This week’s featured founder is Scott Paul, founder of Wooly. Wooly allows brands to see who their fans are, what their social reach is, and then reach out to them directly as potential brand ambassadors. It is a startup created to bring authenticity to the influencer marketspace; created by the guy who helped build the influencer marketspace to the heights that it has become today.
This week’s featured founder is Scott Paul,, founder of Wooly. Wooly allows brands to see who their fans are, what their social reach is, and then reach out to them directly as potential brand ambassadors. It is a startup created to bring authenticity to the influencer marketspace; created by the guy who helped build the influencer marketspace to the heights that it has become today.
In this episode, you will hear how Scott’s mobile startup pivoted from what it was to become one that helped leverage social influencers. Later, he shares how that expertise played a key role in becoming part of a firm that Disney acquired because of the impact on the marketspace. I like hyperbole as much as the next hopeful entrepreneur, but this is 100% legit with zero overstatement.
Scott’s story will take us through his various startups. Like Scott, I hope you’ll hear how the dots all connect or rather how they started connecting from when he was a very young kid. This is Scott Paul’s startup story.
“After 10 years of having ideas and seeing someone else bring them to market, I got tired of ‘dabbling’ and jumped all in.” – Scott Paul, Wooly
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Special Guest: Scott Paul.
The Startup Story - Scott Paul
Scott Paul: Hi. I'm Scott Paul. I'm the founder and CEO of Wooly, and this is MY startup story.
James McKinney: Every wildfire began with a spark. Every superhero has an origin story. And every single startup has a moment that they point to as their beginning. And every founder has a purpose that drove them in the midst of all obstacles. THAT is The Startup Story.
James McKinney: Before we jump into this week's episode, I want to read a review from Hannah Flint, who gives the podcast five stars and writes, "I am so glad I learned about this podcast and James McKinney. As a fairly new entrepreneur, I appreciate the true stories of tenacity, serendipity, failures and successes. The Modern Woman's Business Planner is my own success in the making. Check it out at MWBP.shop." Well, thank you Hannah for the great review and I'm glad you discovered the show. Now please share the show with other entrepreneurs you know. And also, because you took the time to write a review and include your URL, I'm going to take a look at what you're working on. I think you're onto something special there, so if you are a modern business woman, you should visit MWBP.shop and check out what Hannah's working on. I have never seen a planner like it. In fact, for all my listeners, male or female, go check out MWBP.shop and see if Hannah's product might make for a great Christmas gift this season. Yes, I just mentioned Christmas and it's still October.
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Now, let's jump into this week's episode. Our guest this week is Scott Paul, founder of Wooly. What's interesting about Wooly is that it's a startup created to bring authenticity to the influencer market space that was created by the guy who helped build the influencer market space to the heights that it had become. Wooly allows brands to see who their fans are, what their social reach is, and then reach out to them directly as potential brand ambassadors. And by the way, I was not exaggerating when I commented that Scott helped build the influencer market space. In his journey, you will hear how his mobile startup pivoted because of the niche he created in leveraging social influencers, and then how that expertise played a role in him becoming part of a firm that Disney acquired because of the impact they were having. Look, I love hyperbole as much as the next hopeful entrepreneur, but this is 100% legit with zero overstatement. Scott's story will takes us through his various startups, but because of the journey Scott has taken, he already sees how the dots all connect and how they started connecting from when he was a very, very young kid.
Scott Paul: Yeah. I think that it was, in fact a memory just came to me that I haven't thought about for probably 30 years, and it was me and my mom shopping for fabric when I was like eight and I wanted to make shorts, and I was in California. I wanted to make shorts, but not for myself. I wanted to sell these shorts. There's these brands… I remember these brands in California in the eighties. There was one called like Gotcha, weird brands you don't see anymore, but I'm like, "I can make these shorts, Mom, with these fabrics from the store." So I had not even thought about that until you just asked the question. So yeah, it's been early. It's been very early for me at least how can I arbitrage an opportunity with make something and sell it for more, or even just bringing suckers to school that my mom got at Walmart and then sell them for a quarter or 50 cents a piece. I think I was very much the how do I take home some money when I didn't have any money, or allowance was my cap for any kind of weekly money. So that's been in me, but I never knew what the word entrepreneur meant. I don't think I heard that until I was like 16.
My history is growing up in California, and I'll tell you the thing that kind of defines me of my upbringing is I was always in trouble. I was early diagnosed ADD/ADHD and I knew right away that like school wasn't my thing, and sitting in classes wasn't my thing, and I was always a kid that had to like have a special program where I was getting a note from the teacher at the end of the day, was he good, was he bad. I was suspended many times just for doing dumb little things. I didn't even know what I was doing, but I was just doing me. I think what happened there is I quickly realized that I was going to probably go up against authority, but not just authority but probably this like… I was going to go up against someone told me I couldn't do something, that didn't have any real weight on me.
I'm like there's always a different way to do something, and I don't think I even really recognized that my troubled youth that caused my parents a lot of issues was actually just boot camp for me to eventually become what I became. But it could have gone the other way. One teacher told my mom that, "Your son's either going to become a CEO or he's going to be in prison." That was the dichotomy there of what I was going to do in the future.
James McKinney: When you look at, obviously seeing that the system, and that's really what public education is, is the system, seeing that the system didn't serve you best because of your ADHD and just how you were wired. You talked about rebelling against authority. It really wasn't authority, it was really the system you were trying to figure out because you were wired differently, and you couldn't put a label of entrepreneur on it yet because you didn't know that label. Now looking back again and following these breadcrumbs, you can see that's really what it was, is that you didn't fit into the system that made sense to the culture, and so what was your… as you came to the end of your high school years and you probably sold a ton of shorts to compete with Gotcha and Jimmy Z and all the big brands of late eighties, early nineties, when you came to the end of high school what was your next step? What did you think you wanted to do?
Scott Paul: Well it didn't even take until the end of high school. I did sell a ton of shorts. That was like junior high. It was when I was 17, I got a job going door to door selling… I live in Utah, and in Utah there's a strong Mormon culture, and Mormons believe in having a year supply of food storage, just in case the worst thing happens.
James McKinney: Oh wow, okay.
Scott Paul: It's just a thing that… and so you'll go around here, and there's a lot of houses that have tons of cans of food. Near the mid nineties, Y2K had started being, there was rumblings about what's going on with Y2K, it's going to be big. Being opportunistic, I first started selling these dehydrated foods door to door for this company that was kind of piggybacking on the Y2K scare and selling a bunch of dehydrated foods door to door to families. I was a really good sales person. My job was to knock on doors and set up an appointment for sales reps to come cook the food and show them how these foods were actually pretty good to eat, and also had long shelf life.
I'm a junior in high school. I go out one night and I knock like maybe 50 or 60 doors, and I set up like 7 or 8 appointments. I got $20 for every one is set up. This is crazy. Other kids are going home and studying for the AP test, but I'm out making like hundreds of dollars a night as a high school student. It ended up being like $3,000 for a part time job every month in the nineties. I'm 17. Then I said, after only one week of knocking doors, I'm like why can't I be the guy that goes in and cooks the food? I'm setting them up, why can't I just verticalize the whole, I'm going to get vertically integrated here. I want the whole things. So now you had all these 22 or 26 year olds that were sales reps, wondering why this 17 year old is on the team because all I did is I asked let me get on the team. So now I'm the sales rep for this company. Now I'm making $5,000 a month. This is like more than a lot of adults are making in my same neighborhood.
James McKinney: That is awesome.
Scott Paul: And then I'm like wait a second, why am I just knocking on doors and selling in one city? There's this thing called the internet. Why don't we use this internet? So I went back to my school and I found this math teacher who knew how to make web pages. This is early day, Geo Cities. I'm like, "Math teacher, here's $600. Make me a website where I can show off all these emergency preparedness items. I have them all. I'm selling them already, but let's put them online so that people in New Mexico and Nevada and California can just buy."
So I went out and had my mom sign for merchant accounts so I could sell online. 17, in 1998, I'm running an ecommerce story. I didn't know what ecommerce was. It was a website, right. Ultimately, we know how the story goes with the Y2K, nothing happened and that business taught me so many lessons when I was young. I loved having the only kid in high school with the big cell phone and I was going around. But at the end of the day, I didn't spend all my money wisely and I probably grew too fast.
Ultimately, it would be 10 years before I actually got the guts to try that again. I went all out and it was fun, but I was subsidized. I had seed funding which was my parents at house, and their home, and their food. So it was a few years. I got married after that. I kind of tried to go a little more responsible. Like okay, I've got to do the day job thing, I've got to see how… I've got to get stable first. I've got to learn lessons from other people. So I didn't have the traditional story where I never worked for the man, where I'm always like, "I'm an entrepreneur at heart and I'm always going to work for myself." I had early start, but I had a 10 year period where I kind of went to school I guess to learn how to do the corporate life, or how to work for other people.
James McKinney: You used an interesting phrase in there, that you said it'd be 10 years before you had the courage to do it again. I'm big on word choice. Why that phrase? Why did you say until you had the courage? Because it sounds like you had a pretty big success at 17 in ecommerce. Granted, you blew it all right like most 17 year olds would. But why that phrase?
Scott Paul: That courage to do your own thing for most people does take courage. There's an unknown. There's no program. The schools never taught you to go start a business. That's not what they teach you. You're there to go through the system all the way to college and graduate degrees, to then get recruited. You don't get recruited to be an entrepreneur. No one's going to recruit you to go startup a company. Only lately has that even kind of been a thing where you could actually go from your Harvard MBA or Stanford MBA and go join a startup, because they actually have money now in the VC world.
But back then, no. The world you would go to was laid out in front of you, and that was safe. So bravery was to actually like go and do the unknown, the thing that no one was encouraging you to do. When your parents are asking, "What's your kid up to?" It's always nice to say, "They're studying economics," or, "He wants to be a doctor." But, "He's out hustling something on the street, we don't know," that's not the story they want to tell. So it was courage for me.
And then secondly, there is real courage because I had a family that was started shortly after high school. I got married and had responsibility and a family. There's definitely risk to all that by not taking the day job, the health insurance, the predictability. You've got to blindly go off that cliff at some point and that takes courage.
James McKinney: So common wisdom would say you take the risks when you have the least amount of responsibilities, and so graduating high school and even if you got married, I don't know how many years after high school you got married, but it sounds like you got married young. So getting married young, it's still a spouse with no kids yet, so again we're still in that season of lesser responsibilities but it sounds like you didn't take the risks when you had the least amount of responsibility. It wasn't until 10 years later where now you have kids, and I'm assuming there's probably a mortgage somewhere in there, and then you decided to jump into either your first startup or a startup.
What happened at that season of life, and what were your responsibilities? And then how did you navigate starting your own company with those responsibilities? And the reason I ask that question is that there are people listening that have a 9 to 5, and some narrative in their mind as to why they can't start something. A lot of times that is I have kids and a mortgage. For some, it's even well I'm 60 and I can't do it. Again, you started your, I guess we'll call it your second, your third startup if you count the short company. So you started your third startup when you had greater responsibilities. So what was your thought process and how'd you make that transition?
Scott Paul: I should say that 10 years to take the courage, there's an asterisks there. I did start with my wife in about 2002 and 2003, I took some really big risks, and this is maybe not entrepreneurship. But I took all of our student loans that I didn't need at the time. I didn't need the student loans, but I'm like they're going to give me these loans for 1% interest? This was early 2000s. That's interesting. That's, what should I do with that? So I was trying other things. I took that money and, get this, this is kind of a weird… this is just a little bit crazy. I was on the campus and everyone had these white ear buds in their ears, and I'm just like something is going on. Like what are all these whit ear buds doing?
Of course, I knew what they were. They were the Apple, the iPod had just come out and every students getting them at the Apple store on campus. I go and get a Scott Trade account to trade stocks. I'm like this stock is at like all time low. It's at the time it was $8, the Apple stock, AAPL. I kid you not, this is 2002 or 2003, you can go look at it. It's all there in history. I took $20,000 of my student loans and I dumped $10,000 of it into Apple and a few into Amazon, Home Depot. I remember I did a few stocks, like Sirius Satellite, which never did anything, but I did a little basket, but I remember I did the majority in Apple.
Why do I remember? Because that fed me for the next five years. I just sat there and watched a stock double. Now, this is getting lucky. There's nothing about this that is skill or anything, other than an observation I made and decided to bet on it. My very conscious wife, who's a school teacher and her parents are school teachers, every day said, "Sell it, sell it, sell it," and I finally listened to her, and I sold it. I probably sold it at maybe a 10x return when it would have been about a 40 or… I don't even know. I haven't even gone back to look at it because it's one of those sad stories. It would have been several million dollars, I think a million dollars by now at how many times it split, right? So my wife apologizes sometimes for that. But if I didn't have her to balance out my risk, I would have lost it somewhere else like I did at 17 with my food storage winnings.
So I was taking risks in other ways, but that's not bravery. That's, some people call that stupidity, but that's just the nature of I think entrepreneurs is that we, even when it wasn't in me and I wasn't running a company, I was trying to take risk. And I did also try to make a wedding video company where I would scan photos into scanners, and try to make a slideshow back when that was still a thing, pre digital camera. But I think to your listeners, what's important is that I was always trying something. It doesn't take a lot of courage. Anybody can be dabbling.
So for the 10 years, I actually did dabble with things. It's very important to realize an hour a day can allow you to do a lot. Never has the world been so open to dabbling. There's so many platforms to dabble. Go try Etsy, go try… you can mess around and really test an idea and test a product. I was always doing that. I never gave up on that, but here's where I think I really got frustrated is that I was dabbling and I was telling people my ideas, and then two years later I would see Groupon come out and I would go show the email like, "You guys, I wrote this whole idea out," and I would show Airbnb. I had tried to build an Airbnb, but I only dabbled. I only made the website and with no marketing spin, and it was kind of like couchsurfing.com if you remember that. But I never put the money into it. I never committed.
So in some ways, I didn't have courage. I actually only had enough to play around with ideas, but I was the person who was saying, "I came up with that idea," and then finally it got to me after 10 years. I'm like I'm not going to sit and be that person that says, "I had another idea that in my mind invented, that I didn't bring forward. I'm going to start executing." And that finally happened in about 2010.
James McKinney: That is amazing, and I hope all the listeners heard all of that. Because I know for myself, as you were talking about those things that you thought of or even dabbled on or did a little bit of setting up a website, I can think of so many things in my life that I have dabbled on, or bought a URL with intentions of doing something and then a couple years later, I mean who knows. I don't know how many URLs you have right now, but my URL bank is a memory of things I should have moved on at some point in time.
I think a lot of listeners are in that same place, especially my listeners being entrepreneurs and want-repreneurs. And so now, we get to 2010 and you say no more am I going to sit on the sideline and watch people execute on these ideas that I'm having, that I can execute on. And what was that first one for you?
Scott Paul: The first one was a failure. The first one was 2009 actually to be honest. 2010 is when it finally hit, but 2009 I was working for a company that was experimenting with small rotary aircraft, like helicopters, filming with small remote control helicopters. Of all things, we were filming a whole bunch of the beautiful national parks with these things. Then I see a video from Germany where this guy has got this weird little drone that has eight propellers, and it's flying around being really stable. Lo and behold, this is the beginning of drones. This was like ground zero. This guy in Germany with a company called Microcopter. Yes, DJI was growing over in China but in a dorm. If you ever read that story, it's amazing, but there wasn't a lot of drones in the US right now outside of probably the military doing things.
So we see this on the internet in about 2008 and I decided I'm going to import drones. So I start buying from Australia and from all these hobbyists and enthusiasts. I start buying with all the money I've saved for the last 10 years, my Apple winnings, right? I start buying drones and I had this hacker friend who was a close friend, who can build anything. We're going to go around, we're going to start selling our services. Video, photo, whatever because now we have this stabilized platform.
Well, the first day out with my $7,000 Octocopter, which looked like this flying spider that I just got in the mail, we get it up in the air and then it just runs away from us. It just, we don't know what happened. Lands at a baseball game, a little league game, right on the line of the first base where you run. It just comes out of the air, parents are screaming, no one knows what's going on because satellite had just fallen out of the sky. We run in there, grab it, run out of there. It's destroyed. My $7,000 of carbon fiber material is gone. I'm just like okay, do I have the patience to rebuild? No, I'm going to kind of sunset this one. I'm going to let people come in through the website. Maybe they'll want something, but I don't have the heart and the patience to go through the R&D necessary to watch these things fly out of the sky.
So that was failure, but at least I took the chance. This wasn't a dabble. I went all out. I started putting tens of thousands, at least $10,000 toward equipment and website. I had a partnership and I employed that partner, like I was paying his time. I was taking my income from a day job and giving it pretty much entirely over to another person to help build this dream of mine. Meanwhile, I'm living on meager savings. So that was courage. That was execution, but the wrong idea. And that's, your listeners also need to realize, you're going to fail. Even if you go all out, you're going to fail. If you don't fail, you're doing something wrong. You're going to fail, but you're going to find in the failure the Phoenix is going to rise out of the ashes, and that's what happened with that idea. I actually, ironically that's how my next thing came about was from that learning.
James McKinney: What was that next thing?
Scott Paul: The irony of this is that I'm going around trying to sell these drone videos to hotels. I'm telling them, "You see this new iPad that just came out? You can put this on your front desk in your hotel, and you can show all the cool things to do in the area, and you can replace that brochure rack there in the hotel lobby that's really ugly. Why don't you just have this interactive kiosk? We can make all these videos for you. We can make all these cool videos of all the vendors and outfitters, and cool things to do in Park City, Utah and in Moab, Utah, and St. George, Utah and Zions."
So I'm selling this idea that I had, this crackpot idea that was way too much to do, but the hotel people are like… they're looking at this iPad and they're like, "That iPad is pretty cool." This thing just came out, like brand new. We're talking April 2010. Meantime, I'm also in the MBA so I'm doing school at night. I'm going at all cylinders. I'm out of time. But this hotelier says to me, "I like that iPad. I like what you're doing with that iPad. Can you help me get it stable? Can you help me, I want to do the kiosk idea in the hotel." I'm like, "Okay, okay, yeah, cool, okay. I'm going to go make a case for you. I'm going to find some way to make a case so that you can put it on your front desk and it won't get stolen."
So I go hire a brother in law's brother to machine up a metal cage for the iPad. This is where it gets good, and that is where it's just stupid, stupid luck where you don't know what's going to happen, but if you're not adaptable, I might have missed this. I go and I machine up this stainless steel enclosure, and I take it to the hotel. I'm like, "Okay, here you go." Like yeah, we like that. They just wanted the enclosure. They wanted to put on their iPad their rooms. They didn't anything else. They wanted to show their rooms. They didn't want any videos from me flying drones through the canyons. That was too much. They wanted the hardware. So I'm like, "Okay, how many do you want?" They're like, "Well, we need several for all of our hotels." I'm like, "Okay, I'm going to go get 10 of them for you."
So I go get 10 more of these things machined. And here's the funny part too, as an entrepreneur what you have to learn, I didn't even know how things were made. I thought the way you made things with metal was like that some forge out there was pouring hot lava into this… and dwarves were pounding it with their hammers. I had no idea that you could actually… you actually made with lasers, you could cut steel and fold it with benders. I thought everything went into some hot lava mold and was pressed. That was my mind of how metal was manufactured.
James McKinney: That's awesome.
Scott Paul: So here I am learning engineering. I'm in fabricators. I'm learning that's how you make that. So here the story is that I'm in my MBA and I'm so bored. I'm like I'm never going to get recruited, I'm never going to go work for a big company. What am I doing here? I buy this URL, just like we were talking earlier, this URL binge. I've done it before, but this one stuck. I bought ipadenclosures.com. That's all it was. It wasn't a great URL because it's not that brand, it's not really brandable.
But in April 2010, the iPad came out and yes consumer liked it, but guess who else really liked this iPad? Every restaurant that wanted to do point of sale. They're all going to hospitals. They were going everywhere. And in those cases, people needed an enclosure to keep it from being stole essentially. So we had one of the first locking metal enclosures. I called it Full Metal Jacket. That was my name for that first one, and we sold $5 million of that stupid enclosure, that first version that got bent up. We didn't even edit it really. We put a lock on it. That's the only change we made in the four years that we sold that thing.
James McKinney: Wow, that is incredible.
Scott Paul: Yep, total accident.
James McKinney: In that process though, did you still keep manufacturing stateside or now, as you had volume, you tried to figure out just to kind of increase margin? What was that journey as you saw that this was actually going to be something?
Scott Paul: I didn't know what I was doing, so yeah. I didn't even… I didn't know how to go over to China, so I stayed the same person who bent the first one I made practically. We took over his entire shop and he was manufacturing, boxing, kitting the whole thing for us of that SKU, of that Full Metal Jacket. We did go on to manufacture injection molded cases and a whole bunch of… so at the end, we had many, many SKUs and sold a whole line of kiosks and enclosures for Surface and iPad and Android tablets. But that very first one, by the time that company was purchased by a bigger competitor up in Oregon, and that happened in 2015, that was my first exit and we can go on that later.
But in the time that I started and sold that, I didn't really diversify my supply chain outside of the US. I probably, in retrospect, would do so maybe differently today because that's kind of where the pressure starts to come when competitors come is on price, and you need to have that lower cost. But I was the first mover and I enjoyed the years of, before a lot of competitors came in, of kind of having a premium stateside, US made product.
James McKinney: That is awesome. Now again, based on what research I have done on you, you did not work that business the entire time through the exit, correct? You had other startups.
Scott Paul: I saw another shiny thing right in the middle of the success of that company, and I couldn't resist it. Once you get an idea, it's kind of like… there's some quote in Inception I need to go figure out what it is but like this idea takes seed and root in your brain, and you can't get it out. Once that happens in an entrepreneur, it's like didn't even matter that I had a successful company that needed my management and my leadership. I luckily had a good executive team and I kind of put that one on a little bit of cruise control, and then went after a completely different thing which was a social media consumer application, an iOS app essentially on the app store.
James McKinney: Before we jump into what that was, because a lot of people when they find success in a lane, and let's just call it consumer good, when they find success in a lane they can take all the things they've learned in that lane and apply it to different products. Was there any concern about changing lanes? Because now you went from hardware to software.
Scott Paul: You've got to remember, like now there's people you can listen to, there's podcasts, there's all this stuff. This type of like discussion didn't even happen back then. This is I'm talking 2010, 2011. Lanes, entrepreneurship, the only podcast I had was I was listening to the Stanford Business School, they had a class that they broadcast where Zuckerberg and other people would come in and talk with these students, and tell their stories just like we're doing right now. And I got to peep into the world of I remember Elon Musk was there at one point, and all these crazy people, and I'm just like wow, that big world out there in San Francisco.
But locally, there was no conversations about how staying in your lane… I didn't even know. Back then, I didn't have any mentors. I saw something shiny, I switched and I didn't know. No one was telling me, "Scott, you've kind of built a little bit of expertise in this space and your network is here, and tradeshows you've gone to, and the people you know. You have an engineering team manufacturing physical goods. You're just going to switch lanes and go and get coders and go into marketing?" I'm like, I didn't know any better. I didn't have a clue. Didn't even cross my thought once.
So luckily today, people even… well I don't know if it's lucky. Today, there's so much noise to the listeners right now that they can go listen to Gary V, they can go listen to who knows who, and they can get all these opinions, thousands of them. There's listicles all over Medium that you could go for hours and hours, and podcasts. You couldn't listen to half of the good podcasts in a day on 3X speed and get through anything, so think about that. Think about that. It wasn't there, wasn't there. Y Combinator was just starting, right? This is all new. That's a long answer, but I think it's really important for us to kind of sit with it and remember that just 10 years ago, we didn't have Uber. We didn't know about this stuff.
James McKinney: Yeah, it's amazing. Absolutely amazing. So you don't have these people to tell you to stay in your lane, and something catches your eye, iOS development. So leaving your ipadenclosure.com business, what was that startup you had in iOS?
Scott Paul: Let me tell you how it happened, because it happened because of iPad Enclosures. I'm on a call with Luxotica, which owns Sunglass Hut, they own Ray Ban and Oakley and pretty much they own all the sunglasses now. They're from Italy and they have a headquarters in Ohio here in the US, and they said, "We want an iPad in our stores and our Sunglass Hut stores where we can use it like a mirror for people to try on glasses and compare. Take a photo, try another pair on, take a photo, and kind of compare and contrast in real time." So kind of like a multi mirror experience.
I'm like, "That is a cool idea. Will they be able to send that image to their friends and have their friends give them feedback?" They're like, "No, we didn't think about that. We're just going to like… but that's a cool idea. That's really cool. But no, we're just looking for… we just have an application we're trying to do and stuff." After that call, I'm like I remember sitting and telling the sales manager who was on the call with me, I'm like, "I'm going to build that app." That's all. I said, "I'm going to build that." Crazy idea, but I'm like, "I'm going to build that app." If they just build it themselves, it'll just sit in Sunglass Hut, but that whole app should be… that should be a social network where people take photos and then they ask their friends which is the best.
So this thing gets in my head, it doesn't leave. I go home to my wife that night, or at least it was that week, and I say, "Natalie, for the next year you're not going to really see me." And I remember, because I knew what was going to happen. I knew that I was going to go so deep on this next problem that I was going to kind of disappear and I was not going to be balanced. She did not like that, but I just told her I have to do this. Utah has never had a consumer app. We don't have… we never have had a story of our own. I'm like I want to be that story. I'm going to be the local Zynga, Facebook, Pinterest. I want to be that, and we need that. We need it for Utah, because we're up and coming, we're a tech scene, blah, blah, blah. And so I got my tunnel vision.
I mean, it was crazy what I thought was going to happen. I went out and I got engineers. I started paying them $30,000 a month to build the craziest app. The app was called Voto, V-O-T-O. It was voting on photos. It was an amazing app. It was actually really, really cool. Well built, worked well, Launched it. Within two and a half months of that idea, I actually had launched to that iOS store to the app, and then crickets. Crickets. Just chirp, chirp, nothing. Where is everybody? I just launched an app, where are you all?
James McKinney: When you launched it, again being that the idea came from a conversation with a client under iPad Enclosures, how come you didn't go to them with the finished product to sell it to them as an offering, and just kind of go around the other competitors, other use cases for this?
Scott Paul: You know, I did. I actually did. I went to Irv his name was. I remember going to him and telling him, and showing him, and demoing it. He thought it was really cool, but like I thought it was bigger than them. I'm like okay, I could sell this. Like maybe they would buy it for their stores for this one time campaign, but I'm like no, this is the next Facebook. My brain's thinking that way. I don't need them, I need to go to San Francisco and raise big capital because I'm going to build a social network that's based off… You know, right now Instagram is growing and it's liking one photo, and I'm like I have a network where you can like up to four photos. In my brain, I'm thinking this is genius.
So funny, because one of the other reasons I built it is I remember people were posting on Facebook like, "What logo do you like the most?" and people would comment a ton. You couldn't really analyze that data because it was like 40 comments of, "I like two, but da, da, da, three. I like one but…" I'm like this should just be a quick tap and scored. And now that all the networks have all their little voting and photo thing, you can kind of do it. So my product essentially got baked into all the numerous networks. Even Twitter I think built a native way to kind of do voting and stuff. So Voto was not meant to live on its own as a network, but something happened special at Voto that made my $400,000 investment in that company actually pay off, even though it never made a dollar.
James McKinney: Oh man.
Scott Paul: So there's a weird story there, and this is back to… it's like the drone crashing, the app didn't pay off but what we learned in the app was that the app was a $400,000 calling card, business card that got the attention of a multi-million dollar opportunity.
James McKinney: Interesting. So before we jump that opportunity, I do want to know what that opportunity is, but before we get there, in that process what did you learn about consumer acquisition and just getting eyes in the app store? Because still, 2012 is still somewhat early days app store, where now it's really, really hard to get visibility inside the app store. You've got to come with your audience ahead of time when you launch something. But back then, not so much the case. So what did you learn about consumer acquisition when it came to apps at that time?
Scott Paul: Well, I learned that yeah, the glory days were all pre 2010 when you could almost publish like anything and there was some success for a lot of those early publishers. Then millions of apps started flooding and you had a lot more noise, and you had to kind of like you said come with your audience. I quickly learned that acquisition is nigh impossible if you don't have distribution. Same thing happens on Kickstarter today. You can't just go do a Kickstarter like you used to be able to when it first came out, and get audience. You now have to bring your audience. They don't have as much discovery anymore. So that's the app story today. In fact today it's so impossible that the budgets that the big people spend, you can't even do anything.
At least back when I was playing, there was still some optimization you could do. I came out with my app the same time as Tinder and a little bit after Snapchat and Vine. I remember they were the ones I was trying to outrank. And I'm going to tell you what I learned, because that leads to the next story. I had a partner. Her name was Niquelle. She was a very good marketer, and she figured out on Instagram that if she p aid a teenage girl that had 100,000 followers, and remember in 2012 very few people are influencers. It's not even a word yet on Instagram. But she found these fashion accounts that people would post about fashion and had lots of followers. She could pay them $20 and they would post for us.
So the first time she did this, I was looking at the app, and I'd look at all the time. I'm trying to get a few hundred people on it to engage more and I'm looking at it. Then one, all the sudden like 8 o'clock at night, all the statistics on the app, you know they're individual little posts and they usually had 20 likes or 20 votes, all the sudden they have 200 and 300 votes. I'm like… I called the developers. I'm like, "Guys, the app is broken again. Come on, everything has an extra zero on it. All these things have extra zeros." He's like, "Scott, our servers are on fire right now. We're going to have to get several other instances of AWS to keep up with the demand and the speed." I'm like, "What do you mean?" so I call my partner.
I'm like, "Niquelle, what did you do?" She's like, "I paid this girl $20 to post about it. All she did on Instagram was post the icon of our app, and said go download Voto." $20 brought in 3,000 downloads in a matter of like four to five minutes, and practically destroyed the app. Then I asked her, "Niquelle," I was like getting shaky, I'm like shaking, I'm like, "Can you do this again?" Still shaking, and she's like, "I think we can do it many, many times. There's lots of people. Now that I did it with this one girl, all these other people are using this app called Kick and they're saying, 'Can we do it? Can we shout out for you?'"
So in the next five months, we got nearly 700,000 downloads. We outranked Twitter at one point, we outranked Tinder, all these other ones, and we flooded that app with users. With tons of users. It was an amazing time. It was one of those rare instances in the world where you find a hack that it's a temporary, windowed opportunity where you can hack acquisition. We got so good that we got a call from a company that owns some very big apps, and they said, "Can you do this for us?" And we said yes, and we abandoned our app and went over and helped another very big company, and created an agency that ended up at Disney. We sold that to Disney. So that is a very weird way of we built a $400,000 website essentially that attracted a billion dollar group that allowed us to kind of pivot and go after something different.
James McKinney: Let's put a timestamp on this, because now we're getting closer to current day. So this was what, maybe 2014 or 2015?
Scott Paul: Yep, exactly. 2013, 2014, yep.
James McKinney: Okay. And then what was the firm that you joined because of that experience?
Scott Paul: I can't really disclose who the app… they've asked us not to.
James McKinney: Okay, okay.
Scott Paul: But let's just say they own the dating industry. Then all the biggest games started paying us too. Those addictive games that you play that you wish that you didn't spend money on like Candy Crush. Everyone starts paying us to go out and use influencers on Instagram to drive app installs, right? So it wasn't a firm that I joined. We actually just kind of paused Voto and we started a company called Instafluence, which was it was an influencer marketing agency essentially.
We took all the stuff we did on our own app and started doing it for other people. And Disney caught eye of that, and we ended up with them because they had just bought a company kind of doing YouTube influencers called Maker Studios, and they wanted to have a little bit of at this point we knew how to do Snapchat and Vine and Instagram, and even Facebook. So they were like we need to have, we have YouTube, let's get these guys who have all this other stuff and roll up into one happy family.
So that was a crazy few years there, because not only did my hardware company sell in '14 but then we sold to Disney in '15, and then I had another company that I was helping that Snapchat bought, also in end of '14. So it as every six months I was watching a company get bought. That might sound really glorious to people listening. All I can tell you, it was insulting. It was just, when you get bought, unless you're getting bought for a ton of money, all these people are doing is telling you why you're worth nothing and you should just give them the company practically for free. That's all they're doing. They're coming at you saying you're worthless, but you could have a chance to work with us if you let us give you some money and buy your next years of earnings out type of thing.
So it was not a glorious time. It was negotiation, flying to LA, flying to Oregon, flying all over, pretty much feeling like all this hard work that we'd done is nothing to these big companies and we should feel honored that they want to buy out our team. So yes, I had exits. They were not massive. They were base hits but they were definitely life changing for me and allowed me to work on the next thing, and also to become an angel investor where I could help the next tranche of founders and that's kind of what I've been doing since.
James McKinney: So in a bullet point fashion, run through some of the things that you have done from the time that Instafluence sold to Maker Studios. What are some of the things? Again, bullet point fashion because I want to talk more about your shift to investor side. So what have you done since Instafluence sold to Maker?
Scott Paul: Well I did start another company after we were at Disney. We had two years we had to stay out there in LA and work on the product that we sold them. I started seeing some stuff happen in t his influencer space that really scared me. Just really inauthentic way that people were doing influencer marketing. Big brands, and the way they were almost… they were paying for things that weren't real. Like they were buying people cell phones to say that they were Sprint customers or Subaru customers, and then those people would go right back to their preferred choice. I'm like this is stupid. This is broken. I helped start this, I've got to change it.
Wooly, the company I'm now a CEO of, this is my first company that I've actually taken venture capital for, Wooly is a software that's helping fight the in-authenticity of influencers. We help brands run influencer like campaigns, but we do it with their own customers. So brands source stories from their customers and they use that on social media, and they're very real. They're authentic instead of going out and paying influencers. A lot of times, the brands customers are influential and we help them discover that. We help big companies realize that they already have, right under their nose, big influencers that love their brand. Don't go pay the agency like I used to be. Don't go pay the Disney group to do it. Do it yourself in house. So that's been my major undertaking since Disney.
James McKinney: So Wooly is a platform that brands will license that can scour the social platforms to see who are their fans, and they can engage with them directly for ambassador programs if you will.
Scott Paul: 100%. We look at social, we look at their email. So if a brand is selling shoes, we can look at all the transactions and actually find out who the customers are on social media. A lot of it is public data. A lot of our Twitter handles are connected to the same email that we use when we bought our All Birds shoes or whatever, so we just match that data and enrich the profiles of your customers, and then rank them by this person has a lot of influence, this person's a CEO, this person has 200,000 followers on Instagram, this person talks only about shoes on YouTube all day long. So we're able to have you find that right from your customer base, and then they make content with the customers.
You said the right word, more ambassadors and advocates. We don't really care if they're small or large and audiences. We just care that they have a lot of love and want to share that content. So in Wooly's case, we didn't build software to pay your customers anything. A lot of the influencer marketing platforms are paying thousands to these people, and you can't touch influencers once you give them thousands per post. We have generated millions and millions and millions of impressions, hundreds of thousands of posts that have gone out on social media, and not one of them are paid because if you work with your customer, they're much more likely to do things because they love you and they love your products.
James McKinney: Now you said this was the only startup you've had that you took VC funding. I have to ask why, because you came off of quite a few exits and the one selling to Maker, I'm assuming was significant. Why VC funding on this one?
Scott Paul: I used to think when I watched big CEOs who had big exits, and then they go raise money like why don't they just fund that themselves? Well two answers there is even though my exits were exits and yes, there was money there, it wasn't enough to want me to go out and… there's something about this, and I see it all the time, most people want to share in the risk with partners on especially a SAS product, a software product. There's just a lot of costs and you find that just kind of being a validation thing.
If you go at it alone, it's almost concerning. You almost want some buy in from venture partners. Most CEOs who have exits go right back to the same investors they had the first time and they do it again the same people. It's a weird thing. I don't understand all the time, why not keep all the economics if you're so sure of your idea, keep all the equity. I think that's the other thing is I'm not sure of anything. There's no certainty. I learned in Voto the hard lesson. I was so certain that I was going to be the guy in Utah that started the first consumer mobile product, and it was going to be huge. Yes, it was pretty big. It had almost a million users. It was a social network. It was crazy. It was still never made a dollar and I failed miserably on what was in my brain, and what I thought I was going to create.
So going forward, I love to share the risk with others that want to bet on me or team up with me. I am not ready to go in with tunnel vision and do something like that. I think I've learned my lesson I guess. Lastly, at the time Wooly was still a dabble. I didn't think it was going to be my magnum opus. I still don't know if it is, right, but I was leaving Maker and I was dabbling with several things, and this was a dabble. If a VC looked at all my dabbles, Wooly was the one they said, "I'll put some money behind that one. If you put some effort in that one, I'll put some money behind that one," and that was the dabble they liked and I was like okay. I'll do this then, I'll take some of your money.
It didn't preclude me from doing other things, and that's something I think everyone needs to understand. Even as a venture backed CEO, they don't own me. They can't tell me what to do. They think that's what they have, they're mistaken because they're backing crazy CEO founder entrepreneurs. We don't work like that. They knew the risk they were getting in when they look at my history. I'm out doing plenty of other things. I'm very involved in many other projects, but Wooly is the first thing I put on LinkedIn. It's the first thing I lead with when I'm going to speak. It is my day job right now, and I say that with respect. I like my day job. I love working on Wooly.
James McKinney: That's awesome. What other things are you working on? Again, you're an investor you said as well, and being that you've been willing to give you time to The Startup Story podcast, it's obvious that you love entrepreneurship and the community that is entrepreneurship. So what are the things that you're contributing to besides Wooly?
Scott Paul: Yes, I love entrepreneurship. I love… I have about 10 meetings a day and about half of them are people coming to me with an idea. They think they're getting a benefit out of this. Ideas area my fuel. I can't go to the end of the day if I didn't hear someone share a dream or a passion or an idea with me. I can't go to bed. It is a disease. It's awesome if you're, unless you're married to me. It's awesome. But I eat ideas for lunch, breakfast, and dinner. I cannot get enough of them.
It is something about people's visions for the future that's something that's not currently being done or created that just there's so much possibility, there's so much energy. There's so much raw creation that's about to happen. I am addicted to it and I always have been. And I realize that my gift to the world is being someone who will hear those people out and tell them, "You've got this." Also tell them, "Don't do that," or at least don't do this part, or tell them, "You'll probably fail three times, but then when you hit, your batting average will still be 33, you've just got to keep swinging."
So my thing, my reason of living is I'm a very skill-less individual. I don't have many skills that I'm going to go and put on at the bottom of my resume. Maybe 35 words per minute on the typewriter or whatever. That's maybe one of my skills. I can use Google docs a little bit. I don't have any skills, I'm telling you. People don't believe, they're like, "How can you be a CEO and do all these exits, and be no skills?" I don't. I eat up ideas and I inspire. With my love for ideas and the future and what's possible, I think I can inspire teams and people around me. I guess that's a skill at the end of the day. I've come to terms with that's unique to me.
James McKinney: Yes, yes it is.
Scott Paul: But there's not a lot of other hard skills that I have, and I'm very open with that. I used to be able to dance like Michael Jackson when I was like 12. I had that down, but too old now. I can't do it. So what I'm doing now is I'm working with a handful. I've done 50 angel investments and I would say about 15 are already gone. I've only been doing it about five years. 15 are in the dead pool, and about 5 are really exciting for me. They're growing. Some of them have been through Y Combinator. Some have gone through other incubators. One right now is about to launch nationally. It's a safe cell phone network for kids. It's called Gab Wireless and it's fascinating to me that they're the first ones doing this. A lot of us that have kids that are 8, 9, 10, 11 don't want them getting a super computer at 8 and having unlimited social media. Even with Apple phones, it's hard to keep those kids from finding hacks around it.
So I just delivered this week to my 11 year old a Gab phone and it's just text and phone calling on a smart phone with a nice music player and a camera. But it's not a flip phone, it's a smart phone. It looks and acts like a smart phone, but it's just pretty basic. She loves it, I love it, and I think a lot of parents are going to love it. I find a lot of things that have some type of cause, some type of really remarkable opportunity to do marketing for them. So I'm also behind a school, like an Airbnb for elementary schools that's starting called Prenda, that they just went through Y Combinator and they're in Arizona. They're making it so there's an alternative to public education, and it's a blend of home school and public education. It's kind of unique. I could go on but I don't have a lot of time. I get into these things that can change the world.
James McKinney: That is so cool. Unfortunately, I wish we could go on, I do, because there's so many other things that I would like to unpack with you, but I think you've delivered so much value for our listeners. But there's two questions as our time comes to an end that I ask every single founder. The first one is about gratitude, because I believe that if we don't stop to pause and reflect on all the people that poured into our journey, that we will begin to think that we did it on our own. So when you look back on your journey, who are the people that you point to with such immense gratitude for the contribution they made for your journey to where you are today?
Scott Paul: I would put the stoics, like reading about them five years ago I discovered Marcus Aurelius. If you ever listen to Ryan Holiday, he's a really good daily stoic that's around talking today. That's kind of a weird one, because he's not alive. These people aren't alive, but stoic philosophy really helped get me a little bit more balanced recently. So I encourage everyone to go grab Meditations on Amazon and read what the emperor of the biggest empire in the world, how he journaled at night. There's no one close to him. Today, you look at our world leaders and I'm sorry, but they're pretty pathetic leaders. They're not inspiring. I don't go home taking the wisdom of Trump and trying to figure out how to apply it in my life. I think we're a little bit degenerate 2,000 years later than where we were when you read Marcus Aurelius.
The other one is, there's just been a few CEOs that I've had in other companies when I was working there. Not just CEOs, but the people in the companies that were truly, in those 10 years where I was trying to build up the courage to go out on my own again. This is important for the listeners I believe, because they're there right now, if you're at that job a lot of people are going to not encourage you to do your own thing. A lot of people are making your life miserable at your day job, but there's always these people that are more there for you, like what's best for this person, and they're either maybe they're someone you report to.
For me, it was a boss I had of one of the companies I worked for who was an entrepreneur himself, who started up his thing. His door was always open for me to go and release my crazy ideas to. That was so important for me that I could go in, he would hear me out, and he would do like 25% of the crazy things I do would get put into the product. It was the first time I'm like I'm getting a voice, and I was just a sales person there. I wasn't even a… I wasn't in charge of product, I wasn't in charge of company. I was just a sales guy, but I'd go into his office and I'm like, "I think Google's going to do this type of thing." I started using my vision of the future and telling him why I think we need to change things.
And you hear so often how that type of behavior in companies is shot down and not appreciated, and like honestly you get really nowhere and people are afraid to say those type of things to their management. This individual embraced it. When it came time for me to leap on my own company, he was the person I had to go to and say, "I think I have to go and do my iPad business and thank you for your year and a half of paying me, and giving me insurance, and giving me a car. I think I have to go do this." He was there for me. After, before, even today he's… and I just think that type of leadership and that type of individual, we need more of those in organizations. I would encourage the listeners to find those people right now that they can kind of start talking to. They might be at their company, they might be in their family or whatever, but you need someone that you can go to with the crazy ideas that will hear you out, and not either overindulge you or under indulge you, but can just be that reason.
James McKinney: So the last question, and we've been talking to tens of thousands of listeners up to this point. Right now, because I know you love talking to entrepreneurs, I want you to picture one entrepreneur that you're having coffee with or tea, whatever your beverage of choice is. And you're getting a chance, instead of mentoring tens of thousands, this is a chance for you to mentor the one. And the one I'd like for you to give advice to you is that individual who has a 9 to 5 and some narrative in their mind as to why they can't move on their idea, even though they've seen numerous of their ideas become executed upon by other people. What advice would you give to that person?
Scott Paul: Your job, your 9 to 5, is your first investor. That's your seed capital, and you need to for six months put away a nest egg. You need to live in a way that you can save up enough to buy the domain to pay for the servers, to maybe hire that design firm, to maybe pay for that prototype, that patent, whatever it is you think you need. Use your day job as your seed investor. That is what I did. That is the best way to do it. Don't go to investors or angels, or friends and family, and ask for money if you have not built up the reserves to go at it with some of your own dollars and kind of match them at the table. And then doesn't really matter what the idea is. Just put that aside.
Some people go spend that on NFL games. Some people go spend that on new houses or boats. If you're serious about this, go earn up that luxury travel budget or whatever it is, and spend it on a startup, and don't worry about. The ideas… most likely it's going to fail. But you know what? Vacation is just that. It's like an experience. And you did it, and it cost money, and there's not a lot that you take home after it other than memories. That first startup, that's what I'm going to tell them. Go get a reserve. You're going to have to live frugally for that little while, and then go and execute. If you don't think you have time, you're lying to yourself because that whole 9 to 5 is 9 to 5 for a reason. You've got whatever, 18 other hours of the day to do it. So boom, do it.
James McKinney: There are certain episodes that I wish I could be sitting next to you while you listen to them, and this is one of those episodes. Here, we got to listen to an entrepreneur who had three successful exits. While none of them are life changing with regards to money, they all played a major part in his journey. There are so many incredible points he made and many of them we will be posting on our Instagram account, so make sure you follow us @TheStartupStory.
The one point I do want to talk about a little bit more here is the idea of simply starting. He shared how he had thought about the concept for Groupon or Airbnb before they ever happened, but he never got started. And I'm sure each of us have those types of ideas. Now is the time to stop watching those ideas sit idle. Let's move on them. Each of us has the same number of hours in the day. If you were to simply commit to working on your idea just two hours a day, you'd be able to put in 14 hours in a week, and 56 hours in a month. Do you understand how much progress you could make in that amount of time?
But maybe time is not the reason that you haven't started. Maybe it's finances. Well, Scott shifted my perspective when he mentioned that we spend money on vacations and all we have left are memories from the experience. A startup is no different. We're timid to spend money because we want to make sure every dollar spent is going for a win. Guess what? The chances are against you on that one. You're going to make mistakes, and you might even fail. But that experience, much like the vacation, will enrich your life and prepare you for the next step forward. There is no losing in this game unless you just give up or never start at all.
I hope you found some real value in Scott's The Startup Story episode. If you've been around The Startup Story for any length of time, then you know how much emphasis I put on the idea that entrepreneurs support other entrepreneurs. So if you have found any value in Scott's startup story, then go follow him on LinkedIn and let him know. You heard him in this episode. He lives for talking to entrepreneurs. In fact, he loves getting feedback from his LinkedIn network on his various endeavors. The value continues far beyond this episode. Entrepreneurs support other entrepreneurs, so let's make sure to show up for Scott Paul in a major way and go connect with him on LinkedIn. In fact, we'll include a link to his profile in our show notes for easy access.
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