio of dividend positions as a software engineer or a designer or a customer support person in a way that wasn't really possible before. And then lastly, it's super long-term aligned. Like people talk about venture as like, oh, VC funds are like 12 years, 15 years. They're super long-term thinkers, all of these things. But I've been doing this for 20 12 years, it feels like a second. Like it feels like I could be doing this for— there's so much more to do. AI is just getting started, or I guess it's just getting started for the last 50 years, but it feels like there's just always stuff to do. And a business model like that, incentive structure that like aligns people to say, oh, I'm going to own this stock because I think Gumroad is going to be interesting and valuable for a long period of time. Yes, you probably won't get like a 10x right away, but the truth is like those opportunities are like pretty far, far, pretty rare basically. Few and far between. So yeah. And then the, but the reason I've talked to lots of people, like, why don't, you know, dividends? Like I talked to our lawyers and I'm like, can we do dividends? And they're like, yeah, that's literally why companies exist. We don't need external shareholders and dividends. You don't need a company. Like, just like, that's the point. And literally, if you look in the Gumroad incorporation docs, like the first thing is like dividend. Like that is why companies exist, but no one issues them. Literally, I talked to an investor who's been investing in Silicon Valley since 2004. And this dividend that we plan to do this year will be the first one that they've ever received, like 2004. It's insane. And that's, that just doesn't seem super sustainable to me. And then the but is like, there's, it's hard. There's like a lot of people you have to like issue all these payments. Like why don't you just raise money and do secondary and you'll make more money sooner and like it's better and you don't have to deal with all this stuff that I just feel are excuses for this is like the standard default way. We have all of this software now, like Gumroad issues thousands of payments every month. Month or every week to, in small dollar amounts all over the world. Flexile, by the way, does the exact same thing. So I think I have, we have a good amount of domain expertise to actually solve this problem. The other thing that's nice is that it takes away a lot of the BS. There's all of these different ways of valuing a company. And as an investor in Gumroad, you, you should, you'd be interested in all the different ways, right? And like through Gumroad, like I, we've switched, we like 10x, 10x ARR is a common one that VCs use, 40% growth. Growth plus profitability should add up to 40%. There's all of these hacks. And the reason all these hacks exist is because the companies we build are not profitable. So if you actually value these companies at the standard, which is what most people do, which is a PE ratio, which is profit over earnings, I think, but basically yield, you have to come up with all these things, right? Because if you're making zero, guess what? Zero times 20 PE ratio is Right. So that's not compelling. So you have to like proxy in one day Shopify will be 20x profit and the way they get there, they're growing this fast and this is it. And then so you develop all like all of this sort of this stuff. But the great thing is once you're profitable, like you don't need any of it, frankly. You just say we do this much in cash flow and roughly it seems like this is what the market is valuing it. And certainly you can see during COVID was crazy. Went up to— sorry, price earnings.

Sorry.

Yes. Price earnings. Exactly. Went, you know, 40x, which is, you can see why didn't VCs pay 100x? It's because this market's public markets are playing 40x. Crazy. And now there's still a lot of people think in startups, they're like, we're screwed. You go on Twitter and people are saying that this thing is trading at 1.5x revenue. And it's like, exactly. It's because that's not the right ratio. It's irrelevant. Like you can make a gazillion dollars, but if it costs you a gazillion and $1, it's a valueless business. So ultimately I really like the fact that I can just say Gumroad will roughly be valued at whatever the P/E ratio of the S&P 500 is. Probably there should be a discount because it's not as liquid. So there's the nice thing is you can leave and exit, enter and exit positions. So there's probably a discount. Account there, but illiquidity is also a feature, not a bug in startups. So maybe it cancels out. So anyway, I think based on that, I think it's a lot easier to value, to really get a sense. And that's the purpose of these board meetings, to get a wrap your head around what Gumroad actually is as a business. And it's a little, it's getting a little bit more complicated over time. If you ever look at the Amazon 10-Ks or whatever, they're intense. It's like Amazon is an insane business. But Gall's Law says like every complex system starts as a small system and gets more complicated over time. You can't really get to a complicated system in any other way. And so hopefully people can wrap their heads around Gumroad and I'll be able to continue doing that. And as it gets more complicated, people just have a really good sense of how to value businesses. Anyway, this is Gumroad basically, right? This is what you get. You get $10 million in net income. You get, I guess, all the GMV and the brand, all these things. But really, what does that get you in cash flow? $10 million in net income, assuming the February numbers hold, there's no growth, all these things. Hopefully we see some growth in improves. The goal is to do about 60% dividend rate, which is like historically what was the norm pre-0% interest rates. Like it was much closer to this. Because again, if you're profitable, unless you really think you can invest the capital super well in your existing business, you should give it back, I think. So that's the goal is to do about a 60% dividend rate. We're going to trial run this $1 million dividend in July. If the math works, like for example, let's say you invest in the crowdfunding round at $100 million valuation, it should be a roughly 6% return. DPI is what VCs would say, but you should get a 6%, which by the way is more distribution than As I mentioned, VCs often don't do that well. So that would be cool. Hopefully we can figure it out. Hopefully we can do it. And then there's a sort of a way to value Gumroad. And then there are this sort of moonshot bets like Flexile that we will probably make, cuz I like building stuff. I think it's, I feel like there's a duty almost in that we've built this company in a weird way and like it's sizable enough that we can try things and now we have that sort of the bank, the bank balance to do it and not too small where it doesn't matter. There's lots of weird people doing weird stuff, but they're too small. No one cares. So I think it's important to be like large and do weird stuff and then show people and tell people, hey, this worked, this didn't work. A lot of the ideas we try probably won't work, which is why they aren't done. But hopefully once in a while we find something that's like pretty cool. And if we can figure out, oh wow, there's like actually a whole new way of like onboarding contractors and giving them equity and they get dividends and there's like this much more sustainable long-term view and there's all these companies on Flexile and you can like work for a bunch of them at the same time, part-time or one at a time. Time or whatever. I'm excited to start clarifying like what that vision may look like. Awesome. And then I think that's basically everything. So let's do some Q&A. I'll start with just some quick rapid fire from the chat and then if people in person have questions, we'll see. Yogesh says, can you please do tell us more about discovery? Yeah, to be honest, the number one feature is discovery, right? Because if we can make you more money, great. Like that's the thing that everybody wants. And so I I think it's just using the Gumroad brand and experience and real estate and traffic and all of the stuff that we've built and just like pointing at, pointing it at products on Gumroad that we think, and we just frankly haven't really been able to do that before because Gumroad's just too broad, too diverse, too high variance and stuff. And we have run experiments in the past, but I'm much more hopeful now. I just think with all these advances in ML, you can now have a tiny team compete aggressively with YouTube quality recommendations. And I'm hopeful that Gumroad will actually be able to do discovery in the future. So yeah, that it's about 5, 6% of GMV right now, but I think it can get, it should be like 10, 20% in my view, especially if creators embrace the affiliate stuff and more like this. And there's, there's discovery and distribution advantages. The, what I would love to believe, and this is more hopeful of me, but when you go to Amazon, like you don't need 7 vacuums, right? So everything is like competitive with everything, everybody else. But my hope is with Gumroad, maybe there's an opportunity to say, hey, you like this product, there's actually like 4 other products that would build out this curriculum of content learning for you that we detect because like we see this pattern in all of these other libraries or content consumption patterns. And I think that's where I also think, by the way, this sort of ChatGPT QA interface may be an interesting place to say, hey, the answer to, to your question is in this product that you actually don't have, or it's in this version of a product that you have that you don't have that version. And so building in more like more stuff like that, I think is gonna be, is gonna be pretty compelling. Eduardo says, have you considered partnering with or building your own platform such as ConvertKit? Yeah, I think so. I think my guess is Q4 of this year we'll start competing more directly with ConvertKit. We won't, it'll just be building features in the beginning to just like for Gumroad creators, but I could foresee it once we have a G and an F to start company names. I'm gonna start wanting like an E. Email starts with E. I have an idea for a thing called Helper, which starts with H. Yeah, always looking to for excuses to build more stuff. Second Someone asks, is Flexile part of the same company? Yes. So it's 100% owned by Gumroad. It's just a product of Gumroad. The goal is to spin it out as a separate company and to do a similar thing with Gumroad where we crowdfund it. So we just spin it out. Gumroad owns some percent afterward, but it just is spun out as a separate company. And that way it's, we, we kind of prototype our own idea. We dogfood our own Flexile. We have two companies now. People work for two companies. All these things we'll start to do. Any plans for Flexile marketing? You're looking at it. Check out this hat. Pretty cool. I have one more of these, very bespoke, but honestly, like wait for product market fit. Marketing is like, is easy. Once you have satisfied customers, it's so easy. Getting satisfied customers is hard. So that's, yeah, Daniel, it's a $50 up contractor a month. It'll get bundled in with everything else will come as part of that one-off per invoice or per account would be nice. Yeah. Let me take a screenshot of your comment so I can think about this in the future. How much is our revenue per quarter? I've always found quarterly financials like super weird because every quarter's different. Like Q1, Q4, it's all different. We're also still, we have one more day today and tomorrow left in the quarter, but I would just take the Feb numbers and multiply by 3 roughly. It would be 1.8 times 3 is 55.4, I think, million, roughly 5.4 million a quarter. Seems about right. We should do about $23 to $24 million in revenue this year. Yeah. Yeah. Share price over earnings. Correct. Why not go public and give out dividends as a public company? To be honest, yeah, there's some head shaking. Have you run a public company? Excuse me? No, honestly, maybe one day, but I just feel like there's a regular— yeah, there's a regulatory cost in here. You now have a boss again, in a sense. You now have to do things like, for example, if you want to be on the NASDAQ, you need at least one woman or LGBTQ+ person on the board, or maybe I think at least one, and that's fine. But like currently Gumroad is just me and I'm not a woman or LGBTQ+. And so just like things that you have to start thinking about, which I think is good. Generally you want governance, like public companies, I think do have more responsibilities. But to be honest, like I think Flexile, if we can pull off dividends and do all these things, like I would like to think we get the best of both worlds. We get the liquidity of, we could use Reg CF, we could use Reg A+, we could do dividends. Like we obviously, it's not maybe the biggest thing we lack is we don't get like the ticker. You can go to Robinhood and gamble with your Gumroad stock, But take the hit on that one, I think for now. Louis says, are you concerned at all that once you start giving out a dividend, it won't be so easy to take it away? Yeah, I think so, but I think that's fine. I think Gumroad is, and that's why I want to spin Flexile out is because I think it is a kind of different risk profile of company. And I think it'll be good to have it as a separate thing. People can make their own decision based on that valuation of whatever it ends up being and all that kind of stuff. Maybe even has a different way of working style associated with it potentially. But to be honest, I would, I do want the forcing function of, I do think it should be be like 0.6 and then it should be automated. I'm a huge believer in automation. I don't think like right now issuing a dividend is manual labor. We got a quote from a bank for $100,000 to issue a dividend. And this is like pretty normal. It's not being a public company, it's a lot of regulatory costs. So in line with the vision of Gumroad of just like using software to automate as much stuff as possible so people can focus on what they're good at. I think similarly, I would love to just figure out this problem so that we can offer it to other companies. I think there's like thousands and thousands of people who would want some of these advantages but don't want to go public. Wouldn't be big enough to go public. To be public, you need to be doing like $20, $30, $40 million in revenue and growing 40, 50%. And bankers, talk to bankers and all these sorts of things. Louie also asks, why not keep the money and reinvest into the product? I could keep the money. If you don't want dividends, let me know. But to be honest, like, I, we have the money. We like, we still keep 40%, right? And I just don't, I'm not convinced that we like got, you can look at the Gumroad chart, right? What can we do to make this grow faster? I think we can just keep doing what we're doing, which is like ship product, ship faster, keep doing that. But like beyond that, I'm not convinced that like we could deploy $5, $10 million a year super effectively. And I honestly think that's a lot of startups need to realize that, especially in a 4.5% interest rate environment, they may not actually be able to do that. And it might be the most responsible thing to return the money back to investors who can deploy that capital however they may want. But I have thought about it. I've thought about potentially buying companies. We could roll up other creator economy companies or something like that, but we'll see. We will be building a website like this will all, by the way, live within Flexile. We're going to like hack Flexile a little bit so investors can sign up and get dividends through it. Maybe it'll be a separate company, but my guess is it'll be via Flexile and that will have that UI that will show you like, this is how many shares of the company you own. Ideally we convert everyone's SAFEs too, so it's real equity. Technically SAFE holders aren't entitled, and I'll actually answer that question. There's another thing, but technically SAFE holders are not entitled to dividends, which I think there was some viral tweet about. Oh, Gumroad's like scamming people or something. But that's just what SAFEs are. SAFEs are just debt instrument to promise future equity. So we'll just convert it into preferred stock, which is what you would want because that entitles you to dividends and all the other things that VCs generally get as part of having that preferred stock. What's the goal or bet on Flexile? I would say think about it like Gumroad's 20% project, and if it gets a product market fit, we'll spin it out as a separate company, and then I'll basically be working on both things. And someone asked like how much How much do you work on Gumroad? It's a really hard question. I spend almost no time at my laptop. I try to spend like a few hours a day maximum on my laptop. Most days less than 1. If I'm at my laptop, I'm probably writing code, so I'm just building stuff as an individual contributor. But I think about Gumroad all the time. Like I think about Flexile, like this is what I love doing. I built Gumroad on a weekend, like Friday night through Monday morning, literally. I probably put in more time, like part-time, than most people put in full-time. That's a good pithy little one-liner. Kerem says, will crowdfunding investors convert before July at $100 million valuation? That's the goal. Yes. There is a, technically the investors have to approve it. So if the majority says we don't want to convert, then they'll just stay as SAFEs. I think we can still issue dividends cuz technically it's just free money, but then the, you would be taxed as income. So there's some reasons to convert, but the goal is to convert all the SAFEs at the caps. Dividends prorata to all shares, or is there a preferred tier above common? There is a preferred tier above common. So SAFE holders will be preferred over common. It shouldn't matter because once you're profitable and stuff, stuff. Like, it— there's a little bit of a hurdle for preferred stock, and there's a little bit— the first few dividends might have some weird allocation stuff, but once we get past, like, kind of the hurdles, then it should be pretty much pro rata. And if this works, then ideally we would convert everything to just common stock, and then it would just simplify everything quite a lot. Pablo says dividends will be through Republic or Flexile. Probably Flexile. Does the concept of dividends work with crowdfunding? I would love to. I honestly think it would— it works best. Like, my belief is that crowdfunding is not actually going to work that well for venture-funded bets, and actually It's much more appealing if you can look at a business and say, okay, this is the cash flow of a business and I'm going to invest as part of the crowd to invest in this kind of business. And if that's 6% a year, there's always ways to do like Gumroad, like you can have a balance, you can have a custodial account, you can absorb the payments as the company for these de minimis payments of like pennies or dollars. But the hope is, I would say the average investment was about $668. Most people invested $1,000, bucks. So 6% is $60. So yeah, I think it's still, even at our scale, which is still small, it still can be significant. Love the dividend structure. Do you have a setup? How to set up the dividend structure plus considerations plus dos and don'ts? I don't have it yet, but I am making it as we go and I will publish it so that other founders who want to pursue this path, like can, and hopefully Flexile makes it super productizable and easy, easy to do. What kind of creators have left due to the pricing change? That's a really good question. It's mostly been SaaS creators. So a lot of creators signed up for to use Gumroad. A lot of, if they're international, maybe Stripe Connect didn't exist. They were selling some license key type stuff. Gumroad has some of those features. So most of the folks who left were basically people who honestly, like many of them told me like, I'm glad for the pricing change cuz I, it finally got me to leave because they basically picked Gumroad for some other reason. It was a weird hacky solution for them. They were selling a Mac app using license keys, and then it's just not the best fit for that, those kinds of things, especially if with 10%, if you can code, you can use Stripe yourself or something like that. So that's, I think what most people did is they just were like, they just took a day to build, to rebuild their kind of Stripe integration or something like that. On what timeline do you think Gumroad needs to address the Stripe take rate from Gumroad? To be honest, never. And I, and now I'm more confident with the delta is so much larger between the two that like, I don't think, I think we're just fundamentally different product in most people's minds. Stefan says show GMV historically. Yeah, let me, let me do that. And you can see what I look at generally. And we are moving this internally, so it'll be a bit nicer. Actually, the best metric sheet is probably this one. See how updated it is. But basically, all right, let's see. Yeah, so this is, you can see March 2012, and I just keep this updated every month and we're gonna automate this. So I have one less thing to do in my life. Um, so I can have more time with my existential dread. But yeah, you can see GMV over time looks like this. So you can, this is like the beginning of COVID and then like peaked around March '21. We've been roughly flat and then this should start going up hopefully this year. We are starting to see some growth, so hopefully that starts to happen. We've definitely been in a kind of digital recession that Patreon and Substack and other folks have faced a little bit.

That feels like a core issue. Like how do you get more creators?

Because ultimately that's the biggest thing. Yeah, that's the biggest thing for sure. And as I wrote about in Reflecting on My Failure to Build a Billion Dollar Company, the market you're in is going to determine most of your growth. And I think that's why I think like I, a lot of people are like, why don't you just put Gumroad on autopilot, turn in cash, it'll just do this forever, whatever, it's easier for you. But like the truth is I want Gumroad to stay relevant. And I think for the creator economy to stay relevant in the age of ChatGPT and AI Like we have to build stuff, like we have to show, we have to build stuff. I don't think this stuff like, I think helped create the ecosystem to a degree and that, yeah, I think otherwise, guess what? The creator economy's gonna go away cuz everyone's just gonna get everything for free from TikTok or Google or ChatGPT or whatever thing. So yeah. Awesome. What else is here? Yehuda says, okay, second says we invested thinking you could manage our money better than we could. Yeah, you can reject the dividend. We can make it optional and you can just— good news is like you still like getting the dividend doesn't change your equity position in the company at all. So you 100% still own exactly the, the percent of Gumroad. And to be honest, like I spent all my time thinking about this stuff anyway. Like I don't think this will affect things too much.

Can I ask a tiny rapid fire question?

Yeah, sure.

Do you think Gumroad is the most interesting startup company? Out there. I think it's a pretty interesting one. I don't want to put anything to your head, but I think like the fact that you reveal your numbers and are transparent and have a public board.

Are there any other companies that you feel like could do this?

Like I felt there's a company that had transparent salary for a while, but they completely stopped that, I think. A whole tech company.

Buffer?

Buffer. Buffer.

Yeah.

But I think they completely stopped that. And so, I mean, are there any other startups that kind of do what you do in terms of your transparency?

Not really, to be honest. Yeah. Financial transparency is something that most people, when they get to a certain scale, They basically stop.

Exactly.

Which is interesting 'cause like every public company does it, so it can't be that. People are like, what happens if everyone steals your stuff? I'm like, that would happen to every public company ever then. You only like, generally it's all there.

But that's some of the benefit of a private company. You don't have to.

You don't have to. Yeah. But that's the, the thing is like, I, but I want to. Yeah. So it's a question of like how many founders want to, who also happen to be running business that can, and it's just a small number, I think. Like the fact that Gumroad doesn't have co-founders who may not want this or like investors on the board who may not want this. Like, I do it a lot. And even if most people, to be honest, would probably be like fine with, I think, more creativity on this stuff, just the fact that you'd have to ask, I think a lot of people just don't. They're like, why would I like call somebody or text them and be like, hey, can we publish our board? I had a call with First Round when they were thinking about investing in the crowdfunding round for Ratta, and I was like, can I put this on YouTube? Like our pitch? And they're like, we can record it so it's somewhere, but we're not going to. No, that's weird.

So do you think you'll ever stop public forums? And totally know that you deserve the right to be smarter tomorrow, but I'm curious where you stand today.

Sorry, could you repeat the question?

Will you ever stop doing public forums?

Yeah, yeah, I would love to keep doing them. I think they're really fun and rewarding for me. I think they're useful. I think they're like, when I first started doing them, Gumroad was doing like $2 million in revenue. Now we're doing $24 million. Like this all happened in public. Public. Like you can literally go through every single board meeting and see exactly how many businesses go from 2 to 24. Almost none. Like $10 million in net income is more cash flow than almost any startup in the Bay Area. And I did this all in front of everybody, like tweeting them. Like, I don't know. Like, I think it's cool. I honestly wish there were more people doing it, but maybe once you're first, you get a lot of value and maybe the second person, it's not as compelling or interesting. I think there are lots of compelling, interesting starting startups in all different ways. And I think we picked like financial transparency as a way to educate founders and creators and marketing. I think it works for us, but then other people will do other interesting, weird things. But yeah, it's, I don't know, I think part of it is like people who do the interesting stuff just want to do it. Like they, it exists, but it happens like behind closed doors or things like this might happen at like some CEO summit or something like that. And I think I've just always been very much, I didn't go to Ivy League school or really, I went to USC for a semester. Like I've never really been in the scene as much, so I feel like I I just have more— I have less attached to it, and I'm willing to like put this stuff on YouTube or say things that maybe other people may not want to say.

But one more question, and I want to make sure that people can ask, because I'm surprised no one brought this up yet, or maybe they have, which is a lot of folks who are in public companies or even index funds with dividends, you can choose to not get the tax, but how do you be invested? Yeah, yeah, we think you're using— might there be a concept of, hey, rather than reinvesting in this, you actually— or rather than getting dividends, you can somehow reinvest it.

Yeah, that's interesting. I honestly hadn't thought about it, but yeah, that's definitely worth it. Especially for a lot of people, it's not worth it. And if they're like, ah, whatever, let's just keep it and put— I can build up.

You can choose.

Exactly. I like that, actually.

It's all I can think of is that the law— I remember one time we did a public board meeting. Our lawyers make a lot of money because I ask them those.

Yeah, that is one reason people don't want to be creative is because their lawyers are expensive. And like, I do have to pay lawyers every time I have a weird question, which less now with ChatGPT. I definitely, I've saved a lot of money using it. But yeah, definitely they're like, they like me, I think. Yeah, but reinvesting is interesting. I do like that idea. I'll see if we can figure it out. One of the cool things with building it all ourselves is we can just do it. So many people are like, oh, you can't do this. And it's like, why? Someone's like, you have to mail a check. It's what if they're in Uganda? Like, you have to mail a check. It's illegal to do anything else. I'm like, can I just PayPal them? They're like, no. And I'm like, but like, people have been issuing dividends for like hundreds of years. What do you mean it's not? Can I just give them the money? They're like, yeah, you can. I'm like, then in theory, I'm just giving them the money via Gumroad or via Flexa.

I don't know.

But honestly, a lot of people like risk aversion real. Very few people are risk takers. So to be honest, like most of these things, even founders of $20 million revenue companies are like, eh, not worth it. But I'm like, eh, it's fun. Life's a video game. You only got one, one life before game over. Might as well have fun and learn a lot. What percentage of GMV is now through affiliates? About 10%, I think. How often would you want to give out a dividend? Yearly, quarterly, in the long run? To be honest, I feel like daily, like in, in the sense that like, why is it yearly? It's 'cause it's a pain in the ass. So like in theory, software should make it free and it's like daily, right? Like in an ideal world, you make money and get the money instantly, whether that's making a sale on Gumroad or PayPal or whatever, right? But the truth is like you get your money on Gumroad in 7 days, net 7. Apple's like net 60 or some insane thing. Amazon takes 7 years to give you your money or some stupid thing. I'm just kidding, but like a long time. But yeah, in theory it's all risk or regulatory or like some reason, but the truth is like Software should make it almost immediate. And I think it could be really cool. Like what if every day you woke up and you got a dividend from Gumroad and it's 70 cents, 89 cents, could be interesting. And then you can cash out whenever you want. So there are all these things that we could potentially do that could be interesting in terms of people do ask about like financial, like what financial stuff do I use? Honestly, like I can show you actually, no, I record, but don't overshare. I'm trying. Yeah, I'm trying really hard.

Don't overshare.

Trying not to overshare. At all. Okay. Let's see if I can do this. So this is what I get from our accounting firm, CFO, et cetera. And there we do use QuickBooks Online, but it basically just looks like this. And this is it. This is like the P&L for Gumroad. And you could see this in the, in this chart too. I record basically these line items, but it's really simple. GMV leads to revenue minus the cost of the revenue, COGS, which is basically Stripe and hosting. Which used to be, and you can probably almost see how, like what a significant part of it was. Imagine we did $800K and, or like $900K and $600K went out the door immediately to Stripe, basically, and PayPal. Of that we have gross profit, then we basically have people expenses, and then the remainder is net profit, which you could see after we raised the crowdfunding round, we were pretty good at losing money and hopefully we'll get better now. So yeah, this is really, this is all I look at. And there's a little bit more complexity here. You can see like it's split a little bit cuz there's like different tax depreciation, depre— all this like different stuff. This is what you pay accountants to do, but it's a really simple like line item business. There's not much here. This is all of Gumroad basically. We don't do marketing. We don't do, I guess we did some, maybe I think I experimented with Twitter advertising here. There's some, some, there's some few things, but really it's a very simple business. So yeah, that's what I look at. And honestly, if you look at like Amazon, it's not that there's more basically, but it's like the same exercise, which is why I'm so confident that GPT is so interesting is 'cause people are like, oh, it's not smart. But it's like, no, you just simplify the problem. And big problems are just a lot of small problems. Problems that like form a pyramid.

And then you think you'll do not just public board meetings, but like this in-person public board meetings?

I would love to do more in-person stuff. We only had 700 people show up in person for all those tuning on YouTube, but if we get more, then we'll keep doing these in person. I, I do think there's like value. What I would love is to figure out how to get more other, like other founders to share more cool stuff. That's what I've been thinking about is like, how do I get Dylan from Figma to share some of this, like what their boarding meeting slides look like, or the Pinterest team, or there's other There's so many cool, and it's honestly surprising to me that there is such a dearth of this stuff out there. Like you get like the letters from Bezos or Warren Buffett, but what does it look like when you have all the execs at Amazon, like talk through something? You just don't see that, which is just, I don't know, sad. You just gotta go to the space. So yeah, I'll be back. And then someone asked, when do the dividends come? The goal is to figure everything out this quarter, just write all the code, figure that out and then issue, that means basically issuing it as soon as possible would be like July of this year, July 1st or 4th or something like that. So 3 months, ideally we convert all the saves and we do, we have all the code written. And as long as we don't run into some crazy stuff, that would be awesome. Like July. And then once we do it, like once we, once it's done, then we can actually go tell people like, hey, this is a thing that we can actually help other people do too. And here's a, here's a proof, right? That we've done it ourselves.

How can we promote Tumblr, like you don't do, this is like 50% of your marketing. Yeah. So like basically you should tell creators you should build a course or membership on Tumblr. I feel like that's the—

Yeah. I mean, to be honest, I think our creators just do such a good job of that instinctively that I think for me it's just help them make more money and the score will take care of itself. I think there is a next level, which is just mainstream branding, which is you just basically, you just find some famous person and you just put the Gumroad logo on their face or whatever. I really think, imagine you do a 4-minute music video with Kanye West and now Americans know who you are as a brand. I don't think it actually takes a lot. And you can, like, I think as startups, we're so focused, we're like, oh, Super Bowl stuff's stupid. But it's like, if you sell like merch or like food and beverage or things like you, brand is fucking like sports team, like it's fucking important. Like that's 99% of spend is biased by advertising. Advertising and brand and all these things. It matters. Yeah, it's easy to laugh about or think it's stupid, but it really matters. And so I think that's probably honestly like the— once we get to a certain— let's say people are like, we don't want dividends, we want you to blow $10 million a year. Okay, let's sponsor them. I don't even know, I would have to learn about more sports stuff.

The government.

Yeah, exactly. There's definitely going to be some like crypto companies like being scraped off. Maybe they want to sell PDFs instead of NFTs. Gummer.com, Miami SoFi Center, whatever.

You have a public board meeting, this one's in person. How about like a creator event, given that is like two sides of your— essentially you got customers who buy from WordPress, but then you got someone who's a creator. There's VidCon, there's all this. Yeah, I haven't thought about creators.

I think VidCon is— I went once, it was awesome.

It's big. Last Oh yeah.

Oh yeah, that's true.

I guess that was many years ago.

Oh yeah. Interesting. I could see it. I could see it one day, but honestly, it's so much work that like, I'm good at software. Like we did Gumroad creator dinners in 2019 where we just, I went to SF, had the top 50 Gumroad creators, went to New York, had a really good day. And then yeah, everyone got a plus one. So that was, and honestly that was like, that's what I did. Like when people are like reinvest the cash before we raised money and like Gumroad was making $40K, $50K a month in profit, that's what I would do. I'd be like, okay, we can just throw a dinner for our top creators in this city. And then once we're like, literally that's how I was deploying the capital that I had. So maybe there's, yeah, like I could totally imagine like a creator con. To me, I would almost want to just work with Substack and Patreon or like figure out like, can we just do all I don't think we're that competitive. Like, I think we all have like unique features. And for example, Patreon and Substack, very, it's like Democrat and Republican. It's like the same but different in a way where it's like you're unlikely to switch from one to another, but like Substack and Patreon, it's like you could add some CSS and make Substack look like Patreon and vice versa. So much of it is like branding, network effects, like subtle features and this and that. So I honestly think like they could, we could do it. Creator Economy Con.

Patreon used to have one.

They did one. Yeah. And we're actually, we do more GMV and revenue than Patreon did when they did that. However, they all, they also, we wanna be profitable. Yes. A lot of the way that these companies, they have lots of staff like doing these sort of communities, et cetera, events. And so yeah, anyway, I think this will, hopefully this was useful. I think this is everything, all the Q&A. I'll wrap up the online recording. I'll post this YouTube. Thanks everybody for tuning in and I'll send more information. I'll send a text recap. A lot of people wanted that last time, so I'm gonna send a text recap of everything we shipped in Q1, what we want to do in Q2, plan about the dividends. You might get at some point a survey about if you want to convert or not, or more details like we're figuring that out sort of day to day. So yeah, thanks everybody. See ya.