What’s every entrepreneur’s dream? To build a big business, successfully exit and lead a life of autonomy with choice. Our guest today needs no introduction: Carley Roney co-founded The Knot in 1996. Think about where the internet was then. It was AOL chatrooms, dial up modems, and a single photo took five minutes to load. Carley takes us through the roller coaster ride of her entrepreneurial journey – from pitching the “worst idea ever” – according to AOL – to building the first model of an ad supported business, and talks about what it was like working with 3 other co- founders (spoiler alert: one was her husband), to going public, being de-listed and going public again. And while you may not think startup lessons from 1996 are relevant today, guess what folks, they are more relevant than ever! Efficient use of capital has not gone out of style! Knowing your customers has not gone out of style! If you’re the least bit worried about being unconventional in your approach as an entrepreneur, then you will want to listen to this episode where you will get all the permission you need from Carley Roney!
Yes Please by Amy Poehler, iBooks
Instagram Is Getting So Good at News, It Should Scare Twitter by Jessi Hempel, Wired
Meet Seasoned Silicon Valley Investor, Ann Winblad by Shradha Sharma, Your Story
The Knot Straightens Out by Emily Maltby, WSJ
Wedding Spend Reaches All-Time High, PR Newswire
How To Find A Co-Founder For Your Startup by George Deeb, Forbes
Lessons From A Study of Perfect Pitch Decks by Kim-Mai Cutler, TechCrunch
The Long Lost Myth of Capital Efficiency by Brad Feld, FeldThoughts
3 Ways Startups Can Accomplish More With Less by David Klein, Inc
A Complete History of the Rise and Fall — and Reincarnation! — of the Beloved ’90s Chatroom by Caitlin Dewey, WaPo
The 5 Commandments of Running a Successful Business With Your Spouse by David and Carrie McKeegan, Entrepreneur
Guest bios & transcripts are available on www.broadmic.com.
CARLEY RONEY - Motivated by the excruciating process of planning her own wedding, Carley Roney made it her mission to find a fun, hip, user-generated resource for couples planning their weddings. The wedding world was in dire need for a new voice, and the web was the perfect place to break ground. In 1996, Roney founded TheKnot.com with her husband (XO Group Chairman of The Board, David Liu) and two other business partners.
The Knot has since transformed the wedding landscape as the leading wedding resource and most-trafficked online wedding destination.
As the country's best modern wedding and lifestyle expert, Roney frequently offers inspiring and sensible advice on television, radio, internet, and print outlets nationwide. Roney helped to develop NBC’s TODAY show's groundbreaking interactive wedding planning series “Today Ties The Knot” and was featured as the series’ key expert year after year. She has also appeared on top television shows and channels, including Oprah, ABC’s The View, LIVE! With Kelly & Michael, CBS This Morning, E!, CNN, Inside Edition, and The FOX News Report, and has been featured in InStyle, Vogue, Elle, Glamour, The New York Times, The Wall Street Journal, and USA Today. She's a seasoned speaker who's invited to headline many bridal and lifestyle industry events across the country.
Roney has authored over a dozen books in partnership with publishers Random House, Chronicle Books, and Clarkson Potter. She has spearheaded the editorial development of a video-on-demand service with Comcast Cable and the launch of The Knot TV -- a nonstop streaming video channel on TheKnot.com.
When not working or playing with her three children, Roney most enjoys planning dinner parties for family and friends in her chic and modern Brooklyn loft. She is a native of Rhode Island and currently works with her partners in SoHo, New York City.
XO Group, Inc.
Carley: My strategy has always been to be informed by whatever the prevailing methodology is, but don't necessarily think that it's something if you don't want to ascribe to it word for word, that you are going to fail.
Kelly: I'm Kelly Hoey, host of BroadMic. I speak with the most accomplished entrepreneurs, investors, and thought leaders about the issues that matter in building a business. You will get the inspiration as well as the picks and shovels you need to become a better entrepreneur. Be inspired. Take action. Think Broad.
Our guest today needs no introduction. Carley Roney is an entrepreneur with a very successful, if somewhat unconventional, exit under her belt, who is doing just that. Carley founded The Knot in 1996. 1996. Think about where the internet was then. It was AOL chat rooms, dial-up modems, and a single photo took five minutes to load. Carley takes us through the roller coaster ride of her entrepreneurial journey. And while you might not think startup lessons from 1996 are relevant today, guess what, folks? They are more relevant than ever. Efficient use of capital has not gone out of style. Knowing your customer has not gone out of style. And if you're the least bit worried about being unconventional in your approach as an entrepreneur, then you want to listen to this conversation with Carley Roney.
All right, Carley. I got to start this interview by saying I am so excited to talk about your crazy, wild ride journey from the dot-com bust to situations of going public, running a company with your husband. But he was not your only co-founder. So we're going to talk about all of that, and ultimately, your exit, and what you're up to now. So let's go back, 1995. Why did you think The Knot was needed?
Carley: Oh, I had just planned a wedding, and I can tell you it was an unequivocal nightmare to try to get that project done while working a full-time job in a foreign city without the help of my family and friends. It seemed inexplicable how something could be so complicated to do that you had to do on a deadline and spend that much money. And I didn't actually immediately start the company after getting married. I pretty much swore off ever doing anything wedding ever again in my entire life. And then I saw the internet and I thought, "Now, wait a minute. That thing, wedding planning, that could've really been helped by all this ability to communicate and get amazing information quickly. You could open up choices to everyone." And a lightbulb kind of went off, but it actually took some convincing because it was such a nightmare experience planning a wedding and wanting to have nothing to do with it ever again.
Kelly: So your professional life started with a J-O-B. You had a job. And so, had you ever contemplated being an entrepreneur?
Carley: It's funny. It was never my dream, although I had always operated pretty independently. I had always sort of had things going on in my world. I was always kind of freelancing and picking up cool projects. I went to film school, ultimately, which is kind of like a long life of being in startups. But it wasn't my obsession in any way. I mean, I don't even think people articulated it in that way at the time. You just figured out how you were going to make money next. And that sort of became the thing for us. I came out of film school. There were no jobs in New York City. And we came up with this idea and thought, "Oh, wait. We should do that." And that was it. We thought of an idea we wanted to do. We didn't think, "Oh, I want to start a company and be an entrepreneur." It was, "How do we get this done because we think this will be a great thing and will make money for us?" And so that was the foundation of starting a company was trying to really make a job for ourselves and get a project completed. But oddly, I was really well-suited to it because I don't need a lot of structure and kind of like coming up with my own sort of rules and culture, and very self-driven. So it was sort of perfect. Besides, I don't think anyone would hire me. I'd probably be a nightmare to have work for you.
Kelly: Yeah, definitely, after having your own company now. Now, I won't go back in time and ask these things. Let's talk about the founders. So how did the founding team come together? Because there were four of you. I mean, it's one thing to talk to your husband about this idea. Who were the other two? And how did that dynamic work to ensure that you actually launched The Knot?
Carley: I had an incredible team I launched The Knot with. And honestly, if it weren't for all of us, this company would have never been built. The four of us had worked together in a kind of little previous incarnation. It was Rob Fassino, Michael Wolfson, David Liu, and I. They worked in an ad agency, the two of them, and my husband and I had kind of a early digital production company. We worked on some projects together. And I really hated the work-for-hire grind, finding your next project. And one of them had an idea that kind of parlay into this concept of The Knot. But the four of us were this really critical combination because everyone was entirely different. And I actually say that if people want to have a startup and they have their best friend, and they're like the exact same person, and that's why they love to be together, that's actually the opposite person you want as your partner in a company. You need people that complement each other and test each other. And so the four of us, Michael Wolfson was like the rainmaker idea guy, always coming up with the most random, extreme, bold ideas. Rob Fassino was like the operator, always coming up with how we were going to get stuff done in this sort of path to critical...I don't know. He always used words like that.
Kelly: The path to critical success.
Carley: Yeah, whatever it was. Exactly. He also understood advertising at the time. David was the only one who understood anything about technology and about running a business because he had actually had a real job running a company. And I was the only person who knew anything about women, fashion, media, style, editorial, photography, anything that had to actually do with the consumer side of things. So the four of us together ultimately made this incredible powerhouse team. And what was great about it is that we all ran in entirely different directions with 100% trust that the other person was handling their direction in the best way possible. Not that we didn't test each other regularly and have incredible blowout, you know, dramatic arguments over aspects of the business, as one does. Because we are also four incredibly passionate people, which is its own excitement and problem. We challenged each other very well, but we had very, very strong trust. And so the four people, it was like 10X of what an individual founder could do by themselves. Because it was really all these four people empowered by total trust of their partnership with other people. We made decisions really quickly and could move very fast. So it's very complementary. It is a lot of what our success was, the unique attributes of these four founders together.
Kelly: That's amazing. And I often say to founders, in terms of looking at who their co-founders or who they're hiring, beyond the skill set, if you're interviewing someone who you're locking horns with, it's probably the person you should hire because they are bringing this different perspective to the table.
All right. Building that company with your husband, I find it humorous given the way it is often perceived in the startup and VC world that this is a detriment. Ooh, we got a husband-and-wife founding team. Yet you, once again, are another example of...all right. This is something that, in my mind, a recipe for success of a company. You've lived it and breathed it since 1995. Working with your husband, what was it like?
Carley: It was the best of times. It was the worst of times. It is. We always, David and I, very clearly state to anyone who asks us...and believe me, it is like a secret fantasy everyone has to create a company with their spouse. Except if they've been married a long time, then they don't want to at all. People come to us all the time, "I'm thinking of doing this." And we literally look them straight in the eye and say, "If you have any other option available to you to survive, do not start a company with your spouse." I mean, we really had an amazing time and a wild ride, and we really learned how to work together. But the first couple of years were truly treacherous, I think, in some ways. Because it's 24/7. I think for our investors, it was the best case scenario, because they literally got five workers out of one between the two of us. Because we were brainstorming brushing our teeth, brainstorming all night. Never having sex, only brainstorming. It was probably the driest period in our life. Because God forbid, you have an argument about something, and like, "All right. Well, you're never going to get any." So he'd come around to my side. It's amazing because there's a tremendous amount of trust. And there's no one you can trust more than your partner in crime, in this instance, and your partner in life to want to do the right thing to make this company successful, because it's all either of you have.
It's also great because nobody is waiting for you at home, right, or wondering why you're so stressed out, or all those things. I can't imagine what it would be like to actually be married to an entrepreneur. That would be pure torture, and [inaudible 00:10:19] myself, that is. And so I think you get a lot out of it. But it's so complicated, because we're both really opinionated people. We both have different ways of dealing with stress. We both have different ways of managing our staffs and envisioning aspects of the company, so we butt heads a ton. I ultimately think the company won for it. It was better for it, because we really did balance each other out. But I cannot say it was easy in any way. And I think that it took us like five years to really learn how to divide and conquer and clearly know for each other that there are a lot of things, yeah, the person was going to do that you did not agree with and you just had to shut your mouth. And then you would save yourself for the time you're like, "No, I just can't be quiet this time."
But it was interesting. People invested in us not knowing. It seems sort of horrible now, but we just never let on because we didn't think it should be an issue. In fact, AOL invested in us without knowing that we were married, because we have different last names and one of us had lost their wedding ring. So we just didn't replace it because it was convenient. And then we ended up actually acquiring, over the course of our history in the company, at least three different husband-and-wife teams, because we believed in the power of that partnership. And so it was great. David and I divided and conquered. It all worked out. We lived to tell the tale.
Kelly: And the marriage lived to tell the tale.
Carley: The marriage lived to tell the tale.
Kelly: And you have lovely children.
Carley: I have three kids. I think what was funny about us is we never wanted people to feel that it was a secret society between the two of us. And I think that that's the challenge. We always wanted a very open world, particularly because it could be perceived, whether it was with our two other partners or even with our staff or other executives, that it was like the two of us having some sort of secret conversation. We talked about the company a lot. But we made it clear to everyone we have very differing opinions, so people never felt like we were these partners that were impenetrable. People knew very well, and honestly, more often used that "Well, I asked mommy, and she said no. So now I'm going to ask daddy." That was one of the bigger challenges of it.
Kelly: That's hilarious. And well, it sounds to me, what I'm hearing, is there's a lot of self-awareness of the founding team, in general, about who you were and how you worked, and then learning how to work together, right?
Kelly: Versus hey, there's the husband and wife. And I love this part about the conspiracy and going to mommy and daddy. All right. Let's also go back. Because I think we have certain views on okay, entrepreneurs and founding teams, but also how product is built. And we're going to talk a little bit about lean startup and the dogma that is delivered up frequently and often in the startup community. But back in the '90s, was there a product roadmap? How did you build The Knot back then?
Carley: You know, it's interesting. We definitely transitioned to lean in our company when it became popular in the late, whatever, 2009, 2010, but it didn't exist in the beginning of our company. But in many ways, I think we had the same positive outcome. If you think lean is a way to basically ensure that you are not waiting to create the perfect product to talk to your customer, that you are having the least wasteful production process, that you are making sure people listen...I think that basically, in our early days, the fact that we had no money, no time, had to impress our customers really quickly and get them to be obsessed with us, and were personally obsessed with being successful, it actually created the same kind of environment. Because it made us focus on what was essential to do at that moment, and get it out to market quickly, and then launch things to make it better by listening to our customers. Because we didn't have very many choices, because we didn't have a lot of money, right? In a weird way, it's just lean by very nature, when you were starting at that time.
We had a product roadmap in that we had a vision of what we wanted the site to be. You have to remember, we started with a media company, so it was a little different than building software. We were working on an existing platform, because AOL was our founding financier, and they wanted us to create something for the AOL platform. We later obviously moved to the web and to apps and all of that. Some of lean methodology, I think, is more relevant in those environments, because you couldn't create a partial concept when you are going out to advertisers and selling them on a thing. And you're really creating a new use case for your customers as well. You can't say like, "Well, get a little taste of this, and then decide whether you want to entrust your entire wedding to us."
It is a one-year process that you are asking someone to make you their 100% partner in planning this wedding. So even when we started to have sort of more software-driven or app-driven stuff where it was like your checklist and budget are in Guest List Manager, we couldn't constantly be like, "Oh, let's try something new." Once they had input all of their data of their guest list, 250 names, it's not like we'd be like, "People aren't really using this. Delete." At that moment, you're in the middle of their wedding planning process. We were very respectful of user expectations and user comfort, I think, and really tried to make changes that were inspired by them and were the most relevant to them. But I don't think we just thought of that in that way. We literally thought of it as "This project needs to get done. These people need this help from us, just 100%." We called it at the time just a really intense focus on satisfying the demand, satisfying the needs of these customers who were trying to get this huge project done of planning a wedding. And I think that followed through when we did it with having a baby, that it's not as simple as they can use it one day and not use it another. You really need to build trust in those life stages. And so I think it required us to really have a little bit more of a complete view of what we were offering to them so they could kind of see it and say, "Yes," or "No," "I want to partner with this brand to go through this really important process. I'm trusting them with this. "
And I often feel sometimes now that there's this perception that there's only really one way to get a job done. And so that I feel a little bit uncomfortable with because I think there are examples of people just being laser-focused on their customer and not being focused on perfection, let's say, and making sure that that time-to-market is one of their driving factors, just getting out there. And I think that's the most important aspects of that methodology. I wish that those were just there, whether or not you would ascribe 100%. But it's certainly, as a way for people to work together, I think it's valuable for people to have a concept of how to get projects done and get them out the door, particularly if you're bringing a lot of people together, disparate people. We didn't have the benefit of there being any methodology because there was no such thing as the internet. I'm going to date myself. There was the internet, and we'd be like, "How do you make things for this?" I mean, that's pretty much how it worked at the time.
Kelly: Well, I want to go back. I want to say, because you've mentioned AOL and their being your initial funder...but before we leave sort of this concept of lean, if you were mentoring someone, mentoring a young woman starting a company and creating that kind of software product, what would be your big picture advice in terms of thinking about lean methodology and some of these rules that we are telling startups? "This is how your pitch deck is. This is your product roadmap." From your experience, what's sort of that big-picture, mentoring advice?
Carley: My strategy has always been to be informed by whatever the prevailing methodology is, but don't necessarily think that it's something if you don't want to ascribe to it word for word, that you are going to fail. I think you have to work with whatever team you have, whatever customer you have, and make sure that you're kind of custom fitting the way you want to work with your people around that. But it's great to have a starting place. I always liked the research-adapt type of person, but you don't want to be intimidated by these methodologies. Because I think they do kind of become like a religion that you can't quite find your way in, or the people you are working with don't, that it becomes very hard for people to work together. So I think people should be able to find their space for their product or their customer and their own personal team, and inside of it. So that's what I say. Learn it, and then adapt it for your situation.
Kelly: Color outside the lines.
Carley: Yes. There you go. Better said by Kelly.
Kelly: Because all of a sudden, I was like, "Color outside the lines." So let's go back. AOL. Okay, I don't think we need to explain to people who AOL is. [inaudible 00:19:49]
Carley: At the time, right. Yes, very funny.
Kelly: They were AOL. But also sort of differences in the time when you were building The Knot and now, we really have seen the proliferation and the importance of strategic corporate investors and the VC arms within these big corporates, but that wasn't necessarily the case back in the '90s. So talk about them funding your Series A, which seems, in some ways, unimaginable today.
Carley: Well, yes. They had a venture arm. AOL had a venture arm at the time, run by Ted Leonsis. And they were basically giving out seed funding, but their main goal was to get people to create content for their platform. They wanted people to spend more time on AOL and have more passion for their brand, more reasons to be on their platform. It wasn't the number one prevailing thing. At the time, there was actually CompuServe , which is even more of a name you don't even hear anymore...was actually the prevailing platform at the time, so it was risky to go with AOL. But they had more money and were more invested in the content side of things.
But it was very funny. When we went into this pitch, honestly, we really did not know what we were doing, like 100% didn't know what we were doing. We had an idea. We built this pitch deck that was really ridiculous, looking back on it. It was all about kind of sizzle...I think it showed well on some level. It looked good. It looked like we knew what we were doing. And then I remember we had this nice-looking deck, and then we had an Excel spreadsheet that was our business model, our P&L projections for this thing.
Kelly: The financials.
Carley: The financials. But it was really just, you know, this random, made up list of numbers. It really was. It was based on some logic, but logic that the original assumptions were totally made up. And part of it was, you have to remember, we actually were pitching the idea that we were going to have advertising on our platform on AOL. At that moment in time, not a single piece of advertising had been sold on AOL. It didn't exist as a concept. So when you're creating something from nothing, you're basically just modeling it off of whatever you've made up. It's not like we could go out and research from people how much would you spend a month to be on a platform that you've never really seen or paid any attention to before, reaching customers we cannot predict the number that you will have. There wasn't really any way to model it. You had to make it up and be starting somewhere.
And I remember the best part about this whole pitch process was we walked into this hotel room with our fancy pitch. And part way through the meeting, Ted Leonsis literally looked up and said, "Wait a second. Wait a second. Your customers churn 100% every year?" We're like, "Yeah." He was like, "That's the worst business I've ever heard of, literally the worst." And we were like, "Wait, no." And we stopped. It was total silence in the room. And that was it. We were like, "Okay, we've completely botched this. We didn't think about it in that way." And fortunately we turned around, and we were like, "Wait a minute. That's the upside of our business. Wait a second. Remember, if you're selling advertising and you want new customers who are each going to spend their average of $30,000 on this wedding every year, you want a new customer every year, silly." And I remember the moment where we went from being the world's worst business idea ever to funded in literally 120 seconds.
Kelly: As soon as he realized, no, no, new customers, same ads.
Carley: New customers, same ads. You'll have clients forever because they all want to influence this customer. And they're spending that much money in this short...wait a minute. What have I not been getting? And so you just never ever know. Now, we look at it and be like, "That made such sense as a pitch. How come we didn't start with that?" But you just don't know how the person's going to hear what you're saying. You don't exactly know how to tell your story in those first days. You just have to listen very carefully to what they're saying and respond very well and quickly. And I think that that's what we were always good at as founders is listening very carefully to what people were saying and what they weren't getting about your story, not just telling our story our way. And then also because you're selling advertising, you just have to kind of know what's in the mind of the person who is listening to you. But it was like whiplash. We went from okay, we were going to have to go get jobs, to, "Oh my gosh, they're giving us $1.7 million in six months. We have to start getting going now." So amazing, but we learned a lot. And it's okay not to know almost anything when you start out. Or at least we're an example of how complete and total naïveté and stupidity works for you.
Kelly: How did you pitch as four founders?
Carley: Everyone had their part. I pitched how it was going to be a brand play in the mindset of the customer, and how our brand was going to be sort of different and attract them to be using us regularly. Rob pitched the idea of online advertising as a business model, and the financials. So we just all picked what our best areas of either passion points or expertise were. And that always worked for us. Once again, since we had different areas of interest and different areas of expertise, people always kind of clearly understood who was where, and we were able to tag team very easily.
Kelly: Thank you for being so honest about the projections and the numbers being crap. Because as an investor, we know that looking at pitch X that the numbers are crap. So what's your advice on that, in terms of, as you said, there was logic behind it? And I always sort of said people, to founders, we're looking at the logic and the thought process. But what's your advice on people pitching and the numbers?
Carley: We were always told that by our investors, that they always knew it was all wrong anyway. They just know which part of it was wrong. And I was like, "Well, since all it's all wrong, all of it's wrong." We always just wanted to make sure that people knew we put the right thought into it, but that we were never going to be able to [inaudible 00:26:08]. Once we understood that...you want to explain your logic. What I understand and what I tell young companies, people are investing in you and an opportunity, and that you will be able to figure out the best pathway between the opportunity you see...if you're smart enough and hardworking enough and at least straightforward enough, and they think that you have the intelligence and personality and perseverance, above all else, to get through a process, to find your right way to that opportunity, that that's really, more than anything else, what you're trying to express in a pitch. Because everyone knows you don't actually know the path from day one.
Kelly: We, in some ways, think, "Oh, we don't know the path from day one because you can create something better." But let's also talk about the amount of money that you took from AOL. Because that's something that is very different than today in terms of, first of all, the amount it cost to build the company. Things now that startups literally don't have to pay for that you needed to pay for, but also the amount of money that they're getting. So talk about sort of Series A and $1.6 million from AOL. What were they expecting you to do with that, and how did you put that money to work?
Carley: It's funny now. It seems like a lot for a seed round. The equivalent that you would need today would be whatever, $300,000 or even less to get as much done as we got done. But yeah, I have a hard time...and I remind people, we had to actually buy servers, buy bandwidth, buy software licenses to the tune of hundreds and hundreds of thousands of dollars. So majority of that money was just gone from trying to get the baseline company, getting started. I remember nobody had their own computers. You couldn't do BYOD. You had to buy the $6000 Apple desktop machine for your one graphic designer that you had. So a lot of the money was taken purely from the infrastructure of getting your company going.
Because once that was the case, there was so little left, we learned this really early rigorous rigor with spending. And we always felt like we had not a dime to spare, and that it created this real creativity, I think, on the part of all four co-founders, and resourcefulness. Because we knew we needed to make big splashes with very little money. Remember, this was, in many ways, a brand play, in the early days. We needed to get the foundation going of what we were, get a company started, but we needed to get out there and make a lot of...be visible in a big way. So whether it was trying to create events that drew attention to our brand...
And this is actually why we started coming up with these creative marketing ideas of getting a book deal. We didn't get a book because we really felt like we needed to have books that was part of our original mission. It was because h do you get on The Today Show? You go on The Today Show because you have a book. And you get a book, well, that's a benefit is you're also in the bookstore shelves where the brides look for information on bookstore shelves. Wait. That's a good marketing idea. It's a lot of work, by the way. But boy, it builds your credibility as well. A lot of it was sort of iterative to think about how to be ubiquitous, how to be every single place that a bride would look, and then to use some of the money to create some sizzle and appeal. Because their real customer in terms of spending money was actually the advertisers.
So a lot of that was just putting a nice, glossy package on what we were doing or having, creative events that advertisers could attend and go out there. But that's really all that money got us, once the million dollars is gone building your infrastructure to actually pay your staff. And believe me, people made absolutely nothing in those early days, particularly us founders. It was mostly getting on planes, traveling around, meeting with clients, creating a little bit of sizzle, and just turning a ton of content out the door.
Kelly: When did the founding team finally take a salary?
Carley: I think we got a salary starting maybe a year in. I think that was...but all of our original salary, I remember, was $25,000, which, for me, it was David doubling up a heck. It became 50.
Kelly: Living large in New York City on $50,000.
Carley: Yeah, exactly.
Kelly: I'm laughing, even at like '96, '97, that's nothing.
Carley: No, and we had already been living on a shoestring for a long time, but you didn't care. A lot of it didn't matter. I was in the office all the time anyway. I had nothing to spend money on. That is the beauty of those early days was some of it was just creating a culture where people wanted to be in a company that was doing something fresh and new, and people didn't care that much. They believed in the dream of all being there together, investing in everything we had. And so people really did us a lot of favors and took a lot of low salaries. And yeah, people did really right by us in those early years, trying to help us be successful with the bootstrapping world we were in. You got to have a lot of friends.
Kelly: Oh yeah, got to be a good person that your friends want to do that for you. Now, this is interesting, too, in terms of the differences in eras and times. Now, we have big companies, Uber. Take all those list of companies, and everyone's wondering, "Are they going to go public? Are they going to stay private? What are they going to do? What's the exit?" You went public twice. Explain that to me.
Carley: Well, it sounds sexy. It's not really true. It's a very complicated story. But okay, we went public 1999. It was the era when companies who were still losing a ton of money, it was a great way to raise money. We did. We were taken public by Credit Suisse. We went out. We raised $35 million. It was that exciting time of all of that happening. In late 1999, the door slammed and hit us on the ass on the way out. Because, as everyone remembers who was alive then, that spring, basically the stock market, particularly the internet bubble, burst, and companies started failing. And the entire category pretty much just started to plummet.
So we had the best of times once again and the worst of times. And that was a very, very difficult period. Our company went from worth being...we were $10 a share. We went up to $20 a share. And then over the course of the next two years, we went down to 26 cents, to the point where we were ultimately delisted. And you get delisted as a public company when your stock trades below a dollar for a certain period of time. And once you're delisted, you're on the pink sheets. None of your institutional investors...really they automatically eject you from their portfolios. You're literally in the Siberia of the stock market. And this is all despite the fact that we were a company who was absolutely concentrating our business. We were growing our market share. Our expenses were getting reduced. Our revenues were getting up. Every indication in the company was 100% positive, but the psychological influence of how people felt about dot-com companies just had 100% influence on our stock price.
And it was really exhausting. It was one of the darkest periods in our company. You had to spend all of your energy talking your staff through this, never mind talking all your customers through this. Our competitors in the market were faxing our stock chart to our clients who are...say Macy's was a big advertiser. They would fax our stock chart to Macy's and be like, "Really? You sure you want to give your money to this company? Look, they're going out of business." We were not going out of business. Our stock was just suffering on the market.
And it was just one of the most challenging times in our company, I have to say. But what you do in that instance is poor husband, David Liu, you have to hit the road and you have to start getting retail investors to be interested in you, meaning the guys who wanted to buy you on E-Trades. So you're going to investor clubs out in hotel airports in Cincinnati trying to talk to people about your company - this is the dark underbelly of being a public company - and just went around. This happened basically for two years until we were really able to elevate enough interest, to get enough trading going on with the company to get it back listed.
So that was the second thing. That's sort of like going public again, but not. We basically got back on the New York Stock Exchange by doing that. And what a lot of people do is they do a reverse stock split and pool multiple shares together to make a higher stock price. We didn't want to do that. We believed in the fundamentals of our business, and we just had to persevere and push through. We ultimately went back. We got back up, $5. If you look at our stock chart, it is the most insane thing you've ever seen. Because then, a couple of years later, we were worth $30 a share. All of it is pure insanity. But we had several rounds of investing on the market. And then ultimately, I think what is seen as us going public again is that we actually transferred from NASDAQ over to the New York Stock Exchange because we were sort of rebranding our company as being more encompassing of multiple life stages. So that's when we went from being The Knot, or KNOT ticker...when we went to New York Stock Exchange, we became XO Group, and XOXO is our ticker.
And that was, in some ways, trying to shed our past of what we had been seen as, and just this sort of small company, and really to market the opportunity that it was to be covering these multiple life stages, not just the wedding market. It also was more visible on a global scale. We were doing our China expansion at the time. And also because New York Stock Exchange was very aggressive, wanting us to move over.
Kelly: Which, in itself, says something about the fundamentals of the company.
Carley: Right. You're right.
Kelly: And believing in them [inaudible 00:37:00] all those retail investors who bought at 26 cents must have been very happy.
Carley: Oh my God, so happy. My father-in-law's best friend being one of them. He made so much money off of our company. But that's what it is. I swear, Kelly, this is a story of perseverance. Everybody needs to think of being an entrepreneur as really just testing your perseverance at all times. That is the number one message, the bumper sticker, I think, of our company, is just pushing through incredible...there are going to be roller coaster rides, and you just have to use your heart and your focus on your company just to keep going. Keep your staff focused on doing the right thing for your customers. It's the only way to find your way through these periods.
Kelly: And if you're not prepared to stay in hotels and airports...
Carley: Oh, my gosh.
Kelly: ...in cities you otherwise wouldn't want to visit.
Carley: I've been in some...
Kelly: You got to do everything.
Carley: ...really ugly places.
Kelly: You got to do everything. Your management team, your leadership skills were tested and pushed from every moment with starting The Knot and everything that you've been through. Did your leadership style change besides, I would say, maturing and growing with experience? But did it change at all over the course?
Carley: Oh, I think it must've been such a challenge to work for me in the early years. I was like totally take no prisoners. To me, the end result was the only thing that mattered. And I think I definitely learned over time. I always say having kids was the best thing. I was like, "Oh, that's what patience is." I was so impatient. I swear to God. People will hear this and be like, "Yeah, you were a nightmare." But the one thing I always had as kind of a fundamental...actually really we always cared about our staff deeply on a personal level, to really care that they were having a great working experience. And so my style, I think, has always been...at the forefront, was being inspirational and really put so much passion to what I do. And I think that that is infectious.
And if you have the right people around you who can be in that with you, and also to just be really open to letting other people play a huge role, as big a role as they wanted to play...I always let people play. Because then you, if you have enough humility, and you can give other people the space, and you're creating a safe environment for them to do bold things, they get bitten by their own entrepreneurial bug. And that was my favorite part of this was always being able to take charge and have that sense of almost impunity, in a way. And I wanted to create that for people around me, because I thought that that would make a really successful environment.
And so I think it changed in my patience for people's ease in doing that. I didn't understand early on that people weren't automatically like me, and they needed more time to understand that they could take risks and make mistakes. And that was okay, and that they were not going to get in trouble for it. So I think the how I communicated it and how I encouraged people to follow that path changed a lot.
And I also learned just I have to communicate a lot more. I really believed that people can read my mind. And there were some people like, people do not think like you. They cannot read your mind. You have to over-communicate, even though for you, it seems like a total waste of time.
Kelly: That self-awareness is just so, so, so huge. I want to go back to the product itself again, for a moment, because I think this is the other important thing. Knowing that weddings are such visual creatures, and that's part of what the sale is, originally, you couldn't build the product that you wanted to build.
Carley: Well, the internet at the time could take 20 pixel by 20 pixel pictures. You remember there was no bandwidth, right? So it was interesting, but necessity makes you think very differently. And so I knew that planning a wedding was about a couple of things, right? Magazines were all about looking through pictures and all of that. So that was one side of them. Okay. Well, we can't do that. What's the other thing? Oh, it's about communicating. People are obsessed with talking with each other about their weddings, and kind of just fishing around within the constraints of what was available on the platform at the time. We were really led to focus on community, on really fostering...I didn't really understand community at the time. I wasn't a super early adopter of the early, early internet message boards. I didn't really get it. But when I thought about my customer and I thought about two women meeting each other on the street who both found out they were getting married, that there was so much value and intensity in their communication, we realized like, "Oh, right. That's what we're doing. We're connecting people. We're making a social network around the world of weddings." And that's what we can really use this platform.
And so I fell in it almost by a mistake. Once again, I didn't have the vision to understand it from the very beginning. But once I put two and two together and had the [inaudible 00:42:13] to do it, and that really powered so much of our early growth was that social network working aspect of it. And only later when there was the internet and there was higher bandwidth...and I almost, honestly, even miss that side of it. I actually acquired a company that had created the world's largest online database of wedding gowns, right? And that became the other thing that powered our tremendous growth and page views. It really just goes to show that even when you think you've researched your audience, sometimes you will miss major aspects of what it is that is interesting to them. And I really liken it to half the time just picking up a bunch of rocks all the time, and be like, "Oh, I got really lucky," and maybe had the openness to see it at the time. But I think that constraints are, in many ways, a powerful thing and can lead you to push your expectations or preconceived notions of what people are interested in.
And then, if you look at it overall, that is ultimately what we did. We created the first social network around weddings and connected people to share reviews of their vendors and uncover different ideas. We connected people, one person in Northern California who was planning a Scottish-Japanese wedding with a random person in New Jersey who was doing the same thing. We were really able to make connections around people. And that connectivity is ultimately what...as we all have discovered over time. And I know you're a huge proponent of it's that idea of connecting people that is really the power of all these tools we have in front of us.
Kelly: And it was in good old AOL chat rooms. I say to people, "Go to Wikipedia. Look it up and you'll see what they were..."
Carley: I know.
Kelly: "...and realize how crazy and visionary this was."
Carley: It was. So much that is old is new again. Let's just put it that way.
Kelly: What goes around and comes around. Let's also explore this. Because you talked about going public in 1999 as a way of getting financing. You didn't talk about going public in 1999 as a way of an exit. So were you ever building The Knot for an exit?
Carley: No, we were completely naïve. We didn't think of the world in that way. We were building The Knot to make the number one destination for people on the planet to plan their weddings. We had no plan that way. We always were thinking six months, one year ahead of us. The four founders all together were just obsessed with really making something important that stood the test of time, but more than anything else, helped these people accomplish this incredible project that they had. People looked at us, I think, as very naïve, the entrepreneurs around us. They were like, "What do you mean...?" Even when the first person said exit, I swear to God, I was like, "What does that mean?" We just didn't think about it that way.
I didn't necessarily think I'd be building this company for my entire life. We actually had a plan where we were going to be launching brands of a similar size every six months, which, of course, was total and complete naïveté once again. It took us 10 years to launch the second brand. So you could just see how off the mark we were in so many ways. But I think that it benefited us because even when it came to having four founders, it wasn't about the sharing ownership in the company for us. When we got our financing, it wasn't about that to us. It was about making all the right choices now to be able to get this company off the ground and going. We just weren't in it for the exit. We only thought about it maybe 12, 15 years in. I'm like, "Huh, are we going to be doing this forever? How does one think about, you know, transitioning? Interesting." And then we would pretty much just stick our nose back in our business and not think about it again for a while.
And over time, two of our partners left and moved on to other things because it wasn't the right fit for them anymore in terms of how they wanted to be spending their time. David and I stayed. It was so challenging all the time. It was so interesting. It never occurred to me to think of any way out. I just wanted to keep doing it until we could change the world, and there always seemed to be a new technology coming up. Imagine, you've been doing this since AOL where you have 1 inch by 1 inch pictures, and then people have mobile phones. It's so exciting, the opportunity. All the things we wanted to do 18 years ago were finally becoming possible. Why on earth would you exit now? And so it always seemed to be exciting to me, and...
Kelly: But you and David have now exited.
Carley: Yeah, for the most part.
Kelly: You stepped...
Carley: Yeah, stepped away from the day-to-day. It did occur to me one day. We actually did have sort of a 20-year mark in our mind, that maybe 20 years was enough to give to The Knot. And it also occurred to us that we had been continually surrounded by these incredibly powerful, smart people who were joining our company all the time. And so as we looked at the next 10 years and what the opportunity was there, we just thought, "There are people who can do this. We don't need to do this anymore." David's currently chairman of the board. He can provide general strategic guidance on the company from that position. I am the brand ambassador and sort of a strategic advisor to the company, and I can kind of help them have a vision for maybe the next generation of the brand, or thinking about that, or marketing the company is really the best role I can play. But I didn't need to be in the trenches anymore. Things just happened. I don't know. I feel like really just by listening to yourself on some level...I didn't plan for it, but suddenly it just seemed like the right time to transition and let people take over the day-to-day. And I actually didn't have a lot of time with my family in all those years. My daughter was going to college. I don't know. It was just one of those things, like a lightbulb appears ahead of you. It takes two years to make your lightbulb get to come to fruition. But we planned...
Kelly: Why two years?
Carley: Well, you actually have to find people to replace you. In a way, you're like, "Oh, I'm totally irreplaceable." Then you actually look at all the things you do as the kind of green berets in a company. And we had to make sure. We had to hire all the right people. We had to hire a new CEO. I had to hire a new editor-in-chief. I did the role of three people, so I had to hire all those people, train all those people. It's not like when you actually are even a C-level executive and you can kind of give someone six months' notice and walk out the door. You actually had to rebuild the company around you to make sure that the people we brought in had a sense of the direction we were going and provide enough of wind beneath their wings, that they could just use a little Celine Dion. I don't know.
Kelly: Knowing that I'm Canadian, I knew you wanted to pull in the Canadian aspect.
Carley: Exactly. You just want to make sure they're going to be successful. This is my entire net worth. I'm not going to walk away without making sure that everyone has enough room on the runway, and foundation from us to get to be successful. And so it takes a while to make that happen.
Kelly: And you and David leave big footprints. How do you ensure that the new CEO and your new editor-in-chief can be successful without feeling like, "Oh, but you're not like mom and dad?"
Carley: You know, we pick people who were not going to have a problem with that. Mike Steib, our new CEO, has got very much his own way of running the company. And he's a strong personality with an incredible vision. People were very uncomfortable for six months, no question. Believe me, I think some people were...there were just as many people who were uncomfortable, who were relieved, who were like, "Oh, a few fresh...if I hear her tell that story once again..."
Kelly: Twenty years is enough of this woman, yeah.
Carley: Yeah, exactly. So I think that ultimately - you're right - founders are a really significant force in a company. And I think we almost underestimate it because that was sort of our way. We underestimated our value. But that's why you have a long time to do it, so you can really build around it and provide the support. But you're just picking the right people. And it's not easy to do, but it's almost fun. Your number one thing is...and for anyone who gets to the point, to be in the lucky position that I'm in, it's amazing because what you're really doing is you're saying, "It's your startup now. You're the entrepreneur. You have to go make it the company you want it to be. Don't make it the company I want it to be, because you are in charge. You're in charge of this department or team or brand, in a way." And that has moments where you're like, "No, I changed my mind."
But mostly, that's the job. The job is to hand off the excitement, and you really want that. Once you've had a taste of what it's like to give birth to a company and a brand in that way, and a culture, all of that, you want people to have the sense of ownership. Because there's nothing quite like that feeling. And I think that that was one of the [inaudible 00:51:32] of our culture throughout its history, was making everyone feel like this was their company. And we never did it well. I look back now and I sit on the board of companies, Rent the Runway. And I look, they're so professional, and they learned everything in business school, and they put all their key values on a wall. And I'm like, "Oh, wow. Look, there's such a science to it now." And that is really important. And we never did it the right way because we didn't know the right way to do it. Because we didn't have that history. But we were impassioned about communicating it, I think, in our own way. But you do have to say those things out loud. I have so much I could learn, and I'd do it if I did it again. But...
Kelly: Would you do it again?
Carley: It's funny. I'm giving myself a good, solid break. I am still super passionate about the company that I built, and I want to give all my free time, I'm thinking, to that. Or I feel like it's my time to give back. And so I love taking the call from that entrepreneur who has heard about me from so-and-so and just needs a half an hour of my time to give advice. I really enjoy doing that because I feel like it is an amazing moment to pay it forward. But I also am really enjoying focusing on something totally different and that's inspiring to me. I never had a lot of time to pay attention to things outside of my business. I literally just focused on my business and my kids, my business and my kids, and that's all I could think about. I didn't get a manicure, except if I was going to be on The Today Show. For 15 years, it was no personal time. And so it's nice to be able to put your eyes up and [inaudible 00:53:15] things.
Kelly: And do that. And I want to thank you personally for keeping your head down on the business, because you had a successful business. And I think there is some of this, I'm going to say, extracurricular activity that a lot of startup founders do, that I'm like, "Yeah, get back and focus on your business." I want to hit some questions that we got in from listeners. You got some money from Sand Hill Road. [inaudible 00:53:39]
Carley: I know. We flew all the way across the country, used our precious dollars on airplane rides.
Kelly: So you know Hummer Winblad, particularly one of the few women VCs at the time? How did you convince them to invest?
Carley: It's very funny. We made a great run because we had really early seed money that was completely uninvolved. AOL, once they gave us the money, they didn't talk to us again. It was perfect. It was almost exactly like angel money in a way. And then we knew we needed more money, went out in the venture capital round. And it was interesting. We had heard about Ann Winblad. And we were like "Oh, wow. Finally, there'll be a woman who will understand." Because every pitch meeting you go into with a women's-focused consumer-facing media company on weddings...are you kidding me? All their eyes, completely glazed over. And it was only the young associates who weren't even sitting at the table who were able to actually provide the verification of the pitch in terms of the opportunity we were providing. And so we thought, "Oh, Ann Winblad, that'll be amazing because she's [inaudible 00:54:49]." And it actually was not even Ann Winblad who was interested in our company at the time. I think she supported it. But it was Bill Gurley who was...we were one of his first investments. And I think he saw the opportunity in the market size, and in the idea that it could be his original concept of a marketplace, that there was so much money that could be unearthed through this technology.
So ultimately, I think Ann was curious, but consumer companies weren't really their thing. They were just dipping their toes in there. They did see the opportunity. But she became ultimately an incredibly powerful advisor to us, and not because we were a women's-focused company, but because our way of looking at the world...she was a straight shooter. And she came and told us...and my favorite quote actually from anyone for my entire history was Ann Winblad saying, "Define your market and declare victory. I don't care how big it is. I don't care what the definition of it is, but define your market and declare victory." And she did. She became a great advocate of ours.
Kelly: Okay. So I want to go to our pay-it-forward questions.
Carley: Got it.
Kelly: So the way I ask all of our guests these...so I'm going to hold you to fast answers.
Kelly: We'll save the editorial for a blog post, if it's needed. But otherwise, fast answers on these. So what are your go-to sources of information?
Carley: It's quick and dirty. I go through Twitter and click on any links that are interesting to me. That's it.
Kelly: Twitter's a favorite. How do you discover new information?
Carley: It's interesting, always through Instagram.
Kelly: Wow. I like that answer. I like that a lot. What book are you reading?
Carley: Amy Poehler's "Yes, Please," because I think that comedians are the boldest risk-takers there are, and I want to know what's going on in their minds.
Kelly: Is it Kindle or hardcover, softcover?
Carley: It's on all of the above.
Kelly: Okay. Got it. Got it. Got it. Got it. Is there a technology conversation that we're not seeing and having that you think we should be having?
Carley: Oh, I'm afraid I'm a little bit of a Luddite on this one. I'm not a Luddite, but I'm scared that we're not having a conversation right now, never mind a technology conversation. I'm definitely in that mode right now where I want to see people's faces and talk to them face-to-face, and I feel fearful for the fact that our eyes aren't up. So I hate to be that person in the room, but I'm so avid in technology. But I'm just like, right now, put your eyes up.
Kelly: Yeah, more technology to get us out of our technology.
Carley: Yeah, exactly.
Kelly: Who were the people who most influenced your career?
Carley: My business partners, the three founders of our company. I learned the most from them, my best inspiration.
Kelly: Best advice you ever received.
Carley: Ann Winblad's advice to define your market and declare victory.
Kelly: What makes your work fun and rewarding for you?
Carley: Oh, the people I work with. I love, love, love working on teams.
Kelly: All right. When you go into your wardrobe and you need something that's going to make you feel bold and brave and badass, what is it?
Carley: A killer pair of high heels, there's no question. I can't do anything big and bold without a pair of heels on.
Kelly: I'm with you on that. And you alluded to this at the end, how are you paying it forward for women?
Carley: I love to talk to young entrepreneurs and make them put their anxieties aside and not be afraid to be bold. I think that that is the best I can do is to give people confidence to take the risk. There's no going back to not take the risk anymore after the fact, so go for it.
Kelly: Thank you. Thank you for being a successful founder, and thank you for sharing your story.
Carley: Thank you.
Kelly: This concludes Season 1 of BroadMic. Thank you so much for sending us your comments and for sharing BroadMic with your friends over the past few months. We read everything you send us, and we've been really grateful for everyone's enthusiasm. Words cannot convey what it means to us to have you as part of this community. We'll be taking a short break while we produce Season 2. During the break, you can listen to the bonus cuts from BroadMic's Season 1 guest interviews. Subscribe to BroadMic on iTunes so you don't miss an episode of our upcoming Season 2. Please review our podcast on iTunes, which will help other listeners discover BroadMic and grow the BroadMic community. BroadMic is produced by Christy Mirabal, with editing by John Marshall Media. Our executive producer is Sara Weinheimer. Think Broad.